UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
20-F/A




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




OR




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




For the
fiscal year ended August 31, 2009




OR




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




For the
transition period from ______________________ to
______________________




OR




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




Date of
event requiring this shell company
report ____________________________




Commission
File Number: 0-53646




EAGLEFORD
ENERGY INC.


(formerly:
Eugenic Corp.).


(Exact
name of Registrant as specified in its charter)




Ontario,
Canada


(Jurisdiction
of incorporation or organization)




1
King Street West, Suite 1505


Toronto,
Ontario, Canada, M5H 1A1


(Address
of principal executive offices)




Sandra
J. Hall, Telephone (416) 364-4039, Fax (416) 364-8244


1
King Street West, Suite 1505, Toronto, Ontario, Canada, M5H 1A1


(Name,
telephone, e-mail and/or facsimile number and address of company contact
person)




Securities
registered or to be registered pursuant to section 12(b) of the Act:
  None




Securities
registered or to be registered pursuant to Section 12(g) of the Act:
  Common Stock, no
par value


(Title of Class)




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


(Title of Class)




The
number of outstanding shares of the issuer’s common stock as of January 31, 2010
was 24,232,559 shares.




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




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




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




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




Large accelerated filer  ̈
            Accelerated filer  ̈
            Non-accelerated filer x




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




U.S.
      GAAP  ̈
            International Financial Reporting Standards
              by the International Accounting Standards Board  ̈
            Other x




If
“Other” has been checked in response to the previous question, indicate by check
mark which financial statement item the registrant has elected to follow.
    Item 17 x    Item
18  ̈




If this
is an annual report, indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
    Yes  ̈     No
x





Table
of Contents




GENERAL
              1NOTE
      REGARDING FORWARD-LOOKING STATEMENTS
              1PART
      I
              
              1ITEM
      1
              IDENTITY
      OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
              1A.
              DIRECTORS
      AND SENIOR MANAGEMENT
              1B.
              ADVISERS
              1C.
              AUDITORS
              1ITEM
      2
              OFFER
      STATISTICS AND EXPECTED TIMETABLE
              2A.
              OFFER
      STATISTICS
              2B.
              METHOD
      AND EXPECTED TIMETABLE
              2ITEM
      3
              KEY
      INFORMATION
              2A.
              SELECTED
      FINANCIAL DATA
              2B.
              CAPITALIZATION
      AND INDEBTEDNESS
              4C.
              REASONS
      FOR THE OFFER AND USE OF PROCEEDS
              4D.
              RISK
      FACTORS
              4ITEM
      4
              INFORMATION
      ON THE COMPANY
              11A.
              HISTORY
      AND DEVELOPMENT OF THE COMPANY
              11B.
              BUSINESS
      OVERVIEW
              14C.
              ORGANIZATIONAL
      STRUCTURE
              16D.
              PROPERTY,
      PLANTS AND EQUIPMENT
              16ITEM
      4A
              UNRESOLVED
      STAFF COMMENTS
              20ITEM
      5
              OPERATING
      AND FINANCIAL REVIEW AND PROSPECTS
              20A.
              OPERATING
      RESULTS
              34B.
              LIQUIDITY
      AND CAPITAL RESOURCES
              38C.
              RESEARCH
      AND DEVELOPMENT, PATENTS AND LICENSES
              39D.
              TREND
      INFORMATION
              39E.
              OFF-BALANCE
      SHEET ARRANGEMENTS
              40F.
              TABULAR
      DISCLOSURE OF CONTRACTUAL OBLIGATIONS
              40G.
              SAFE
      HARBOR
              40ITEM
      6.
              DIRECTORS,
      SENIOR MANAGEMENT AND EMPLOYEES
              41A.
              DIRECTORS
      AND SENIOR MANAGEMENT
              41B.
              COMPENSATION
              42C.
              BOARD
      PRACTICES
              45D.
              EMPLOYEES
              52E.
              SHARE
      OWNERSHIP
              52ITEM
      7
              MAJOR
      SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
              54A.
              MAJOR
      SHAREHOLDERS
              54B.
              RELATED
      PARTY TRANSACTIONS
              55C.
              INTERESTS
      OF EXPERTS AND COUNSEL
              55ITEM
      8
              FINANCIAL
      INFORMATION
              55A.
              CONSOLIDATED
      STATEMENTS AND OTHER FINANCIAL INFORMATION
              55B.
              SIGNIFICANT
      CHANGES
              56ITEM
      9
              THE
      OFFER AND LISTING
              56A.
              OFFER
      AND LISTING DETAILS
              56B.
              PLAN
      OF DISTRIBUTION
              56


i




C.
              MARKETS
              57D.
              SELLING
      SHAREHOLDERS
              57E.
              DILUTION
              57F.
              EXPENSES
      OF THE ISSUE
              57ITEM
      10
              ADDITIONAL
      INFORMATION
              57A.
              SHARE
      CAPITAL
              57B.
              MEMORANDUM
      AND ARTICLES OF ASSOCIATION
              57C.
              MATERIAL
      CONTRACTS
              59D.
              EXCHANGE
      CONTROLS
              59E.
              TAXATION
              60F.
              DIVIDENDS
      AND PAYING AGENTS
              63G.
              STATEMENT
      BY EXPERTS
              63H.
              DOCUMENTS
      ON DISPLAY
              63I.
              SUBSIDIARY
      INFORMATION
              63ITEM
      11
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
              64ITEM
      12
              DESCRIPTION
      OF SECURITIES OTHER THAN EQUITY SECURITIES
              64A.
              DEBT
      SECURITIES
              64B.
              WARRANTS
      AND RIGHTS
              64C.
              OTHER
      SECURITIES
              65D.
              AMERICAN
      DEPOSITORY SHARES
              65PART
      II
              
              65ITEM
      13
              DEFAULTS,
      DIVIDENDS ARREARAGES AND DELINQUENCIES
              65ITEM
      14
              MATERIAL
      MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
      PROCEEDS
              65ITEM
      15
              CONTROLS
      AND PROCEDURES
              65ITEM
      16
              [RESERVED]
              65A.
              AUDIT
      COMMITTEE FINANCIAL EXPERT
              65B.
              CODE
      OF ETHICS
              66C.
              PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
              66D.
              EXEMPTIONS
      FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
              67E.
              PURCHASES
      OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS
              67F.
              CHANGE
      IN REGISTRANT’S CERTIFYING ACCOUNTANT
              67G.
              CORPORATE
      GOVERNANCE
              67PART
      III
              
              68ITEM
      17
              FINANCIAL
      STATEMENTS
              68ITEM
      18
              FINANCIAL
      STATEMENTS
              68ITEM
      19
              EXHIBITS
              68


ii


GENERAL




In this
Annual Report, references to “we”, “us”, “our”, the “Company”, and “Eagleford”
mean Eagleford Energy Inc., and its subsidiaries, unless the context requires
otherwise.




We use
the Canadian dollar as our reporting currency and our financial statements are
prepared in accordance with Canadian generally accepted accounting principles.
Note 16 to our annual consolidated financial statements provide a reconciliation
of our financial statements to United States generally accepted accounting
principles. All monetary references in this document are to Canadian dollars,
unless otherwise indicated. All references in this document to “dollars” or “$”
or “CDN$” mean Canadian dollars, unless otherwise indicated, and references to
“US$” mean United States dollars.




Except as
noted, the information set forth in this Annual Report is as of January 31, 2010
and all information included in this document should only be considered accurate
as of such date. Our business, financial condition or results of operations may
have changed since that date.




NOTE
REGARDING FORWARD-LOOKING STATEMENTS




Much of
the information included in this Annual Report is based upon estimates,
projections or other “forward-looking statements”. Such forward-looking
statements include any projections or estimates made by us and our management in
connection with our business operations. 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 those terms or other comparable terminology. While
these forward-looking statements, and any assumptions upon which they are based,
are made in good faith and reflect our current judgment regarding the direction
of our business, actual results will almost always vary, sometimes materially,
from any estimates, predictions, projections, assumptions or other future
performance suggested herein. Such estimates, projections or other
forward-looking statements involve various risks and uncertainties and other
factors, including the risks in the section titled “Risk Factors” below, which
may cause our actual results, levels of activities, 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. We caution the reader that important factors in some cases have
affected and, in the future, could materially affect actual results and cause
actual results to differ materially from the results expressed in any such
estimates, projections or other 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 those statements to actual results.




The
statements contained in Item 4 – “Information on the Company”, Item 5 –
“Operating and Financial Review and Prospects” and Item 11 – “Quantitative and
Qualitative Disclosures About Market Risk” are inherently subject to a variety
of risks and uncertainties that could cause actual results, performance or
achievements to differ significantly.




PART
I




ITEM 1
            IDENTITY OF DIRECTORS, SENIOR
      MANAGEMENT AND ADVISORS




A.           DIRECTORS
AND SENIOR MANAGEMENT




Not
applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.




B.           ADVISERS




Not
applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.




C.           AUDITORS




Not
applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.


1




ITEM 2
            OFFER STATISTICS AND EXPECTED
      TIMETABLE




A.           OFFER
STATISTICS




Not
applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.




B.           METHOD
AND EXPECTED TIMETABLE




Not
applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.




ITEM 3
            KEY
      INFORMATION




A.           SELECTED
FINANCIAL DATA




The
following table presents selected financial data derived from our Audited
Consolidated Financial Statements for the fiscal years ended August 31, 2009,
2008, 2007, 2006 and 2005. You should read this information in conjunction with
our  Audited Consolidated Financial Statements and related notes (Item
17), as well as Item 4: “Information on the Company” and Item 5: “Operating and
Financial Review and Prospects” of this Annual Report.




Our
consolidated financial statements have been prepared in accordance with Canadian
generally accepted accounting principles (“Canadian GAAP”) in Canadian dollars.
Note 16 to the audited annual consolidated financial statements provides
descriptions of material measurement differences between Canadian GAAP and US
generally accepted accounting principles (“US GAAP”) as they relate to us and a
reconciliation of our consolidated financial statements to US GAAP.




The
selected consolidated statement of operations data set forth below for the years
ended August 31, 2009, 2008 and 2007 and the selected consolidated balance sheet
data set forth below as of August 31, 2009, 2008 and 2007 is derived from our
consolidated financial statements, which have been audited by Schwartz Levitsky
Feldman LLP, Chartered Accountants, Toronto, Canada all of which are attached to
and forming part of this Annual Report under Item 17 – Financial
Statements.




The
selected consolidated statement of operations data set forth below for the years
ended August 31, 2006 and 2005 and the selected consolidated balance sheet data
set forth below as of August 31, 2006 and 2005 is derived from our consolidated
financial statements, which have been audited by BDO Dunwoody LLP, Chartered
Accountants, Toronto, Canada.




EAGLEFORD
ENERGY INC.


Presented
Pursuant to Canadian Generally Accepted Accounting Principles


(STATED
IN CANADIAN DOLLARS)




YEARS ENDED AUGUST 31,CONSOLIDATED
                        STATEMENT OF
                        OPERATIONS DATA
                      
                      2009
                      
                      
                      2008
                      
                      
                      2007
                      
                      
                      2006
                      
                      
                      2005Revenue
                      
                      $
                      56,199
                      
                      
                      $
                      292
                      
                      
                      $
                      637
                      
                      
                      $
                      760
                      
                      
                      $
                      6,079Income
      (loss) from oil and gas operations
                      
                      
                      (53,626
                      )
                      
                      
                      268
                      
                      
                      
                      541
                      
                      
                      
                      311
                      
                      
                      
                      (1,304
                      )Administrative
      expenses
                      
                      
                      276,815
                      
                      
                      
                      50,782
                      
                      
                      
                      40,691
                      
                      
                      
                      51,463
                      
                      
                      
                      74,407Operating
      loss for the year
                      
                      
                      (330,441
                      )
                      
                      
                      (50,514
                      )
                      
                      
                      (40,150
                      )
                      
                      
                      (51,152
                      )
                      
                      
                      (75,711
                      )Interest
      income
                      
                      
                      1,580
                      
                      
                      
                      -
                      
                      
                      
                      205
                      
                      
                      
                      -
                      
                      
                      
                      -Income
      taxes (recovery) future
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      9,100Net
      loss and comprehensive loss for the year/period
                      
                      
                      (328,861
                      )
                      
                      
                      (50,514
                      )
                      
                      
                      (39,945
                      )
                      
                      
                      (51,152
                      )
                      
                      
                      (84,811
                      )Loss
      per common share basic and diluted
                      
                      
                      (0.019
                      )
                      
                      
                      (0.006
                      )
                      
                      
                      (0.006
                      )
                      
                      
                      (0.008
                      )
                      
                      
                      (0.013
                      )Weighted
      average common shares outstanding
                      
                      
                      17,646,295
                      
                      
                      
                      7,955,482
                      
                      
                      
                      6,396,739
                      
                      
                      
                      6,396,739
                      
                      
                      
                      6,396,739BALANCE
      SHEET INFORMATIONWorking
      capital (deficiency)
                      
                      
                      (137,372
                      )
                      
                      
                      (93,634
                      )
                      
                      
                      (483,860
                      )
                      
                      
                      (444,839
                      )
                      
                      
                      (393,763
                      )Total
      assets
                      
                      
                      600,327
                      
                      
                      
                      208,486
                      
                      
                      
                      9,746
                      
                      
                      
                      8,298
                      
                      
                      
                      25,216Total
      shareholders’ equity (deficiency)
                      
                      
                      265,994
                      
                      
                      
                      (93,186
                      )
                      
                      
                      (482,860
                      )
                      
                      
                      (442,915
                      )
                      
                      
                      (391,763
                      )




2




The
following table sets forth our selected consolidated financial data as set forth
in the preceding table, as reconciled pursuant to United States Generally
Accepted Accounting Principles:




EAGLEFORD
ENERGY INC.


Presented
Pursuant to United States Generally Accepted Accounting Principles


(STATED
IN CANADIAN DOLLARS)




YEARS ENDED AUGUST 31,CONSOLIDATED STATEMENT OF
                          OPERATIONS DATA
                        
                        2009
                        
                        
                        2008
                        
                        
                        2007
                        
                        
                        2006
                        
                        
                        2005Revenue
                        
                        $
                        56,199
                        
                        
                        $
                        292
                        
                        
                        $
                        637
                        
                        
                        $
                        760
                        
                        
                        $
                        6,079Income
      (loss) from operations
                        
                        
                        (53,626
                        )
                        
                        
                        268
                        
                        
                        
                        541
                        
                        
                        
                        311
                        
                        
                        
                        (1,304
                        )Administrative
      expenses
                        
                        
                        276,815
                        
                        
                        
                        50,782
                        
                        
                        
                        40,691
                        
                        
                        
                        51,463
                        
                        
                        
                        74,407Operating
      loss for the year
                        
                        
                        (330,441
                        )
                        
                        
                        (50,514
                        )
                        
                        
                        (40,150
                        )
                        
                        
                        (51,152
                        )
                        
                        
                        (75,711
                        )Interest
      income
                        
                        
                        1,580
                        
                        
                        
                        -
                        
                        
                        
                        205
                        
                        
                        
                        -
                        
                        
                        
                        -Income
      taxes (recovery) future
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        9,100Net
      loss and comprehensive loss according to Canadian GAAP
                        
                        
                        (328,861
                        )
                        
                        
                        (50,514
                        )
                        
                        
                        (39,945
                        )
                        
                        
                        (51,152
                        )
                        
                        
                        (84,811
                        )Unrealized
      gain on marketable securities
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (171
                        )
                        
                        
                        (1,354
                        )Additional
      impairment of oil and gas interests
                        
                        
                        (73,638
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Comprehensive
      loss according to US GAAP
                        
                        
                        (402,499
                        )
                        
                        
                        (50,514
                        )
                        
                        
                        (39,945
                        )
                        
                        
                        (51,323
                        )
                        
                        
                        (86,165
                        )Net
      loss per common share basic and diluted according to US
    GAAP
                        
                        
                        (0.023
                        )
                        
                        
                        (0.006
                        )
                        
                        
                        (0.006
                        )
                        
                        
                        (0.008
                        )
                        
                        
                        (0.013
                        )Shares
      used in the computation of basic and diluted earnings pershare
                        
                        
                        17,646,295
                        
                        
                        
                        7,955,482
                        
                        
                        
                        6,396,739
                        
                        
                        
                        6,396,739
                        
                        
                        
                        6,396,739BALANCE
      SHEET INFORMATIONWorking
      capital deficiency
                        
                        
                        (137,372
                        )
                        
                        
                        (93,634
                        )
                        
                        
                        (483,860
                        )
                        
                        
                        (444,840
                        )
                        
                        
                        (393,592
                        )Total
      assets per Canadian GAAP
                        
                        
                        600,327
                        
                        
                        
                        208,486
                        
                        
                        
                        9,746
                        
                        
                        
                        8,298
                        
                        
                        
                        25,216Unrealized
      gain on marketable securities
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        171Write-down
      of marketable securities
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (1
                        )
                        
                        
                        -Additional
      impairment of oil and gas interests
                        
                        
                        (73,638
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Total
      assets per US GAAP
                        
                        
                        526,689
                        
                        
                        
                        208,486
                        
                        
                        
                        9,746
                        
                        
                        
                        8,297
                        
                        
                        
                        25,387Total
      shareholders’ equity (deficiency) per Canadian GAAP
                        
                        
                        265,994
                        
                        
                        
                        (93,186
                        )
                        
                        
                        (482,860
                        )
                        
                        
                        (442,915
                        )
                        
                        
                        (391,763
                        )Accumulated
      other comprehensive income:
                        
                        
                        -Unrealized
      gain on marketable securities
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (1
                        )
                        
                        
                        171Additional
      impairment of oil and gas interests
                        
                        
                        (73,638
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Total
      shareholders’ equity (deficiency) per US GAAP
                        
                        
                        192,356
                        
                        
                        
                        (93,186
                        )
                        
                        
                        (482,860
                        )
                        
                        
                        (442,916
                        )
                        
                        
                        (391,592
                        )OTHER
      FINANCIAL DATACash
      flow provided by (used in):Operating
      activities
                        
                        
                        (172,333
                        )
                        
                        
                        (50,414
                        )
                        
                        
                        (268
                        )
                        
                        
                        (17,523
                        )
                        
                        
                        (28,916
                        )Investing
      activities
                        
                        
                        80,499
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        11,512
                        
                        
                        
                        5,160Financing
      activities
                        
                        
                        62,013
                        
                        
                        
                        252,188
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -




3




Differences
between Generally Accepted Accounting Principles (GAAP) in Canada and the United
States


For the
year ended August 31, 2009 the preparation of our Audited Consolidated
Financial Statements in accordance with Canadian GAAP with a reconciliation to
US GAAP recorded an additional impairment in oil and gas interests of $73,638 on
the consolidated balance sheet and on the consolidated statement of loss,
comprehensive loss and deficit. For the years ended August 31, 2008 and 2007 the
preparation of our Audited Consolidated Financial Statements in accordance with
US GAAP would not have resulted in differences to the Consolidated Balance Sheet
or Consolidated Statement of Loss, Comprehensive Loss and Deficit from our
Audited Consolidated Financial Statements prepared using Canadian
GAAP.  For the years ended August 31, 2006 and 2005 the preparation of
our  Audited Consolidated Financial Statements in accordance with US
GAAP recorded an unrealized (loss) gain on marketable securities in accumulated
other comprehensive (loss) income on the consolidated balance sheet and the
consolidated statement of loss, comprehensive loss and deficit of $(1) and $171,
respectively.




Recently
Issued United States Accounting Standards are included in Note 16 to our August
31, 2009 Audited Consolidated Financial Statements.




Exchange
Rate Information




The
exchange rate between the Canadian dollar and the U.S. dollar was CDN$1.0652 per
US$1.00 (or US$0.9348 per CDN$1.00) as of January 29, 2010.




The
average exchange rates for the periods indicated below (based on the daily noon
buying rate for cable transfers in New York City certified for customs purposes
by the Federal Reserve Bank of New York) are as follows:




YEARS ENDED AUGUST 31,2009
                      
                      
                      2008
                      
                      
                      2007
                      
                      
                      2006
                      
                      
                      2005Average
      exchange rate CDN$ per US$1.00
                      
                      
                      1.0967
                      
                      
                      
                      1.0631
                      
                      
                      
                      1.0560
                      
                      
                      
                      1.1066
                      
                      
                      
                      1.1893Average
      exchange rate US$ per CDN$1.00
                      
                      
                      0.9033
                      
                      
                      
                      0.9369
                      
                      
                      
                      0.9440
                      
                      
                      
                      0.8934
                      
                      
                      
                      0.8107




The high
and low exchange rates between the Canadian dollar and the U.S. dollar for each
of the six months ended January 31, 2010 are as follows:




Month
                        
                        Exchange rate CDN$ per
                          US$1.00Low
                        
                        
                        HighJanuary
      2010
                        
                        
                        1.0260
                        
                        
                        
                        1.0669December
      2009
                        
                        
                        1.0400
                        
                        
                        
                        1.0713November
      2009
                        
                        
                        1.0458
                        
                        
                        
                        1.0742October
      2009
                        
                        
                        1.0289
                        
                        
                        
                        1.0843September
      2009
                        
                        
                        1.0615
                        
                        
                        
                        1.1060August
      2009
                        
                        
                        1.0251
                        
                        
                        
                        1.0677




B.           CAPITALIZATION
AND INDEBTEDNESS




Not
Applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.




C.           REASONS
FOR THE OFFER AND USE OF PROCEEDS




Not
Applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.




D.           RISK
FACTORS




Our
securities are highly speculative and subject to a number of risks. You should
not consider an investment in our securities unless you are capable of
sustaining an economic loss of the entire investment. In addition to the other
information presented in this Annual Report, the following risk factors should
be given special consideration when evaluating an investment in our
securities.




4




General
Risk Factors




We require
additional capital which may not be available to us on acceptable terms, or at
all.   Both the exploration and development of oil and gas
reserves can be capital-intensive businesses. We intend to satisfy any
additional working capital requirements from cash flow and by raising capital
through public or private sales of debt or equity securities, debt financing or
short-term loans, or a combination of the foregoing.  We have no
current arrangements for obtaining additional capital, and may not be able to
secure additional capital, or on terms which will not be objectionable to us or
our shareholders.  Under such circumstances, our failure or inability
to obtain additional capital on acceptable terms or at all could have a material
adverse effect on us.




We have a history
of losses and a limited operating history as an oil and gas exploration and
development company which makes it more difficult to evaluate our future
prospects.   To date, we have incurred significant losses. We
have a limited operating history upon which any evaluation of us and our
long-term prospects might be based. We are subject to the risks inherent in the
oil and gas industry, as well as the more general risks inherent to the
operation of an established business.  We and our prospects must be
considered in light of the risks, expenses and difficulties encountered by all
companies engaged in the extremely volatile and competitive oil and gas markets.
Any future success we might achieve will depend upon many factors, including
factors, which may be beyond our control.  These factors may include
changes in technologies, price and product competition, developments and changes
in the international oil and gas market, changes in our strategy, changes in
expenses, fluctuations in foreign currency exchange rates, general economic
conditions, and economic and regulatory conditions specific to the areas in
which we compete.  To address these risks, we must, among other
things, comply with environmental regulations; expand our portfolio of proven
oil and gas properties and negotiate additional working interests and prospect
participations; and expand and replace depleting oil and gas
reserves.




We have
significant debt which may make it more difficult for us to obtain future
financing or engage in business combination transactions.   We
have significant debt obligations.  The degree to which this
indebtedness could have consequences on our future prospects includes the effect
of such debts on our ability to obtain financing for working capital, capital
expenditures or acquisitions. The portion of available cash flow that will need
to be dedicated to repayment of indebtedness will reduce funds available for
expansion.   If we are unable to meet our debt obligations
through cash flow from operations, we may be required to refinance or adopt
alternative strategies to reduce or delay capital expenditures, or seek
additional equity capital.




Our future
operating results are subject to fluctuation based upon factors outside of our
control.   Our operating results may in the future fluctuate
significantly depending upon a number of factors including industry conditions,
oil and gas prices, rate of drilling success, rates of production from completed
wells and the timing of capital expenditures.  Such variability could
have a material adverse effect on our business, financial condition and results
of operations.  In addition, any failure or delay in the realization
of expected cash flows from operating activities could limit our future ability
to participate in exploration or to participate in economically attractive oil
and gas projects.




Our operating
results will be affected by foreign exchange rates.   Since
energy commodity prices are primarily priced in US dollars, a portion of our
revenue stream is affected by U.S./Canadian dollar exchange rates.  We
do not hedge this exposure.  While to date this exposure has not been
material, it may become so in the future.




Our inability to
manage our expected growth could have a material adverse effect on our business
operations and prospects.   We may be subject to growth-related
risks including capacity constraints and pressure on our internal systems and
controls. The ability to manage growth effectively will require us to continue
to implement and improve our operational and financial systems and to expend,
train and manage our employee base. The inability to deal with this growth could
have a material adverse impact on our business, operations and
prospects.




To compete in our
industry, we must attract and retain qualified personnel.   Our
ability to continue our business and to develop a competitive edge in the
marketplace depends, in large part, on our ability to attract and retain
qualified management and personnel.  Competition for such personnel is
intense, and we may not be able to attract and retain such personnel which may
negatively impact our share price. We do not have key-man insurance on any of
our employees, directors or senior officers and we do not have written
employment agreements with any of our employees, directors or senior
officers.


5


We must continue
to institute procedures designed to avoid potential conflicts involving our
officers and directors. Some of our directors and officers are or may
serve on the board of directors of other companies from time to time. Pursuant
to the provisions of the Business Corporations Act ( Ontario ), our directors and
senior officers must disclose material interests in any contract or transaction
(or proposed contract or transaction) material to us.  To avoid the
possibility of conflicts of interest which may arise out of their fiduciary
responsibilities to each of the boards, all such directors have agreed to
abstain from voting with respect to a conflict of interest between the
applicable companies.  In appropriate cases, we will establish a
special committee of independent directors to review a matter in which several
directors, or members of management, may have a conflict.




We rely on the
expertise of certain persons and must insure that these relationships are
developed and maintained.   We are dependent on the advice and
project management skills of various consultants and joint venture partners
contracted by us from time to time.  Our failure to develop and
maintain relationships with qualified consultants and joint venture partners
will have a material adverse effect on our business and operating
results.




We must indemnify
our officers and directors against certain actions.   Our
articles contain provisions that state, subject to applicable law, we must
indemnify every director or officer, subject to the limitations of the Business
Corporations Act (Ontario), against all losses
or liabilities that our directors or officers may sustain or incur in the
execution of their duties.  Our articles further state that no
director or officer will be liable for any loss, damage or misfortune that may
happen to, or be incurred by us in the execution of his duties if he acted
honestly and in good faith with a view to our best interests. Such limitations
on liability may reduce the likelihood of litigation against our officers and
directors and may discourage or deter our shareholders from suing our officers
and directors based upon breaches of their duties to us, though such an action,
if successful, might otherwise benefit us and our shareholders.




We do not
currently maintain a permanent place of business within the United States. A
majority of our directors and officers are nationals or residents of countries
other than the United States, and all or a substantial portion of such persons'
assets are located outside the United States. As a result, it may be difficult
for investors to enforce within the United States any judgments obtained against
our company or our officers or directors, including judgments predicated upon
the civil liability provisions of the securities laws of the United States or
any state thereof.




The global
financial crisis is expected to cause petroleum and natural gas prices to remain
volatile for the near future.Recent market events and
conditions, including disruptions in the international credit markets and other
financial systems and the deterioration of global economic conditions, have
caused significant volatility to commodity prices. These conditions worsened in
2008 and are continuing into 2010, causing a loss of confidence in the broader
U.S. and global credit and financial markets and resulting in the collapse of,
and government intervention in, major banks, financial institutions and insurers
and creating a climate of greater volatility, less liquidity, widening of credit
spreads, a lack of price transparency, increased credit losses and tighter
credit conditions. Notwithstanding various actions by governments, concerns
about the general condition of the capital markets, financial instruments,
banks, investment banks, insurers and other financial institutions caused the
broader credit markets to further deteriorate and stock markets to decline
substantially. These factors have negatively impacted company valuations and
will impact the performance of the global economy going forward. Petroleum and
natural gas prices are expected to remain volatile for the near future as a
result of market uncertainties over the supply and demand of these commodities
due to the current state of the world economies, OPEC actions and the ongoing
global credit and liquidity concerns.




Since our sole
executive officer does not devote her full time to the performance of her
Company duties, she may engage in other work activities to our
detriment.  Sandra Hall, our sole executive officer, devotes
approximately 40% of her work time to the performance of her Company duties.
Although she has an obligation to perform her duties in a manner consistent with
our best interests and through her stock ownership in the Company, is
incentivized to do so, she may encounter conflicts regarding the availability
and use of her work time. Although there are no such present conflicts, the
development thereof could have a material adverse effect on us.




Risks
Factors Relating to Our Common Stock




Our stockholders
may have difficulty selling shares of our common stock as there is a limited
public trading market for such stock.  There is only a limited
public market for our common stock, and no assurance can be given that a broad
or active public trading market will develop in the future or, if developed,
that it will be sustained. Our common stock trades on the Over-the-Counter
Bulletin Board.  In addition, our common stock has not been qualified under
any applicable state blue-sky laws, and we are under no obligation to so qualify
or register our common stock, or otherwise take action to improve the public
market for such securities. Our common stock could have limited marketability
due to the following factors, each of which could impair the timing, value and
market for such securities:  (i) lack of profits, (ii) need for
additional capital, (ii) limited public market for such securities; (iii) the
applicability of certain resale requirements under the Securities Act; and (iv)
applicable blue sky laws and the other factors discussed in this Risk Factors
section.


6




Possible
volatility of stock price. The market price for our common stock may be
volatile and is subject to significant fluctuations in response to a variety of
factors, including the liquidity of the market for the common stock, variations
in our quarterly operating results, regulatory or other changes in the oil and
gas industry generally, announcements of business developments by us or our
competitors, litigation, changes in operating costs and variations in general
market conditions. Because we have a limited operating history, the market price
for our common stock may be more volatile than that of a seasoned issuer.
Changes in the market price of our securities may have no connection with our
operating results. No predictions or projections can be made as to what the
prevailing market price for our common stock will be at any time.




We do not
anticipate paying dividends on our common stock.   We presently
plan to retain all available funds for use in our business, and therefore do not
plan to pay any cash dividends with respect to our securities in the foreseeable
future.  Hence, investors in our common stock should not expect to
receive any distribution of cash dividends with respect to such securities for
the foreseeable future.




Our shareholders
may experience dilution of their ownership interests because of our future
issuance of additional shares of common stock.   Our constating
documents authorize the issuance of an unlimited number of shares of common
stock, without par value. In the event that we are required to issue additional
shares of common stock or securities exercisable for or convertible into
additional shares of common stock, enter into private placements to raise
financing through the sale of equity securities or acquire additional oil and
gas property interests in the future from the issuance of shares of our common
stock to acquire such interests, the interests of our existing shareholders will
be diluted and existing shareholders may suffer dilution in their net book value
per share depending on the price at which such securities are sold. If we do
issue additional shares, it will cause a reduction in the proportionate
ownership and voting power of all existing shareholders.




At the
Annual and Special Meeting of Shareholders held on February 9, 2010,
shareholders approved a resolution permitting us to issue up 24,232,559 shares
of common stock by way of private placements, acquisitions or equity credit
lines to be completed on or before February 9, 2011.




At the
Annual and Special Meeting of Shareholders held on February 9, 2010,
shareholders approved a resolution authorizing us to consolidate our issued and
outstanding common shares on an up to one (1) for four (4) basis, or divide our
issued and outstanding common shares on an up to four (4) for one (1)
basis.




At the
Annual and Special Meeting of Shareholders held on February 9, 2010,
shareholders approved a resolution authorizing us to issue up to 20% of the
outstanding shares of common stock from time to time (or a total of 4,846,512
shares) in connection with our 2000 Stock Option Plan, as amended (the
“Plan”).




As of the
date of this Annual Report, no such options are issued.




Prospective
investors in our Company are urged to seek independent investment
advice.  Independent legal, accounting or business advisors (i)
have not been appointed by, and have not represented or held themselves out as
representing the interests of prospective investors in connection with this
Annual Report, and (ii) have not “expertized” or held themselves out as
“expertizing” any portion of this Annual Report, nor is our legal counsel
providing any opinion in connection with us, our business or the completeness or
accuracy of this Annual Report.  Neither we nor any of our respective
officers, directors, employees or agents, including legal counsel, make any
representation or expresses any opinion (i) with respect to the merits of an
investment in our common stock, including without limitation the proposed value
of our common stock; or (ii) that this Annual Report provides a complete or
exhaustive description of us, our business or relevant risk factors which an
investor may now or in the future deem pertinent in making his, her or its
investment decision.  Any prospective investor in our common stock is
therefore urged to engage independent accountants, appraisers, attorneys and
other advisors to (a) conduct such due diligence review as such investor may
deem necessary and advisable, and (b) to provide such opinions with respect to
the merits of an investment in our Company and applicable risk factors upon
which such investor may deem necessary and advisable to rely.  We will
fully cooperate with any investor who desires to conduct such an independent
analysis so long as we determine, in our sole discretion, that such cooperation
is not unduly burdensome.


7




We will incur
significant costs as a result of being a public company.   As a
public company, we will incur significant accounting, legal, governance,
compliance and other expenses that private companies do not incur. In addition,
the Sarbanes-Oxley Act of 2002 and the rules subsequently implemented by the
Securities and Exchange Commission have required changes in corporate governance
practices of public companies. These rules and regulations increase public
company’s legal, audit and financial compliance costs and make some activities
more time-consuming and costly. For example, as a public company, we are
required to adopt policies regarding internal controls and disclosure controls
and procedures. In addition, we will incur additional costs associated with our
public company reporting requirements. These rules and regulations will also
make it more difficult and more expensive for us to obtain director and officer
liability insurance and we may be required to accept reduced policy limits and
coverage or incur substantially higher costs to obtain the same or similar
coverage. As a result, it may be more difficult for us to attract and retain
qualified persons to serve on our board of directors or as executive
officers.




Applicable SEC
rules governing the trading of “penny stocks” will limit the trading and
liquidity of our common stock and may affect the trade price for our common
stock.   The Securities and Exchange Commission (“SEC”) has
adopted rules which generally define "penny stock" to be any equity security
that has a market price (as defined) of less than US$5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions. Our
securities will be 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 investors". The term "accredited investor"
refers generally to institutions with assets in excess of US$5,000,000 or
individuals with a net worth in excess of US$1,000,000 or annual income
exceeding US$200,000 or US$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 SEC 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 shares that are subject to
these penny stock rules. Consequently, these penny stock rules may affect the
ability of broker-dealers to trade our securities. We expect that the penny
stock rules will discourage investor interest in and limit the marketability of
our common shares.




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




8




Risks
Factors Relating to Our Business




Our future
success is dependent upon our ability to locate, obtain and develop commercially
viable oil and gas deposits.   Our future success is dependent
upon our ability to economically locate commercially viable oil and gas
deposits. We may not be able to consistently identify viable prospects, and such
prospects, if identified, may not be commercially exploitable.  Our
inability to consistently identify and exploit commercially viable hydrocarbon
deposits would have a material and adverse effect on our business and financial
position.




Exploratory
drilling activities are subject to substantial risks.   Our
expected revenues and cash flows will be principally dependent upon the success
of any drilling and production from prospects in which we
participate.  The success of such prospects will be determined by the
economical location, development and production of commercial quantities of
hydrocarbons.  Exploratory drilling is subject to numerous risks,
including the risk that no commercially productive oil and gas reservoirs will
be encountered. The cost of drilling, completing and operating wells is often
uncertain, and drilling operations may be curtailed, delayed or canceled as a
result of a variety of factors, including unexpected formation and drilling
conditions, pressure or other irregularities in formations, blowouts, equipment
failures or accidents, as well as weather conditions, compliance with
governmental requirements or shortages or delays in the delivery of
equipment.  Our inability to successfully locate and drill wells that
will economically produce commercial quantities of oil and gas could have a
material adverse effect on our business and, financial position.




Our drilling and
exploration plans will be subject to factors beyond our
control.  A prospect is a property that has been identified
based on available geological and geophysical information that indicates the
potential for hydrocarbons. Whether we ultimately drill a property may depend on
a number of factors including funding; the receipt of additional seismic data or
reprocessing of existing data; material changes in oil or gas prices; the costs
and availability of drilling equipment; the success or failure of wells drilled
in similar formations or which would use the same production facilities; changes
in estimates of costs to drill or complete wells; our ability to attract
industry partners to acquire a portion of our working interest to reduce
exposure to drilling and completion costs; decisions of our joint working
interest owners; and restrictions under provincial regulators.




Our operating
results are subject to oil and natural gas price
volatility.  Our profitability, cash flow and future growth
will be affected by changes in prevailing oil and gas prices.  Oil and
gas prices have been subject to wide fluctuations in recent years in response to
changes in the supply and demand for oil and natural gas, market uncertainty,
competition, regulatory developments and other factors which are beyond our
control.  It is impossible to predict future oil and natural gas price
movements with any certainty.  We do not engage in hedging
activities.  As a result, we may be more adversely affected by
fluctuations in oil and gas prices than other industry participants that do
engage in such activities.   An extended or substantial decline
in oil and gas prices would have a material adverse effect on our access to
capital, and our financial position and results of operations.




Unforeseen title
defects may result in a loss of entitlement to production and
reserves.  Although we conduct title reviews in accordance with
industry practice prior to any purchase of resource assets, such reviews do not
guarantee that an unforeseen defect in the chain on title will not arise and
defeat our title to the purchased assets.  If such a defect were to
occur, our entitlement to the production from such purchased assets could be
jeopardized.




Estimates of
reserves and predictions of future events are subject to
uncertainties.  Certain statements included in this Annual
Report contain estimates of our oil and gas reserves and the discounted future
net revenues from those reserves, as prepared by independent petroleum engineers
or us.  There are numerous uncertainties inherent in such estimates
including many factors beyond our control. The estimates are based on a number
of assumptions including constant oil and gas prices, and assumptions regarding
future production, revenues, taxes, operating expenses, development expenditures
and quantities of recoverable oil and gas reserves.  Such estimates
are inherently imprecise indications of future net revenues, and actual results
might vary substantially from the estimates based on these
assumptions.  Any significant variance in these assumptions could
materially affect the estimated quantity and value of reserves.  In
addition, our reserves might be subject to revisions based upon future
production, results of future exploration and development, prevailing oil and
gas prices and other factors. Moreover, estimates of the economically
recoverable oil and gas reserves, classifications of such reserves and estimates
of future net cash flows prepared by independent engineers at different times
may vary substantially.  Information about reserves constitutes
forward-looking statements.


9


The success of
our business is dependent upon our ability to replace
reserves.  Our future success depends upon our ability to find,
develop and acquire oil and gas reserves that are economically
recoverable.  As a result we must locate, acquire and develop new oil
and gas reserves to replace those being depleted by
production.  Without successful funding for acquisitions and
exploration and development activities, our reserves will decline.  We
may not be able to find and develop or acquire additional reserves at an
acceptable cost.




Most of our
competitors have substantially greater financial, technical, sales, marketing
and other resources than we do.   We engage in the exploration
for and production of oil and gas, industries which are highly competitive. We
compete directly and indirectly with oil and gas companies in our exploration
for and development of desirable oil and gas properties. Many companies and
individuals are engaged in the business of acquiring interests in and developing
oil and gas properties in the United States and Canada, and the industry is not
dominated by any single competitor or a small number of competitors. Many of
such competitors have substantially greater financial, technical, sales,
marketing and other resources, as well as greater historical market acceptance
than we do. We will compete with numerous industry participants for the
acquisition of land and rights to prospects, and for the equipment and labor
required to operate and develop such prospects. Competition could materially and
adversely affect our business, operating results and financial condition. Such
competitive disadvantages could adversely affect our ability to participate in
projects with favorable rates of return.




Shortages of
supplies and equipment could delay our operations and result in higher operating
and capital costs.   Our ability to conduct operations in a
timely and cost effective manner is subject to the availability of natural gas
and crude oil field supplies, rigs, equipment and service crews. Although none
are expected currently, any shortage of certain types of supplies and equipment
could result in delays in our operations as well as in higher operating and
capital costs.




Our business is
subject to interruption from severe weather. Presently, our operations
are conducted principally in the central region of Alberta. The weather in this
area and other areas in which we may operate in the future can be extreme and
can cause interruption or delays in our drilling and construction
operations.




We are dependent
on third-party pipelines and would experience a material adverse effect on our
operations were our access to such pipelines be curtailed or the rates charged
for use thereof materially increased.   Substantially all our
sales of natural gas production are effected through deliveries to local
third-party gathering systems to processing plants.  In addition, we
rely on access to inter-provincial pipelines for the sale and distribution of
substantially all of our gas. As a result, a curtailment of our sale of natural
gas by pipelines or by third-party gathering systems, an impairment of our
ability to transport natural gas on inter-provincial pipelines or a material
increase in the rates charged to us for the transportation of natural gas by
reason of a change in federal or provincial regulations or for any other reason,
could have a material adverse effect upon us. In such event, we would have to
obtain other transportation arrangements. We may not have economical
transportation alternatives and it may not be feasible for us to construct
pipelines. In the event such circumstances were to occur, our operating netbacks
from the affected wells would be suspended until, and if, such circumstances
could be resolved.




Our business is
subject to operating hazards and uninsured risks.   The oil and
gas business involves a variety of operating risks, including fire, explosion,
pipe failure, casing collapse, abnormally pressured formations, adverse weather
conditions, governmental and political actions, premature reservoir declines,
and environmental hazards such as oil spills, gas leaks and discharges of toxic
gases. The occurrence of any of these events with respect to any property
operated or owned (in whole or in part) by us could have a material adverse
impact on us. Insurance coverage is not always economically feasible and is not
obtained to cover all types of operational risks. The occurrence of a
significant event that is not insured or insured fully could have a material
adverse effect on our financial condition.




Our business is
subject to restoration, safety and environmental risk.   Our
present operations are primarily in western Canada and certain laws and
regulations exist that require companies engaged in petroleum activities to
obtain necessary safety and environmental permits to operate. Such legislation
may restrict or delay us from conducting operations in certain geographical
areas. Further, such laws and regulations may impose liabilities on us for
remedial and clean-up costs, or for personal injuries related to safety and
environmental damages, such liabilities collectively referred to as “asset
retirement obligations”. While our safety and environmental activities have been
prudent in managing such risks, we may not always be successful in protecting us
from the impact of all such risks.


10


The termination
or expiration of any of our licenses and leases may have a material adverse
effect on our results of operations.   Our properties are held
in the form of licenses and leases and working interests in licenses and leases.
If we, or the holder of the license or lease, fail to meet the specific
requirement of a license or lease, the license or lease may terminate or expire.
We may not meet the obligations required to maintain each license or lease. The
termination or expiration of our licenses or leases or the working interests
relating to a license or lease may have a material adverse effect on our results
of operations and business.




Compliance with
the Kyoto Protocol may subject us to increased operating
costs.  The Kyoto Protocol, ratified by the Canadian federal
government in December 2002, came into force on February 16, 2005. The protocol
commits Canada to reducing greenhouse gas emissions to six percent below 1990
levels over the period 2008-2012. The Canadian government released a framework
outlining its Climate Change action plan on April 13, 2005. The plan contains
few technical details regarding the implementation of the government’s
greenhouse gas reduction strategy. The Climate Change Working Group of the
Canadian Association of Petroleum Producers continues to work with the Canadian
and Alberta governments to develop an approach for implementing targets and
enabling greenhouse gas control legislation, which protects the industry’s
competitiveness, limits the cost and administrative burden of compliance and
supports continued investment in the sector. As the Canadian government has yet
to release a detailed Kyoto compliance plan, we are unable to predict the impact
of potential regulations upon our business; however, it is possible that we
would face increases in operating costs in order to comply with the greenhouse
gas emissions legislation.




Compliance with
new or modified environmental laws or regulations could have a materially
adverse impact on us.   We are subject to various Canadian
federal and provincial laws and regulations relating to the
environment.  We believe that we are currently in compliance with such
laws and regulations.  However, such laws and regulations may change
in the future in a manner which will increase the burden and cost of compliance.
In addition, we could incur significant liability under such laws for damages,
clean-up costs and penalties in the event of certain discharges into the
environment. In addition, environmental laws and regulations may impose
liability on us for personal injuries, clean-up costs, environmental damage and
property damage as well as administrative, civil and criminal penalties. We
maintain limited insurance coverage for accidental environmental damages, but do
not maintain insurance for the full potential liability that could be caused by
such environmental damage. Accordingly, we may be subject to significant
liability, or may be required to cease production in the event of the noted
liabilities.




ITEM 4
            INFORMATION ON THE
      COMPANY




We are
incorporated under the laws of the Province of Ontario, and are registered as an
extra-provincial company in Alberta.  Our primary activities are
investment in, exploration and development and production of oil and
gas.




We hold a
0.5% non-convertible gross overriding royalty in a natural gas well located in
the Haynes area in the Province of Alberta, Canada.




We hold a
5.1975% working interest held in trust through a joint venture partner in a
natural gas unit located in the Botha area in the Province of Alberta,
Canada.




Our
registered office and management office is located at 1 King Street West, Suite
1505, Toronto, Ontario, M5H 1A1, Telephone (416) 364-4039, Facsimile (416)
364-8244. Our books and financial records are located in the registered office
and management office.  Our Canadian public filings can be accessed
and viewed via the System for Electronic Data Analysis and Retrieval (“SEDAR”)
at www.sedar.com. . Readers can also access and view our Canadian public insider
trading reports via the System for Electronic Disclosure by Insiders at
www.sedi.ca. Our Registrar and Transfer Agent is Equity Transfer & Trust
Company located at Suite 400, 200 University Avenue, Toronto, Ontario, M5H 4H1.
Our U.S. public filings are available at the public reference room of the U.S.
Securities and Exchange Commission (“SEC”) located at 100 F Street, N.E., Room
1580, Washington, DC 20549 and at the website maintained by the SEC at
www.sec.gov.




A.           HISTORY
AND DEVELOPMENT OF THE COMPANY




We were
incorporated in Ontario, Canada on September 22, 1978, under the Business
Corporations Act ( Ontario ), under the name
Bonanza Red Lake Explorations Inc. (“Bonanza Red Lake”).  By
prospectus dated November 20, 1978 and a further amendment to the Prospectus
dated January 10, 1979 we became a reporting issuer in the Province of Ontario
and raised $250,000 to acquire interests in and to explore and develop certain
mineral lands located near the Town of Red Lake, Ontario, Canada. In 1987, we
optioned our mineral lands in Red Lake, Ontario to Pure Gold Resources Inc., who
expended sufficient funds during 1988 and 1989 to earn an 85% interest in our
eight patented mineral claims, and then discontinued its exploration program on
the property. Bonanza Red Lake had subsequently written the carrying amount of
these mineral claims down to $1.


11




On March
29, 2000, Bonanza Red Lake entered into a Share Exchange Agreement with 1406768
Ontario Inc. (“1406768 Ontario”).  1406768 Ontario is a company
incorporated under the laws of the Province of Ontario by articles of
incorporation dated effective March 13, 2000. The purpose of the transaction was
to allow Bonanza Red Lake to acquire a company, 1406768 Ontario, which resulted
in our owning part of an operating business.  At an Annual and Special
Meeting of shareholders held on May 10, 2000 we received shareholder approval
for the acquisition of 1406768 Ontario; the consolidation of Bonanza Red Lake’s
issued and outstanding common shares on a one new common share for every three
old common shares basis;  a name change from Bonanza Red Lake to
Eugenic Corp; a new stock option plan (the “Plan”) authorizing 1,275,000 common
shares to be set aside for issuance under the Plan; and authorizing the
directors to determine or vary the number of directors of the Company from time
to time which pursuant to our Articles provide for a minimum of three and a
maximum of ten.




By
Articles of Amendment dated August 15, 2000, Bonanza Red Lake consolidated its
issued and outstanding common shares on a one new common share for every three
old common shares basis and changed the name of the company to Eugenic
Corp.




We
completed the acquisition of 1406768 Ontario on October 12, 2000 and acquired
all of the issued and outstanding shares of 1406768 Ontario for $290,000. The
purchase price was satisfied by our issuance of 5,800,000 company units at $0.05
per unit.  Each unit consisted of one common share and one common
share purchase warrant entitling the holder to purchase one common share of ours
at an exercise price of $0.25 per common share until October 12, 2003. As a
result of this transaction, the original shareholders of 1406768 Ontario owned
90.7% of our issued shares. The acquisition resulted in a change in business and
an introduction of new management for us. The acquisition was accounted for as a
reverse take-over of us by 1406768 Ontario. Our net assets acquired at fair
value as at October 12, 2000 resulted in a deficiency of assets over liabilities
in the amount of $123,170 which was charged to share capital. All of the
5,800,000 outstanding warrants expired on October 12, 2003.




On
November 2, 2001, we were extra-provincially registered in the Province of
Alberta, Canada.




As part
of an initiative to create cash flow, we commenced oil and gas operations
effective August 31, 2001 and acquired a 25% working interest in one section of
land (640 gross acres) in the Windfall Area of Alberta, Canada for a purchase
price of $75,000.  On June 25, 2003 we disposed of this property for
net proceeds of $85,000.




On
September 10, 2001, we entered into a Participation Agreement to acquire a 30%
interest in one section of land (640 gross acres) in the St Anne area of
Alberta, Canada by paying 40% of the costs to acquire approximately 7.1
kilometers of proprietary 2D seismic data. After review of the seismic data, it
was determined that the joint partners would not undertake to drill a test well.
Accordingly, the costs associated with acquiring this prospect were written off
during fiscal 2003 - $4,806 and in fiscal 2002 - $22,781.




We
entered into an Agreement dated February 28, 2002 to participate in drilling two
test wells by paying 10% of the costs to drill to earn a 6% working interest
before payout and a 3.6% working interest after payout. The first test well in
the Haynes area of Alberta, Canada was drilled and proved to contain uneconomic
hydrocarbons and was subsequently abandoned and costs of $38,855 were written
off in 2002. On August 28, 2003 the joint partners farmed out their interest in
the Haynes prospect for a 10% non-convertible overriding royalty (“NCOR”). The
farmee drilled a test well and placed the well on production commencing December
2003.  Our share of this NCOR is 0.5%. The second test well in the
Mikwan area of Alberta, Canada was drilled and initially placed on production
from the Glauconite formation and later shut in during 2003.  The
Glauconite formation was subsequently abandoned and the Belly River formation
was completed and placed on production in January 2004.




Effective
August 9, 2002, we entered into an agreement with Wolfden Resources Inc.
(“Wolfden”) and sold our 15% interest in 8 patented mining claims located in
Dome Township, Red Lake, Ontario (the “Mining Claims”) for consideration of
$5,000 plus we retained a 0.3% net smelter return royalty of the net proceeds
realized from the sale of recovered minerals. Wolfden also holds a right of
first refusal to purchase our 0.3% net smelter return royalty. Pursuant to an
arrangement dated effective August 18, 2006, Wolfden transferred certain assets
including its interests in and to the Mining Claims to Premier Gold Mines
Limited (“Premier”).


12




Effective
October 28, 2005, we surrendered our 6% working interest in a gas well slated
for abandonment and related expiring leases in the Mikwan area of
Alberta.  In exchange for the surrender of interests, we were released
of our abandonment and site reclamation obligations.




The
following table sets forth our capital expenditures for the fiscal years
indicated.




Description of Expenditure
                      
                      August 31, 2009
                      
                      
                      August 31, 2008
                      
                      
                      August 31, 2007Oil
      and Gas Interests
                      
                      Nil
                      
                      
                      Nil
                      
                      
                      NilMarketable
      Securities
                      
                      Nil
                      
                      
                      Nil
                      
                      
                      NilTotal
      Expenditures
                      
                      Nil
                      
                      
                      Nil
                      
                      
                      Nil




We intend
to apply additional capital to further enhance our property interests. As part
of our oil and gas development program, management of the Company anticipates
further expenditures to expand its existing portfolio of proved reserves.
Amounts expended on future exploration and development are dependent on the
nature of future opportunities evaluated by us. These expenditures could be
funded through cash held by the Company or through cash flow from operations.
Any expenditure which exceeds available cash will be required to be funded by
additional share capital or debt issued by us, or by other means. Our long-term
profitability will depend upon our ability to successfully implement our
business plan.




On April
14, 2008, we completed a non-brokered private placement of a total of 2,575,000
units (each a "Unit") at a purchase price of $0.10 per Unit for gross proceeds
of $257,500 (the "Offering").  Each Unit was comprised of one common
share and one purchase warrant (each a "Warrant").  Each Warrant is
exercisable until April 14, 2011 to purchase one additional share of our common
stock at a purchase price of $0.20 per share.




On April
14, 2008, we also entered into an agreement (the "Debt Settlement Agreement")
with our President, Secretary and Director, Sandra J. Hall, to convert debt in
the amount of $50,000 through the issuance of a total of 500,000 shares at an
attributed value of $0.10 per Share.  In connection with the
conversion, Ms. Hall has also agreed to forgive $38,000 of the debt owing to her
by us.




In
addition, on April 14, 2008, we also completed similar debt settlement
arrangements with two other arm's length parties, in an effort to reduce the
debt that we have reflected on our financial statements.  In the
aggregate, we entered into agreements to convert $100,000 of debt, through the
issuance of a total of 1,000,000 shares at an attributed value of $0.10 per
share.




On
February 5, 2009, we completed a non-brokered private placement of 2,600,000
units (each a “Unit”) at a purchase price of $0.05 per Unit for gross proceeds
of $130,000. Each Unit was comprised of one common share (each a “Unit Share”)
and one purchase warrant (each a “Warrant”).  Each Warrant is
exercisable until February 5, 2014 to purchase one additional share of our
common stock (each a “Warrant Share”) at a purchase price of $0.07 per share.
1407271 Ontario Inc. purchased 1,600,000 units. 1407271 Ontario Inc. is owned
100% by Ms. Sandra Hall.  Ms. Hall is also the sole director and
officer of 1407271.




On
February 25, 2009, we completed a non-brokered private placement of 1,000,256
units (each a “Unit”) at a purchase price of $0.05 per Unit for gross proceeds
of approximately $50,013. Each Unit was comprised of one common share (each a
“Unit Share”) and one purchase warrant (each a “Warrant”).  Each
Warrant is exercisable until February 25, 2014 to purchase one additional share
of our common stock (each a “Warrant Share”) at a purchase price of $0.07 per
share. Sandra Hall, our president and a director, and Milton Klyman, a director,
purchased 600,000 Units and 50,000 Units, respectively.




On
February 27, 2009, we purchased all of the issued and outstanding shares issued
in the capital stock of 1354166 Alberta Ltd. (“1354166 Alberta”), a company
incorporated on October 3, 2007 in the Province of Alberta Canada (the
"Transaction") under the Business Corporations Act (Alberta).  In
connection therewith, we issued to the shareholders of 1354166 an aggregate of
8,910,564 units (each a "Unit") at $0.05 per unit or an aggregate of $445,528
and following the closing repaid $118,000 of shareholder loans in 1354166 by
cash payment. . Each unit is comprised of one share of our common stock (each a
"Share") and one purchase warrant (each a "Warrant").  Each Warrant is
exercisable until February 27, 2014 to purchase one additional share of our
common stock at a purchase price of $0.07 per share. The shareholders of 1354166
and 1354166 itself are arm's-length parties to us. 1354166 is a private company
that has a 5.1975% working interest held in trust through a joint venture
partner in a natural gas unit located in the Botha area of Alberta,
Canada.


13




On
February 27, 2009, we entered into an agreement with a non-related party, to
convert debt in the amount of $62,500 through the issuance of a total of
1,250,000 units at an attributed value of $0.05 per unit (the "Debt
Settlement").  Each Unit was comprised of one common share (each a
“Unit Share”) and one purchase warrant (each a “Warrant”).  Each
Warrant is exercisable until February 27, 2014 to purchase one additional share
of our common stock (each a “Warrant Share”) at a purchase price of $0.07 per
share.




By
Articles of Amendment dated November 12, 2009, 1406768 Ontario changed its name
to Eagleford Energy Inc.




By
Articles of Amalgamation dated November 30, 2009 we amalgamated with Eagleford
Energy Inc. and upon the amalgamation the amalgamated entity's name became
Eagleford Energy Inc.




Our past
primary source of liquidity and capital resources has been advances, cash flow
from oil and gas operations and proceeds from the sale of marketable securities
and from the issuance of common shares.




Our
registered office and principal place of business in Ontario is located at 1
King Street West, Suite 1505, Toronto, Ontario M5H 1A1.  Our telephone
number at that address is (416) 364-4039.




B.           BUSINESS
OVERVIEW




Directly
and through our wholly owned subsidiary 1354166 Alberta we are primarily engaged
in the development, acquisition and production of oil and gas interests located
in Alberta, Canada. Our operations currently consist of a 0.5% NCOR in a natural
gas well located in Haynes, Alberta, Canada and a 5.1975% working interest in a
natural gas unit located in Alberta, Canada held through our wholly owned
subsidiary 1354166 Alberta.




We have a
0.3% Net Smelter Return Royalty on 8 patented mining claims located in Red Lake,
Ontario, Canada.




For the
three fiscal years ending August 31, 2009, 2008 and 2007 the total gross revenue
derived from the sale of our natural gas interests was as follows:




TotalAugust
      31, 2009
                    
                    $
                    56,199August
      31, 2008
                    
                    $
                    292August
      31, 2007
                    
                    $
                    637




We sell
our natural gas production to integrated oil and gas companies and marketing
agencies. Sales prices are generally set at market prices available in Canada or
the United States.




The level
of activity in the Canadian oil and gas industry is influenced by seasonal
weather patterns.  Wet weather and spring thaw make the ground
unstable and municipalities and provincial transportation departments enforce
road bans that may restrict the level of activity.  Seasonal factors
and unexpected weather patterns may lead to declines in production activity and
increased consumer demand or changes in supply during certain months of the year
may influence the commodity prices.




There is
an existing and available market for the oil and gas produced from the
properties. However, the prices obtained for production are subject to market
fluctuations, which are affected by many factors, including supply and demand.
Numerous factors beyond our control, which could affect pricing
include:




•
            the
      level of consumer product demand;




•
            weather
      conditions;




•
            the
      foreign supply of oil and gas;




•
            the
      price of foreign imports; and


14




•
            volatility
      in market prices for oil and natural
gas;




•
            ability
      to raise financing;




•
            reliance
      on third party operators;




•
            ability
      to find or produce commercial quantities of oil and natural
      gas;




•
            liabilities
      inherent in oil and natural gas
operations;




•
            dilution
      of interests in oil and natural gas
properties;




•
            general
      business and economic conditions;




•
            the
      ability to attract and retain skilled
staff;




•
            uncertainties
      associated with estimating oil and natural gas
  reserves;




•
            competition
      for, among other things, financings, acquisitions of reserves, undeveloped
      lands and skilled personnel; and




•
            governmental
      regulation and environmental
legislation.




We
caution that the foregoing list of important factors is not exhaustive.
Investors and others who base themselves on our forward-looking statements
should carefully consider the above factors as well as the uncertainties they
represent and the risk they entail. We also caution readers not to place undue
reliance on these forward-looking statements. Moreover, the forward-looking
statements may not be suitable for establishing strategic priorities and
objectives, future strategies or actions, financial objectives and projections
other than those mentioned above.




We do not
have a reliance on raw materials, as we operate in an extractive
industry.




We do not
have a reliance on any significant patents or licenses.




The oil
and gas business is highly competitive in every phase.  Many of our
competitors have greater financial and technical resources, and have established
multi-national operations, secured land rights and licenses, which we may not
have.  As a result, we may be prevented from participating in drilling
and acquisition programs (See, Item 3.D Key Information - Risk
Factors).




Governmental
Regulation/Environmental Issues




Our oil
and gas operations are subject to various Canadian governmental regulations
including those imposed by Alberta Energy Resources Conversation Board and
Alberta Utilities Commission. Matters subject to regulation include discharge
permits for drilling operations, drilling and abandonment bonds, reports
concerning operations, the spacing of wells, and pooling of properties and
taxation. From time to time, regulatory agencies have imposed price controls and
limitations on production by restricting the rate of flow of oil and gas wells
below actual production capacity in order to conserve supplies of oil and gas.
The production, handling, storage, transportation and disposal of oil and gas,
by-products thereof, and other substances and materials produced or used in
connection with oil and gas operations are also subject to regulation under
federal, state, provincial and local laws and regulations relating primarily to
the protection of human health and the environment. To date, expenditures
related to complying with these laws, and for remediation of existing
environmental contamination, have not been significant in relation to the
results of operations of our company. The requirements imposed by such laws and
regulations are frequently changed and subject to interpretation, and we are
unable to predict the ultimate cost of compliance with these requirements or
their effect on our operations. These regulations may adversely affect our
operations and cost of doing business. It is likely that these laws and
regulations will become more stringent in the future (See, Item 3.D Key
Information - Risk Factors).




15




C.           ORGANIZATIONAL
STRUCTURE




We have a
wholly owned subsidiary, 1354166 Alberta Ltd., a company incorporated under the
Business Corporations Act (Alberta).




D.           PROPERTY,
PLANTS AND EQUIPMENT




Our
executive offices consist of approximately 140 square feet of office space and
are rented on a month to month basis.  The address of our executive
offices is 1 King Street West, Suite 1505, Toronto, Ontario Canada.




We hold a
0.5% NCOR in a natural gas well located in Haynes, Alberta, Canada and a 5.1975%
working interest in a natural gas unit located in Botha, Alberta, Canada through
our wholly owned subsidiary 1354166 Alberta.




We have a
0.3% Net Smelter Return Royalty on eight patented mining claims located in Red
Lake, Ontario, Canada.




The table
below is a glossary of terms and abbreviations that may be used in this
Item.




GLOSSARY
OF TERMS




Natural
      Gas
              
              Mcf
              
              1,000
      cubic feetMMcf
              
              1,000,000
      cubic feetMcf/d
              
              1,000
      cubic feet per dayOil
      and Natural Gas Liquids
              
              Bbl
              
              BarrelMbbls
              
              1,000
      barrelsBlpd
              
              Barrels
      of liquid per dayBoe
              
              Barrel
      of oil equivalent (1)Bpd
              
              Barrels
      per dayBoepd
              
              Barrels
      of oil equivalent per dayBopd
              
              Barrels
      of oil per dayNGLs
              
              Natural
      gas liquids




(1)
Disclosure provided herein in respect of BOEs may be misleading, particularly if
used in isolation.  A BOE conversion ratio of 6 Mcf: 1 Bbl is based on
an energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead.




The
following table sets forth certain standard conversions between Standard
Imperial Units and the International System of Units (or metric
units).




To Convert From
                      
                      To
                      
                      Multiply ByMcf
                      
                      Cubic
      metres
                      
                      
                      28.317Cubic
      metres
                      
                      Cubic
      feet
                      
                      
                      35.494Bbls
                      
                      Cubic
      metres
                      
                      
                      0.159Cubic
      metres
                      
                      Bbls
                      
                      
                      6.289Feet
                      
                      Metres
                      
                      
                      0.305Metres
                      
                      Feet
                      
                      
                      3.281Miles
                      
                      Kilometers
                      
                      
                      1.609Kilometers
                      
                      Miles
                      
                      
                      0.621Acres
      (Alberta)
                      
                      Hectares
                      
                      
                      0.405Hectares
      (Alberta)
                      
                      Acres
                      
                      
                      2.471




The
process of evaluating reserves is inherently complex.  It requires
significant judgments and decisions based on available geological, geophysical,
engineering and economics data.  These estimates may change
substantially as additional data from ongoing development activities and
production performance becomes available and as economic conditions impacting
oil and gas prices and costs changes.  The reserve estimates contained
herein are based on current production forecasts, prices and economic
conditions.  These factors and assumptions include among others (i)
historical production in the area compared with production rates from analogous
producing areas; (ii) initial production rates, (iii) production decline rates,
(iv) ultimate recovery of reserves; (v) success of future development
activities; (vi) marketability of production, (vii) effects of government
regulation; and (viii) other government levies imposed over the life of the
reserves.


16




As
circumstances change and additional data becomes available, reserves estimates
also change.  Estimates are reviewed and revised, either upward or
downward, as warranted by the new information.  Revisions are often
required for changes in well performance, prices, economic conditions and
governmental restrictions.  Revisions to reserve estimates can arise
from changes in year–end prices, reservoir performance and geological conditions
or production.  These revisions can be either positive or negative
(See Item 3.D. Key Information – Risk Factors).




As a
Canadian issuer, we are required under Canadian law to comply with National
Instrument 51-101 “Standards of Disclosure for Oil and Gas Activities” (NI
51-101) issued by the Canadian Securities Administrators, in all of our reserves
related disclosures. NI 51-101 was effective September 30, 2003 and applies to
financial years ended on or after December 31, 2003. NI 51-101 mandates
significant changes in the way reporting issuers are required to determine and
publicly disclose information relating to oil and gas reserves. Under NI 51-101,
proved reserves is an estimate, the premise of which means there must be at
least a ninety percent probability that actual quantities of crude oil and
natural gas proved reserves recovered will equal or exceed the estimated proved
reserves.




The
purpose of NI 51-101 is to enhance the quality, consistency, timeliness and
comparability of crude oil and natural gas activities by reporting issuers and
elevate reserves reporting to a higher level of confidence and accountability.
In the United States, registrants, including foreign private issuers like us,
are required to disclose proved reserves using the standards contained in the
United States Securities and Exchange Commission (“SEC”) Regulation S-X.
However, under certain circumstances, applicable U.S. law permits us to comply
with our own country’s law if the requirements vary. We believe that the
standards for determining proved reserves under NI 51-101 meet those set forth
under U.S. law and thus we have presented our proved reserves under NI 51-101
only.




The crude
oil and natural gas industry commonly applies a conversion factor to production
and estimated proved reserve volumes of natural gas in order to determine an
“all commodity equivalency” referred to as barrels of oil equivalent (“boe”).
The conversion factor we have applied in this Report is the current convention
used by many oil and gas companies, where six thousand cubic feet (“mcf”) is
equal to one barrel (“bbl”). A boe is based on an energy equivalency conversion
method primarily applicable at the burner tip. It may not represent equivalency
at the wellhead and may be misleading if used in isolation.




Reserve Information. The
estimate of our proved reserves on a constant-pricing basis, and their
associated net present values, have been based on the August 31, 2009, 2008 and
2007 actual posted commodity prices as determined by our independent engineering
evaluators, Sproule Associates Limited (“Sproule”), a member of the Association
of Professional Engineers Geologists and Geophysicists of Alberta, Canada.
Appropriate adjustments have been made to account for quality and
transportation, to the constant natural gas prices, and to the constant natural
gas by-products prices to reflect historical prices received for each
area.  It should not be assumed that the discounted net present value
estimated by Sproule represents the fair market value of the reserves. Where the
present value is based on constant price and cost assumptions, there is no
assurance that such price and cost assumptions will be attained and variances
could be material. At August 31, 2009, we hold a 0.5% NCOR in a natural gas well
located in Haynes, Alberta, Canada which is carried on the books at NIL and
through our wholly owned subsidiary 1354166 Alberta holds a 5.1975% working
interest in a natural gas unit located in the Botha area Northwest, Alberta near
the town of Manning, Canada. The unit is governed by a Pooling Agreement dated
December 01, 1991 (covering Natural Gas in the Debolt formation) which contains
a Right of First Refusal provision. Under a participation agreement dated
October 15, 2003, 1354166 Alberta’s working interest is held in trust by a joint
venture partner.




The table
below sets out in CDN dollars the constant prices and the exchange rate used.
All of our reserves are located in Alberta, Canada.




August 31, 2009
                
                Natural Gas Alberta AECO-C
                  Exchange Rate:
                
                2.14 $/Mcf
                  0.9132 $ US/$ Cdn.August 31, 2008
                
                Natural Gas Alberta AECO-C
                  Exchange Rate:
                
                6.92 $/Mcf
                  0.9483 $US/$Cdn.




17


August 31, 2007
                      
                      Natural Gas Alberta AECO-C
                        Exchange Rate:
                      
                      4.65 $/Mcf
                        0.8980 $US/$Cdn.




Proved Reserves: The following
table reflects estimates of our proved developed reserves as at August 31, 2009,
2008, and 2007 as reported by Sproule stated in CDN dollars.   All of
our gas reserves are located in Canada. The following table represents our net
interest in its reserves (after crown royalties, freehold royalties and
overriding royalties and interests owned by others).  Estimated cash
flow figures before income tax are net of all royalties, operating and capital
costs and discounted at 10% to the Net Present Value (“NPV”). NPV figures are
based on constant prices.




Period
                          
                          Proved Reserves
                          
                          Natural Gas
                            Mmcf
                          
                          Net Present Value
                            discounted at 10%August
      31, 2009
                          
                          Proved
      Developed
                          
                          29
                          
                          $
                          NilAugust
      31, 2008
                          
                          Proved
      Developed
                          
                          Nil
                          
                          $
                          256August
      31, 2007
                          
                          Proved
      Developed
                          
                          Nil
                          
                          $
                          1,000




Production
Volume:  The following table sets forth the net quantities of
natural gas produced during the fiscal years ended August 31, 2009, 2008 and
2007.




August 31,
                  
                  2009
                  
                  
                  2008
                  
                  
                  2007Natural
      Gas  (Mcf)
                  
                  
                  16,412
                  
                  
                  
                  37
                  
                  
                  
                  65




Historical
Production:  The following table sets out our net share of
production, average sales prices, average royalties, production costs and
average net back per unit of production for the fiscal years ended August 31,
2009, 2008 and 2007.




For the Years EndedHistorical Production
                
                August 31, 2009
                
                
                August 31, 2008
                
                
                August 31, 2007Natural
      Gas – Mcf/d
                
                45
                
                
                Nil
                
                
                NilNatural
      Gas Prices- $/Mcf
                
                $
                3.42
                
                
                $
                9.23
                
                
                $
                9.76Royalty
      Costs - $/Mcf
                
                0.63
                
                
                Nil
                
                
                
                0.62Production
      Costs - $/Mcf
                
                3.28
                
                
                Nil
                
                
                
                2.12Net
      Back - $/Mcf
                
                $
                (0.49)
                
                
                $
                9.23
                
                
                $
                9.76




Producing
Wells:  The following table sets forth the number of our gross
and net oil and natural gas wells and the number of gross and net non-producing
oil and natural gas wells that we have an interest in by location as of August
31, 2009, 2008 and 2007,.  A gross well is a well in which we own an
interest.  A net well represents the fractional interest we own in
gross wells. For the fiscal years ended August 31, 2009, 2008 2007 we held a
0.5% NCOR in a natural gas well located in Haynes, Alberta, Canada and through
our wholly owned subsidiary, 1354166 Alberta a 5.1975% working interest in a
natural gas unit located in the Botha area Northwest, Alberta near the town of
Manning, Canada.




The
following table sets out the number of gross and net producing oil and natural
gas wells and the number of gross and net non-producing oil and natural gas
wells that we have an interest in by location.




Location-
                    Alberta,
                    Canada
                  
                  Gross Producing
                    Gas Wells
                  
                  
                  Net Producing
                    Gas Wells
                  
                  
                  Gross Non-Producing
                    Gas Wells
                  
                  
                  Net Non-Producing
                    Gas Wells2009
                  
                  
                  3
                  
                  
                  
                  5.1975
                  
                  
                  
                  6
                  
                  
                  
                  5.19752008
                  
                  
                  Nil
                  
                  
                  
                  Nil
                  
                  
                  
                  Nil
                  
                  
                  
                  Nil2007
                  
                  
                  Nil
                  
                  
                  
                  Nil
                  
                  
                  
                  Nil
                  
                  
                  
                  Nil




Acreage. The following table
sets forth the developed and undeveloped acreage of the projects in which the
Company holds an interest, on a gross and a net basis as of August 31, 2009,
2008 and 2007. The developed acreage is stated on the basis of spacing units
designated by provincial authorities and typically on the basis of 160 acre
spacing unit for oil production and 640 acre spacing unit for gas production in
Alberta.  Our acreage is located in Alberta, Canada. All of our
leasehold acreage is deemed developed


18




August
      31,
                
                2009
                
                
                2008
                
                
                2007Gross
                
                
                Net
                
                
                Gross
                
                
                Net
                
                
                Gross
                
                
                NetLeasehold
      Acreage
                
                
                8,320
                
                
                
                432.43
                
                
                
                Nil
                
                
                
                Nil
                
                
                
                Nil
                
                
                
                Nil




Drilling
Activity:  As of August 31, 2009, 2008 and 2007 we have not
participated in any drilling activities.




Reserve
Reconciliation:  The following table sets forth a
reconciliation of the changes in our associated and non-associated gas (MMcf)
reserves as at August 31, 2009 against such reserves as at August 31,
2008.




ASSOCIATED AND NON-ASSOCIATED
                                    GASNet Proved
                                    (MMcf)
                                  
                                  
                                  Net
                                    Probable
                                    (MMcf)
                                  
                                  
                                  Net Proved
                                    Plus
                                    Probable
                                    (MMcf)At
      August 31, 2008
                                  
                                  
                                  45
                                  
                                  
                                  
                                  27
                                  
                                  
                                  
                                  72Technical
      Revisions
                                  
                                  
                                  (45
                                  )
                                  
                                  
                                  (27
                                  )
                                  
                                  
                                  (72
                                  )Additions
                                  
                                  
                                  29
                                  
                                  
                                  
                                  10
                                  
                                  
                                  
                                  39At
      August 31, 2009
                                  
                                  
                                  29
                                  
                                  
                                  
                                  10
                                  
                                  
                                  
                                  39




Production
Estimates:  The following table indicates the volume of
production estimated for the year ending August 31, 2010 reflected in the
estimates of future net revenue based on constant prices and costs.




Property
              
              Associated and Non-Associated
      Gas
                (MMcf)Botha,
      Alberta
              
              12




Additional Information Concerning
Abandonment and Reclamation Costs:   We base our estimates for
costs of abandonment and reclamation of surface leases and wells on previous
experience with similar well site locations and area terrain. We believe that
our range of estimates at $30,000 gross per well for abandonment and reclamation
costs are reasonable and applicable to its wells.  Our independent
engineering evaluator has also estimated similar costs in deriving our estimate
of future net revenue. Ultimately all wells in the natural gas unit will require
abandonment and reclamation.  The total of such costs estimated for
5.1975 net wells for the fiscal year ended August 31, 2009 was $12,474 and
$2,080 calculated using a discount rate of 10% percent. We do not expect to pay
abandonment and reclamation costs over the next 3 fiscal years.




Present Activities, Results of
Exploration and Drilling:   At the present, we have no pending
results for any drilling or exploration program or additional results pending
from further activities.




Governmental Regulation/Environmental
Issues:   Our oil and gas operations are subject to various
Canadian governmental regulations. Matters subject to regulation include
discharge permits for drilling operations, drilling and abandonment bonds,
reports concerning operations, the spacing of wells, and pooling of properties
and taxation. From time to time, regulatory agencies have imposed price controls
and limitations on production by restricting the rate of flow of oil and gas
wells below actual production capacity in order to conserve supplies of oil and
gas. The production, handling, storage, transportation and disposal of oil and
gas, by-products thereof, and other substances and materials produced or used in
connection with oil and gas operations are also subject to regulation under
federal, state, provincial and local laws and regulations relating primarily to
the protection of human health and the environment. To date, expenditures
related to complying with these laws, and for remediation of existing
environmental contamination, have not been significant in relation to the
results of operations of our company. The requirements imposed by such laws and
regulations are frequently changed and subject to interpretation, and we are
unable to predict the ultimate cost of compliance with these requirements or
their effect on our operations  (See, Item 3.D Key Information - Risk
Factors).


19




ITEM 4A   UNRESOLVED
STAFF COMMENTS




Not
Applicable




ITEM 5
            OPERATING
      AND FINANCIAL REVIEW AND PROSPECTS




The
following discussion should be read in conjunction with our “Selected Financial
Data” under Item 3 above, our Audited Consolidated Financial Statements for the
fiscal years ended August 31, 2009, 2008 and 2007 and notes thereto included
under “Item 17”. Unless otherwise indicated, discussion under this Item is based
on Canadian dollars and is presented in accordance with Canadian Generally
Accepted Accounting Principles (“GAAP”).  For reference to differences
between Canadian GAAP and United States Generally Accepted Accounting Principles
(“US GAAP”) see Note 16 to our Audited Consolidated Financial Statements for the
fiscal years ended August 31, 2009 and 2008.




Certain
measures in this discussion and analysis do not have any standardized meaning as
prescribed by Canadian generally accepted accounting principles such as netback
and other production figures and therefore are considered non-GAAP measures.
Therefore these measures may not be comparable to similar measures presented by
other issuers. These measures have been described and presented in order to
provide shareholders and potential investors with additional information
regarding the Company’s liquidity and its ability to generate funds to finance
its operations.




Certain
statements made in this Item are forward-looking statements under the Reform
Act.  Forward- looking statements are based on current expectations
that involve a numbers of risks and uncertainties, which could cause actual
events or results to differ materially from those reflected herein. See, Item
3.D Key Information - Risk Factors for discussion of important factors, which
could cause results to differ materially from the forward- looking statements
below.




Overview




Our
Audited Consolidated Financial Statements for the years ended August 31, 2009,
August 31, 2008 and August 31, 2007 include our accounts and those of our then
wholly owned subsidiary 1406768 Ontario and 1354166 Alberta (from the date of
acquisition February 27, 2009).    Our primary business
focus consists of acquiring and developing oil and gas interests.  We
have a 0.5% NCOR in a natural gas well located in Haynes, Alberta,
Canada.  In addition, we hold a 0.3% net smelter return royalty in
eight patented mining claims in Red Lake, Ontario, Canada that is carried on the
balance sheet at Nil.  In February 2009, we acquired 1354166
Alberta.  1354166 Alberta has a 5.1975% working interest in a natural
gas unit located in the Botha area of Alberta, Canada.




Financial
Instruments and Risk Factors




We are
exposed to financial risk, in a range of financial instruments including cash,
other receivables and accounts payable and income taxes payable and loans
payable. We manage our exposure to financial risks by operating in a manner that
minimizes its exposure to the extent practical. The main financial risks
affecting us are discussed below:




The fair
value of financial instruments at August 31, 2009 and August 31, 2008 is
summarized as follows:




August 31, 2009
                  
                  
                  August 31, 2008Amount
                  
                  
                  Fair Value
                  
                  
                  Amount
                  
                  
                  Fair ValueFinancial
      assetsHeld
      for tradingCash
      and cash equivalents
                  
                  $
                  172,905
                  
                  
                  $
                  172,905
                  
                  
                  $
                  202,726
                  
                  
                  $
                  202,726Loans
      and receivablesAccounts
      receivable
                  
                  $
                  20,421
                  
                  
                  $
                  20,421
                  
                  
                  $
                  5,311
                  
                  
                  $
                  5,311Financial
      liabilitiesAccounts
      payable
                  
                  $
                  152,984
                  
                  
                  $
                  152,984
                  
                  
                  $
                  71,672
                  
                  
                  $
                  71,672Income
      taxes payable
                  
                  $
                  10,215
                  
                  
                  $
                  10,215
                  
                  
                  $
                  -
                  
                  
                  $
                  -Loan
      payable
                  
                  $
                  167,500
                  
                  
                  $
                  167,500
                  
                  
                  $
                  230,000
                  
                  
                  $
                  230,000




20




(a)
            Credit
  Risk




Credit
risk arises when a failure by counter parties to discharge their obligations
could reduce the amount of future cash inflows from financial assets on hand at
the balance sheet date. Receivables from natural gas marketers are collected on
the 25th day of
each month following production. Our policy to mitigate credit risk associated
with these balances is to establish relationships with credit-worthy marketers.
The majority of our natural gas is marketed through a major international energy
company. There are no other material accounts receivable at August 31, 2009 that
we deemed uncollectible.




(b)
            Foreign Exchange
      Risk




The
prices received by us for the production of natural gas and natural gas liquids
are primarily determined in reference to U.S. dollars but are settled with us in
Canadian dollars. Our cash flow for commodity sales will therefore be impacted
by fluctuations in foreign exchange rates. We consider this risk to be
limited.




(c)
            Interest Rate
      Risk




Interest
rate risk refers to the risk that the value of a financial instrument or cash
flows associated with the instrument will fluctuate due to changes in market
interest rates. We are not exposed to interest rate risk.




Based on
management's knowledge and experience of the financial markets, we believe that
the movements in interest rates that are reasonably possible over the next
twelve month period will not have a significant impact on us.




(d)
            Liquidity
    Risk




Liquidity
risk includes the risk that, as a result of our operational liquidity
requirements:




·
            We
      will not have sufficient funds to settle transaction on the due
      date;


·
            We
      will be forced to sell financial assets at a value which is less than what
      they are worth; or


·
            We
      may be unable to settle or recover a financial asset at
    all.




We
consider this risk to be limited.




(e)
            Commodity Price
      Risk




Commodity
price risk is the risk that the fair value or future cash flows will fluctuate
as a result of changes in commodity prices. Commodity prices for petroleum and
natural gas are impacted by world economic events that dictate the levels of
supply and demand.




We
believe that movement in commodity prices that are reasonably possible over the
next twelve month period will not have a significant impact on us.




(f)
            Commodity Price
      Sensitivity




The
following table summarizes the sensitivity of the fair value of our risk
management position for the for the fiscal years ended August 31, 2009 and 2008
to fluctuations in natural gas prices, with all other variables held constant.
When assessing the potential impact of these price changes, the Company believes
that 10 percent volatility is a reasonable measure. Fluctuations in natural gas
prices potentially could have resulted in unrealized gains (losses) impacting
net income as follows:




August 31, 2009
                        
                        
                        August 31, 2008Increase
      10%
                        
                        
                        Decrease
      10%
                        
                        
                        Increase
      10%
                        
                        
                        Decrease
      10%Revenue
                        
                        $
                        61,819
                        
                        
                        $
                        50,579
                        
                        
                        $
                        321
                        
                        
                        $
                        263Net
      loss
                        
                        $
                        (323,241
                        )
                        
                        $
                        (334,481
                        )
                        
                        $
                        (50,485
                        )
                        
                        $
                        (50,543
                        )


21


(g)
              Market
  Risk





Market
risk represents the risk of loss that may impact our financial position, results
of operations, or cash flows due to adverse changes in financial market prices,
including interest rate risk, foreign currency exchange rate risk, commodity
price risk, and other relevant market or price risks. We do not have activities
related to derivative financial instruments or derivative commodity instruments.
We hold equity securities which have been written down to $1 on our consolidated
balance sheet.  Our primary risk relates to commodities price
risk.




The oil
and gas industry is exposed to a variety of risks including the uncertainty of
finding and recovering new economic reserves, the performance of hydrocarbon
reservoirs, securing markets for production, commodity prices, interest rate
fluctuations, potential damage to or malfunction of equipment and changes to
income tax, royalty, environmental or other governmental
regulations.




We
mitigate these risks to the extent we are able by:




•
            utilizing
      competent, professional consultants as support teams to company
      staff.




•
            performing
      careful and thorough geophysical, geological and engineering analyses of
      each prospect.




•
            focusing
      on a limited number of core
properties.




Market
risk is the possibility that a change in the prices for natural gas, natural gas
liquids, condensate and oil, foreign currency exchange rates, or interest rates
will cause the value of a financial instrument to decrease or become more costly
to settle.




The
global financial crisis is expected to cause petroleum and natural gas prices to
remain volatile for the near future. Recent market events and conditions,
including disruptions in the international credit markets and other financial
systems and the deterioration of global economic conditions, have caused
significant volatility to commodity prices. These conditions worsened in 2008
and continued in 2009, causing a loss of confidence in the broader U.S. and
global credit and financial markets and resulting in the collapse of, and
government intervention in, major banks, financial institutions and insurers and
creating a climate of greater volatility, less liquidity, widening of credit
spreads, a lack of price transparency, increased credit losses and tighter
credit conditions. Notwithstanding various actions by governments, concerns
about the general condition of the capital markets, financial instruments,
banks, investment banks, insurers and other financial institutions caused the
broader credit markets to further deteriorate and stock markets to decline
substantially. These factors have negatively impacted company valuations and
will impact the performance of the global economy going forward. Petroleum and
natural gas prices are expected to remain volatile for the near future as a
result of market uncertainties over the supply and demand of these commodities
due to the current state of the world economies, OPEC actions and the ongoing
global credit and liquidity concerns.




Capital
Management




Our
objective when managing capital is to safeguard our ability to continue as a
going concern. We set the amount of capital in proportion to risk. We manage the
capital structure and makes adjustments to it in light of changes in economic
conditions and the risk characteristics of any underlying assets. Our board of
directors does not establish quantitative return on capital criteria for
management, but rather relies on the expertise of our management to sustain
future development of the business.




Currently,
we do not have any operational cash requirements other than administrative
expenditures. Our producing properties are fully developed and there are no
further outlays or expenses projected to develop these properties at this
time.




Management
reviews its capital management approach on an ongoing basis and believes that
this approach, given our relative size, is reasonable.


22


There
were no changes in our capital management during the year ended August 31,
2009.




We are
not subjected to any externally imposed capital requirements.




Critical
Accounting Policies and Estimates and Change in Accounting Policies and Initial
Adoption




Our
significant accounting policies, estimates and changes to accounting policies
are also described in the Notes to the  Audited Consolidated Financial
Statements for the fiscal years ended August 31, 2009, 2008, and 2007 (See Item
19 – Exhibits). It is increasingly important to understand that the application
of generally accepted accounting principles involves certain assumptions,
judgments and estimates that affect reported amounts of assets, liabilities,
revenues and expenses. The application of principles can cause varying results
from company to company.




The most
significant accounting policies that impact us relate to oil and gas accounting
and reserve estimates.




Our
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada.  The preparation
of our consolidated financial statements in accordance with US GAAP have
resulted in differences to the consolidated balance sheet and the consolidated
statement of loss, comprehensive loss and deficit from the consolidated
financial statements prepared using Canadian GAAP (see Reconciliation to
Accounting Principles Generally Accepted in the United States
below).




Critical
Accounting Policies and Estimates




Going
Concern




The Audited
Consolidated Financial Statements for the fiscal year ended August 31, 2009 have
been prepared on a going concern basis which contemplates the realization of
assets and the payment of liabilities in the ordinary course of business. We
plan to obtain additional financing by way of debt or the issuance of common
shares or some other means to service our current working capital requirements,
any additional or unforeseen obligations or to implement any future
opportunities. Should we be unable to continue as a going concern, we may be
unable to realize the carrying value of our assets and to meet its liabilities
as they become due. Our consolidated financial statements do not include any
adjustments for this uncertainty.




We have
accumulated losses and working capital and cash flows from operations are
negative which raises doubt as to the validity of the going concern assumption.
As at August 31, 2009, we had a working capital deficiency of $137,372 and an
accumulated deficit of $1,028,526.  Management of the Company does not
have sufficient funds to meet the Company’s liabilities for the ensuing twelve
months as they fall due. In assessing whether the going concern assumption is
appropriate, management takes into account all available information about the
future, which is at least, but not limited to, twelve months from the end of the
reporting period. Our ability to continue operations and fund our liabilities is
dependent on management's ability to secure additional financing. Management is
actively pursuing such additional sources of financing, and while it has been
successful in doing so in the past, there can be no assurance it will be able to
do so in the future. Management is aware, in making its assessment, of material
uncertainties related to events or conditions that may cast significant doubt
upon the entity's ability to continue as a going concern. Accordingly, they do
not give effect to adjustments that would be necessary should we be unable to
continue as a going concern and therefore to realize its assets and liquidate
its liabilities and commitments in other than the normal course of business and
at amounts different from those in the accompanying consolidated financial
statements.




Principles
of Consolidation




The
consolidated financial statements include the accounts of Eagleford the legal
parent, together with its wholly owned subsidiaries, 1406768 Ontario and 1354166
Alberta. All material inter-company transactions have been
eliminated.




Marketable
Securities




At each
financial reporting period, we estimate the fair value of investments which are
held-for-trading, based on quoted closing bid prices at the consolidated balance
sheet dates or the closing bid price on the last day the security traded if
there were no trades at the consolidated balance sheet dates and such valuations
are reflected in the consolidated financial statements. The resulting values for
unlisted securities whether of public or private issuers, may not be reflective
of the proceeds that could be realized by us upon their disposition. The fair
value of the securities at August 31, 2009 was $1 (2008 - $1).


23


Cash
and Cash Equivalents




We
classified cash, redeemable investment deposits, and deposits with original
maturities less than or equal to three months as cash and cash
equivalents.




Oil
and Gas Interests




We follow
the successful efforts method of accounting for its oil and gas
interest.  Under this method, costs related to the acquisition,
exploration, and development of oil and gas interests are capitalized. We carry
as an asset, exploratory well costs if a) the well found a sufficient quantity
of reserves to justify its completion as a producing well and b) we are making
sufficient progress assessing the reserves and the economic and operating
viability of the project. If a property is not productive or commercially
viable, its costs are written off to operations.  Impairment of non
producing properties is assessed based on management's expectations of the
properties.




Costs
capitalized, together with the costs of production equipment, are depleted on
the unit of production method based on the estimated proved
reserves.




Proved
oil and gas properties held and used by us are reviewed for impairment whenever
events and circumstances indicate that the carrying amounts may not be
recoverable. Impairments are measured by the amount by which the asset’s
carrying value exceeds its fair value and is included in the determination of
net income for the year.




Revenue
Recognition




Revenues
associated with the sale of crude oil and natural gas are recorded when the
title passes to the customer. The customer has assumed the risks and rewards of
ownership, prices are fixed or determinable and collectability is reasonably
assured. We do not enter into ongoing arrangements whereby we are required to
repurchase our products, nor do we provide the customer with a right of
return.




Royalties




As is
normal to the industry, our future production is subject to crown
royalties.  These amounts are reported net of related tax
credits.




Environmental
and Site Restoration Costs




We
recognize an estimate of the liability associated with an asset retirement
obligation (“ARO”) in the financial statements at the time the liability is
incurred. The estimated fair value of the ARO is recorded as a long-term
liability with a corresponding increase in the carrying amount of the related
asset. The capitalized amount is depleted on a straight-line basis over the
estimated life of the asset. The liability amount is increased each reporting
period due to the passage of time and the amount of accretion to operations in
the period. The ARO can also increase or decrease due to changes in the
estimates of timing of cash flows or changes in the original estimated
undiscounted cost. Actual costs incurred upon settlement of the ARO are charged
against the ARO to the extent of the liability recorded.




Ceiling
Test




We
perform a ceiling test calculation in accordance with the Canadian Institute of
Chartered Accountants’ successful efforts method guidelines, including an
impairment test on undeveloped properties. The recovery of costs is tested by
comparing the carrying amount of the oil and natural gas assets to the reserves
report. If the carrying amount exceeds the recoverable amount, then impairment
would be recognized on the amount by which the carrying amount of the assets
exceeds the present value of expected cash flows using proved plus probable
reserves and expected future prices and costs. For the fiscal year ended August
31, 2009 we recorded an impairment of $105,805 (2008- $528).


24


Foreign
currencies




Assets
and liabilities denominated in currencies other than Canadian dollars are
translated at exchange rates in effect at the balance sheet date. Revenue and
expense items are translated at the average rates of exchange for the year.
Exchange gains and losses are included in the determination of net income for
the year.




Financial
Instruments




Our
financial instruments consist of certain instruments with short term
maturities.  It is management's opinion that we are not exposed to any
significant interest rate or credit risks arising from these financial
instruments.  The fair value of short term financial instruments
approximates the carrying value.  All of our cash is held at one major
financial institution.




Accounting
Estimates




The
preparation of the consolidated financial statements in conformity with Canadian
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities, and the
disclosures of revenues and expenses for the reported year.  Actual
results may differ from those estimates.




The
amounts recorded for depletion and amortization of oil and gas properties and
the valuation of these properties, are based on estimates of proved and probable
reserves, production rates, oil and gas prices, future costs and other relevant
assumptions.  The effect on the consolidated financial statements of
changes in estimates in future periods could be significant.




Income
Taxes




We
account for income taxes under the asset and liability method.  Under
this method, future income tax assets and liabilities are recognized for the
future tax consequences attributable to differences between financial reporting
and tax bases of assets and liabilities and available loss carry forwards and
are measured using the substantively enacted tax rates and laws that will be in
effect when the differences are expected to be reversed.  A valuation
allowance is established to reduce tax assets if it is more likely than not that
all or some portions of such tax assets will not be realized.




Stock
Based Compensation




We have a
stock option plan. The fair value method of accounting is used to account for
stock options granted to directors, officers and employees whereby the fair
value of options granted is recorded as a compensation expense in the
consolidated financial statements. Compensation expense is based on the
estimated fair value at the time of the grant and recognized over the vesting
period of the option. Upon exercise of the options, the amount of the
consideration paid together with the amount previously recorded in contributed
surplus is recorded as an increase in share capital.




Non-Monetary
Transactions




Transactions
in which shares or other non-cash consideration are exchanged for assets or
services are measured at the fair value of the assets or services involved in
accordance with Section 3830 (“Non-monetary Transactions”) of the Canadian
Institute of Chartered Accountants Handbook (“CICA Handbook”).




Loss
Per Share




Basic
loss per share is calculated by dividing the loss for the year by the weighted
average number of common    shares outstanding during the
year. Diluted loss per share is computed using the treasury stock method. Under
this method, the diluted weighted average number of shares is calculated
assuming the proceeds that arise from the exercise of stock options and other
dilutive instruments are used to repurchase our shares at their weighted average
market price for the period.


25


Change
in Accounting Policy and Future Accounting Changes




Accounting
Changes




During
2007, we adopted the revised CICA Section 1506, “Accounting Changes”, which
provides expanded disclosures for changes in accounting policies, accounting
estimates and corrections of errors. Under the new standard, accounting changes
should be applied retrospectively unless otherwise permitted or where
impracticable to determine. As well, voluntary changes in accounting policy are
made only when required by a primary source of GAAP or when the change results
in more relevant and reliable information. The impact that the adoption of
Section 1506 will have on our results of operations and financial condition will
depend on the nature of future accounting changes.




Comprehensive
Income (Loss) and Deficit – During 2007, we adopted the CICA Section 1530,
“Comprehensive Income”. Under the new standards, a new statement, the Statement
of Comprehensive Income (Loss), has been introduced that will provide for
certain gains and losses arising from changes in fair value, to be temporarily
recorded outside the income statement. Upon adoption of Section 1530, we
incorporated the new required Statement of Comprehensive Loss by creating
“Consolidated Statements of Loss, Comprehensive Loss, and Deficit”. The
application of this revised standard did not result in comprehensive loss being
different from net loss for the periods presented. Should we recognize any other
comprehensive loss in the future, the cumulative changes in other comprehensive
loss would be recognized in Accumulated Other Comprehensive Loss, which would be
presented as a new category within shareholders’ deficiency on the consolidated
balance sheets.




Financial
Instruments – During 2007, we adopted Section 3855, “Financial Instruments –
Recognition and Measurement”, and Section 3861 “Financial Instruments –
Disclosure and Presentation”. All financial instruments, including derivatives,
are to be included in our Consolidated Balance Sheets and measured, in most
cases, at fair value upon initial recognition. Measurement in subsequent periods
depends on whether the financial instrument has been classified as
held-for-trading, available-for-sale, held-to-maturity, loans or receivables, or
other financial liabilities. Financial assets and financial liabilities held-for
trading are measured at fair value with changes in those fair values recognized
in net earnings. Financial assets held-to-maturity, loans and receivables, and
other financial liabilities are measured at amortized cost using the effective
interest method of amortization. Investments in equity instruments classified as
available-for-sale that do not have a quoted market price in an active market
are measured at the lower of cost and the carrying value. The financial
instruments recognized on our consolidated balance sheets are deemed to
approximate their estimated fair values, therefore no further adjustments were
required upon adoption of the new section. We have designated its cash as
held-for-trading which is measured at fair value and its marketable securities
have been designated as available-for-sale. All other financial assets were
classified as loans or receivables. All financial liabilities were classified as
other liabilities.




Hedges –
During fiscal 2008 we adopted CICA Section 3865, “Hedges” which specifies
circumstances under which hedge accounting is permissible and how hedge
accounting may be performed. We currently do not have any hedges.




Financial
Instruments – Disclosures and Presentation – During fiscal 2008, we adopted CICA
Section 3862, “Financial Instruments – Disclosures” and Section 3863, “Financial
Instruments–Presentation”, which will replace Section 3861, “Financial
Instruments – Disclosure and Presentation”. These new sections 3862 (on
disclosures) and 3863 (on presentation) replace Section 3861, revising and
enhancing its disclosure requirements, and carrying forward unchanged its
presentation requirements. Section 3862 complements the principles recognizing
measuring and presenting financial assets and financial liabilities in Financial
Instruments. Section 3863 deals with the classification of financial
instruments, from the perspective of the issuer, between liabilities and equity,
the classification of related interest, dividends, losses and gains, and the
circumstances in which financial assets and financial liabilities are offset
(see Financial Instruments and Risk Factors above).




Capital
Disclosures – During fiscal 2008, we adopted CICA 1535, “Capital Disclosures”.
This new pronouncement establishes standards for disclosing information about an
entity’s capital and how it is managed. Section 1535 also requires the
disclosure of any externally-imposed capital requirements, whether the entity
has complied with them, and if not, the consequences (see Capital Disclosures
above).


26


Inventories
– During fiscal 2008 we adopted CICA Section 3031, “Inventories” which replaced
Section 3030 and establishes new standards for the measurement and disclosure of
inventories. The main features of the new Section are as follows:




·
            Measurement of inventories at the
      lower of cost and net realizable
value




·
            Consistent use of either
      first-in, first-out or a weighted average cost formula to measure
      cost




·
            Reversal of previous write-down
      to net realizable value when there is a subsequent increase to the value
      of inventories.




This new
standard did not have an impact on our financial statements.




Future
accounting changes




The CICA
issued a new accounting standard, Section 3064, “Goodwill and Intangible
Assets”. This section replaces Section 3062, “Goodwill and Other Intangible
Assets” and Section 3450, “Research and Development Costs”. Various changes have
made to other sections of the CICA Handbook for consistency purposes. Section
3064 establishes standards for the recognition, measurement, presentation and
disclosure of goodwill subsequent to its initial recognition and of intangible
assets by profit-oriented enterprises. Standards concerning goodwill are
unchanged from the standards included in the previous Section 3062. The new
section will be applicable to financial statements relating to fiscal years
beginning on or after October 1, 2008. Accordingly, we will adopt the new
standards for its fiscal year beginning September 1, 2009. We are currently
assessing the impact that the adoption of this standard will have on its
financial statements.




The CICA
has amended Section 1400, “General Standard of Financial Statement Presentation”
which is effective for annual and interim financial periods beginning on or
after October 1, 2008 to include requirements to assess and disclose the
Company’s ability to continue as a going concern. The adoption of this new
section is not expected to have an impact on our financial
statements.




Business
Combinations, Consolidated Financial Statements and Non-controlling Interests –
The CICA issued three new accounting standards in January 2009: section 1582,
Business Combinations ,
section 1601, Consolidated
Financial Statements , and section 1602, Non-controlling interests .
These new standards will be effective for fiscal years beginning on or after
January 1, 2011. We are in the process of evaluating the requirements of the new
standards.




Section
1582 replaces section 1581, and establishes standards for the accounting for a
business combination. It provides the Canadian equivalent to International
Financial Reporting Standard IFRS 3 – Business Combinations . The section
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after January 1, 2011.




Sections
1601 and 1602 together replace 1600 – Consolidated Financial
Statements. Section 1601, establishes standards for the preparation of
consolidated financial statements. Section 1601 applies to interim and annual
consolidated financial statements relating to fiscal years beginning on or after
January 1, 2011.




Section
1602 establishes standards for accounting for a non-controlling interest in a
subsidiary in consolidated financial statements subsequent to a business
combination. It is equivalent to the corresponding provisions of International
Financial Reporting Standard IAS 27 - Consolidated and Separate Financial
Statements and applies to interim and annual consolidated financial
statements relating to fiscal years beginning on or after January 1,
2011.




In
February 2008, the Accounting Standards Board “(AcSB)” confirmed that the use of
IFRS will be required in 2011 for publicly accountable enterprises in Canada. In
April 2008, the AcSB issued an IFRS Omnibus Exposure Draft proposing that
publicly accountable enterprises be required to apply IFRS, in full and without
modification, for fiscal years beginning on or after January 1, 2011. The
adoption date of September 1, 2011 for us will require the restatement, for
comparative purposes, of amounts reported by us for our year ended August 31,
2011, and of the opening balance sheet as at September 1, 2010. The AcSB
proposes that CICA Handbook Section, Accounting Changes, paragraph
1506.30, which would require an entity to disclose information relating to a new
primary source of GAAP that has been issued but is not yet effective and that
the entity has not applied not be applied with respect to the IFRS Omnibus
Exposure Draft. We are continuing to assess the financial reporting impacts of
the adoption of IFRS and, at this time, the impact on future financial position
and results of operations is not reasonably determinable or estimable. We
anticipate a significant increase in disclosure resulting from the adoption of
IFRS and are continuing to assess the level of disclosure required, as well as
system changes that may be necessary to gather and process the required
information.


27


RECONCILIATION
TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES




Our
accounting policies do not differ materially from accounting principles
generally accepted in the United States ("US GAAP") except for the
following:




Oil and
Gas Interest




In
applying the full cost method under US GAAP (Regulation S-X Article 4-10), we
perform a ceiling test based on the same calculations used for Canadian GAAP
except we are required to discount future net revenues from proved reserves at
10% as opposed to utilizing the fair market value and probable reserves are
excluded. During the year an impairment loss of $179,443 for US GAAP and an
impairment loss of $105,805 was recorded for Canadian GAAP.




If US
GAAP was followed, the effect on the consolidated balance sheet would be as
follows:




2009
                          
                          
                          2008Total
      assets according to Canadian GAAP
                          
                          $
                          600,327
                          
                          
                          $
                          208,486Additional
      impairment of oil and gas interests
                          
                          
                          (73,638
                          )
                          
                          
                          -Total
      assets according to US GAAP
                          
                          $
                          526,689
                          
                          
                          $
                          208,486





2009
                          
                          
                          2008Total
      shareholders’ equity (deficiency) according to Canadian
    GAAP
                          
                          $
                          265,994
                          
                          
                          $
                          (93,186
                          )Deficit
      adjustment per US GAAPAdditional
      impairment of oil and gas interests
                          
                          
                          (73,638
                          )
                          
                          
                          -Total
      shareholders’ equity (deficiency) according to US GAAP
                          
                          $
                          192,356
                          
                          
                          $
                          (93,186
                          )


If
      US GAAP was followed, the effect on the consolidated statements of loss
      and comprehensive loss would be as
follows:




2009
                              
                              
                              2008
                              
                              
                              2007Net
      loss, comprehensive loss according to Canadian GAAP
                              
                              $
                              328,861
                              
                              
                              $
                              50,514
                              
                              
                              $
                              39,945Add:   Additional
      impairment of oil and gas interests
                              
                              
                              73,638
                              
                              
                              
                              -
                              
                              
                              
                              -Net
      loss, comprehensive loss according to US GAAP
                              
                              $
                              402,499
                              
                              
                              $
                              50,514
                              
                              
                              $
                              39,945Loss
      per share, basic and diluted
                              
                              $
                              (0.023
                              )
                              
                              $
                              (0.006
                              )
                              
                              $
                              (0.006
                              )Shares
      used in the computation of loss per share
                              
                              
                              17,646,295
                              
                              
                              
                              7,955,482
                              
                              
                              
                              6,396,739





Recently
Issued United States Accounting Standards:




In July
2006, the Financial Accounting Standards Board ("FASB") published FASB
Interpretation No. 48 ("FIN No. 48), Accounting for Uncertainty in Income Taxes,
to address the non-comparability in reporting tax assets and liabilities
resulting from a lack of specific guidance in FASB Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, on the
uncertainty in income taxes recognized in an enterprise's financial statements.
FIN No. 48 will apply to fiscal years beginning after December 15, 2006, with
earlier adoption permitted. The adoption of FIN 48 did not have a material
effect on our financial condition or results of operations.




In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." SFAS
No. 157 clarified the principle that fair value should be based on the
assumptions market participants would use when pricing an asset or liability and
establishes a fair value hierarchy that prioritizes the information used to
develop those assumptions. Under the standard, fair value measurements would be
separately disclosed by level within the fair value hierarchy. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years, with early
adoption permitted. The adoption of SFAS No. 157 did not have a material impact
on our consolidated financial statements.


28


In
September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements
No. 87, 88, 106, and 132(R)”. This statement requires employers to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit organization. This
statement also requires an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. The provisions of SFAS No. 158 are effective for employers with
publicly traded equity securities as of the end of the fiscal year ending after
December 15, 2006. The adoption of this statement did not have a material effect
on our financial position or results of operations.




In
September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
Accounting Bulletin No. 108 (Topic 1N), “Quantifying Misstatements in Current
Year Financial Statements” (“SAB No. 108”). SAB No.108 addresses how the effect
of prior year uncorrected misstatements should be considered when quantifying
misstatements in current year financial statements. SAB No. 108 requires SEC
registrants (i) to quantify misstatements using a combined approach which
considers both the balance sheet and income statement approaches; (ii) to
evaluate whether either approach results in quantifying an error that is
material in light of relevant quantitative and qualitative factors; and (iii) to
adjust their financial statements if the new combined approach results in a
conclusion that an error is material. SAB No. 108 addresses the mechanics of
correcting misstatements that include effects from prior years. It indicates
that the current year correction of a material error that includes prior year
effects may result in the need to correct prior year financial statements even
if the misstatement in the prior year of years is considered immaterial. Any
prior year financial statements found to be materially misstated in years
subsequent to the issuance of SAB No. 108 would be restated in accordance with
SFAS No. 154, “Accounting Changes and Error Corrections”. Because the combined
approach represents a change in practice, the SEC staff will not require
registrants that followed an acceptable approach in the past to restate prior
years’ historical financial statements. Rather, these registrants can report the
cumulative effect of adopting the new approach as an adjustment to the current
year’s beginning balance of retained earnings. If the new approach is adopted in
a quarter other than the first quarter, financial statements for prior interim
periods within the year of adoption may need to be restated. SAB No. 108 is
effective for fiscal years ending after November 15, 2006, which for the Company
would be its fiscal year beginning April 1, 2007. The implementation of SAB No.
108 did not have a material impact on our results of operations and financial
condition.




In
February 2007, the FASB issued SFAS No. 159 (“SFAS 159”) – the fair value option
for financial assets and liabilities including an amendment of SFAS 115. This
Statement permits entities to choose to measure many financial instruments and
certain other items at fair value. The objective is to improve financial
reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This statement is
expected to expand the use of fair value measurement objectives for accounting
for financial instruments. This statement is effective as of the beginning of an
entity’s first fiscal year that begins after November 15, 2007, and interim
periods within those fiscal years. Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007, provided
the entity also elects to apply the provisions of FASB Statement No. 157, “Fair
Value Measures”. The adoption of SFAS No. 159 did not have a material impact on
our consolidated financial statements.




In
December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in
Consolidated Financial Statements-An Amendment of ARB No. 51" ("SFAS
160"). SFAS 160
establishes accounting and reporting standards for the non-controlling interest
in a subsidiary (previously referred to as minority interests). SFAS 160 also
requires that a retained non-controlling interest upon the deconsolidation of a
subsidiary be initially measured at its fair value. SFAS 160 requires us to
report any non-controlling interests as a separate component of stockholders'
equity. We are also required to present any net income allocable to non-
controlling interests and net income attributable to our stockholders separately
in our consolidated statements of operations. SFAS 160 is effective for annual
periods beginning after December 15, 2008. The adoption of SFAS 160 is not
expected to have a material impact on our financial statements.


29


In March
2008, the FASB issued FAS No. 161, “Disclosure about Derivative
Instruments and Hedging Activities”(“FAS 161”). FAS 161 changes the
disclosure requirements for derivative instruments and hedging activities by
requiring enhanced disclosures about how and why an entity uses derivatives
instruments, how derivative instruments and related hedged items affect an
entity’s operating results, financial position, and cash flows. FAS No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. Early adoption is permitted. The provisions
of FAS 161 are only related to disclosure of derivative and hedging activities.
The adoption of SFAS 161 has not had a material impact on our consolidated
operating results, financial position or cash flows.




In May
2008, the FASB issued SFAS No.
162, The Hierarchy of Generally Accepted Accounting Principles ("SFAS No.
162"). The new standard
is intended to improve financial reporting by identifying a consistent
framework, or hierarchy, for selecting accounting principles to be used in
preparing financial statements that are presented in conformity with U.S.
generally accepted accounting principles (GAAP) for nongovernmental entities.
SFAS No. 162 is effective 60 days following the Securities and Exchange
Commission's approval of the Public Company Accounting Oversight Board Auditing
amendments to AU Section 411, The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles. We are currently evaluating the impact
of adoption of SFAS No. 162 but do not expect adoption to have a material impact
on our results of operations, cash flows or financial position.




In May
2008, the FASB issued SFAS No.
163, Accounting for Finance Guarantee Insurance Contracts – an interpretation of
FASB Statement No. 60.The premium revenue recognition approach for a
financial guarantee insurance contract links premium revenue recognition to the
amount of insurance protection and the period in which it is provided. For
purposes of this statement, the amount of insurance protection provided is
assumed to be a function of the insured principal amount outstanding, since the
premium received requires the insurance enterprise to stand ready to protect
holders of an insured financial obligation from loss due to default over the
period of the insured financial obligation. This Statement is effective for
financial statements issued for fiscal years beginning after December 15, 2008.
The adoption of SFAS No. 163 is not expected to have a material effect on our
financial statements.




In May
2009, the Financial Accounting Standards Board (“FASB”) issued Statement No.
165, Subsequent Events
(SFAS 165), addressing accounting and disclosure requirements related to
subsequent events. SFAS 165 requires management to evaluate subsequent events
through the date the financial statements are either issued or available to be
issued, depending on the company’s expectation of whether it will widely
distribute its financial statements to its shareholders and other financial
statement users. Companies will be required to disclose the date through which
subsequent events have been evaluated. Statement 165 is effective for interim or
annual financial periods ending after June 15, 2009 and should be applied
prospectively. The adoption of SFAS 165 did not have a material effect on our
financial statements.




On June
12, 2009, the FASB issued FAS No. 166, which amends the de-recognition guidance
in FAS No. 140. FAS No. 166 eliminates the concept of a QSPE (Qualified Special
Purpose Entity) and eliminates the exception from applying FIN 46(r),
Consolidation of Variable Interest Entities to QSPE’s. Additionally, this
Statement clarifies that the objective of paragraph 9 of FAS 140 is to determine
whether a transferor has surrendered control over transferred financial assets.
That determination must consider the transferor’s continuing involvements in the
transferred financial asset, including all arrangements or agreements made
contemporaneously with, or in contemplation of, the transfer, even if they were
not entered into at the time of the transfer. This Statement modifies the
financial-components approach used in Statement 140 and limits the circumstances
in which a financial asset, or portion of a financial asset, should be
derecognized when the transferor has not transferred the entire original
financial asset to an entity that is not consolidated with the transferor in the
financial statements being presented and/or when the transferor has continuing
involvement with the transferred financial asset. It defines the term
“participating interest” to establish specific conditions for reporting a
transfer of a portion of a financial asset as a sale. Under this statement, when
the transfer of financial assets are accounted for as a sale, the transferor
must recognize and initially measure at fair value all assets obtained and
liabilities incurred as a result of the transfer. This includes any retained
beneficial interest. The implementation of this standard materially effects the
securitization process in general, as it eliminates off-balance sheet
transactions when an entity retains any interest in or control over assets
transferred in this process. However, we do not believe the implementation of
this standard will materially effect our reporting as we have no legacy QSPE’s
and it is our intent to treat securitizations as financings. The effective date
for FAS 166 is January 1, 2010. The adoption of SFAS No. 166 is not expected to
have a material effect on our financial statements.


30


In
conjunction with FAS No. 166, FASB issued FAS 167 which amends FASB
Interpretation No. 46(R), (FIN 46(R)). This statement requires an enterprise to
perform an analysis to determine whether the enterprise’s variable interest or
interests give it a controlling financial interest in a variable interest
entity. The analysis identifies the primary beneficiary of a variable interest
entity (VIE) as the enterprise that has both: a) the power to direct the
activities that most significantly impact the entity’s economic performance and
b) the obligation to absorb losses of the entity or the right to receive
benefits from the entity which could potentially be significant to the VIE. With
the removal of the QSPE exemption, established QSPE’s must be evaluated for
consolidation under this statement. This statement requires enhanced disclosures
to provide users of financial statements with more transparent information about
and enterprises involvement in a VIE. Further, this statement also requires
ongoing assessments of whether an enterprise is the primary beneficiary of a
VIE. Should we treat securitizations as sales in the future, we will analyze the
transactions under the guidelines of FAS No, 167 for consolidation. The
effective date for FAS 167 is January 1, 2010. The adoption of SFAS No. 167 is
not expected to have a material effect on our financial statements.




In June
2009, the FASB issued Statement of Financial Accounting Standards No. 168, “The
FASB Accounting Standards CodificationTM and
“The Hierarchy of Generally
Accepted Accounting Principles—a replacement of FASB Statement No. 162”
(“FASB 168”). FAS 168 identifies the sources of accounting principles and the
framework for selecting the accounting principles used in preparing financial
statements of nongovernmental entities that are presented in conformity with
U.S. GAAP. FAS 168 will be effective for financial statements that cover interim
and annual periods ending after September 15, 2009. We do not expect the
adoption of FAS 168 to have an impact on our financial statements.




In
December 2008, the SEC published its final rule, (SAB 113) Modernization of Oil
and Gas reporting requirements, to modernize and update oil and gas disclosure
requirements and align them with current practice and change in technology. The
Final Rule is effective for registration statements filed on or after January 1,
2010 and for annual reports on Forms 10-K and 20-F for fiscal years ending on or
December 31, 2009. We will be assessing the impact of this Final Rule on our
financial reporting for fiscal 2010.




Other
Information




Additional
information relating to us may be obtained or viewed from the System for
Electronic Data Analysis and Retrieval at www.sedar.com and our future United
States Securities and Exchange Commission filings can be viewed through the
Electronic Data Gathering Analysis and Retrieval System (EDGAR) at www.sec.gov.




Share
Capital




Share
Capital as at August 31, 2009 and the date of the filing of this Annual
Report




Authorized:




Unlimited
number of common shares




Unlimited
non-participating, non-dividend paying, voting redeemable preference
shares




Issued:


Common Shares
                                
                                Number
                                
                                
                                AmountBalance
      at August 31, 2007
                                
                                
                                6,396,739
                                
                                
                                $
                                166,291April
      14, 2008, private placement (note a)
                                
                                
                                2,575,000
                                
                                
                                
                                151,313April
      14, 2008 debt conversion (note b)
                                
                                
                                1,500,000
                                
                                
                                
                                150,000Balance
      at August 31, 2008
                                
                                
                                10,471,739
                                
                                
                                $
                                467,604February
      5, 2009 private placement (note c)
                                
                                
                                2,600,000
                                
                                
                                
                                67,600February
      25, 2009 private placement (note d)
                                
                                
                                1,000,256
                                
                                
                                
                                26,007February
      27, 2009 acquisition (note e)
                                
                                
                                8,910,564
                                
                                
                                
                                231,675February
      27, 2009 debt settlement (note f)
                                
                                
                                1,250,000
                                
                                
                                
                                32,500Balance
      at August 31, 2009
                                
                                
                                24,232,559
                                
                                
                                $
                                825,386


31


(a)
            On
      April 14, 2008 we completed a non-brokered private placement of 2,575,000
      units at a purchase price of $0.10 per unit for gross proceeds of $257,500
      (proceeds net of issue costs $252,188). Each unit was comprised of one
      common share and one common share purchase warrant.  Each
      warrant is exercisable until April 14, 2011, to purchase one common share
      at a purchase price of $0.20 per
share.




(b)
            On
      April 14, 2008 we entered into agreements to convert debt in the amount of
      $150,000 through the issuance of 1,500,000 shares at an attributed value
      of $0.10 per share.




(c)
            On
      February 5, 2009, we completed a non-brokered private placement of
      2,600,000 units at a purchase price of $0.05 per unit for gross proceeds
      of $130,000. Each unit was comprised of one common share and one common
      share purchase warrant.  Each warrant is exercisable until
      February 5, 2014, to purchase one common share at a purchase price of
      $0.07 per share.




(d)
            On
      February 25, 2009, we completed a non-brokered private placement of
      1,000,256 units at a purchase price of $0.05 per unit for gross proceeds
      of approximately $50,013. Each unit was comprised of one common share and
      one common share purchase warrant.  Each warrant is exercisable
      until February 25, 2014 to purchase one common share at a purchase price
      of $0.07 per share.




(e)
            On
      February 27, 2009, we acquired the issued and outstanding shares of
      1354166 Alberta Ltd. for total consideration of $445,528 satisfied by the
      issuance of 8,910,564 units of at $0.05 per unit.  Each unit
      consists of one common share and one common share purchase warrant
      exercisable at $0.07 to purchase one common share until February 27,
      2014.




(f)
            On
      February 27, 2009, we entered into an agreement with a non-related party,
      to settle debt in the amount of $62,500 through the issuance of a total of
      1,250,000 units at an attributed value of $0.05 per unit.  Each
      unit was comprised of one common share and one common share purchase
      warrant.  Each warrant is exercisable until February 27, 2014 to
      purchase one common share at a purchase price of $0.07 per
      share.




Warrants
                                            
                                            Number
                                            
                                            
                                            Exercise
                                              Price
                                            
                                            Expiry
                                              Date
                                            
                                            AmountBalance
      at  August 31, 2007
                                            
                                            Nil
                                            
                                            
                                            Nil
                                            
                                            NilApril
      14, 2008, private placement (note a)
                                            
                                            
                                            2,575,000
                                            
                                            
                                            $
                                            0.20
                                            
                                            April 14, 2011
                                            
                                            $
                                            100,875Balance
      at  August 31, 2008
                                            
                                            
                                            2,575,000
                                            
                                            
                                            $
                                            0.20
                                            
                                            April
      14, 2011
                                            
                                            $
                                            100,875February
      5, 2009 private placement (note c)
                                            
                                            
                                            2,600,000
                                            
                                            
                                            $
                                            0.07
                                            
                                            February
      5, 2014
                                            
                                            
                                            62,400February
      25, 2009 private placement (note d)
                                            
                                            
                                            1,000,256
                                            
                                            
                                            $
                                            0.07
                                            
                                            February
      25, 2014
                                            
                                            
                                            24,006February
      27, 2009 acquisition (note e)
                                            
                                            
                                            8,910,564
                                            
                                            
                                            $
                                            0.07
                                            
                                            February
      27, 2014
                                            
                                            
                                            213,853February
      27, 2009 debt settlement (note f)
                                            
                                            
                                            1,250,000
                                            
                                            
                                            $
                                            0.07
                                            
                                            February 27, 2014
                                            
                                            
                                            30,000Balance
      at August 31, 2009
                                            
                                            
                                            16,335,820
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            $
                                            431,134





The fair
value of the warrants issued during the year ended August 31, 2009 and 2008 were
estimated using the Black-Scholes pricing model, using the following
assumptions:




2009
                      
                      
                      2008Fair
      value per warrant
                      
                      $
                      0.05
                      
                      
                      $
                      0.06Risk-free
      interest rate
                      
                      
                      3
                      %
                      
                      
                      3
                      %Expected
      volatility
                      
                      
                      170
                      %
                      
                      
                      129
                      %Expected
      life (years)
                      
                      
                      4
                      
                      
                      
                      3





Weighted Average Shares Outstanding
                            
                            2009
                            
                            
                            2008
                            
                            
                            2007Weighted
      average shares outstanding, basic
                            
                            
                            17,646,295
                            
                            
                            
                            7,955,482
                            
                            
                            
                            6,396,739Dilutive
      effect of warrants
                            
                            
                            9,749,557
                            
                            
                            
                            1,009,467
                            
                            
                            
                            -Weighted
      average shares outstanding, diluted
                            
                            
                            27,395,852
                            
                            
                            
                            8,964,949
                            
                            
                            
                            6,396,739


32


The
effects of any potential dilutive instruments on loss per share related to the
outstanding warrants are anti-dilutive and therefore have been excluded from the
calculation of diluted loss per share.




Stock
Option Plan




We have a
stock option plan to provide incentives for our directors, officers and
consultants.  The maximum number of shares, which may be set aside for
issuance under the stock option plan, is 4,846,512 common shares.  To
date, no options have been issued.




Contributed
Surplus




As part
of the April 14, 2008 debt conversion, Sandra Hall, our President, converted
$50,000 of debt through the issuance of 500,000 common shares at an attributed
value of $0.10 per share and forgave $38,000 of debt owed to her by us, which
was recorded as an increase to contributed surplus.




Overall
Performance




Revenue
for the year ended August 31, 2009 was up $55,907 to $56,199 compared to $292
for the same period in 2008 as a result of the acquisition of 1354166 Alberta
Ltd.




For the
year ended August 31, 2009 our cash position decreased by $29,821 to $172,905
compared to cash of $202,726 at August 31, 2008. At August 31, 2009 our other
receivables were $20,421 representing an increase of $15,110 compared to $5,311
at August 31, 2008. For the year ended August 31, 2009 current liabilities
increased by $29,027 to $330,699 compared to $301,672 at August 31, 2008. We
have working capital deficiency of $137,372at August 31, 2009
compared to a working capital deficiency of $93,634 at August 31,
2008.




On
February 27, 2009, we acquired the issued and outstanding shares of 1354166
Alberta Ltd. for total consideration of $445,528 satisfied by the issuance of
8,910,564 units at $0.05 per unit.  Each unit consists of one common
share and one common share purchase warrant exercisable at $0.07 to purchase one
common share until February 27, 2014.  Following the closing, we paid
to note holders of 1354166 Alberta Ltd. the amount of $118,000 by cash payment.
The results of operations from this acquisition are included effective February
27, 2009.




During
the fiscal year ended August 31, 2009, we completed non-brokered private
placements of 3,600,256 units at a purchase price of $0.05 per unit for net
proceeds of $180,013. Each unit was comprised of one common share and one common
share purchase warrant.




During
the fiscal year ended August 31, 2009 we settled debt in the amount of
$62,500 through the issuance of a total of 1,250,000 units at an attributed
value of $0.05 per unit.  Each unit was comprised of one common share
and one common share purchase warrant.




Our past
primary source of liquidity and capital resources has been advances, cash flow
from oil and gas operations, proceeds from the sale of marketable securities and
from the issuance of common shares.




Selected
Information




The
following table reflects the summary of results for the years ended August 31,
2009, 2008 and 2007.




33


Presented
Pursuant to Canadian Generally Accepted Accounting Principles


(CANADIAN
$, Except Per Share Data)




As of and for the Years Ended August 31,Historical Production
                              
                              2009
                              
                              
                              2008
                              
                              
                              2007(Audited)Natural
      Gas - Mcf/d
                              
                              
                              45
                              
                              
                              
                              ―
                              
                              
                              
                              ―Natural
      Gas - $/Mcf
                              
                              $
                              3.42
                              
                              
                              
                              9.23
                              
                              
                              $
                              9.76Royalty
      Costs - $/Mcf
                              
                              $
                              (0.63
                              )
                              
                              
                              ―
                              
                              
                              $
                              ―Production
      Costs - $/Mcf
                              
                              $
                              (3.28
                              )
                              
                              
                              ―
                              
                              
                              
                              ―Net
      Back - $/Mcf
                              
                              $
                              (0.49
                              )
                              
                              $
                              9.23
                              
                              
                              $
                              9.76RevenueNatural
      Gas sales
                              
                              $
                              56,199
                              
                              
                              $
                              292
                              
                              
                              $
                              637Net
      loss and comprehensive loss for the year/period
                              
                              $
                              (328,861
                              )
                              
                              $
                              (50,514
                              )
                              
                              $
                              (39,945
                              )Net
      loss per share
                              
                              $
                              (0.019
                              )
                              
                              $
                              (0.006
                              )
                              
                              $
                              (0.006
                              )Assets
                              
                              $
                              600,327
                              
                              
                              $
                              208,486
                              
                              
                              $
                              9,746Liabilities
                              
                              $
                              334,333
                              
                              
                              $
                              301,672
                              
                              
                              $
                              492,606





Selected
Financial Data should be read in conjunction with the discussion below and
“Critical Accounting Policies and Estimates” above.




August
31, 2009 - 2008




For the
year ended August 31, 2009 revenue increased substantially compared to revenue
in the comparable period in 2008 as a result of the acquisition of 1354166
Alberta Ltd. The net loss for the year ended August 31, 2009 was $328,861
compared to a net loss of $50,514 in 2008. The increase in net loss and
comprehensive loss for the year ended August 31, 2009 was primarily a result of
the write-down of oil and gas interests of $105,805, an increase in professional
fees of $80,162, an increase in transfer agent and registrar costs of $20,479,
an increase management fees of $6,000 and increase in general and office of
$4,897. In addition, we incurred higher operating costs and depletion for the
year ended August 31, 2009. For the year ended August 31, 2009 assets increased
by $391,841 to $600,327 compared to assets of $208,486 for the same period in
2008. The increase in assets for the year ended August 31, 2008 was primarily
attributed to acquisition of 1354166 Alberta Ltd.




August
31, 2008 – 2007




For the
year ended August 31, 2008 revenue decreased compared to revenue in the
comparable period in 2007 primarily a result of decreased natural gas sales
volumes and decreased commodity prices. The net loss for the year ended August
31, 2008 was $50,514 compared to a net loss of $39,945 in 2007. The increase in
net loss and comprehensive loss for the year ended August 31, 2008 was primarily
attributed to an increase in professional fees of $9,635 and an increase in
transfer and registrar costs of $2,401. For the year ended August 31, 2008
assets increased by $198,740 to $208,486 compared to assets of $9,746 for the
same period in 2007. The increase in assets for the year ended August 31, 2008
was primarily attributed to an increase in cash from the issuance of common
shares.




A.
            OPERATING
      RESULTS




THE
FOLLOWING DISCUSSION OF OUR RESULTS OF OPERATIONS IS A COMPARISON OF OUR FISCAL
YEAR ENDED AUGUST 31, 2009 VERSUS AUGUST 31, 2008 AND AUGUST 31, 2008 VERSUS
AUGUST 31, 2007.




Presented
Pursuant to Canadian Generally Accepted Accounting Principles


(CANADIAN
$, Except Per Share Data)




As of and for the Years Ended August 31,Historical Production
                        
                        2009
                        
                        
                        2008
                        
                        
                        2007(Audited)Natural
      Gas – Mcf/d
                        
                        
                        45
                        
                        
                        
                        ―
                        
                        
                        
                        ―Natural
      Gas - $/Mcf
                        
                        $
                        3.42
                        
                        
                        $
                        9.23
                        
                        
                        $
                        9.76Royalty
      Costs - $/Mcf
                        
                        $
                        (0.63
                        )
                        
                        $
                        ―
                        
                        
                        $
                        ―Production
      Cost $/Mcf
                        
                        $
                        (3.28
                        )
                        
                        $
                        ―
                        
                        
                        $
                        ―Net
      Back - $/Mcf
                        
                        $
                        (0.49
                        )
                        
                        $
                        9.23
                        
                        
                        $
                        9.76RevenueNatural
      Gas sales
                        
                        $
                        56,199
                        
                        
                        $
                        292
                        
                        
                        $
                        637Net
      loss and comprehensive loss for the year/period
                        
                        $
                        (328,861
                        )
                        
                        $
                        (50,514
                        )
                        
                        $
                        (39,945
                        )Net
      loss per share
                        
                        $
                        (0.019
                        )
                        
                        $
                        (0.006
                        )
                        
                        $
                        (0.006
                        )


34


Production
Volume




For the
year ended August 31, 2009 average natural gas sales volumes increased to
45mcf/d compared to Nil mcf/d for the comparable period in 2008. The increase in
average sales volumes was primarily attributed to the acquisition of 1354166
Alberta. Production volume for the year ended August 31, 2009 was 16,412 mcf
compared to 32 mcf for the comparable period in 2008.




For the
year ending August 31, 2008 average natural gas sales volumes remained
consistent at Nil mcf/d compared to Nil mcf/d for the comparable period in 2007.
Production volume for the year ended August 31, 2008 was 32 mcf compared to 65
mcf for the year ended August 31, 2007.




Commodity
Prices




For the
year ended August 31, 2009 average natural gas prices received per mcf decreased
63% to $3.42 compared to $9.23 per mcf for the same period ending August 31,
2008. The decreased in average natural gas prices received was attributed to
lower commodity prices for natural gas during the period.




For the
year ending August 31, 2008 average natural gas prices received per mcf
decreased 5% to $9.23 compared to $9.76 per mcf for the same period ending
August 31, 2007.




Revenue




For the
year ended August 31, 2009 revenue increased by $55,907 to $56,199 compared to
$292 for the same period in 2008. The increase in revenue for the year ended
August 31, 2009 was primarily attributed to an increase in production volume as
a result of the acquisition of 1354166 Alberta. The results of operations from
this acquisition are included effective February 27, 2009. Revenue from our
Haynes property decreased by $202 during the current period compared to revenue
of $292 in 2008.




Revenue
decreased by 54% to $292 for the year ended August 31, 2008 compared to $637 for
the same period in 2007. The decrease in revenue during the year ended August
31, 2008 was related to a decrease in natural gas sales volumes and decreased
commodity prices received.




Operating
Costs




For the
year ended August 31, 2009 operating costs were $83,187 compared to operating
costs of NIL for the year ended August 31, 2008.  The increase in
operating costs for the year ended August 31, 2009 was primarily attributed to
the increased operations from the acquisition of 1354166 Alberta
Ltd.  Also, during the year ended August 31, 2009 we incurred higher
repair and maintenance costs of $22,111 due to a rupture in a
pipeline.




For the
year ended August 31, 2008 operating costs were Nil consistent with operating
costs for the year ended August 31, 2007.




Depletion




Depletion
for the year ended August 31, 2009 increased by $26,614 to $26,638 compared to
$24 for the year ended August 31, 2008. The increase in depletion for the year
ended August 31, 2009 was attributed to increased production volume from the
acquisition of 1354166 Alberta Ltd.


35


Depletion
for the year ended August 31, 2008 was $24 compared to $96 for the year ended
August 31, 2007. The decrease in depletion for year ending August 31, 2008 was a
result of decreased sales volumes due to production declines.




Administrative
Expenses




Administrative
expenses for the year ended August 31, 2009 were $276,815 compared to $50,782
for the year ended August 31, 2008. The increase in expenses during fiscal 2009
were primarily attributed to a write down of oil and gas interests in the amount
of $105,805, compared to $528 in the prior period in 2008, an increase in
professional fees of $80,162 to $106,770 compared to $26,608 in 2008, an
increase in transfer agent and registrar costs of $20,479 to 24,965 compared to
$4,486 in 2008, an increase in management fees of $6,000 to $18,000 compared to
$12,000 in the prior period and an increase in general and office costs of
$4,897 to $5,150 compared to $253 for the year ended August 31, 2008. Higher
administrative expenses during the fiscal 2009 were partially attributed to our
becoming a reporting issuer with the United States Securities and Exchange
Commission and increased operations resulting from the acquisition of 1354166
Alberta Ltd. In fiscal 2008 we recorded an expense recovery of $7,718 compared
to NIL in the current fiscal year 2009.




Expenses
for the year ended August 31, 2008 were $50,782 up 25% compared to $40,691 for
the year ended August 31, 2007. The increase in administrative expenses for the
year ended August 31, 2008 was primarily related to an increase in professional
fees of $9,635 to $26,608 compared to $16,973 in the prior period in 2007, an
increase in transfer and registrar costs of $2,401 to $4,486 compared to $2,085
in the prior period in 2007 and an increase in head office services of $741 to
$14,625 compared to $13,884 in the prior period in 2007. These increases were
partially offset by an expense recovery of $7,718 compared to $5,274 for the
same period in 2007.  During the year ended August 31, 2008 the write
down of oil and gas interests was $528 compared to $828 for the same period in
2007.




Interest




For the
year ended August 31, 2009 interest income was $1,580 compared to NIL for the
comparable period in 2008.




During
the year ended August 31, 2008 we earned Nil in interest income compared to $205
in the comparable period in 2007.




Net
loss and comprehensive loss for the period




Net
loss and comprehensive loss for year ended August 31, 2009 was $328,861, up 551%
compared to a net loss of $50,514 for the year ended August 31, 2008. The
increase in net loss and comprehensive loss for the year ended August 31, 2009
was related to an increase in operating costs and depletion, increased
administrative costs as well as a write-down of oil and gas
interests.




Net loss
and comprehensive loss for the year ended August 31, 2008 was $50,514, up 26%
compared to a net loss of $39,945 for the year ended August 31, 2007. The
increase in net loss and comprehensive loss for the year ended August 31, 2008
was primarily attributed to higher administrative expenses including
professional fees, head office costs, transfer and registrar costs and general
and office costs.




Net
loss per share




The net
loss per share for the year ended August 31, 2009 was $0.019 compared to a net
loss per share of $0.006 for the year ended August 31, 2008.




The net
loss per share for the year ended August 31, 2008 was $0.006 compared to a net
loss per share of $0.006 for the year ended August 31, 2007.




Summary
of Quarterly Results




The
following tables reflect the summary of quarterly results for the years ended
August 31, 2009, August 31, 2008 and August 31, 2007.


36




2009
                      
                      
                      2009
                      
                      
                      2009
                      
                      
                      2008For the Quarters ended
                      
                      August 31
                      
                      
                      May 31
                      
                      
                      February 28
                      
                      
                      November 30Revenue
                      
                      $
                      23,078
                      
                      
                      $
                      32,796
                      
                      
                      $
                      260
                      
                      
                      $
                      65Net
      loss and comprehensive loss for the period
                      
                      $
                      (249,967
                      )
                      
                      $
                      (62,554
                      )
                      
                      $
                      (9,721
                      )
                      
                      $
                      (6,619
                      )Net
      loss per share
                      
                      $
                      (0.013
                      )
                      
                      $
                      (0.005
                      )
                      
                      $
                      (0.001
                      )
                      
                      $
                      (0.001
                      )





Revenue
for the quarters for the May and August 2009 increased as a result of the
acquisition of 1354166 Alberta Ltd. The increase in net loss and comprehensive
loss for the quarter ending August 31, 2009 was primarily attributed to a write
down of oil and gas interests, an increase in professional fees including
year-end audit costs, transfer and registrar costs, office and general expenses,
management fees and head office services, and costs associated with the
evaluation of our reserves.




2008
                            
                            
                            2008
                            
                            
                            2008
                            
                            
                            2007For the Quarters ended
                            
                            August 31
                            
                            
                            May 31
                            
                            
                            February 29
                            
                            
                            November 30Revenue
                            
                            $
                            50
                            
                            
                            $
                            79
                            
                            
                            $
                            92
                            
                            
                            $
                            71Net
      loss and comprehensive loss for the period
                            
                            $
                            (20,646
                            )
                            
                            $
                            (7,064
                            )
                            
                            $
                            (16,539
                            )
                            
                            $
                            (6,265
                            )Loss
      per share
                            
                            $
                            (0.003
                            )
                            
                            $
                            (0.001
                            )
                            
                            $
                            (0.003
                            )
                            
                            $
                            (0.001
                            )





Revenue
over the four quarters has fluctuated as a result of changes in natural gas
sales prices received and natural gas sales volumes. The increase in net loss
and comprehensive loss for the quarter ending August 31, 2008 was primarily
attributed to an increase in professional fees relating to the year-end audit,
costs associated with the evaluation of our reserves and a write down of oil and
gas interests.




2007
                              
                              
                              2007
                              
                              
                              2007
                              
                              
                              2006For the Quarters ended
                              
                              August 31
                              
                              
                              May 31
                              
                              
                              February 28
                              
                              
                              November 30Revenue
                              
                              $
                              49
                              
                              
                              $
                              306
                              
                              
                              $
                              129
                              
                              
                              $
                              153Net
      loss and comprehensive loss for the period
                              
                              $
                              (14,608
                              )
                              
                              $
                              (6,157
                              )
                              
                              $
                              (13,251
                              )
                              
                              $
                              (5,929
                              )Net
      loss per share
                              
                              $
                              (0.002
                              )
                              
                              $
                              (0.001
                              )
                              
                              $
                              (0.002
                              )
                              
                              $
                              (0.001
                              )





Revenue
over the four quarters ended August 31, 2007 has fluctuated as a result of
changes in natural gas sales prices received and natural gas sales
volumes.  The increase in net loss and comprehensive loss for the
quarter ended August 31, 2007 was primarily attributed to an increase in
professional fees relating to the year-end audit, costs associated with the
evaluation of our reserves and a write down of oil and gas interests. For the
quarter ended February 28, 2007 the increase in net loss and comprehensive loss
was related to an increase in professional fees.




Fourth
Quarter Results August 31, 2009 Versus August 31, 2008




Production
Volume




For the
three months ending August 31, 2009 average natural gas sales volumes were 84
mcf/d compared to Nil mcf/d for the comparable three month period in 2008.
Production volume for the three months ended August 31, 2009 was 7,728 mcf
compared to 4 mcf for the comparable three month period in 2008 as a result of
the acquisition of 1354166 Alberta Ltd.




Commodity
Prices




For the
three months ending August 31, 2009 average natural gas sales prices received
per mcf decreased to $2.99 compared to $12.97 per mcf for the three month period
ended August 31, 2008.


37


Revenue




Revenue
increased to $23,078 for the three months ending August 31, 2009 compared to $50
for the three months ending August 31, 2008.




Operating
Costs




Operating
costs increased to $51,876 for the three months ending August 31, 2009 compared
to NIL for the three months ending August 31, 2008.




Depletion




Depletion
for the three months ending August 31, 2009 was $18,374 compared to depletion of
$6 for the three months ending August 31, 2008. The increase in depletion for
the three months ending August 31, 2009 was a result of production volume
increases from the acquisition of 1354166 Alberta Ltd.




Administrative
Expenses




For the
three months ending August 31, 2009 administrative expenditures were up $189,398
to $210,094 compared to $20,696 for the same period in 2008. The primary
increase in administrative expenses for the three months ending August 31, 2009
relate to a write-down of oil and gas interests in the amount of $105,805
compared to $528 for the three month period in 2008, an increase in professional
fees of $$50,645 to $66,507 compared to $15,862 in 2008 and an increase in
transfer and registrar costs of $14,382 to $15,862 compared to $1,155 in the
prior three month period in 2008.




Interest




For the
three months ending August 31, 2009 interest income was $142 compared to
interest income of nil during the comparable three month period in
2008.




Net
loss and comprehensive loss for the period




Net loss
and comprehensive loss for the three months ending August 31, 2009 was $249,967
up $229,321 compared to $20,646 for the prior period in 2008.




Loss
per share




The loss
per share for the three months ending August 31, 2009 was $0.014 compared to
$0.002 for the same period in 2008.




B.
            LIQUIDITY
      AND CAPITAL RESOURCES




Cash as
of August 31, 2009 was $172,905 compared to cash of $202,726 at August 31, 2008.
During the year ended August 31, 2009 we completed non-brokered private
placements of 3,600,256 units at a purchase price of $0.05 per unit for gross
proceeds of $180,013 and converted loans payable in the amount of $62,500
through the issuance of a total of 1,250,000 units at an attributed value of
$0.05 per unit. During the year ended August 31, 2009 the primary use of funds
was related to general and administrative expenditures and a cash payment of
$118,000 to note holders of 1354166 Alberta Ltd. following the closing of the
acquisition. Our working capital deficiency at August 31, 2009 was $137,372
compared to a working capital deficiency of $93,634 at August 31,
2008.




Our
current assets of $193,327 as of  August 31, 2009 ($208,038 as of
August 31, 2008) include the following items: cash $172,905 ($202,726 as of
August 31, 2008); marketable securities $1 ($1 as of August 31, 2008) ; and
other receivables $20,421 ($5,311 as of August 31, 2008).




Our
current liabilities as of August 31, 2009 ($301,672 as of August 31, 2008)
include the following items: accounts payable of $152,984 ($71,672 as of August
31, 2008); income taxes payable of $10,215 ($NIL as of August 31, 2008); and
loans payable of $167,500 ($230,000 as of August 31, 2008).


38


Our past
primary source of liquidity and capital resources has been loans and advances,
cash flow from oil and gas operations, proceeds from the sale of marketable
securities and the issuance of common shares.




We have
2,575,000 common share purchase warrants exercisable at $0.20 per share and a
further 13,760,820 common share purchase warrants exercisable at $0.07 per
share. If any of these common share purchase warrants were exercised it would
generate additional capital for us.




If we
issued additional common shares from treasury it would cause our current
shareholders dilution.




Outlook
and Capital Requirements




Our
producing properties are fully developed and there are no further expected
outlays or expenses projected to develop these properties at this time,
however as part of our oil and gas development program, we anticipate
further expenditures to expand our existing portfolio of proved reserves.
Amounts expended on future exploration and development are dependent on the
nature of future opportunities evaluated by us. These expenditures could be
funded through cash held by us or through cash flow from operations. Any
expenditure which exceeds available cash will be required to be funded by
additional share capital or debt issued by us, or by other means. Our long-term
profitability will depend upon our ability to successfully implement our
business plan.




C.
            RESEARCH
      AND DEVELOPMENT, PATENTS AND
LICENSES




We do not
engage in research and development activities.




D.
            TREND
      INFORMATION




Seasonality




Our oil
and gas operations is not a seasonal business, but increased consumer demand or
changes in supply in certain months of the year can influence the price of
produced hydrocarbons, depending on the circumstances. Production from our oil
and gas properties is the primary determinant for the volume of sales during the
year.




There are
a number of trends that have been developing in the oil and gas industry during
the past several years that appear to be shaping the near future of the
business.




The first
trend is the volatility of commodity prices. Natural gas is a commodity
influenced by factors within North America. A tight supply demand balance for
natural gas causes significant elasticity in pricing, whereas higher than
average storage levels tend to depress natural gas pricing. Drilling activity,
weather, fuel switching and demand for electrical generation are all factors
that affect the supply-demand balance. Recently, liquefied natural gas shipments
to North America have also resulted in natural gas supply and natural gas
pricing being based more on factors other than supply and demand in North
America. Changes to any of these or other factors create price
volatility.




Crude oil
is influenced by the world economy, Organization of the Petroleum Exporting
Countries' ("OPEC") ability to adjust supply to world demand and weather.
Political events also trigger large fluctuations in price levels. The current
global financial crisis has reduced liquidity in financial markets thereby
restricting access to financing and has caused significant volatility to
commodity prices. Petroleum prices are expected to remain volatile for at least
the near term as a result of market uncertainties over the supply and demand of
these commodities due to the current state of the world economies, OPEC actions
and the ongoing global credit and liquidity concerns.




The
impact on the oil and gas industry from commodity price volatility is
significant. During periods of high prices, producers generate sufficient cash
flows to conduct active exploration programs without external capital. Increased
commodity prices frequently translate into very busy periods for service
suppliers triggering premium costs for their services. Purchasing land and
properties similarly increase in price during these periods. During low
commodity price periods, acquisition costs drop, as do internally generated
funds to spend on exploration and development activities. With decreased demand,
the prices charged by the various service suppliers also decline.




World oil
and gas prices are quoted in United States dollars and the price received by
Canadian producers is therefore effected by the Canadian/U.S. dollar exchange
rate, which will fluctuate over time. Material increases in the value of the
Canadian dollar may negatively impact production revenues from Canadian
producers. Such increases may also negatively impact the future value of such
entities' reserves as determined by independent evaluators. In recent years, the
Canadian dollar has increased materially in value against the United States
dollar although the Canadian dollar has recently decreased from such
levels.


39


A second
trend within the Canadian oil and gas industry is the "renewal" of private and
small junior oil and gas companies starting up business. These companies often
have experienced management teams from previous industry organizations that have
disappeared as a part of the ongoing industry consolidation. Many are able to
raise capital and recruit well qualified personnel. To the extent that this
trend continues, we will have to compete with these companies and others to
attract qualified personnel.




A third
trend currently affecting the oil and gas industry is the impact on capital
markets caused by investor uncertainty in the global economy. The capital market
volatility in Canada has also been affected by uncertainties surrounding the
economic impact that the Kyoto Protocol and other environmental initiatives will
have on the sector and, in more recent times, by the tax changes relating to
income trusts and other "specified investment flow-through" entities ("SIFTs")
and by the NRF and new Alberta government royalty programs implemented along
with the NRF. The impact of the NRF and these new royalty programs is still
being determined and will vary company to company based on the percentage of
production in Alberta, their commodity mix and depths of production, among other
things. The amount and degree of these impacts have yet to be
determined.




Pursuant
to the existing provisions of the Tax Act, to the extent that a SIFT has any
income for a taxation year after certain inclusions and deductions, the SIFT
will be permitted to deduct all amounts of income which are paid or become
payable by it to unitholders in the year. Under the legislation which received
Royal Assent on June 22, 2007, SIFTs will be liable for tax at a rate consistent
with the taxes currently imposed on corporations commencing in January 2011,
provided that the SIFT experiences only "normal growth" and no "undue expansion"
before then, in which case the tax could be imposed prior to the January 2011
deadline. Although the tax changes will not affect the method in which we will
be taxed, it may have an impact on the ability of a SIFT to purchase producing
assets from oil and gas exploration and production companies (as well as the
price that a SIFT is willing to pay for such an acquisition) thereby affecting
exploration and production companies' ability to be sold to a SIFT which has
been a key "exit strategy" in recent years for oil and gas companies. This may
be a benefit for us as it will compete with SIFTs for the acquisition of oil and
gas properties from junior producers. However, it may also limit our ability to
sell producing properties or pursue an exit strategy.




E.
            OFF-BALANCE
      SHEET ARRANGEMENTS




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




F.
            TABULAR
      DISCLOSURE OF CONTRACTUAL
OBLIGATIONS




We have
no known contractual obligations requiring disclosure herein.




G.
            SAFE
      HARBOR




Certain
statements in Sections 5.E and 5.F of this Annual Report may constitute "forward
looking statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995, Section 21E of the United States Securities
Exchange Act of 1934, as amended, and Section 27A of the United States
Securities Act of 1933, as amended. Such statements are generally identifiable
by the terminology used such as "plans", "expects", "estimates", "budgets",
"intends", "anticipates", "believes", "projects", "indicates", "targets",
"objective", "could", "may", or other similar words. The forward-looking
statements are subject to known and unknown risks and uncertainties and other
factors that may cause actual results, levels of activity and achievements to
differ materially from those expressed or implied by such statements. Readers
should not place undue reliance on any forward-looking statement and should
recognize that the statements are predictions of future results, which may not
occur as anticipated.


40




ITEM 6.
            DIRECTORS,
      SENIOR MANAGEMENT AND EMPLOYEES




A.
            DIRECTORS
      AND SENIOR MANAGEMENT




The
following table sets forth the names of all of our directors and executive
officers as of the date of the filing of this Annual Report, with each position
and office held by them in our Company, and the period of their service as a
director or as an officer.




Name
                                
                                Age
                                
                                Position with the Company
                                
                                Date First Elected as DirectorSandra
      J. Hall
                                
                                45
                                
                                President,
      Chief Executive Officer, Secretary and Director
                                
                                May
      10, 2000Milton
      Klyman
                                
                                84
                                
                                Director
                                
                                November
      15, 1996William
      Jarvis
                                
                                59
                                
                                Director
                                
                                July
      21, 2005James
      Cassina
                                
                                53
                                
                                Director
                                
                                February
      9,
2010





All of
our directors serve until our next Annual General Meeting or until a successor
is duly elected, unless the office is vacated in accordance with our Articles or
Bylaws.  Subject to the terms of their employment agreements, if any,
executive officers are appointed by the Board of Directors to serve until the
earlier of their resignation or removal, with or without cause by the
directors.  Sandra Hall, our sole executive officer, devotes
approximately 40% of her work time to her duties as an officer and
director.




There are
no family relationships between any of our directors or executive
officers.  There are no arrangements or understandings between any two
or more directors or executive officers.




Ms.
Sandra J. Hall has been an officer and director of ours since May 10,
2000.  From March 13, 2000 until amalgamated with our parent company
in November 2009, Ms. Hall was the President, Secretary, Treasurer and a
Director of 1406768 Ontario Inc.  From February 27, 2009 to present,
Ms. Hall has been the President, Secretary and a director of 1354166 Alberta
Ltd., our oil and gas subsidiary in Canada. Ms. Hall was President of
EnerNorth Industries Inc. (“EnerNorth”), (AMEX: ENY), an international
enterprise engaged in engineering and offshore fabrication, oil and gas
exploration and production, and in India, independent power project development
from July 1, 2002 to March 21, 2007 and had been a Director of EnerNorth from
December 1997 to March 21, 2007 and Secretary from July 1998 to March 21,
2007. Ms. Hall is the President, sole director and shareholder of 1407271
Ontario Inc., a private holding company.




Mr.
Milton Klyman has been a director of ours since November 15,
1996.  Mr. Klyman was also our Treasurer from December 31, 2003 to
December 28, 2007. From February 27, 2009 to present, Mr. Klyman has been a
director of 1354166 Alberta Ltd., our oil and gas subsidiary in Canada. Mr.
Klyman is a self-employed financial consultant and has been a Chartered
Accountant since 1952. Mr. Klyman is a Life Member of the Canadian Institute of
Chartered Accountants.  Mr. Klyman serves as a director on the boards
of Western Troy Capital Resources Inc., and Bonanza Blue Corp. Mr. Klyman served
as a director of the EnerNorth  from April 2001 until March 21,
2007. .




Mr.
William Jarvis has been a director of ours since July 21, 2005.  Mr.
Jarvis has been an independent geological consultant since 1994.




Mr.
Cassina has been a director of ours since February 9, 2010.  As
Chairman of Assure Energy, Inc. (“Assure”) (OTCBB: ASUR), an oil and gas
exploration and production company, Mr. Cassina led Assure’s merger in September
2005 with Geocan Energy Inc. (TSX: GCA) (“Geocan”), an oil and gas company which
then grew to daily production of over 3,700 barrels of oil or gas equivalents.
Mr. Cassina thereafter served as a Director of Geocan and later Chairperson of
its Board appointed Special Advisory Committee formed to seek strategic
alternatives to enhance shareholder value. Subsequently Geocan merged with
Arsenal Energy Inc. in October 2008.  Mr. Cassina served in various
senior capacities, including President, and Director from 1999 to 2002 and then
Chairman until March 2007 of EnerNorth Industries Inc. (AMEX: ENY), an
international enterprise engaged in engineering and offshore fabrication, oil
and gas exploration and production, and in India, independent power project
development.




On March
20, 2007 EnerNorth filed an Assignment in Bankruptcy under the Bankruptcy and
Insolvency Act (Canada).


41




B.
            COMPENSATION




Executive
Compensation




The
following table presents a summary of all annual and long-term compensation paid
by us including our subsidiaries, for services rendered to us by our executive
officers and directors in any capacity for the three fiscal years ended August
31, 2009.




The
aggregate amount of compensation (including salaries, bonuses and other
compensation and the net amount realized on the exercise of stock options) paid
and accrued by us during the three fiscal years ended August 31, 2009 to all
directors, senior management and administrative or supervisory personnel of ours
as a group was CDN $43,400.




Summary Compensation Table (CDN$)




Non-equity Incentive
                Plan CompensationName and
                Principal
                Position
      (1)
              
              Year
              
              Salary(2)
              
              
              Share
                Based
                Awards
              
              
              Option
                Based
                Awards
              
              
              Annual
                Incentive
                Plans
              
              
              Long Term
                Incentive
                Plans
              
              
              Pension
                Value
              
              
              All Other
                Compen-
                sation(4)
              
              
              Total
                Compen-
                sation($)
              
              
              ($)
              
              
              ($)
              
              
              ($)
              
              
              ($)
              
              
              ($)
              
              
              ($)
              
              
              ($)Sandra
      J. Hall, Chief
              
              2009
              
              $
              18,000
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              200
              
              
              $
              18,200Executive
      Officer,
              
              2008
              
              $
              12,000
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              200
              
              
              $
              12,200President
      and
              
              2007
              
              $
              12,000
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              100
              
              
              $
              12,100Director
      (3)Milton
      Klyman,
              
              2009
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              200
              
              
              
              200Director
              
              2008
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              200
              
              
              
              2002007
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              100
              
              
              
              100William
      Jarvis,
              
              2009
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              200
              
              
              
              200Director
              
              2008
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              100
              
              
              
              1002007
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              100
              
              
              
              100




(1) No
options have been issued to date.


(2)
Management fees.


(3) Ms.
Hall has been the acting Chief Financial Officer for each of the years in this
chart.


(4)
Accrued on account of directors fees at a rate of $100 per meeting.




Compensation
Discussion and Analysis




Objective of theCompensation
Program




The
objectives of our compensation program are to attract, hold and inspire
performance of our named executive officers (“NEO”) of a quality and nature that
will enhance our sustainable profitability and growth.  Due to our
present financial situation, we view it as an important objective of our
compensation program to ensure staff retention.




The Compensation Review
Process




To
determine compensation payable, our compensation committee (the "Compensation Committee")
determines an appropriate compensation reflecting the need to provide incentive
and compensation for the time and effort expended by each NEO while taking into
account our financial and other resources.




Our
Compensation Committee is comprised of Milton Klyman (Chair) and William
Jarvis.  The Compensation Committee is comprised entirely of
independent directors. Compensation is determined in the context of our
strategic plan, our growth, shareholder returns and other achievements and
considered in the context of position descriptions, goals and the performance of
each NEO. With respect to directors’ compensation, the Compensation Committee
reviews the level and form of compensation received by the directors, members of
each committee, the board chair and the chair of each board committee,
considering the duties and responsibilities of each director, his or her past
service and continuing duties in service to us. The compensation of directors,
the CEO and executive officers of competitors are considered, to the extent
publicly available, in determining compensation and the Compensation Committee
has the power to engage a compensation consultant or advisor to assist in
determining appropriate compensation.


42




Elements of Executive
Compensation




Our NEO
compensation program is based on the objectives of: (a) recruiting and retaining
the executives critical to our success; (b) providing fair and competitive
compensation; (c) balancing the interests of our management and shareholders;
and (d) rewarding performance, on the basis of both individual and corporate
performance.




For the
fiscal year ended August 31, 2009, our NEO compensation program consisted of the
following elements:




(a)
            a
      base salary/management fee (the "Short-Term
      Incentive").




(b)
            a
      long-term equity compensation consisting of stock options granted under
      our stock incentive plan ("Long-Term
      Incentive").




The
specific rationale and design of each of these elements are outlined in detail
below.




Short-Term
Incentive




Salaries
form an essential element of our compensation mix as they are the first base
measure to compare and remain competitive relative to peer groups. Base salaries
are fixed and therefore not subject to uncertainty and are used as the base to
determine other elements of compensation and benefits. The base salary provides
an immediate cash incentive for each NEO. The Compensation Committee and the
Board review salaries at least annually.




Base
salary/management fees of each NEO is set by the Compensation Committee on the
basis of the applicable officer’s responsibilities, experience and past
performance. In determining the base salary to be paid to a particular NEO, the
Compensation Committee considers the particular responsibilities related to the
position, the experience level of the officer, and his or her past performance
with us and our current financial position.




Long-Term
Incentive




The granting of stock options is a
variable component of compensation intended to reward each NEO for their success
in achieving sustained, long-term profitability and increases in stock value.
Stock options ensure that each NEO is motivated to achieve long-term growth for
us and continuing increases in shareholder value. In terms of relative emphasis,
we place more importance on stock options.




We
provide long-term incentive compensation through our stock option plan. The
Compensation Committee recommends the granting of stock options from time to
time based on its assessment of the appropriateness of doing so in light of our
long-term strategic objectives, our current stage of development, the need to
retain or attract particular key personnel, the number of stock options already
outstanding and overall market conditions. The Compensation Committee views the
granting of stock options as a means of promoting our success and higher returns
to its shareholders. Our Board grants stock options after reviewing
recommendations made by the Compensation Committee.




As of our
fiscal year end August 31, 2009 we had no option/stock appreciation rights or
grants outstanding.




Stock
Option Plan




Amendments
to our 2000 Stock Option Plan (as amended, the “Plan”) were adopted by our board
of directors on January 8, 2010 and approved by a majority of our shareholders
voting at the Annual and Special Meeting held on February 9, 2010. The Plan was
adopted in order that we may be able to provide incentives for directors,
officers, employees, consultants and other persons (an "Eligible Individual") to
participate in our growth and development by providing us with the opportunity
through share options to acquire an ownership interest in us. Directors and
officers currently are not remunerated for their services except as stated in
"Executive Compensation"
above.


43


The
maximum number of common shares which may be set aside for issue under the Plan
is currently 4,846,152 common shares, provided that the board has the right,
from time to time, to increase such number subject to the approval of our
shareholders and any relevant stock exchange or other regulatory
authority.  The maximum number of common shares which may be reserved
for issuance to any one person under the plan is 5% of the common shares
outstanding at the time of the grant less the number of shares reserved for
issuance to such person under any options for services or any other stock option
plans.  Any common shares subject to an option, which are not
exercised, will be available for subsequent grant under the Plan.  The
option price of any common shares cannot be less than the closing sale price of
such shares quoted on any trading system or on any stock exchange on which the
common shares are listed and posted for trading, on the day immediately
preceding the day upon which the grant of the option is approved by the board of
directors.




Options
granted under the Plan may be exercised during a period not exceeding five
years, subject to earlier termination upon the optionee ceasing to be an
Eligible Individual, or, in accordance with the terms of the grant of the
option.  The options are non-transferable and non-assignable except
between an eligible individual and a related corporation controlled by such
Eligible Individual upon the consent of the board of directors.  The
Plan contains provisions for adjustment in the number of shares issuable there
under in the event of subdivision, consolidation, reclassification,
reorganization or change in the number of common shares, a merger or other
relevant change in our capitalization.   We do not have any other
long-term incentive plans, including any supplemental executive retirement
plans.




Overview of How the
Compensation Program Fits with Compensation Goals




The
compensation package is designed to meet the goal of attracting, holding and
motivating key talent in a highly competitive oil and gas exploration
environment through salary and providing an opportunity to participate in our
growth through stock options. Through the grant of stock options, if the price
of our shares increases over time, the holders of the options will
benefit.




Incentive
Plan Awards




There
were no incentive plan awards outstanding for any NEO as of August 31,
2009.




Pension
Plan Benefits




We do not
currently provide pension plan benefits to any NEO.




Termination
and Change of Control Benefits




We do not
currently have executive employment agreements in place with any
NEO.




We have
no compensatory plan, contract or arrangement where a named executive officer or
director is entitled to receive compensation in the event of resignation,
retirement, termination, change of control or a change in responsibilities
following a change in control.




Director
Compensation




Each
director of ours is entitled to receive the sum of $100 for each meeting of the
directors or shareholders attended. During the fiscal year ended August 31, 2009
no amount was paid by us with respect to such fees.




Retirement
Policy for Directors




We do not
have a retirement policy for our directors.




Directors’
and Officers’ Liability Insurance




We do not
maintain directors’ and officers’ liability insurance.


44




C.           BOARD
PRACTICES




Board
of Directors




The
mandate of our board of directors, prescribed by the Business Corporations Act
(Ontario), is to manage or supervise the management of our business and affairs
and to act with a view to our best interests. In doing so, the board oversees
the management of our affairs directly and through its committees.




The
current terms of each of our directors began on August 10, 2000 except for Mr.
Jarvis who was appointed on July 21, 2005 and Mr. Cassina who was appointed on
February 9, 2010. Our directors serve until our next Annual General Meeting or
until a successor is duly elected, unless the office is vacated in accordance
with our Articles or Bylaws.  Our sole executive officer was appointed
by our Board of Directors to serve until the earlier of her resignation or
removal, with or without cause by the directors. There was no compensation paid
by us to our directors during the fiscal year ended August 31, 2009 for their
services in their capacity as directors or any compensation paid to committee
members.




As of
August 31, 2009 and the filing date of this Annual Report except as noted below,
our board of directors consists of four directors, two of which are "independent
directors" in that they are "independent from management and free from any
interest and any business or other relationship which could, or could reasonably
be perceived to, materially interfere with the directors ability to act with a
view to our best interests, other than interests and relationships arising from
shareholding".  The independent directors are Milton Klyman and
William Jarvis.  It is our practice to attempt to maintain a diversity of
professional and personal experience among our directors.




Our
independent directors do not hold regularly scheduled meetings at which
non-independent directors and members of management are not in
attendance.  We hold meetings as required, at which the opinions of
the independent directors are sought and duly acted upon for all material
matters relating to us.




Directorships




The
following directors of ours are directors of Canadian or United States reporting
issuers as follows:




Sandra
      J. Hall
              Eagleford
      Energy IncMilton
      Klyman
              Bonanza
      Blue Corp.;  Eagleford Energy Inc.; and Western Troy Capital
      Resources Inc.William
      Jarvis
              Eagleford
      Energy Inc.James
      Cassina
              Eagleford
      Energy Inc.;  Single Touch Systems Inc.; Bonanza Blue
      Corp.




Board
and Committee Meetings




The board
of directors has met at least once annually or otherwise as circumstances
warrant to review our business operations, corporate governance and financial
results.  The table below reflects the attendance of each director of
ours at each Board and committee meeting of the Board during the fiscal year
ended August 31, 2009.




Name
                
                Board of
                  Directors
                  Meetings
                
                Audit
                  Committee
                  Meetings
                
                Compensation
                  Committee
                  Meetings
                
                Petroleum and
                  Natural Gas
                  Committee
                  Meetings
                
                Disclosure
                  Committee
                  MeetingsMilton
      Klyman
                
                2
                
                2
                
                Nil
                
                Nil
                
                NilWilliam
      Jarvis
                
                2
                
                2
                
                Nil
                
                Nil
                
                NilSandra
      Hall
                
                2
                
                1
                
                Nil
                
                Nil
                
                NilJames
      Cassina (1)
                
                Nil
                
                Nil
                
                Nil
                
                Nil
                
                Nil




Mr.
Cassina was appointed a director at our Annual and Special Meeting of
Shareholders held on February 9, 2010.




Board
Mandate




The Board
assumes responsibility for our stewardship, including overseeing all of the
operation of the business, supervising management and setting milestones for us.
The Board reviews the statements of responsibilities for us including, but not
limited to, the code of ethics and expectations for business
conduct.


45


The Board
approves all significant decisions that affect us and our subsidiaries and sets
specific milestones towards which management directs their efforts.




The Board
ensures, at least annually, that there are long-term goals and a strategic
planning process in place for us and participates with management directly or
through its committees in developing and approving the mission of our business
and the strategic plan by which it proposes to achieve our goals, which
strategic plan takes into account, among other things, the opportunities and
risks of our business. The strategic planning process is carried out at each
Board meeting where there are regularly reviewed specific milestones for
us.




The
strategic planning process incorporates identifying the main risks to our
objectives and ensuring that mitigation plans are in place to manage and
minimize these risks. The Board also takes responsibility for identifying the
principal risks of our business and for ensuring these risks are effectively
monitored and mitigated to the extent practicable. The Board appoints senior
management.




We adhere
to regulatory requirements with respect to the timeliness and content of its
disclosure. The Board approves all of our major communications, including annual
and quarterly reports and press releases. The Chief Executive Officer authorizes
the issuance of news releases. The Chief Executive Officer is generally the only
individual authorized to communicate with analysts, the news media and investors
about information concerning us.




Our Board
and the audit committee (the "Audit Committee") examines
the effectiveness of our internal control processes and information
systems.




The Board
as a whole, given its small size, is involved in developing our approach to
corporate governance. The number of scheduled board meetings varies with
circumstances. In addition, special meetings are called as necessary. The Chief
Executive Officer establishes the agenda at each Board meeting and submits a
draft to each director for their review and recommendation for items for
inclusion on the agenda. Each director has the ability to raise subjects that
are not on the agenda at any board meeting. Meeting agendas and other materials
to be reviewed and/or discussed for action by the Board are distributed to
directors in time for review prior to each meeting. Board members have full and
free access to our senior management and employees.




Position
Descriptions




The Board
has not developed written position descriptions for the Chairman of the Board or
the Chief Executive Officer.  The Board is currently of the view that
the respective corporate governance roles of the Board and management, as
represented by the Chief Executive Officer, are clear and that the limits to
management's responsibility and authority are well-defined.




Each of
the Audit Committee, Compensation Committee, Disclosure Committee and a
Petroleum and Natural Gas Committee has a chair and a mandate.




Orientation
and Continuing Education




We have
developed an orientation program for new directors including a director’s manual
("Director’s Manual") which contains information regarding the roles and
responsibilities of the board, each board committee, the board chair, the chair
of each board committee and our president. The Director’s Manual contains
information regarding its organizational structure, governance policies
including the Board Mandate and each Board committee charter, and our code of
business conduct and ethics. The Director’s Manual is updated as our business,
governance documents and policies change. We update and inform the board
regarding corporate developments and changes in legal, regulatory and industry
requirements affecting us.


46


Ethical
Business Conduct




We have
adopted a written code of business conduct and ethics (the "Code") for our
directors, officers and employees. The board encourages following the Code by
making it widely available. It is distributed to directors in the Director’s
Manual and to officers, employees and consultants at the commencement of their
employment or consultancy.  The Code reminds those engaged in service
to us that they are required to report perceived or actual violations of the
law, violations of our policies, dangers to health, safety and the environment,
risks to our property, and accounting or auditing irregularities to the chair of
the Audit Committee who is an independent director of ours. In addition, to
requiring directors, officers and employees to abide by the Code, we encourage
consultants, service providers and all parties who engage in business with us to
contact the chair of the Audit Committee regarding any perceived and all actual
breaches by our directors, officers and employees of the Code. The chair of our
Audit Committee is responsible for investigating complaints, presenting
complaints to the applicable board committee or the board as a whole, and
developing a plan for promptly and fairly resolving complaints. Upon conclusion
of the investigation and resolution of a complaint, the chair of our Audit
Committee will advise the complainant of the corrective action measures that
have been taken or advise the complainant that the complaint has not been
substantiated. The Code prohibits retaliation by us, our directors and
management, against complainants who raise concerns in good faith and requires
us to maintain the confidentiality of complainants to the greatest extent
practical. Complainants may also submit their concerns anonymously in writing.
In addition to the Code, we have an Audit Committee Charter and a Policy of
Procedures for Disclosure Concerning Financial/Accounting
Irregularities.




Since the
beginning of our most recently completed financial year, no material change
reports have been filed that pertain to any conduct of a director or executive
officer that constitutes a departure from the Code. The board encourages and
promotes a culture of ethical business conduct by appointing directors who
demonstrate integrity and high ethical standards in their business dealings and
personal affairs. Directors are required to abide by the Code and expected to
make responsible and ethical decisions in discharging their duties, thereby
setting an example of the standard to which management and employees should
adhere. The board is required by the Board Mandate to satisfy our CEO and other
executive officers are acting with integrity and fostering a culture of
integrity throughout the Company. The board is responsible for reviewing
departures from the Code, reviewing and either providing or denying waivers from
the Code, and disclosing any waivers that are granted in accordance with
applicable law. In addition, the board is responsible for responding to
potential conflict of interest situations, particularly with respect to
considering existing or proposed transactions and agreements in respect of which
directors or executive officers advise they have a material interest. The Board
Mandate requires that directors and executive officers disclose any interest and
the extent, no matter how small, of their interest in any transaction or
agreement with us, and that directors excuse themselves from both board
deliberations and voting in respect of transactions in which they have an
interest. By taking these steps the board strives to ensure that directors
exercise independent judgment, unclouded by the relationships of the directors
and executive officers to each other and us, in considering transactions and
agreements in respect of which directors and executive officers have an
interest.




Nomination
of Directors




The Board
has not appointed a nominating committee and does not believe that such a
committee is warranted at the present time. The entire Board determines new
nominees to the Board, although a formal process has not been adopted. The
nominees are generally the result of recruitment efforts by the Board members,
including both formal and informal discussions among Board members and officers.
The Board generally looks for the nominee to have direct experience in the oil
and gas business and significant public company experience. The nominee must not
have a significant conflicting public company association.




Compensation




The Board
determines director and executive officer compensation by recommendation of the
Compensation Committee. Our Compensation Committee reviews the amounts and
effectiveness of compensation. Each of the members of the Compensation Committee
are independent. The Board reviews the adequacy and form of compensation and
compares it to other companies of similar size and stage of development. There
is no minimum share ownership requirement of directors.




The
Compensation Committee convenes at least once annually to review director and
officer compensation and status of stock options. The Compensation Committee
also responds to requests from management and the Board to review
recommendations of management for new senior employees and their compensation.
The Compensation Committee has the power to approve and/or amend these
recommendations.




We have
felt no need to retain any compensation consultants or advisors at any time
since the beginning of our most recently completed financial
year.


47


Committees
of the Board




Our board
of directors discharges its responsibilities directly and through committees of
the board of directors, currently consisting of an Audit Committee, Compensation
Committee, Disclosure Committee and a Petroleum and Natural Gas
Committee.




Each of
the Audit Committee, Disclosure Committee and the Petroleum and Natural Gas
Committee consists of a majority of independent directors, while the
Compensation Committee consists of independent directors.  Each
Committee has a specific mandate and responsibilities, as reflected in the
charters for each committee.




Compensation
Committee




The
mandate of the Compensation Committee is formalized in a written charter. The
members of the compensation committee of the Board are William Jarvis and Milton
Klyman (Chair).  The Compensation Committee is comprised entirely of
independent directors. Compensation is determined in the context of our
strategic plan, our growth, shareholder returns and other achievements and
considered in the context of position descriptions, goals and the performance of
each individual director and officer. With respect to directors’ compensation,
the Compensation Committee reviews the level and form of compensation received
by the directors, members of each committee, the board chair and the chair of
each board committee, considering the duties and responsibilities of each
director, his or her past service and continuing duties in service to us. The
compensation of directors, the CEO and executive officers of competitors are
considered, to the extent publicly available, in determining compensation and
the Compensation Committee has the power to engage a compensation consultant or
advisor to assist in determining appropriate compensation.




Disclosure
Committee




The
mandate of the Corporate Governance Committee is formalized in a written
charter. The members of the corporate governance committee of the board are
Milton Klyman, William Jarvis and Sandra Hall (Chair).  The
Committee's duties and responsibilities include, but are not limited to, review
and revise our controls and other procedures ("Disclosure and Controls
Procedures") to ensure that (i) information required by us to be disclosed to
the applicable regulatory authorities and other written information that we will
disclose to the public is reported accurately and on a timely basis, and (ii)
such information is accumulated and communicated to management, as appropriate
to allow timely decisions regarding required disclosure; assist in documenting
and monitoring the integrity and evaluating the effectiveness of the Disclosure
and Control Procedures; the identification and disclosure of material
information about us, the accuracy completeness and timeliness of our financial
reports and all communications with the investing public are timely, factual and
accurate and are conducted in accordance with applicable legal and regulatory
requirements.




Petroleum
and Natural Gas Committee




The
members of the petroleum and natural gas committee of the Board are Milton
Klyman, Sandra Hall and William Jarvis (Chair).  The Petroleum and
Natural Gas Committee has the responsibility of meeting with the independent
engineering firms commissioned to conduct the reserves evaluation on our oil and
natural gas assets and to discuss the results of such evaluation with each of
the independent engineers and management.  Specifically, the Petroleum
and Natural Gas Committee’s responsibilities include, but are not limited to, a
review of management’s recommendations for the appointment of independent
engineers, review of the independent engineering reports and considering the
principal assumptions upon which such reports are based, appraisal of the
expertise of the independent engineering firms retained to evaluate our
reserves, review of the scope and methodology of the independent engineers’
evaluations, reviewing any problems experienced by the independent engineers in
preparing the reserve evaluation, including any restrictions imposed by
management or significant issues on which there was a disagreement with
management and a review of reserve additions and revisions which occur from one
report to the next.


48


Assessments




The board
assesses, on an annual basis, the contributions of the board as a whole, the
Audit Committee and each of the individual directors, in order to determine
whether each are functioning effectively. The board monitors the adequacy of
information given to directors, communication between the board and management
and the strategic direction and processes of the board and
committees.  The Audit Committee will annually review the Audit
Committee Charter and recommend, if any, revisions to the board as
necessary.




Audit
Committee




The
mandate of the Audit Committee is formalized in a written
charter.  The members of the audit committee of the board are William
Jarvis, Milton Klyman (Chairman) and Sandra Hall. Based on his professional
certification and experience, the board has determined that Milton Klyman is an
Audit Committee Financial Expert and that William Jarvis and Sandra Hall are
financially literate. The audit committee's primary duties and responsibilities
are to serve as an independent and objective party to monitor our financial
reporting process and control systems, review and appraise the audit activities
of our independent auditors, financial and senior management, and the lines of
communication among the independent auditors, financial and senior management,
and the board of directors for financial reporting and control matters including
investigating fraud, illegal acts or conflicts of interest.




Relevant
Education and Experience of Audit Committee Members




Milton
Klyman is the Chairman of the Audit Committee.  He is a self-employed
financial consultant and has been a Chartered Accountant since
1952.  Milton Klyman is a Life Member of the Institute of Chartered
Accountants of Ontario, a Life member of the Canadian Institute of Mining
Metallurgy and Petroleum and a Fellow of the Institute of Chartered Secretaries
and Administrators.




William
Jarvis is a self employed exploration consultant. Mr. Jarvis has served as a
director and held various positions with public companies.




Sandra
Hall has served as a director and held various executive positions with a number
of public companies over the past thirteen years. Prior to that Ms. Hall worked
for a corporation that provided accounting and corporate services for numerous
public and private companies.




Audit
Committee Charter




•
            Our
      Audit Committee Charter (the “Charter”) has been adopted by our board of
      directors.  The Audit Committee of the board (the “Committee”)
      will review and reassess this charter annually and recommend any proposed
      changes to the board for approval.  The Audit Committee’s
      primary duties and responsibilities are
to:




•
            Oversee
      (i) the integrity of our financial statements; (ii) our compliance with
      legal and regulatory requirements; and (iii) the independent auditors’
      qualifications and independence.




•
            Serve
      as an independent and objective party to monitor our financial reporting
      processes and internal control
systems.




•
            Review
      and appraise the audit activities of our independent auditors and the
      internal auditing functions.




•
            Provide
      open lines of communication among the independent auditors, financial and
      senior management, and the board for financial reporting and control
      matters.




Role
and Independence: Organization




The
Committee assists the board on fulfilling its responsibility for oversight of
the quality and integrity of our accounting, auditing, internal control and
financial reporting practices.  It may also have such other duties as
may from time to time be assigned to it by the board.




The Audit
Committee is to be comprised of at least three directors.  The
majority of the Committee members must be independent from management and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the
Committee.


49


All
members shall, to the satisfaction of the board, be financially literate (i.e.
will have the ability to read and understand a balance sheet, an income
statement, a cash flow statement and the notes attached thereto), and at least
one member shall have accounting or related financial management expertise to
qualify as “financially sophisticated”.  A person will qualify as
“financially sophisticated” if an individual who possesses the following
attributes:




•
            an
      understanding of financial statements and generally accepted accounting
      principles;




•
            an
      ability to assess the general application of such principles in connection
      with the accounting for estimates, accruals and
  reserves;




•
            experience
      preparing, auditing, analyzing or evaluating financial statements that
      present a breadth and level of complexity of accounting issues that are
      generally comparable to the breadth and complexity of issues that can
      reasonably be expected to be raised by our financial statements, or
      experience actively supervising one or more persons engaged in such
      activities;




•
            an
      understanding of internal controls and procedures for financial reporting;
      and




•
            an
      understanding of audit committee
functions.




William
Jarvis and Milton Klyman are “independent” as defined by the Securities and
Exchange Commission, and the Board has determined that Milton Klyman is an
“audit committee financial expert” as defined in Item 401(h) of Regulation S-K
promulgated by the Securities and Exchange Commission.




The
Committee members will be elected annually at the first meeting of the Board
following the annual meeting of shareholders.  Each member of the
Committee serves during the pleasure of the Board and, in any event, only so
long as he or she is a director.




One
member of the Committee shall be appointed as chair.  The chair shall
be responsible for leadership of the Committee, including scheduling and
presiding over meetings and making regular reports to the Board.  The
chair will also maintain regular liaison with the CEO, CFO, and the lead
independent audit partner.




Responsibilities
and Powers




Although
the Committee may wish to consider other duties from time to time, the general
recurring activities of the Committee in carrying out its oversight role are
described below.




·
            Annual
      review and revision of the Charter as necessary with the approval of the
      board.




·
            Review
      and obtain from the independent auditors a formal written statement
      delineating all relationships between the auditor and us, consistent with
      Independence Standards Board Standard
1.




·
            Recommending
      to the board the independent auditors to be retained (or nominated for
      shareholder approval) to audit our financial statements.  Such
      auditors are ultimately accountable to the board and the Committee, as
      representatives of the
shareholders.




·
            Evaluating,
      together with the board and management, the performance of the independent
      auditors and, where appropriate, replacing such
  auditors.




·
            Obtaining
      annually from the independent auditors a formal written statement
      describing all relationships between the auditors and us. The Committee
      shall actively engage in a dialogue with the independent auditors with
      respect to any relationship that may impact the objectivity and the
      independence of the auditors and shall take, or recommend that the board
      take, appropriate actions to oversee and satisfy itself as to the
      auditors’ independence.




·
            Ensuring
      that the independent auditors are prohibited from providing the following
      non-audit services and determining which other non-audit services the
      independent auditors are prohibited from
  providing:


50


o
            Bookkeeping or other services
      related to our accounting records or consolidated financial
      statements;




o
            Financial information systems
      design and implementation;




o
            Appraisal or valuation services,
      fairness opinions, or contribution-in-kind
  reports;




o
            Actuarial
      services;




o
            Internal audit outsourcing
      services;




o
            Management functions or human
      resources;




o
            Broker or dealer, investment
      advisor or investment banking
services;




o
            Legal services and expert
      services unrelated to the audit;
and




o
            Any other services which the
      Public Company Accounting Oversight Board determines to be
      impermissible.




·
            Approving any permissible
      non-audit engagements of the independent
  auditors.




·
            Meeting with our auditors and
      management to review the scope of the proposed audit for the current year,
      and the audit procedures to be used, and to approve audit
      fees.




·
            Reviewing the audited
      consolidated financial statements and discussing them with management and
      the independent auditors.  Consideration of the quality our
      accounting principles as applied in its financial
      reporting.  Based on such review, the Committee shall make its
      recommendation to the Board as to the inclusion of our audited
      consolidated financial statement in our Annual Report to
      Shareholders.




·
            Discussing with management and
      the independent auditors the quality and adequacy of and compliance with
      our internal controls.




·
            Establishing procedures: (i) for
      receiving, handling and retaining of complaints received by us regarding
      accounting, internal controls, or auditing matters, and (ii) for employees
      to submit confidential anonymous concerns regarding questionable
      accounting or auditing
matters.




·
            Review and discuss all related
      party transactions involving
us.




·
            Engaging independent counsel and
      other advisors if the Committee determines that such advisors are
      necessary to assist the Committee in carrying out its
      duties.




·
            Publicly disclose the receipt of
      warning about any violations of corporate governance
      rules.




Authority




The
Committee will have the authority to retain special legal, accounting or other
experts for advice, consultation or special investigation.  The
Committee may request any officer or employee of ours, our outside legal
counsel, or the independent auditor to attend a meeting of the Committee, or to
meet with any member of, or consultants to, the Committee.  The
Committee will have full access to our books, records and
facilities.




Meetings




The
Committee shall meet at least yearly, or more frequently as the Committee
considers necessary.  Opportunities should be afforded periodically to
the external auditor and to senior management to meet separately with the
independent members of the Committee. Meetings may be with representatives of
the independent auditors, and appropriate members of management, all either
individually or collectively as may be required by the Chairman of the
Committee.


51


The
independent auditors will have direct access to the Committee at their own
initiative.




The
Chairman of the Committee will report periodically the Committee’s findings and
recommendations to the board of directors.




D.           EMPLOYEES




As of
August 31, 2009 and the date of the filing of this Annual Report we did not have
any employees other than our sole executive officer.




E.           SHARE
OWNERSHIP




Our
common shares are owned by Canadian residents, United States residents and
residents of other countries.  The only class of our securities, which
is outstanding as of the date of the filing of this Annual Report, is common
stock.  All holders of our common stock have the same voting rights
with respect to their ownership of our common stock.




The
following table sets forth as of the date of the filing of this Annual Report,
certain information with respect to the amount and nature of beneficial
ownership of the common stock held by (i) each person known to our management to
be the beneficial owner of more than 5% of our outstanding shares of common
stock; (ii) each person who is a director or an executive officer of ours; and
(iii) all directors and executive officers of ours, as a
group.  Shares of our common stock subject to options, warrants, or
convertible securities currently exercisable or convertible or exercisable or
convertible within 60 days of the date of filing of this Annual Report are
deemed outstanding for computing the share ownership and percentage of the
person holding such options, warrants, or convertible securities but are not
deemed outstanding for computing the percentage of any other
person.




Name and Owner
                          
                          Identity
                          
                          Amount and Nature of
                            Beneficial Ownership
                            of Common Stock(1)
                          
                          
                          PercentageSandra
      J. Hall
                          
                          Officer,
      Director, and Principal Shareholder
                          
                          
                          6,100,000
                          (2)
                          
                          
                          23.1
                          %Milton
      Klyman
                          
                          Director
                          
                          
                          100,000
                          (3)
                          
                          
                          0.4
                          %William
      Jarvis
                          
                          Director
                          
                          
                          0
                          
                          
                          
                          0
                          %1407271
      Ontario Inc. (4)
                          
                          Principal
      Shareholder
                          
                          
                          4,400,000
                          (5)
                          
                          
                          17.0
                          %Core
      Energy Enterprises, Inc. (6)
                          
                          Principal
      Shareholder
                          
                          
                          4,073,208
                          (7)
                          
                          
                          15.5
                          %James
      Cassina
                          
                          Director
      and Principal Shareholder
                          
                          
                          12,065,046
                          (8)
                          
                          
                          39.9
                          %Tonbridge
      Financial Corp.
                          
                          Principal
      Shareholder
                          
                          
                          5,483,414
                          (9)
                          
                          
                          20.3
                          %Harvester
      Emerging Markets Fund
                          
                          Principal
      Shareholder
                          
                          
                          2,700,000
                          (10)
                          
                          
                          9.4
                          %All
      officers and directors as a group (4 persons)
                          
                          
                          
                          
                          18,265,046
                          (2)(3)(8)
                          
                          
                          56.2.
                          %




(1)
            Unless otherwise indicated, the
      persons named have sole ownership, voting and investment power with
      respect to their stock, subject to applicable laws relative to rights of
      spouses.  Percentage ownership is based on 24,232,559 shares of
      common stock outstanding as of the date of filing of this Annual
      Report.




(2)
            Includes 2,800,000 outstanding
      shares and 1,600,000 shares underlying 1,600,000 presently exercisable
      warrants owned by 1407271 Ontario Inc.  Also includes 600,000
      shares underlying 600,000 presently exercisable warrants owned directly by
      Sandra Hall.




(3)
            Includes 50,000 shares underlying
      50,000 presently exercisable
warrants.


52


(4)
            Sandra J. Hall owns 1407271
      Ontario Inc. and has sole voting and investment power with respect to the
      shares of our common stock owned by 1407271 Ontario
      Inc.




(5)
            Includes 1,600,000 shares
      underlying 1,600,000 presently exercisable
  warrants.




(6)
            James Cassina has voting and
      investment power with respect to the shares of our common stock owned by
      Core Energy Enterprises Inc.




(7)
            Includes 2,036,604 shares
      underlying 2,036,604 presently exercisable
  warrants.




(8)
            Includes 2,036,604 outstanding
      shares and 2,036,604 shares underlying 2,036,604 presently exercisable
      warrants owned by Core Energy Enterprises Inc.  Also includes
      3,995,919 shares underlying 3,995,919 presently exercisable warrants owned
      directly by James Cassina.




(9)
            Includes
      2,741,707 shares underlying 2,741,707 presently exercisable warrants.
      David Yuhasz has voting and investment power with respect to the shares
      owned by Tonbridge Financial Corp.




(10)
            Includes
      1,450,000 shares underlying 1,250,000 presently exercisable warrants.
      Robert Cordes has voting and investment power with respect to the shares
      owned by Harvester Emerging Markets
Fund.




As of the
date of the filing of this Annual Report, to the knowledge of our management,
there are no arrangements which, could at a subsequent date result in a change
in control of us.  As of such date, and except as disclosed herein,
our management has no knowledge that we are owned or controlled directly or
indirectly by another company or any foreign government.




Amendments
to our 2000 Stock Option Plan (as amended, the "Plan") were adopted by our
board of directors on January 8, 2010 and approved by a majority of our
shareholders voting at the Annual and Special Meeting held on February 9,
2010.  The Plan was adopted in order that we may be able to provide
incentives for directors, officers, employees, consultants and other persons (an
"Eligible Individual")
to participate in our growth and development by providing us with the
opportunity through share options to acquire an ownership interest in
us.  Directors and officers currently are not remunerated for their
services except as stated in "Executive Compensation"
above.




The
maximum number of common shares which may be set aside for issue under the Plan
is currently 4,846,152 common shares, provided that the board has the right,
from time to time, to increase such number subject to the approval of our
shareholders and any relevant stock exchange or other regulatory
authority.  The maximum number of common shares which may be reserved
for issuance to any one person under the plan is 5% of the common shares
outstanding at the time of the grant less the number of shares reserved for
issuance to such person under any options for services or any other stock option
plans.  Any common shares subject to an option, which are not
exercised, will be available for subsequent grant under the Plan.  The
option price of any common shares cannot be less than the closing sale price of
such shares quoted on any trading system or on such stock exchange in Canada on
which the common shares are listed and posted for trading as may be selected for
such purpose by the board of directors, on the day immediately preceding the day
upon which the grant of the option is approved by the board of
directors.




Options
granted under the Plan may be exercised during a period no exceeding five years,
subject to earlier termination upon the optionee ceasing to be an Eligible
Individual, or, in accordance with the terms of the grant of the
option.  The options are non-transferable and non-assignable except
between an Eligible Individual and a related corporation controlled by such
Eligible Individual upon the consent of the board of directors.  The
Plan contains provisions for adjustment in the number of shares issuable there
under in the event of subdivision, consolidation, reclassification,
reorganization or change in the number of common shares, a merger or other
relevant change in the Company’s capitalization.   The Company does
not have any other long-term incentive plans, including any supplemental
executive retirement plans.


53


ITEM
7     MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS




A.           MAJOR
SHAREHOLDERS




There are
24,232,559 issued and outstanding shares of our common stock as of the date of
the filing of this Annual Report.  As of the date of the filing of
this Annual Report, to our knowledge, no persons hold directly or indirectly or
exercise control or direction over, shares of our common stock carrying 5% or
more of the voting rights attached to all issued and outstanding shares of the
common stock except as stated under Item 6.E above or set out in the table
below.  The shares of our common stock owned by our major shareholder
have identical voting rights as those owned by our other
shareholders.




Name
                  
                  Number of
                    Shares
                  
                  
                  Percentage1407271
      Ontario Inc. (1)
                  
                  
                  4,400,000
                  (2)
                  
                  
                  17.0
                  %Sandra
      Hall
                  
                  
                  6,100,000
                  (3)
                  
                  
                  23.1
                  %James
      Cassina
                  
                  
                  12,065,046
                  (4)
                  
                  
                  39.9
                  %Core
      Energy Enterprises Inc. (5)
                  
                  
                  4,073,208
                  (6)
                  
                  
                  15.5
                  %Tonbridge
      Financial Corp.
                  
                  
                  5,483,414
                  (7)
                  
                  
                  20.3
                  %Harvester
      Emerging Markets Fund
                  
                  
                  2,700,000
                  (8)
                  
                  
                  9.4
                  %


(1)
            Sandra
      J. Hall owns 1407271 Ontario Inc. and has sole voting and investment power
      with respect to the shares of our common stock owned by 1407271 Ontario
      Inc.




(2)
            Includes
      1,600,000 shares underlying 1,600,000 presently exercisable
      warrants.




(3)
            Includes
      2,800,000 outstanding shares and 1,600,000 shares underlying 1,600,000
      presently exercisable warrants owned by 1407271 Ontario
      Inc.  Also includes 600,000 shares underlying 600,000 presently
      exercisable warrants owned directly by Sandra
  Hall.




(4)
            Includes
      2,036,604 outstanding shares and 2,036,604 shares underlying 2,036,604
      presently exercisable warrants owned by Core Energy Enterprises
      Inc.  Also includes 3,995,919 shares underlying 3,995,919
      presently exercisable warrants owned directly by James
      Cassina.




(5)
            James
      Cassina has voting and investment power with respect to the shares of our
      common stock owned by Core Energy Enterprises
  Inc.




(6)
            Includes
      2,036,604 shares underlying 2,036,604 presently exercisable
      warrants.




(7)
            Includes
      2,741,707 shares underlying 2,741,707 presently exercisable warrants.
      David Yuhasz has voting and investment power with respect to the shares
      owned by Tonbridge Financial Corp.




(8)
            Includes
      1,450,000 shares underlying 1,250,000 presently exercisable warrants.
      Robert Cordes has voting and investment power with respect to the shares
      owned by Harvester Emerging Markets
Fund.




The
following table discloses the geographic distribution of the majority of the
holders of record of our common stock as of date of January 31,
2010.




Country
                          
                          Number of
                            Shareholders
                          
                          
                          Number of Shares
                          
                          
                          Percentage of
                            Shareholders
                          
                          
                          Percentage of
                            SharesCanada
                          
                          
                          1,085
                          
                          
                          
                          12,463,539
                          
                          
                          
                          96.61
                          %
                          
                          
                          51.43
                          %USA
                          
                          
                          30
                          
                          
                          
                          1,169,623
                          
                          
                          
                          2.67
                          %
                          
                          
                          4.83
                          %All
      Other
                          
                          
                          8
                          
                          
                          
                          10,599,397
                          
                          
                          
                          0.71
                          %
                          
                          
                          43.74
                          %Total
                          
                          
                          1,123
                          
                          
                          
                          24,232,559
                          
                          
                          
                          100
                          %
                          
                          
                          100
                          %


54




We are
not directly or indirectly owned or controlled by another corporation, by any
foreign government or by any other natural or legal person. There are no
arrangements known to us, the operation of which may at a subsequent date result
in a change in the control of us.




B.           RELATED
PARTY TRANSACTIONS




During
the fiscal year ended August 31, 2009 and through the date of the filing of this
Annual Report, we have entered into the related party transactions described
below.




From
November 1, 2000 through April 30, 2009 we accrued a management fee of $1,000
per month to Sandra Hall, our President and a Director. Since May 1, 2009 we
have been paying a management fee of $2,500 per month to Sandra
Hall.




On
February 5, 2009, 1407271 Ontario Inc., a corporation in which Sandra Hall has
voting and investment power, acquired 1,600,000 Units at a price of $0.05 per
Unit.  Each Unit consists of one share of our common stock and one
common stock purchase warrant exercisable until February 5, 2014 for the
purchase of one share of our common stock at a price of $0.07 per
share.




On
February 25, 2009, Sandra Hall acquired 600,000 Units at a price of $0.05 per
Unit.  Each Unit consists of one share of our common stock and one
common stock purchase warrant exercisable until February 25, 2014 for the
purchase of one share of our common stock at a price of $0.07 per
share.




On
February 25, 2009, Milton Klyman acquired 50,000 Units at a price of $0.05 per
Unit.  Each Unit consists of one share of our common stock and one
common stock purchase warrant exercisable until February 25, 2014 for the
purchase of one share of our common stock at a price of $0.07 per
share.




On
February 27, 2009, we purchased all of the issued and outstanding shares issued
in the capital stock of 1354166 Alberta Ltd., a company incorporated on October
3, 2007 in the Province of Alberta Canada. In connection therewith, we issued to
the shareholders of 1354166 an aggregate of 8,910,564 units (each a "Unit") at
$0.05 per unit or an aggregate of $445,528 and following the closing repaid
$118,000 of shareholder loans in 1354166 by cash payment to James Cassina and
Tonbridge Financial Corp. the amounts of $81,420 and 36,580
respectively.




Inter-Company
Balances




As at
August 31, 2009, 1406768 Ontario, our wholly owned subsidiary advanced us
$144,426.52.  The inter-company balance was eliminated upon
amalgamation with 1406768 Ontario effective November 30, 2009. On February 27,
2009, we advanced to our wholly owned subsidiary 1354166 Alberta $118,000.00. As
of the date of the filing of this Annual Report the inter-company balance due
from 1354166 Alberta is $118,000.00.




C.           INTERESTS
OF EXPERTS AND COUNSEL




Not
Applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.




ITEM
8     FINANCIAL INFORMATION




A.           CONSOLIDATED
STATEMENTS AND OTHER FINANCIAL INFORMATION




The
financial statements required as part of this Annual Report are filed under Item
17 of this Annual Report.




Litigation




There are
no pending legal proceedings to which we or our subsidiary is a party or of
which any of our property is the subject. There are no legal proceedings to
which any of the directors, officers or affiliates or any associate of any such
directors, officers or affiliates of either our company or our subsidiary is a
party or has a material interest adverse to us.


55


Dividends




We have
not paid any dividends on our common stock during the past five years. We do not
intend to pay dividends on shares of common stock in the foreseeable future as
we anticipate that our cash resources will be used to finance
growth.




B.           SIGNIFICANT
CHANGES




There
have been no significant changes that have occurred since the date of our annual
financial statements included with this Annual Report except as disclosed in the
Annual Report.




ITEM
9     THE OFFER AND LISTING




Common
Shares




Our
authorized capital consists of an unlimited number of common shares without par
value, of which 24,232,559 were issued and outstanding as of January 31, 2010.
All shares are initially issued in registered form. There are no restrictions on
the transferability of our common shares imposed by our constating
documents.  Holders of our common shares are entitled to one vote for
each common share held of record on all matters to be acted upon by our
shareholders. Holders of common shares are entitled to receive such dividends as
may be declared from time to time by our board of directors, in their
discretion. In addition we are authorized to issue an unlimited number of
preferred shares, with such rights, preferences and privileges as may be
determined from time to time by our board of directors.  There were no
preferred shares outstanding at January 31, 2010.




Our
common shares entitle their holders to: (i) vote at all meetings of our
shareholders except meetings at which only holders of specified classes of
shares are entitled to vote, having one vote per common share, (ii) receive
dividends at the discretion of our board of directors; and (iii) receive our
remaining property on liquidation, dissolution or winding up.




A.           OFFER
AND LISTING DETAILS




Our
common stock became eligible for trading on October 22, 2009 on the Over the
Counter Bulletin Board ("OTCBB") under the symbol (“EGNKF”).  Since
that time through the date of the filing of this Annual Report, there has been
one trade in our common stock. Following the amalgamation on November 30, 2009
with our wholly owned subsidiary 1406768 Ontario, we changed our name to
Eagleford Energy Inc. and commenced trading under the symbol “EFRDF”. Prior to
our common stock being listed on the OTCBB, our common stock had not publicly
traded since 1990.




The
following table set forth the reported high and low bid prices for shares of our
common stock on the OTCBB in US dollars for the periods indicated.




Calendar Year 2009 by Month
                          
                          Period
                          
                          High
                          
                          
                          LowOctober (1)
                          
                          $
                          0.05
                          
                          
                          $
                          0.05November
                          
                          $
                          0.05
                          
                          
                          $
                          0.05December
                          
                          $
                          0.05
                          
                          
                          $
                          0.05Calendar Year 2010 by
      Month
                          
                          January
                          
                          $
                          0.05
                          
                          
                          $
                          0.05Notes




(1)             Our
stock commenced trading on the OTBCC on October 22, 2009.




There is
currently only a limited public market for the common stock in the United
States.  There can be no assurance that a more active market will
develop in the future.




B.           PLAN
OF DISTRIBUTION




Not
Applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.


56


C.           MARKETS




See Item
9.A.




D.           SELLING
SHAREHOLDERS




Not
Applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.




E.           DILUTION




Not
Applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.




F.           EXPENSES
OF THE ISSUE




Not
Applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.




ITEM
10    ADDITIONAL INFORMATION




A.           SHARE
CAPITAL




Not
Applicable.  This Form 20-F is being filed as an Annual Report under
the Exchange Act.




B.           MEMORANDUM
AND ARTICLES OF ASSOCIATION




Certificate
of Incorporation




We were
incorporated under the Business Corporations Act (Ontario) on September 22, 1978
under the name Bonanza Red Lake Explorations Inc.  The corporation
number as assigned by Ontario is 396323.




Articles
of Amendment dated January 14, 1985




By
Articles of Amendment dated January 14, 1985, our Articles were amended as
follows:




1. The minimum number of directors of the
Company shall be 3 and the maximum number of directors of the Company shall be
10.




2. (a)Delete the existing objects clauses and
provide that there are no restrictions on the business we may carry on or on the
powers that we may exercise;




(b)   Delete the term "head office" where it
appears in the articles and substitute therefor the term "registered
office";




(c)   Delete the existing special provisions
contained in the articles and substitute therefor the
following:




The
following special provisions shall be applicable to the Company:




Subject
to the provisions of the Business Corporations Act, as amended or re-enacted
from time to time, the directors may, without authorization of the
shareholders:




(i)
                borrow money on the credit of the
      Company;




(ii)
            issue, re-issue, sell or pledge
      debt obligations of the
Company;




(iii)
            give a guarantee on behalf of the
      Company to secure performance of an obligation of any
      person;




(iv)
            mortgage, hypothecate, pledge or
      otherwise create a security interest in all or any property of
      the  Corporation owned or subsequently acquired, to secure any
      obligation of the Company;
and




57


(v)
            by resolution, delegate any or
      all such powers to a director, a committee of directors or an officer of
      the Company.




3.    (a)   Provide that the Company is authorized
to issue an unlimited number of shares;




(b)  
Provide that the Company is authorized to issue an unlimited number of
preference shares.




Articles
of Amendment dated August 16, 2000




By
Articles of Amendment dated August 16, 2000 our articles were amended to
consolidate our issued and outstanding common shares on the basis on one common
share for every three issued and outstanding common shares in our capital, and
change our name from Bonanza Red Lake Explorations Inc. to Eugenic
Corp.




Our
Articles of Amendment state that there are no restrictions on the business that
may carry on, but do not contain a stated purpose or objective.




Articles
of Amalgamation dated November 30, 2009




By
Articles of Amalgamation dated November 30, 2009 we amalgamated with our wholly
owned subsidiary Eagleford Energy Inc. (formerly: 1406768 Ontario
Inc.)  and changed the entity’s name to Eagleford Energy
Inc.




Bylaws




No
director of ours is permitted to vote on any resolution to approve a material
contract or transaction in which such director has a material interest. (Bylaws,
Article 43).




Neither
our Articles nor our Bylaws limit the directors’ power, in the absence of an
independent quorum, to vote compensation to themselves or any members of their
body. The Bylaws provide that directors shall receive remuneration as the board
of directors shall determine from time to time. (Bylaws, Article
44).




Under our
Articles and Bylaws, our board of directors may, without the authorization of
our shareholders, (i) borrow money upon our credit; (ii) issue, reissue, sell or
pledge debt obligations of ours; whether secured or unsecured (iii) give a
guarantee on behalf of us to secure performance of obligations; and (iv) charge,
mortgage, hypothecate, pledge or otherwise create a security interest in all
currently owned or subsequently acquired real or personal, movable or immovable,
tangible or intangible, property of ours to secure obligations.




Annual
general meetings of our shareholders are held on such day as is determined by
resolution of the directors. (Bylaws, Article 6). Special meetings of our
shareholders may be convened by order of our Chairman of the Board, our
President if he/she is a director, a Vice-President who is a director, or the
board of directors. (Bylaws, Article 6). Shareholders of record must be given
notice of such special meeting not less than 10 days or more than 50 days before
the date of the meeting. Notices of special meetings of shareholders must state
the nature of the business to be transacted in detail and must include the text
of any special resolution or bylaw to be submitted to the meeting. (Bylaws,
Article 8). Our board of directors is permitted to fix a record date for any
meeting of the shareholders that is between 21 and 50 days prior to such
meeting. (Bylaws, Article 9). The only persons entitled to admission at a
meeting of the shareholders are shareholders entitled to vote, our directors,
our auditors, and others entitled by law, by invitation of the chairman of the
meeting, or by consent of the meeting. (Bylaws, Article 13).




Neither
our Articles nor our Bylaws discuss limitations on the rights to own securities
or exercise voting rights thereon, and there is no provision of our Articles or
Bylaws that would delay, defer or prevent a change in control of us, or that
would operate only with respect to a merger, acquisition, or corporate
restructuring involving us or any of its subsidiaries. Our Bylaws do not contain
a provision indicating an ownership threshold above which shareholder ownership
must be disclosed.




Other
Provisions




Neither
our Articles nor our Bylaws discuss the retirement or non-retirement of
directors under an age limit requirement or the number of shares required for
director qualification.


58


Neither
our Articles nor our Bylaws require that a director hold a share in the capital
of the Company as qualification for his/her office.




Neither
our Articles nor our Bylaws contain sinking fund provisions, provisions allowing
us to make further capital calls with respect to any shareholder of ours, or
provisions which discriminate against any holders of securities as a result of
such shareholder owning a substantial number of shares.




C.           MATERIAL
CONTRACTS




During
the two year period preceding the filing date of this Annual Report, we entered
into no material contracts other than contracts entered into in the ordinary
course except for the following:




On
February 27, 2009, we purchased all of the issued and outstanding shares issued
in the capital stock of 1354166 Alberta Ltd., a company incorporated on October
3, 2007 in the Province of Alberta Canada (the "Transaction").  In
connection therewith, we issued to the shareholders of 1354166 an aggregate of
8,910,564 units (each a "Unit") at $0.05 per unit or an aggregate of $445,528
and following the closing repaid $118,000 of shareholder loans in 1354166 by
cash payment.  Each unit is comprised of one share of our common stock
(each a "Share") and one purchase warrant (each a "Warrant").  Each
Warrant is exercisable until February 27, 2014 to purchase one additional share
of our common stock at a purchase price of $0.07 per share.  The
shareholders of 1354166 and 1354166 itself are arm's-length parties to
us.  1354166 is a private company that has a 5.1975% working interest
held in trust through a joint venture partner in a natural gas unit located in
the Botha area of Alberta, Canada.




D.           EXCHANGE
CONTROLS




There are
no governmental laws, decrees or regulations in Canada that restrict the export
or import of capital, or affect the remittance of dividends, interest or other
payments to a non-resident holder of our common stock, other than withholding
tax requirements (See "Taxation" below).




Except as
provided in the Investment Canada Act, there are no limitations imposed under
the laws of Canada, the Province of Ontario, or by our constituent documents on
the right of a non-resident to hold or vote our common stock.




The
Investment Canada Act (the "ICA"), which became effective on June 30, 1985,
regulates the acquisition by non-Canadians of control of a Canadian business
enterprise.  In effect, the ICA requires review by Investment Canada,
the agency which administers the ICA, and approval by the Canadian government,
in the case of an acquisition of control of a Canadian business by a
non-Canadian where: (i) in the case of a direct acquisition (for example,
through a share purchase or asset purchase), the assets of the business are CDN
$5 million or more in value; or (ii) in the case of an indirect acquisition (for
example, the acquisition of the foreign parent of the Canadian business) where
the Canadian business has assets of CDN $5 million or more in value or if the
Canadian business represents more than 50% of the assets of the original group
and the Canadian business has assets of CDN $5 million or more in
value.  Review and approval are also required for the acquisition or
establishment of a new business in areas concerning "Canada's cultural heritage
or national identity" such as book publishing, film production and distribution,
television and radio production and distribution of music, and the oil and
natural gas industry, regardless of the size of the investment.




As
applied to an investment in us, three methods of acquiring control of a Canadian
business would be regulated by the ICA: (i) the acquisition of all or
substantially all of the assets used in carrying on the Canadian business; (ii)
the acquisition, directly or indirectly, of voting shares of a Canadian
corporation carrying on the Canadian business; or (iii) the acquisition of
voting shares of an entity which controls, directly or indirectly, another
entity carrying on a Canadian business.  An acquisition of a majority
of the voting interests of an entity, including a corporation, is deemed to be
an acquisition of control under the ICA.  An acquisition of less than
one-third of the voting shares of a corporation is deemed not to be an
acquisition of control.  An acquisition of less than a majority, but
one-third or more, of the voting shares of a corporation is presumed to be an
acquisition of control unless it can be established that on the acquisition the
corporation is not, in fact, controlled by the acquirer through the ownership of
voting shares.  For partnerships, trusts, joint ventures or other
unincorporated entities, an acquisition of less than a majority of the voting
interests is deemed not to be an acquisition of control.


59


In 1988,
the ICA was amended, pursuant to the Free Trade Agreement dated January 2, 1988
between Canada and the United States, to relax the restrictions of the
ICA.  As a result of these amendments, except where the Canadian
business is in the cultural, oil and gas, uranium, financial services or
transportation sectors, the threshold for direct acquisition of control by US
investors and other foreign investors acquiring control of a Canadian business
from US investors has been raised from CDN $5 million to CDN $150 million of
gross assets, and indirect acquisitions are not reviewable.




In
addition to the foregoing, the ICA requires that all other acquisitions of
control of Canadian businesses by non-Canadians are subject to formal
notification to the Canadian government.  These provisions require a
foreign investor to give notice in the required form, which notices are for
information, as opposed to review, purposes.




E.           TAXATION




Certain
Canadian Federal Income Tax Consequences




Management
has been advised by its Canadian legal counsel that the following discussion
fairly describes the principal Canadian federal income tax consequences
applicable to a holder of our common shares who, at all material times, is a
resident of the United States and is not a resident, or deemed to be a resident,
of Canada, deals at arm's length and is not affiliated with the Company, did not
acquire our common shares by virtue of employment, is not a financial
institution, partnership or a trust, holds our common shares as capital
property, and does not use or hold, and is not deemed to use or hold, his or her
common shares in connection with carrying on a business in Canada (a
"non-resident shareholder").




This
description is based upon the current provisions of the Income Tax Act (Canada)
(the "ITA"), the regulations thereunder (the "Regulations"), the current
publicly announced administration and assessing policies of Canada Revenue
Agency, and all specific proposals (the "Tax Proposals") to amend the ITA and
Regulations announced by the Minister of Finance (Canada) prior to the date
hereof.  This description is not exhaustive of all possible Canadian
federal income tax consequences and, except for the Tax Proposals, does not take
into account or anticipate any changes in law, whether by legislative,
governmental or judicial action, nor does it take into account any income tax
laws or considerations of any province or territory of Canada or foreign tax
considerations which may differ significantly from those discussed
below.  The following discussion is for general information only and
is not intended to be, nor should it be construed to be, legal or tax advice to
any holder of Common Shares of the Company, and no opinion or representation
with respect to the Canadian Federal Income Tax consequences to any such holder
or prospective holder is made.  Accordingly, holders and prospective
holders of common shares are urged to consult with their own tax advisors about
the federal, provincial and foreign tax consequences of purchasing, owning and
disposing of common shares.




Dividends




Dividends
paid on our common shares to a non-resident holder will be subject to a 25%
withholding tax pursuant to the provision of the ITA.  The Canada-US
Income Tax Convention (the "Treaty") provides that the normal 25% withholding
tax rate is generally reduced to 15% on dividends paid on shares of a
corporation resident in Canada (such as the Company) to beneficial owners who
are residents of the United States.  However, if the beneficial owner
is a resident of the United States and is a corporation which owns at least
10% of the voting stock of the Company, the withholding tax rate on dividends is
reduced to 5%.




Capital
Gains




A
non-resident of Canada is subject to tax under the ITA in respect of a capital
gain realized upon the disposition of a share of a corporation if the shares are
considered to be "taxable Canadian property" of the holder within the meaning of
the ITA and no relief is afforded under an applicable tax treaty.  For
purposes of the ITA, a Common Share of the Company will be taxable Canadian
property to a non-resident holder if the non-resident holder and/or persons with
whom that holder does not deal at arm's length holds 25% or more of the issued
shares of any class or series of the capital stock of the Company at any time
during the 60 month period immediately preceding the disposition of the common
share.


60


In the
case of a non-resident holder to whom shares of our common stock represent
taxable Canadian property and who is a resident in the United States and not a
former resident of Canada, no Canadian taxes will be payable on a capital gain
realized on such shares by reason of the Treaty unless the value of such shares
is derived principally from real property situated in Canada within the meaning
of the Treaty.




Certain
United States Federal Income Tax Consequences




The
following is a general discussion of certain possible United States Federal
income tax consequences, under current law, generally applicable to a US Holder
(as defined below) of our common shares.  This discussion does not
address all potentially relevant Federal income tax matters and does not address
consequences peculiar to persons subject to special provisions of Federal income
tax law, such as those described below as excluded from the definition of a US
Holder.  In addition, this discussion does not cover any state, local
or foreign tax consequences (See “Certain Canadian Federal Income Tax
Consequences” above).




The
following discussion is based upon the sections of the Internal Revenue Code of
1986, as amended (the “Code”), Treasury Regulations, published Internal Revenue
Service (“IRS”) rulings, published administrative positions of the IRS and court
decisions that are currently applicable, any or all of which could be materially
and adversely changed, possibly on a retroactive basis, at any
time.  In addition, this discussion does not consider the potential
effects, both adverse and beneficial, of recently proposed legislation which, if
enacted, could be applied, possibly on a retroactive basis, at any
time.  The following discussion is for general information only and it
is not intended to be, nor should it be construed to be, legal or tax advice to
any holder or prospective holder of common shares, and no opinion or
representation with respect to the United States Federal income tax consequences
to any such holder or prospective holder is made.  Accordingly,
holders and prospective holders of common shares are urged to consult their own
tax advisors about the Federal, state, local, and foreign tax consequences of
purchasing, owning and disposing of common shares.




U.S.
Holders




As used
herein, a “U.S. Holder” means a holder of common shares who is a citizen or
individual resident (as defined under United States tax laws) of the United
States; a corporation created or organized in or under the laws of the United
States or of any political subdivision thereof; an estate the income of which is
taxable in the United States irrespective of source; or a trust if (a) a court
within the United States is able to exercise primary supervision over the
trust’s administration and one or more United States persons have the authority
to control all of its substantial decisions or (b) the trust was in existence on
August 20, 1996 and has properly elected to continue to be treated as a United
States person.  This summary does not address the United States tax
consequences to, and U.S. Holder does not include, persons subject to specific
provisions of federal income tax law, including but not limited to tax-exempt
organizations, qualified retirement plans, individual retirement accounts and
other tax-deferred accounts, financial institutions, insurance companies, real
estate investment trusts, regulated investment companies, broker-dealers,
non-resident alien individuals, persons or entities that have a “functional
currency” other than the U.S. dollar, persons who hold common shares as part of
a straddle, hedging or a conversion transaction, and persons who acquire their
common shares as compensation for services.  This discussion is
limited to U.S. Holders who own common shares as capital assets and who hold the
common shares directly (e.g., not through an intermediary entity such as a
corporation, partnership, limited liability company, or trust).  This
discussion does not address the consequences to a person or entity of the
ownership, exercise or disposition of any options, warrants or other rights to
acquire common shares.




Distributions
on Our Common Shares




Subject
to the discussion below regarding passive foreign investment companies
(“PFICs”), the gross amount of any distribution (including non-cash property) by
us (including any Canadian taxes withheld therefrom) with respect to common
shares generally should be included in the gross income of a U.S. Holder as
foreign source dividend income to the extent such distribution is paid out of
current or accumulated earnings and profits of ours, as determined under United
States Federal income tax principles.  Distributions received by
non-corporate U.S. Holders may be subject to United States Federal income tax at
lower rates than other types of ordinary income (generally 15%) in taxable years
beginning on or before December 31, 2010 if certain conditions are
met.  These conditions include the Company not being classified as a
PFIC, it being a “qualified foreign corporation,” the U.S. Holder’s satisfaction
of a holding period requirement, and the U.S. Holder not treating the
distribution as “investment income” for purposes of the investment interest
deduction rules.  To the extent that the amount of any distribution
exceeds our current and accumulated earnings and profits for a taxable year, the
distribution first will be treated as a tax-free return of capital to the extent
of the U.S. Holder’s adjusted tax basis in our common shares and to the extent
that such distribution exceeds the Holder’s adjusted tax basis in our common
shares, will be taxed as capital gain.  In the case of U.S. Holders
that are corporations, such dividends generally will not be eligible for the
dividends received deduction.


61


If a U.S.
Holder receives a dividend in Canadian dollars, the amount of the dividend for
United States federal income tax purposes will be the U.S. dollar value of the
dividend (determined at the spot rate on the date of such payment) regardless of
whether the payment is later converted into U.S. dollars.  In such
case, the U.S. Holder may recognize additional ordinary income or loss as a
result of currency fluctuations between the date on which the dividend is paid
and the date the dividend amount is converted into U.S. dollars.




Disposition
of Common Shares




Subject
to the discussion below regarding PFIC’s, gain or loss, if any, realized by a
U.S. Holder on the sale or other disposition of our common shares (including,
without limitation, a complete redemption of our common shares) generally will
be subject to United States Federal income taxation as capital gain or loss in
an amount equal to the difference between the U.S. Holder’s adjusted tax basis
in our common shares and the amount realized on the disposition. Net capital
gain (i.e., capital gain in excess of capital loss) recognized by a
non-corporate U.S. Holder (including an individual) upon a sale or other
disposition of our common shares that have been held for more than one year will
generally be subject to a maximum United States federal income tax rate of 15%
subject to the PFIC rules below.  Deductions for capital losses are
subject to certain limitations.  If the U.S. Holder receives Canadian
dollars on the sale or disposition, it will have a tax basis in such dollars
equal to the U.S. dollar value.  Generally, any gain or loss realized
on a subsequent disposition of the Canadian dollars will be U.S. source ordinary
income or loss.




U.S.
“Anti-Deferral” Rules




Passive Foreign Investment
Company (“PFIC”) Regime .  If we, or a non-U.S. entity directly
or indirectly owned by us (“Related Entity”), has 75% or more of its gross
income as “passive” income, or if the average value during a taxable year of
ours or the Related Entity’s “passive assets” (generally, assets that generate
passive income) is 50% or more of the average value of all assets held by us or
the Related Entity, then the United States PFIC rules may apply to U.S.
Holders.  If we or a Related Entity is classified as a PFIC, a U.S.
Holder will be subject to increased tax liability in respect of gain recognized
on the sale of his, her or its common shares or upon the receipt of certain
distributions, unless such person makes a “qualified electing fund” election to
be taxed currently on its pro
rata portion of our income and gain, whether or not such income or gain
is distributed in the form of dividends or otherwise, and we provide certain
annual statements which include the information necessary to determine
inclusions and assure compliance with the PFIC rules.  As another
alternative to the foregoing rules, a U.S. Holder may make a mark-to-market
election to include in income each year as ordinary income an amount equal to
the increase in value of its common shares for that year or to claim a deduction
for any decrease in value (but only to the extent of previous mark-to-market
gains).  We or a related entity can give no assurance as to its status
as a PFIC for the current or any future year.  U.S. Holders should
consult their own tax advisors with respect to the PFIC issue and its
applicability to their particular tax situation.




Controlled Foreign
Corporation Regime (“CFC”) .  If a U.S. Holder (or person
defined as a U.S. persons under Section 7701(aX301 of the Code) owns 10% or more
of the total combined voting power of all classes of our stock (, a “U. S.
Shareholder”) and U.S. Shareholders own more than 50% of the vote or value of
our Company, we would be a “controlled foreign corporation”..  This
classification would result in many complex consequences, including the required
inclusion into income by such U. S. Shareholders of their pro rata shares of
“Subpart F income” of our Company (as defined by the Code) and our earnings
invested in “US property” (as defined by the Code).  In addition,
under Section 1248 of the Code, gain from the sale or exchange of our common
shares by a US person who is or was a U. S. Shareholder at any time during the
five year period before the sale or exchange may be treated as ordinary income
to the extent of earnings and profits of ours attributable to the stock sold or
exchanged.  It is not clear the CFC regime would apply to the U.S.
Holders of our common shares, and is outside the scope of this
discussion.


62


Foreign
Tax Credit




A U.S.
Holder who pays (or has withheld from distributions) Canadian income tax with
respect to us may be entitled to either a deduction or a tax credit for such
foreign tax paid or withheld, at the option of the U.S.
Holder.  Generally, it will be more advantageous to claim a credit
because a credit reduces United States federal income tax on a dollar-for-dollar
basis, while a deduction merely reduces the taxpayer’s income subject to
tax.  This election is made on a year-by-year basis and generally
applies to all foreign taxes paid by (or withheld from) the U.S. Holder during
that year.




There are
significant and complex limitations which apply to the credit, among which is
the general limitation that the credit cannot exceed the proportionate share of
the U.S. Holder’s United States income tax liability that the U.S. Holder’s
foreign source income bears to its worldwide taxable income.  This
limitation is designed to prevent foreign tax credits from offsetting United
States source income.  In determining this limitation, the various
items of income and deduction must be classified into foreign and domestic
sources.  Complex rules govern this classification
process.




In
addition, this limitation is calculated separately with respect to specific
“baskets” of income such as passive income, high withholding tax interest,
financial services income, shipping income, and certain other classifications of
income.  Foreign taxes assigned to a particular class of income
generally cannot offset United States tax on income assigned to another
class.  Under the American Jobs Creation Act of 2004 (the “Act”), this
basket limitation will be modified significantly after 2006.




Unused
foreign tax credits can generally be carried back one year and carried forward
ten years.  U.S. Holders should consult their own tax advisors
concerning the ability to utilize foreign tax credits, especially in light of
the changes made by the Act.




Backup
Withholding




Payment
of dividends and sales proceeds that are made within the United States or
through certain U.S.-related financial intermediaries generally are subject to
information reporting requirement and to backup withholding unless the US Holder
(i) is a corporation or other exempt recipient or (ii) in the case of backup
withholding, provides a correct taxpayer identification number and certifies
that no loss of exemption from backup withholding has occurred




The
amount of any backup withholding from a payment to a US Holder will be allowed
as a credit against the US Federal income tax liability of the US Holder and may
entitle the US Holder to a refund, provided that the required information is
furnished to the IRS.




F.
            DIVIDENDS
      AND PAYING AGENTS




Not
Applicable.  This Form 20-F is being filed as an Annual Report filed
under the Exchange Act.




G.
            STATEMENT
      BY EXPERTS




Not
Applicable.  This Form 20-F is being filed as an Annual Report filed
under the Exchange Act.




H.
            DOCUMENTS
      ON DISPLAY




The
documents and exhibits referred to in this Annual Report are available for
inspection at the registered and management office at 1 King Street West, Suite
1505, Toronto, Ontario M5H 1A1 during normal business hours.




I.
            SUBSIDIARY
      INFORMATION




Not
Applicable.  This Form 20-F is being filed as an Annual Report filed
under the Exchange Act.


63


ITEM
      11
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK




Market
Risk




Market
risk represents the risk of loss that may impact our financial position, results
of operations, or cash flows due to adverse changes in financial market prices,
including interest rate risk, foreign currency exchange rate risk, commodity
price risk, and other relevant market or price risks. We do not have activities
related to derivative financial instruments or derivative commodity instruments.
We hold equity securities which have been written down to $1 on our consolidated
balance sheet.  Our primary risk relates to commodities price
risk.




The oil
and gas industry is exposed to a variety of risks including the uncertainty of
finding and recovering new economic reserves, the performance of hydrocarbon
reservoirs, securing markets for production, commodity prices, interest rate
fluctuations, potential damage to or malfunction of equipment and changes to
income tax, royalty, environmental or other governmental
regulations.




We
mitigate these risks to the extent we are able by:




•
            •utilizing
      competent, professional consultants as support teams to company
      staff.




•
            •performing
      careful and thorough geophysical, geological and engineering analyses of
      each prospect.




•
            •focusing
      on a limited number of core
properties.




Market
risk is the possibility that a change in the prices for natural gas, natural gas
liquids, condensate and oil, foreign currency exchange rates, or interest rates
will cause the value of a financial instrument to decrease or become more costly
to settle.




We are
exposed to commodity price risks, credit risk and foreign currency exchange rate
risks.




Commodity
Price Risk




Our
financial condition, results of operations and capital resources are dependent
upon the prevailing market prices of oil and natural gas. These commodity prices
are subject to wide fluctuations and market uncertainties due to a variety of
factors that are beyond our control. Factors influencing oil and natural gas
prices include the level of global demand for crude oil, the foreign supply of
oil and natural gas, the establishment of and compliance with production quotas
by oil exporting countries, weather conditions which determine the demand for
natural gas, the price and availability of alternative fuels and overall
economic conditions. It is impossible to predict future oil and natural gas
prices with any degree of certainty. Sustained weakness in oil and natural gas
prices may adversely affect our financial condition and results of operations,
and may also reduce the amount of oil and natural gas reserves that we can
produce economically. Any reduction in our oil and natural gas reserves,
including reductions due to price fluctuations, can have an adverse affect on
our ability to obtain capital for our development activities. Similarly, any
improvements in oil and natural gas prices can have a favorable impact on our
financial condition, results of operations and capital resources. If natural gas
prices were to change by $0.50 per mcf, the impact on our earnings and cash flow
would be approximately $8,206.




Credit
Risk




In
addition to market risk, our financial instruments involve, to varying degrees,
risk associated with trade credit and risk associated with properties as well as
credit risk related to our customers and trade payables. All of our accounts
receivable are with customers or joint venture partners and are subject to
normal industry credit risk.




We do not
require collateral or other security to support financial instruments nor do we
provide collateral or security to counterparties. Currently, we do not expect
non-performance by any counterparty. However, there can be no assurance that
performance will occur. See Item 5. – Operating and Financial Review and
Prospects.




ITEM
      12
            DESCRIPTION
      OF SECURITIES OTHER THAN EQUITY
SECURITIES




A.           DEBT
SECURITIES




Not
applicable.




B.           WARRANTS
AND RIGHTS




Not
applicable.


64


C.           OTHER
SECURITIES




Not
Applicable.




D.           AMERICAN
DEPOSITORY SHARES




Not
Applicable.




PART
II




ITEM
      13
            DEFAULTS,
      DIVIDENDS ARREARAGES AND
DELINQUENCIES




Not
applicable.




ITEM 14
            MATERIAL MODIFICATIONS TO THE
      RIGHTS OF SECURITY HOLDERS AND USE OF
  PROCEEDS




Not
applicable.




ITEM
      15T
            CONTROLS
      AND PROCEDURES




Disclosure Controls and
Procedures




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




Management’s Annual Report
on Internal Control Over Financial Reporting, Attestation Report of the
Registered Public Accounting Firm




This
Annual Report does not include a report of management’s assessment regarding
internal control over financial reporting or an attestation report of our
registered public accounting firm due to a transition period established by
rules of the Securities and Exchange Commission for newly public
companies.




Changes in Internal Control
Over Financial Reporting




There
have been no changes in our internal control over financial reporting that
occurred during the quarter ended August 31, 2009 that have materially affected
or are reasonably likely to materially affect our internal control over
financial reporting.




ITEM
      16
            [RESERVED]




A.           AUDIT
COMMITTEE FINANCIAL EXPERT




Our Board
of Directors has determined that Mr. Milton Klyman is an "audit
committee financial expert", as defined in Item 16A of Form 20-F and is
independent. Milton Klyman is the Chairman of the Audit Committee.  He
is a self-employed financial consultant and has been a Chartered Accountant
since 1952.  Milton Klyman is a Life Member of the Institute of
Chartered Accountants of Ontario, a Life member of the Canadian Institute of
Mining Metallurgy and Petroleum and a Fellow of the Institute of Chartered
Secretaries and Administrators.


65


B.           CODE
OF ETHICS




We have
adopted a written code of business conduct and ethics (the "Code") for our
directors, officers and employees. The board encourages following the Code by
making it widely available. It is distributed to directors in the Director’s
Manual and to officers, employees and consultants at the commencement of their
employment or consultancy.  The Code reminds those engaged in service
to us that they are required to report perceived or actual violations of the
law, violations of our policies, dangers to health, safety and the environment,
risks to our property, and accounting or auditing irregularities to the chair of
the Audit Committee who is an independent director of ours. In addition, to
requiring directors, officers and employees to abide by the Code, we encourage
consultants, service providers and all parties who engage in business with us to
contact the chair of the Audit Committee regarding any perceived and all actual
breaches by our directors, officers and employees of the Code. The chair of our
Audit Committee is responsible for investigating complaints, presenting
complaints to the applicable board committee or the board as a whole, and
developing a plan for promptly and fairly resolving complaints. Upon conclusion
of the investigation and resolution of a complaint, the chair of our Audit
Committee will advise the complainant of the corrective action measures that
have been taken or advise the complainant that the complaint has not been
substantiated. The Code prohibits retaliation by us, our directors and
management, against complainants who raise concerns in good faith and requires
us to maintain the confidentiality of complainants to the greatest extent
practical. Complainants may also submit their concerns anonymously in writing.
In addition to the Code, we have an Audit Committee Charter and a Policy of
Procedures for Disclosure Concerning Financial/Accounting
Irregularities.




Since the
beginning of our most recently completed financial year, no material change
reports have been filed that pertain to any conduct of a director or executive
officer that constitutes a departure from the Code. The board encourages and
promotes a culture of ethical business conduct by appointing directors who
demonstrate integrity and high ethical standards in their business dealings and
personal affairs. Directors are required to abide by the Code and expected to
make responsible and ethical decisions in discharging their duties, thereby
setting an example of the standard to which management and employees should
adhere. The board is required by the Board Mandate to satisfy our CEO and other
executive officers are acting with integrity and fostering a culture of
integrity throughout the Company. The board is responsible for reviewing
departures from the Code, reviewing and either providing or denying waivers from
the Code, and disclosing any waivers that are granted in accordance with
applicable law. In addition, the board is responsible for responding to
potential conflict of interest situations, particularly with respect to
considering existing or proposed transactions and agreements in respect of which
directors or executive officers advise they have a material interest. The Board
Mandate requires that directors and executive officers disclose any interest and
the extent, no matter how small, of their interest in any transaction or
agreement with us, and that directors excuse themselves from both board
deliberations and voting in respect of transactions in which they have an
interest. By taking these steps the board strives to ensure that directors
exercise independent judgment, unclouded by the relationships of the directors
and executive officers to each other and us, in considering transactions and
agreements in respect of which directors and executive officers have an
interest. Our Code applies to our directors, officers and employees, including
our principal executive officer, principal financial officer, principal
accounting officer or persons performing similar functions of the Company. There
have been no waivers of our Code granted to our principal executive officer,
principal financial officer, principal accounting officer or controller, or
similar persons during the period covered by this Annual Report




Upon
written request to us at our registered and management office attention: the
President, we will provide by mail, to any person without charge a copy of our
Code of Ethics.




C.           PRINCIPAL
ACCOUNTANT FEES AND SERVICES




It is the
policy of the Audit Committee that all audit and non-audit services are
pre-approved prior to engagement.  Before the initiation of each
audit, the principal accountant submits a budget of the expected range of
expenditures to complete their audit engagement (including Audit Fees and Tax
Fees) to the Audit Committee for approval. In the event that the principal
accountant exceeds these parameters, the individual auditor is expected to
communicate to management the reasons for the variances, so that such variances
can be ratified by the Audit Committee. As a result, 100% of expenditures within
the scope of the noted budget are approved by the Audit Committee.




During
fiscal 2009 and 2008 there were no hours performed by any person other than the
primary accountant’s fulltime permanent employees.


66


Since the
commencement of the Company's most recently completed financial year, no
recommendations were made by the Audit Committee to nominate or compensate an
external auditor.




External
Auditor Service Fees (By Category)




The
aggregate fees billed for professional fees rendered by Schwartz Levitsky
Feldman LLP, Chartered Accountants for the years ended August 31, 2009 and
August 31, 2008 are as follows:




Nature of Services
                        
                        Fees Paid to Auditor in Year-
                          ended
                          August 31, 2009
                        
                        
                        Fees Paid to Auditor in Year-
                          ended
                          August 31, 2008Audit
      Fees(1)
                        
                        $
                        18,000
                        
                        
                        $
                        19,000Audit-Related
      Fees(2)
                        
                        $
                        31,249
                        (5)
                        
                        NilTax
      Fees(3)
                        
                        Nil
                        
                        
                        $
                        5,800All
      Other Fees(4)
                        
                        Nil
                        
                        
                        NilTOTALS
                        
                        $
                        49,249
                        
                        
                        $
                        24,800





Notes:




1.
            "Audit Fees" include fees
      necessary to perform the annual audit and any quarterly reviews of the
      Company's financial statements management discussion and
      analysis.  This includes fees for the review of tax provisions
      and for accounting consultations on matters reflected in the financial
      statements.  This also includes audit or other attest services
      required by legislation or regulation, such as comfort letters, consents,
      reviews of securities filings and statutory
  audits.




2.
            "Audit-Related Fees"
      include fees for assurance and related services that are reasonably
      related to the performance of the audit or review of the Company's
      financial statements and that are not included in "Audit
      Fees".




3.
            "Tax Fees" include fees
      for all professional services rendered by the Company's auditors for tax
      compliance, tax advice and tax
planning.




4.
            "All Other Fees" include
      all fees for products and services provided by the Company's auditors not
      included in "Audit Fees", "Audit-Related Fees" and "Tax
    Fees".




5.
            Included
      in Audit-Related Fees are fees of $31,249 from the Company’s former
      auditor BDO Dunwoody LLP for review of the Company’s Registration
      Statement with the United States Securities and Exchange Commission on
      Form 20-F.




D.           EXEMPTIONS
FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES




Not
Applicable.




E.           PURCHASES
OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS




Not
applicable.




F.           CHANGE
IN REGISTRANT’S CERTIFYING ACCOUNTANT




Not
Applicable.




G.           CORPORATE
GOVERNANCE




Not
applicable.


67


PART
III




ITEM
17       FINANCIAL STATEMENTS





The
following attached consolidated financial statements are incorporated
herein:





1.           Consolidated Audited Financial
Statements of Eagleford Energy Inc. (formerly: Eugenic Corp.) for the years
ended August 31, 2009, 2008 and 2007, comprised of the
following:





(a)
            Auditor’s Report of Schwartz
      Levitsky Feldman LLP, Chartered Accountants for the years ended August 31,
      2009, 2008 and 2007;





(b)
            Consolidated Balance Sheets as at
      August 31, 2009 and 2008;





(c)
            Consolidated
      Statements of Loss, Comprehensive Loss and Deficit for the years ended
      August 31, 2009, 2008 and 2007;





(d)
            Consolidated Statements of
      Shareholders’ Equity
(Deficiency);





(e)
            Consolidated Statements of Cash
      Flows for the years ended August 31, 2009, 2008 and
      2007;





(f)
            Notes to Consolidated Financial
      Statements.





ITEM
18     FINANCIAL STATEMENTS





We have
elected to provide financial statements pursuant to Item 17.





ITEM
19     EXHIBITS





The
following exhibits are included in the Annual Report on Form 20-F:





1.1*
            Certificate of Incorporation of
      Bonanza Red Lake Explorations Inc. (presently known as Eagleford Energy
      Inc.) dated September 22,
1978





1.2*
            Articles of Amendment dated
      January 14, 1985





1.3*
            Articles of Amendment dated
      August 16, 2000





1.4*
            Bylaw No 1 of Bonanza Red Lake
      Explorations Inc. (presently known as Eagleford Energy
      Inc.)





1.5*
            Special By-Law No 1 – Respecting
      the borrowing of money and the issue of securities of Bonanza Red Lake
      Explorations Inc. (presently known as Eagleford Energy
      Inc.)





1.6***
            Articles
      of Amalgamation dated November 30,
2009





4.1*
            2000 Stock Option
      Plan





4.2*
            Code of Business Conduct and
      Ethics





4.3*
            Audit Committee
      Charter





4.4*
            Petroleum and Natural Gas
      Committee Charter





4.5*
            Compensation Committee
      Charter





4.6*
            Purchase and Sale Agreement dated
      February 5, 2008 among Eugenic Corp. (presently known as Eagleford Energy
      Inc.), 1354166 Alberta Ltd., and the Vendors of 1354166 Alberta
      Ltd.


68





4.7 **
            Amended Audit Committee
      Charter





4.8
            Amended
      Stock Option Plan




8.1
            Subsidiary
      of Eagleford Energy Inc.




12.1/12.2
              Section
      302 Certification of Chief Executive and Financial
    Officer
 
 13.1/13.2
              Section 906
      Certification of Chief Executive and Financial
  Officer


15.1
            Consent of Schwartz Levitsky
      Feldman LLP with respect to the report dated December 18, 2009 to the
      consolidated financial statements of Eagleford Energy Inc. for the
      years ended August 31, 2009, 2008 and
  2007.




*
            Previously
      filed by Registrant on April 29, 2009 as part of Registration Statement on
      Form 20 F (SEC File No. 0 53646)





**
            Previously
      Filed by Registrant as part of Amendment #2 to Registration Statement on
      Form 20F/A on July 14, 2009 (SEC File No.
  0-53646)





***
            Previously
      Filed by Registrant on Form 6-K on December 1,
  2009





The
registrant hereby certifies that it meets all of the requirements for filing on
Form 20-F/A and that it has duly caused and authorized the undersigned to sign
this Annual Report on its behalf.




EAGLEFORD
      ENERGY INC.By:
                    /s/
      Sandra J. HallName:  Sandra
      J. HallTitle:  President
      and Chief Executive
Officer




Date:
March 12, 2010


69


INDEX
TO FINANCIAL STATEMENTS




1.         Consolidated
      Audited Financial Statements of Eagleford Energy Inc. for the
      years ended August 31, 2009, 2008 and 2007, comprised of the
      following:(a)
              Auditor’s
      Report of Schwartz Levitsky Feldman LLP, Chartered Accountants for the
      years ended August 31, 2009, 2008 and 2007;
              
              F-2
      –F-3(b)
              Consolidated
      Balance Sheets as at August 31, 2009 and 2008;
              
              F-4(c)
              Consolidated
      Statements of Loss, Comprehensive Loss and Deficit for the years ended
      August 31, 2009, 2008 and 2007;
              
              F-5(d)
              Consolidated
      Statements of Shareholders’ Equity (Deficiency)
              
              F-6(e)
              Consolidated
      Statements of Cash Flows for the years ended August 31, 2009, 2008 and
      2007;
              
              F-7(f)
              Notes
      to Consolidated Financial Statements.
              
              F-8
      – F-31


F -
1


CHARTERED
ACCOUNTANTS
 LICENSED
PUBLIC ACCOUNTANTS
 TORONTO
·MONTREAL
 
 AUDITORS’
REPORT
 
 To the
Shareholders of
 Eagleford
Energy Inc.
 
 We have
audited the consolidated balance sheets of Eagleford Energy Inc. (the “Company”)
as at August 31, 2009 and 2008 and the related consolidated statements of loss,
comprehensive loss and deficit, and cash flows for each of the years in the
three year period ended August 31, 2009.  These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
 
 We
conducted our audits in accordance with Canadian generally accepted auditing
standards and with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance, about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
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.
 
 In our
opinion, these consolidated financial statements present fairly, in all material
respects, the financial position of the Company as at August 31, 2009 and 2008
and the results of its operations and its cash flows for each of the years in
the three year period ended August 31, 2009 in accordance with Canadian
generally accepted accounting principles which differ in certain respects from
generally accepted accounting principles in the United States (refer to note
16).
 
 
 /s/
“SCHWARTZ LEVITSKY FELDMAN LLP”
 
 Toronto,
      Ontario, Canada
              Chartered
      AccountantsDecember  18,
      2009
              Licensed
      Public Accountant
  1167
      Caledonia RoadToronto,
      Ontario M6A 2X1Tel:  416
      785 5353Fax:  416
      785 5663
 F -
2
  Schwartz
Levitsky Feldman llp
 CHARTERED
ACCOUNTANTS
 LICENSED
PUBLIC ACCOUNTANTS
 TORONTO
·MONTREAL
 
 Comments
by Auditors for U.S. Readers
 on
Canada - U.S. Reporting Difference
 
 In the
United States, reporting standards for auditors require the addition of an
explanatory paragraph (following the opinion paragraph) when the consolidated
financial statements are affected by conditions and events that cast substantial
doubt on the Corporation’s ability to continue as a going concern, such as those
described in the summary of significant accounting policies.  Our
report to the shareholders dated December 18, 2009 is expressed in accordance
with Canadian reporting standards, which do not permit a reference to such
events and conditions in the auditors’ report when these are adequately
disclosed in the consolidated financial statements.
 
 /s/
“SCHWARTZ LEVITSKY FELDMAN LLP”
 
 Toronto,
      Ontario, Canada
              Chartered
      AccountantsDecember
      18, 2009
              Licensed
      Public Accountant
 
 1167
      Caledonia RoadToronto,
      Ontario M6A 2X1Tel:  416
      785 5353Fax:  416
      785 5663
  F -
3
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Consolidated
Balance Sheets
 (Expressed
in Canadian Dollars)
 
 August 31
                                                      
                                                      2009
                                                      
                                                      
                                                      2008AssetsCurrentCash
      and cash equivalents
                                                      
                                                      $
                                                      172,905
                                                      
                                                      
                                                      $
                                                      202,726Marketable
      securities (Note 6)
                                                      
                                                      
                                                      1
                                                      
                                                      
                                                      
                                                      1Other
      receivables
                                                      
                                                      
                                                      20,421
                                                      
                                                      
                                                      
                                                      5,311193,327
                                                      
                                                      
                                                      
                                                      208,038Oil
      and gas interests (Note 7)
                                                      
                                                      
                                                      407,000
                                                      
                                                      
                                                      
                                                      448$
                                                      600,327
                                                      
                                                      
                                                      $
                                                      208,486Liabilities
      and Shareholders’ Equity (Deficiency)CurrentAccounts
      payable (Note 10)
                                                      
                                                      $
                                                      152,984
                                                      
                                                      
                                                      $
                                                      71,672Income
      taxes payable (Note 15)
                                                      
                                                      
                                                      10,215
                                                      
                                                      
                                                      
                                                      -Loans
      payable (Note 11)
                                                      
                                                      
                                                      167,500
                                                      
                                                      
                                                      
                                                      230,000330,699
                                                      
                                                      
                                                      
                                                      301,672Long
      termAsset
      retirement obligations (Note 8)
                                                      
                                                      
                                                      3,634
                                                      
                                                      
                                                      
                                                      -334,333
                                                      
                                                      
                                                      
                                                      301,672Shareholders’
      Equity (Deficiency)Share
      capital (Note 9)
                                                      
                                                      
                                                      825,386
                                                      
                                                      
                                                      
                                                      467,604Warrants
      (Note 9)
                                                      
                                                      
                                                      431,134
                                                      
                                                      
                                                      
                                                      100,875Contributed
      Surplus (Note 9)
                                                      
                                                      
                                                      38,000
                                                      
                                                      
                                                      
                                                      38,000Deficit
                                                      
                                                      
                                                      (1,028,526
                                                      )
                                                      
                                                      
                                                      (699,665
                                                      )265,994
                                                      
                                                      
                                                      
                                                      (93,186
                                                      )$
                                                      600,327
                                                      
                                                      
                                                      $
                                                      208,486Going
      concern (Note 1)Related Party Transactions and Balances (Note
      10)On
      behalf of the Board:(signed) “Sandra J.
      Hall”                 Director(signed) “Milton
      Klyman”                 Director
  The
accompanying summary of significant accounting policies and notes are an
integral part of these consolidated financial statements
  F -
4
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Consolidated
Statements of Loss, Comprehensive Loss and Deficit
 (Expressed
in Canadian Dollars)
 
 For the years ended August
    31
                            
                            2009
                            
                            
                            2008
                            
                            
                            2007Oil
      and Gas OperationsRevenue
                            
                            $
                            56,199
                            
                            
                            $
                            292
                            
                            
                            $
                            637Operating
      Costs
                            
                            
                            83,187
                            
                            
                            
                            -
                            
                            
                            
                            -Depletion
                            
                            
                            26,638
                            
                            
                            
                            24
                            
                            
                            
                            96109,825
                            
                            
                            
                            24
                            
                            
                            
                            96Income
      (loss) from oil and gas operations
                            
                            
                            (53,626
                            )
                            
                            
                            268
                            
                            
                            
                            541ExpensesManagement
      fees (Note 10)
                            
                            
                            18,000
                            
                            
                            
                            12,000
                            
                            
                            
                            12,000Office
      and general
                            
                            
                            5,150
                            
                            
                            
                            253
                            
                            
                            
                            195Professional
      fees
                            
                            
                            106,770
                            
                            
                            
                            26,608
                            
                            
                            
                            16,973Transfer
      and registrar costs
                            
                            
                            24,965
                            
                            
                            
                            4,486
                            
                            
                            
                            2,085Head
      office services
                            
                            
                            16,125
                            
                            
                            
                            14,625
                            
                            
                            
                            13,884Expense
      recovery
                            
                            
                            -
                            
                            
                            
                            (7,718
                            )
                            
                            
                            (5,274
                            )Write
      down of oil and gas interests
                            
                            
                            105,805
                            
                            
                            
                            528
                            
                            
                            
                            828276,815
                            
                            
                            
                            50,782
                            
                            
                            
                            40,691Operating
      loss for the year
                            
                            
                            (330,441
                            )
                            
                            
                            (50,514
                            )
                            
                            
                            (40,150
                            )Other
      itemInterest
                            
                            
                            1,580
                            
                            
                            
                            -
                            
                            
                            
                            205Net
      loss and comprehensive loss for the year
                            
                            
                            (328,861
                            )
                            
                            
                            (50,514
                            )
                            
                            
                            (39,945
                            )Deficit,  beginning
      of year
                            
                            
                            (699,665
                            )
                            
                            
                            (649,151
                            )
                            
                            
                            (609,206
                            )Deficit end of year
                            
                            $
                            (1,028,526
                            )
                            
                            $
                            (699,665
                            )
                            
                            $
                            (649,151
                            )Loss per share, basic and
      diluted
                            
                            $
                            (0.019
                            )
                            
                            $
                            (0.006
                            )
                            
                            $
                            (0.006
                            )Weighted
      average shares outstanding
                            
                            
                            17,646,295
                            
                            
                            
                            7,955,482
                            
                            
                            
                            6,396,739
 
 The
accompanying summary of significant accounting policies and notes are an
integral part of these consolidated financial statements
  F -
5
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Consolidated
Statements of Shareholders’ Equity (Deficiency)
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009 and
      2008
 SHARE
      CAPITAL
                        
                        
                        WARRANTS
                        
                        
                        CONTRIBUTEDNumber
                        
                        
                        Amount
                        
                        
                        Number
                        
                        
                        Amount
                        
                        
                        SURPLUS
                        
                        
                        DEFICIT
                        
                        
                        TOTALBalance,
      August 31, 2007
                        
                        
                        6,396,739
                        
                        
                        $
                        166,291
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        $
                        (649,151
                        )
                        
                        $
                        (482,860
                        )Private
      placement
                        
                        
                        2,575,000
                        
                        
                        
                        151,313
                        
                        
                        
                        2,575,000
                        
                        
                        $
                        100,875Debt
      conversion
                        
                        
                        1,500,000
                        
                        
                        
                        150,000Forgiveness
      of debt, related party
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        $
                        38,000Net
      loss for the year
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (50,514
                        )Balance
      August 31, 2008
                        
                        
                        10,471,739
                        
                        
                        
                        467,604
                        
                        
                        
                        2,575,000
                        
                        
                        
                        100,875
                        
                        
                        
                        38,000
                        
                        
                        
                        (699,665
                        )
                        
                        
                        (93,186
                        )Private
      placement
                        
                        
                        2,600,000
                        
                        
                        
                        67,600
                        
                        
                        
                        2,600,000
                        
                        
                        
                        62,400Private
      placement
                        
                        
                        1,000,256
                        
                        
                        
                        26,007
                        
                        
                        
                        1,000,256
                        
                        
                        
                        24,006Issuance
      of units on acquisition of1354166
      Alberta Ltd.
                        
                        
                        8,910,564
                        
                        
                        
                        231,675
                        
                        
                        
                        8,910,564
                        
                        
                        
                        213,853Debt
      settlement
                        
                        
                        1,250,000
                        
                        
                        
                        32,500
                        
                        
                        
                        1,250,000
                        
                        
                        
                        30,000Net
      loss for the year
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (328,861
                        )Balance
      August 31, 2009
                        
                        
                        24,232,559
                        
                        
                        $
                        825,386
                        
                        
                        
                        16,335,820
                        
                        
                        $
                        431,134
                        
                        
                        $
                        38,000
                        
                        
                        $
                        (1,028,526
                        )
                        
                        $
                        265,994
 
 The
accompanying summary of significant accounting policies and notes are an
integral part of these consolidated financial statements
  F -
6
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Consolidated
Statements of Cash Flows
 (Expressed
in Canadian Dollars)
 
 For the years ended August
    31
                            
                            2009
                            
                            
                            2008
                            
                            
                            2007Cash
      provided by (used in)Operating
      activitiesNet
      loss for the year
                            
                            $
                            (328,861
                            )
                            
                            $
                            (50,514
                            )
                            
                            $
                            (39,945
                            )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Depletion
      and accretion
                            
                            
                            26,768
                            
                            
                            
                            24
                            
                            
                            
                            96Write-down
      of oil and gas interests
                            
                            
                            105,805
                            
                            
                            
                            528
                            
                            
                            
                            828Changes
      in non-cash working capital balances:Other
      receivables
                            
                            
                            (9,297
                            )
                            
                            
                            2,482
                            
                            
                            
                            (2,640
                            )Accounts
      payable
                            
                            
                            33,252
                            
                            
                            
                            (2,934
                            )
                            
                            
                            41,393(172,333
                            )
                            
                            
                            (50,414
                            )
                            
                            
                            (268
                            )Investing
      activitiesOil
      and gas interests
                            
                            
                            (10,000
                            )
                            
                            
                            -
                            
                            
                            
                            -Cash
      and cash equivalents acquired onacquisition
      of 1354166 Alberta Ltd.
                            
                            
                            90,499
                            
                            
                            
                            -
                            
                            
                            
                            -80,499
                            
                            
                            
                            -
                            
                            
                            
                            -Financing
      activitiesProceeds
      from private placements, net
                            
                            
                            180,013
                            
                            
                            
                            252,188
                            
                            
                            
                            -Repayment
      to note holders pursuant toacquisition
      of 1354166 Alberta Ltd.
                            
                            
                            (118,000
                            )
                            
                            
                            -
                            
                            
                            
                            -62,013
                            
                            
                            
                            252,188
                            
                            
                            
                            -Increase
      (decrease) in cash for the year
                            
                            
                            (29,821
                            )
                            
                            
                            201,774
                            
                            
                            
                            (268
                            )Cash,
      beginning of year
                            
                            
                            202,726
                            
                            
                            
                            952
                            
                            
                            
                            1,220Cash, end of year
                            
                            $
                            172,905
                            
                            
                            $
                            202,726
                            
                            
                            $
                            952Non-cash
      transactionsAcquisition
      of subsidiary
                            
                            $
                            445,528
                            
                            
                            
                            -
                            
                            
                            
                            -Issuance
      of units on acquisition of subsidiary
                            
                            $
                            (445,528
                            )
                            
                            
                            -
                            
                            
                            
                            -Shares
      issued to settle debt
                            
                            $
                            62,500
                            
                            
                            $
                            150,000
                            
                            
                            
                            -Forgiveness of debt
                            
                            
                            -
                            
                            
                            $
                            38,000
                            
                            
                            
                            -Cash
      consists of:Cash
                            
                            $
                            72,392
                            
                            
                            $
                            202,726
                            
                            
                            $
                            952Cash
      equivalents
                            
                            
                            100,513
                            
                            
                            
                            -
                            
                            
                            
                            -$
                            172,905
                            
                            
                            $
                            202,726
                            
                            
                            $
                            952
 
 The
accompanying summary of significant accounting policies and notes are an
integral part of these consolidated financial statements
  F -
7
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
  1.
              Nature
      of Business
  The
Company's business focus consists of acquiring, exploring and developing oil and
gas interests. The recoverability of the amount shown for these properties is
dependent upon the existence of economically recoverable reserves, the ability
of the Company to obtain the necessary financing to complete exploration and
development, and future profitable production or proceeds from disposition of
such property.In
addition the Company holds a 0.3% net smelter return royalty on 8 mining claim
blocks located in Red Lake, Ontario which is carried on the consolidated balance
sheets at nil.
 
 Going
Concern
 These
consolidated financial statements have been prepared on a going concern basis
which contemplates the realization of assets and the payment of liabilities in
the ordinary course of business. The Company plans to obtain additional
financing by way of debt or the issuance of common shares or some other means to
service its current working capital requirements, any additional or unforeseen
obligations or to implement any future opportunities. Should the Company be
unable to continue as a going concern, it may be unable to realize the carrying
value of its assets and to meet its liabilities as they become due. These
consolidated financial statements do not include any adjustments for this
uncertainty.
 
 The
Company has accumulated losses and cash flows from operations are negative which
raises doubt as to the validity of the going concern assumption. As at August
31, 2009, the Company had a working capital deficiency of $137,372 and an
accumulated deficit of $1,028,526. Management of the Company does not have
sufficient funds to meet its liabilities for the ensuing twelve months as they
fall due. In assessing whether the going concern assumption is appropriate,
management takes into account all available information about the future, which
is at least, but not limited to, twelve months from the end of the reporting
period. The Company's ability to continue operations and fund its liabilities is
dependent on management's ability to secure additional financing and cash flow.
Management is pursuing such additional sources of financing and cash flow and
while it has been successful in doing so in the past, there can be no assurance
it will be able to do so in the future. Management is aware, in making its
assessment, of material uncertainties related to events or conditions that may
cast significant doubt upon the entity's ability to continue as a going concern.
Accordingly, they do not give effect to adjustments that would be necessary
should the Company be unable to continue as a going concern and therefore to
realize its assets and liquidate its liabilities and commitments in other than
the normal course of business and at amounts different from those in the
accompanying consolidated financial statements.
 
 2.
              Significant
      Accounting Policies
 
 These
consolidated financial statements of Eagleford Energy Inc. have been prepared in
accordance with accounting principles generally accepted in Canada. The
preparation of our consolidated financial statements in accordance with US GAAP
have resulted in differences to the consolidated balance sheet and the
consolidated statement of loss, comprehensive loss and deficit from the
consolidated financial statements prepared using Canadian GAAP (see Note
16).
 
 Principles
of Consolidation
 The
consolidated financial statements include the accounts of Eagleford Energy
Inc.("Eagleford or the “Company"), the legal parent, together with its
wholly-owned subsidiaries, 1406768 Ontario Ltd. and 1354166 Alberta Ltd. All
material inter-company transactions have been eliminated.
  F -
8
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 For the years ended August 31, 2009, 2008 and
      2007
 
 2.
              Significant
      Accounting
Policies   (cont’d)
 
 Marketable
Securities
 At each
financial reporting period, the Company estimates the fair value of investments
which are held-for-trading, based on quoted closing bid prices at the
consolidated balance sheet dates or the closing bid price on the last day the
security traded if there were no trades at the consolidated balance sheet dates
and such valuations are reflected in the consolidated financial statements. The
resulting values for unlisted securities whether of public or private issuers,
may not be reflective of the proceeds that could be realized by the Company upon
their disposition. The fair value of the securities at August 31, 2009 was $1
(2008 - $1).
 
 Cash
and Cash Equivalents
 The
Company classified cash, redeemable investment deposits, and deposits with
original maturities less than or equal to three months as cash and cash
equivalents.
 
 Oil
and Gas Interests
 The
Company follows the successful efforts method of accounting for its oil and gas
interest.  Under this method, costs related to the acquisition,
exploration, and development of oil and gas interests are capitalized. The
Company carries as an asset, exploratory well costs if a) the well found a
sufficient quantity of reserves to justify its completion as a producing well
and b) the Company is making sufficient progress assessing the reserves and the
economic and operating viability of the project. If a property is not productive
or commercially viable, its costs are written off to
operations.  Impairment of non-producing properties is assessed based
on management's expectations of the properties.
 
 Costs
capitalized, together with the costs of production equipment, are depleted on
the unit-of-production method based on the estimated proved
reserves.
 
 Proved
oil and gas properties held and used by the Company are reviewed for impairment
whenever events and circumstances indicate that the carrying amounts may not be
recoverable. Impairments are measured by the amount by which the asset’s
carrying value exceeds its fair value and is included in the determination of
net income for the year.
 
 Revenue
Recognition
 Revenues
associated with the sale of crude oil and natural gas are recorded when the
title passes to the customer. The customer has assumed the risks and rewards of
ownership, prices are fixed or determinable and collectability is reasonably
assured.The
Company does not enter into ongoing arrangements whereby it is required to
repurchase its products, nor does the Company provide the customer with a right
of return.
 
 Royalties
 As is
normal to the industry, the Company's future production is subject to crown
royalties.  These amounts are reported net of related tax
credits.
  F -
9
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 For the years ended August 31, 2009, 2008 and
      2007
 
 2.
              Significant
      Accounting
Policies   (cont’d)
 
 Environmental and Site
Restoration Costs
 The
Company recognizes an estimate of the liability associated with an asset
retirement obligation (“ARO”) in the financial statements at the time the
liability is incurred. The estimated fair value of the ARO is recorded as a
long-term liability with a corresponding increase in the carrying amount of the
related asset. The capitalized amount is depleted on a straight-line basis over
the estimated life of the asset. The liability amount is increased each
reporting period due to the passage of time and the amount of accretion to
operations in the period. The ARO can also increase or decrease due to changes
in the estimates of timing of cash flows or changes in the original estimated
undiscounted cost. Actual costs incurred upon settlement of the ARO are charged
against the ARO to the extent of the liability recorded.
 
 Ceiling
Test
 The
Company performs a ceiling test calculation in accordance with the Canadian
Institute of Chartered Accountants’ successful efforts method guidelines,
including an impairment test on undeveloped properties. The recovery of costs is
tested by comparing the carrying amount of the oil and natural gas assets to the
reserves report. If the carrying amount exceeds the recoverable amount, then
impairment would be recognized on the amount by which the carrying amount of the
assets exceeds the present value of expected cash flows using proved plus
probable reserves and expected future prices and costs. At August 31, 2009 the
Company recorded an impairment of $105,805 (2008 - $528).
 
 Foreign
Currencies
 Assets
and liabilities denominated in currencies other than Canadian dollars are
translated at exchange rates in effect at the balance sheet date. Revenue and
expense items are translated at the average rates of exchange for the year.
Exchange gains and losses are included in the determination of net income for
the year.
 
 Financial
Instruments
 The
Company's financial instruments consist of certain instruments with short term
maturities.  It is management's opinion that the Company is not
exposed to any significant interest rate or credit risks arising from these
financial instruments.  The fair value of short term financial
instruments approximates the carrying value.  All of the Company's
cash is held at one major financial institution.
 
 Accounting
Estimates
 The
preparation of the consolidated financial statements in conformity with Canadian
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities, and the
disclosures of revenues and expenses for the reported year.  Actual
results may differ from those estimates.
 
 The
amounts recorded for depletion and amortization of oil and gas properties and
the valuation of these properties, are based on estimates of proved and probable
reserves, production rates, oil and gas prices, future costs and other relevant
assumptions.  The effect on the consolidated financial statements of
changes in estimates in future periods could be significant.
  F -
10
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
  For the years ended August 31, 2009, 2008 and
      2007
 
 2.
              Significant
      Accounting
Policies   (cont’d)
 
 Income
Taxes
 The
Company accounts for income taxes under the asset and liability
method.  Under this method, future income tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between financial reporting and tax bases of assets and liabilities and
available loss carry forwards and are measured using the substantively enacted
tax rates and laws that will be in effect when the differences are expected to
be reversed.  A valuation allowance is established to reduce tax
assets if it is more likely than not that all or some portions of such tax
assets will not be realized.
 
 Non-Monetary
Transactions
 Transactions
in which shares or other non-cash consideration are exchanged for assets or
services are measured at the fair value of the assets or services involved in
accordance with Section 3830 (“Non-monetary Transactions”) of the Canadian
Institute of Chartered Accountants Handbook (“CICA Handbook”).
 
 Stock-Based
Compensation
 The
Company has a stock option plan. The fair value method of accounting is used to
account for stock options granted to directors, officers and employees whereby
the fair value of options granted is recorded as a compensation expense in the
consolidated financial statements. Compensation expense is based on the
estimated fair value at the time of the grant and recognized over the vesting
period of the option. Upon exercise of the options, the amount of the
consideration paid together with the amount previously recorded in contributed
surplus is recorded as an increase in share capital.
 
 Loss
Per Share
 Basic
loss per share is calculated by dividing the loss for the year by the weighted
average number of common shares outstanding during the year. Diluted loss per
share is computed using the treasury stock method. Under this method, the
diluted weighted average number of shares is calculated assuming the proceeds
that arise from the exercise of stock options and other dilutive instruments are
used to repurchase the Company’s shares at their weighted average market price
for the period.
 
 3.
              Change
      in Accounting Policy and Future Accounting
  Changes
 
 (a)
Accounting Changes
 
 During
2007, the Company adopted the revised CICA Section 1506, “Accounting Changes”,
which provides expanded disclosures for changes in accounting policies,
accounting estimates and corrections of errors. Under the new standard,
accounting changes should be applied retrospectively unless otherwise permitted
or where impracticable to determine. As well, voluntary changes in accounting
policy are made only when required by a primary source of GAAP or when the
change results in more relevant and reliable information. The impact that the
adoption of Section 1506 will have on the Company’s results of operations and
financial condition will depend on the nature of future accounting
changes.
  F -
11
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 For the years ended August 31, 2009, 2008 and
      2007
  3.
              Change
      in Accounting Policy and Future Accounting Changes
  (cont’d)
 
 (b)
Comprehensive Income (Loss) and Deficit
 
 During
2007, the Company adopted the CICA Section 1530, “Comprehensive Income”. Under
the new standards, a new statement, the Statement of Comprehensive Income
(Loss), has been introduced that will provide for certain gains and losses
arising from changes in fair value, to be temporarily recorded outside the
income statement. Upon adoption of Section 1530, the Company incorporated the
new required Statement of Comprehensive Loss by creating “Consolidated Statement
of Loss, Comprehensive Loss, and Deficit”. The application of this revised
standard did not result in comprehensive loss being different from net loss for
the periods presented. Should the Company recognize any other comprehensive loss
in the future, the cumulative changes in other comprehensive loss would be
recognized in Accumulated Other Comprehensive Loss, which would be presented as
a new category within shareholders’ deficiency on the consolidated balance
sheets.
 
 (c)
Financial Instruments
 
 During
2007, the Company adopted Section 3855, “Financial Instruments – Recognition and
Measurement”, and Section 3861 “Financial Instruments – Disclosure and
Presentation”. All financial instruments, including derivatives, are to be
included in the Company’s Consolidated Balance Sheets and measured, in most
cases, at fair value upon initial recognition. Measurement in subsequent periods
depends on whether the financial instrument has been classified as
held-for-trading, available-for-sale, held-to-maturity, loans or receivables, or
other financial liabilities. Financial assets and financial liabilities held-for
trading are measured at fair value with changes in those fair values recognized
in net earnings. Financial assets held-to-maturity, loans and receivables, and
other financial liabilities are measured at amortized cost using the effective
interest method of amortization. Investments in equity instruments classified as
available-for-sale that do not have a quoted market price in an active market
are measured at the lower of cost and the carrying value. The financial
instruments recognized on the Company’s consolidated balance sheets are deemed
to approximate their estimated fair values, therefore no further adjustments
were required upon adoption of the new section.  The Company has
designated its cash as held-for-trading which is measured at fair value and its
marketable securities have been designated as available-for-sale. All other
financial assets were classified as loans or receivables. All financial
liabilities were classified as other liabilities.
 
 (d)
Hedges
 
 During
fiscal 2008 the Company adopted CICA Section 3865, “Hedges” which specifies
circumstances under which hedge accounting is permissible and how hedge
accounting may be performed. The Company currently does not have any
hedges.
  F -
12
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 For the years ended August 31, 2009, 2008 and
      2007
 3.
              Change
      in Accounting Policy and Future Accounting
      Changes   (cont’d)
 
 (e)
Financial Instruments – Disclosures and Presentation
 
 During
fiscal 2008, the Company adopted CICA Section 3862, “Financial Instruments –
Disclosures” and Section 3863, “Financial Instruments–Presentation”, which will
replace Section 3861, “Financial Instruments – Disclosure and Presentation”.
These new sections 3862 (on disclosures) and 3863 (on presentation) replace
Section 3861, revising and enhancing its disclosure requirements, and carrying
forward unchanged its presentation requirements. Section 3862 complements the
principles recognizing measuring and presenting financial assets and financial
liabilities in Financial Instruments. Section 3863 deals with the classification
of financial instruments, from the perspective of the issuer, between
liabilities and equity, the classification of related interest, dividends,
losses and gains, and the circumstances in which financial assets and financial
liabilities are offset (see Note 13).
 
 (f)
Capital Disclosures
 
 During
fiscal 2008, the Company adopted CICA 1535, “Capital Disclosures”. This new
pronouncement establishes standards for disclosing information about an entity’s
capital and how it is managed. Section 1535 also requires the disclosure of any
externally-imposed capital requirements, whether the entity has complied with
them, and if not, the consequences (see Note 14).
 
 (g)
Inventories
 
 During
fiscal 2008 the Company adopted CICA Section 3031, “Inventories” which replaced
Section 3030 and establishes new standards for the measurement and disclosure of
inventories. The main features of the new Section are as follows:
 
 ·     Measurement
of inventories at the lower of cost and net realizable value
 ·     Consistent
use of either first-in, first-out or a weighted average cost formula to measure
cost
 ·     Reversal
of previous write-down to net realizable value when there is a subsequent
increase to the value of inventories.
 
 This new
standard did not have an impact on the Company’s financial
statements.
 
 (h)
Future Accounting Changes
 
 The CICA
issued a new accounting standard, Section 3064, “Goodwill and Intangible
Assets”. This section replaces Section 3062, “Goodwill and Other Intangible
Assets” and Section 3450, “Research and Development Costs”. Various changes have
made to other sections of the CICA Handbook for consistency purposes. Section
3064 establishes standards for the recognition, measurement, presentation and
disclosure of goodwill subsequent to its initial recognition and of intangible
assets by profit-oriented enterprises. Standards concerning goodwill are
unchanged from the standards included in the previous Section 3062. The new
section will be applicable to financial statements relating to fiscal years
beginning on or after October 1, 2008. Accordingly, the Company will adopt the
new standards for its fiscal year beginning September 1, 2009. The Company is
currently assessing the impact that the adoption of this standard will have on
its financial statements.
  F -
13
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 3.
              Change
      in Accounting Policy and Future Accounting
      Changes   (cont’d)
 
 (h)
              Future
      Accounting
Changes   (cont’d)
 
 The CICA
has amended Section 1400, “General Standard of Financial Statement Presentation”
which is effective for annual and interim financial periods beginning on or
after October 1, 2008 to include requirements to assess and disclose the
Company’s ability to continue as a going concern. The adoption of this new
section is not expected to have an impact on the Company’s financial
statements.
 
 Business
Combinations, Consolidated Financial Statements and Non-controlling Interests –
The CICA issued three new accounting standards in January 2009: section 1582,
Business Combinations,
section 1601, Consolidated
Financial Statements, and section 1602, Non-controlling interests.
These new standards will be effective for fiscal years beginning on or after
January 1, 2011. The Company is in the process of evaluating the requirements of
the new standards.
 
 Section
1582 replaces section 1581, and establishes standards for the accounting for a
business combination. It provides the Canadian equivalent to International
Financial Reporting Standard IFRS 3 – Business Combinations. The section
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after January 1, 2011.
 
 Sections
1601 and 1602 together replace 1600 – Consolidated Financial Statements.Section 1601, establishes standards for the preparation of consolidated
financial statements. Section 1601 applies to interim and annual consolidated
financial statements relating to fiscal years beginning on or after January 1,
2011.
 
 Section
1602 establishes standards for accounting for a non-controlling interest in a
subsidiary in consolidated financial statements subsequent to a business
combination. It is equivalent to the corresponding provisions of International
Financial Reporting Standard IAS 27 - Consolidated and Separate Financial
Statementsand applies to interim and annual consolidated financial
statements relating to fiscal years beginning on or after January 1,
2011.
 
 In
February 2008, the Accounting Standards Board “(AcSB)” confirmed that the use of
IFRS will be required in 2011 for publicly accountable enterprises in Canada. In
April 2008, the AcSB issued an IFRS Omnibus Exposure Draft proposing that
publicly accountable enterprises be required to apply IFRS, in full and without
modification, for fiscal years beginning on or after January 1, 2011. The
adoption date of September 1, 2011 for this company will require the
restatement, for comparative purposes, of amounts reported by the Company for
its year ended August 31, 2011, and of the opening balance sheet as at September
1, 2010. The AcSB proposes that CICA Handbook Section, Accounting Changes, paragraph
1506.30, which would require an entity to disclose information relating to a new
primary source of GAAP that has been issued but is not yet effective and that
the entity has not applied, not be applied with respect to the IFRS Omnibus
Exposure Draft. The Company is continuing to assess the financial reporting
impacts of the adoption of IFRS and, at this time, the impact on future
financial position and results of operations is not reasonably determinable or
estimable. The Company does anticipate a significant increase in disclosure
resulting from the adoption of IFRS and is continuing to assess the level of
disclosure required, as well as system changes that may be necessary to gather
and process the required information.
  F -
14
 
 Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 4.
              Business
      Combination
 
 On
February 27, 2009, Eagleford acquired the issued and outstanding shares of
1354166 for total consideration of $445,528 satisfied by the issuance of
8,910,564 units of the Company at $0.05 per unit.  Each unit consists
of one common share and one common share purchase warrant exercisable at $0.07
to purchase one common share until February 27, 2014.  Following the
closing, the Company paid to note holders of 1354166 the amount of $118,000 by
cash payment.  The acquisition was accounted for using the purchase
method of accounting where the Company is identified as the acquirer. The
purchase price allocation to the fair values of the assets and liabilities
acquired is estimated as at February 27, 2009 as follows:
 
 
 (i)   Consideration:Issuance
      of 8,910,564 Eugenic units at $0.05 per unit
                        
                        $
                        445,528Transaction
      costs
                        
                        
                        10,000Total
      consideration
                        
                        $
                        455,528Allocated to:Oil
      and gas interests
                        
                        
                        538,995Notes
      payable and working capital deficit
                        
                        
                        (79,963
                        )Asset
      retirement obligation
                        
                        
                        (3,504
                        )Net
      assets acquired
                        
                        $
                        455,528Incurred
      transaction costs:Financial
      advisory, legal and other expenses
                        
                        $
                        10,000
 
 The above
purchase price allocation has been determined from information available to the
management of Eagleford Energy Inc. The allocation of the purchase price to the
assets and liabilities of 1354166 Alberta Ltd. have been obtained and the final
fair values of the assets and liabilities have been determined. The results of
operations from this acquisition are included effective February 27,
2009.
 
 5.
              Segmented
      Information
 
 The
Company’s only segment is oil and gas exploration and production. All reportable
segments are located in Canada.
 
 6.
              Marketable
      Securities
 2009
                      
                      
                      2008Investments
      in quoted companies(market
      value $1 (2008 - $1))
                      
                      $
                      1
                      
                      
                      $
                      1
  F -
15
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 7.
              Oil
      and Gas Interests
 2009
                    
                    
                    2008Net
      book value at September 1
                    
                    $
                    448
                    
                    
                    $
                    1,000Acquisition
      of 1354166 Alberta Ltd.
                    
                    
                    538,995
                    
                    
                    
                    -Depletion
                    
                    
                    (26,638
                    )
                    
                    
                    (24
                    )Write
      down of oil and gas interests
                    
                    
                    (105,805
                    )
                    
                    
                    (528
                    )$
                    407,000
                    
                    
                    $
                    448
 
 The
Company’s has a 0.5% non convertible gross overriding royalty in a natural gas
well located in the Haynes area of Alberta and a 5.1975% interest in a natural
gas unit located in the Botha area of Alberta, Canada.
 
 The
Company performed a ceiling test calculation at August 31, 2009 using forecast
prices and costs to assess the potential impairment of its oil and gas
properties. The oil and gas future prices are based on the commodity price
forecast of the Company’s independent reserve evaluators. The following table
summarizes the benchmark prices used in the ceiling test
calculation:
 
 Year
                    
                    WTI
                      Cushing
                      Oklahoma
                      ($US/bbl)
                    
                    
                    Edmonton
                      Par Price
                      40oAPI
                      ($Cdn/bbl)
                    
                    
                    Cromer
                      Medium
                      29.3oAPI
                      ($Cdn/bbl)
                    
                    
                    Natural Gas
                      AECO Gas
                      Prices
                      ($Cdn/MMBtu)
                    
                    
                    Pentanes
                      Plus F.O.B.
                      Field Gate
                      ($Cdn/bbl)
                    
                    
                    Butanes
                      F.O.B.
                      Field Gate
                      ($Cdn/bbl)
                    
                    
                    Inflation
                      Rate
                      (%/Yr)
                    
                    
                    Exchange
                      Rate
                      ($US/$Cdn)2009
                    
                    
                    71.47
                    
                    
                    
                    77.61
                    
                    
                    
                    73.73
                    
                    
                    
                    3.65
                    
                    
                    
                    79.48
                    
                    
                    
                    54.95
                    
                    
                    
                    2.0
                    
                    
                    
                    0.902010
                    
                    
                    77.03
                    
                    
                    
                    83.76
                    
                    
                    
                    78.74
                    
                    
                    
                    5.50
                    
                    
                    
                    85.78
                    
                    
                    
                    62.43
                    
                    
                    
                    2.0
                    
                    
                    
                    0.902011
                    
                    
                    80.20
                    
                    
                    
                    87.27
                    
                    
                    
                    80.28
                    
                    
                    
                    6.44
                    
                    
                    
                    89.37
                    
                    
                    
                    65.04
                    
                    
                    
                    2.0
                    
                    
                    
                    0.902012
                    
                    
                    84.62
                    
                    
                    
                    89.62
                    
                    
                    
                    81.55
                    
                    
                    
                    6.78
                    
                    
                    
                    91.78
                    
                    
                    
                    66.80
                    
                    
                    
                    2.0
                    
                    
                    
                    0.9252013
                    
                    
                    92.01
                    
                    
                    
                    94.97
                    
                    
                    
                    85.48
                    
                    
                    
                    7.50
                    
                    
                    
                    97.27
                    
                    
                    
                    70.79
                    
                    
                    
                    2.0
                    
                    
                    
                    0.9502014
      and thereafter escalated at 2%
 
 At August
31, 2009 the Company recorded an impairment of $105,805 (2008 -
$528).
 
 8.
              Asset
      Retirement Obligation
 
 The
Company’s asset retirement obligations result from net ownership interests in
natural gas assets including well sites, gathering systems and processing
facilities. The Company estimates the total undiscounted amount of cash flows
required to settle its asset retirement obligations at August 31, 2009 was
approximately $8,840, which will be incurred between 2009 and 2026 (2008 – Nil).
A credit-adjusted risk-free rate of 7 percent and an annual inflation rate of 5
percent were used to calculate the future asset retirement
obligation.
 
 2009
                  
                  
                  2008Balance,
      beginning of period
                  
                  $
                  -
                  
                  
                  $
                  -Liabilities
      assumed on acquisition of 1354166 Alberta Ltd
                  
                  
                  3,504
                  
                  
                  
                  -Accretion
      expense
                  
                  
                  130
                  
                  
                  
                  -Balance,
      August 31, 2009
                  
                  $
                  3,634
                  
                  
                  $
                  -
  F -
16
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 9.
              Share
      Capital and Contributed Surplus
 
 Authorized:
 Unlimited
number of common shares
 Unlimited
non-participating, non-dividend paying, voting redeemable preference
shares
 Issued:
 Common
      Shares
                    
                    Number
                    
                    
                    AmountBalance
      at August 31, 2007
                    
                    
                    6,396,739
                    
                    
                    $
                    166,291April
      14, 2008, private placement (note a)
                    
                    
                    2,575,000
                    
                    
                    
                    151,313April
      14, 2008 debt conversion (note b)
                    
                    
                    1,500,000
                    
                    
                    
                    150,000Balance
      at August 31, 2008
                    
                    
                    10,471,739
                    
                    
                    $
                    467,604February
      5, 2009 private placement (note c)
                    
                    
                    2,600,000
                    
                    
                    
                    67,600February
      25, 2009 private placement (note d)
                    
                    
                    1,000,256
                    
                    
                    
                    26,007February
      27, 2009 acquisition (note e)
                    
                    
                    8,910,564
                    
                    
                    
                    231,675February
      27, 2009 debt settlement (note f)
                    
                    
                    1,250,000
                    
                    
                    
                    32,500Balance
      at August 31, 2009
                    
                    
                    24,232,559
                    
                    
                    $
                    825,386
 
 (a)
              On
      April 14, 2008 the Company completed a non-brokered private placement of
      2,575,000 units at a purchase price of $0.10 per unit for gross proceeds
      of $257,500 (proceeds net of issue costs $252,188). Each unit was
      comprised of one common share and one common share purchase
      warrant.  Each warrant is exercisable until April 14, 2011, to
      purchase one common share at a purchase price of $0.20 per
      share.
 
 (b)
              On
      April 14, 2008 the Company entered into agreements to convert debt in the
      amount of $150,000 through the issuance of 1,500,000 shares at an
      attributed value of $0.10 per share. (see Note
  10).
 
 (c)
              On
      February 5, 2009, the Company completed a non-brokered private placement
      of 2,600,000 units at a purchase price of $0.05 per unit for gross
      proceeds of $130,000. Each unit was comprised of one common share and one
      common share purchase warrant.  Each warrant is exercisable
      until February 5, 2014, to purchase one common share at a purchase price
      of $0.07 per share.
 
 (d)
              On
      February 25, 2009, the Company completed a non-brokered private placement
      of 1,000,256 units at a purchase price of $0.05 per unit for gross
      proceeds of approximately $50,013. Each unit was comprised of one common
      share and one common share purchase warrant.  Each warrant is
      exercisable until February 25, 2014 to purchase one common share at a
      purchase price of $0.07 per share.
 
 (e)
              On
      February 27, 2009, Eugenic acquired the issued and outstanding shares of
      1354166 Alberta Ltd. for total consideration of $445,528 satisfied by the
      issuance of 8,910,564 units of the Company at $0.05 per
      unit.  Each unit consists of one common share and one common
      share purchase warrant exercisable at $0.07 to purchase one common share
      until February 27, 2014.
  F -
17
 
 Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 9.
              Share
      Capital and Contributed
  Surplus   (cont’d)
 
 (f)
              On
      February 27, 2009, the Company entered into an agreement with a
      non-related party, to settle debt in the amount of $62,500 through the
      issuance of a total of 1,250,000 units at an attributed value of $0.05 per
      unit.  Each unit was comprised of one common share and one
      common share purchase warrant.  Each warrant is exercisable
      until February 27, 2014 to purchase one common share at a purchase price
      of $0.07 per share.
 
 Warrants
                  
                  Number
                  
                  
                  Exercise
                    Price
                  
                  Expiry
                    Date
                  
                  AmountBalance
      at  August 31, 2007
                  
                  Nil
                  
                  
                  Nil
                  
                  NilApril
      14, 2008, private placement (note a)
                  
                  
                  2,575,000
                  
                  
                  $
                  0.20
                  
                  April 14, 2011
                  
                  $
                  100,875Balance
      at  August 31, 2008
                  
                  
                  2,575,000
                  
                  
                  $
                  0.20
                  
                  April
      14, 2011
                  
                  $
                  100,875February
      5, 2009 private placement (note c)
                  
                  
                  2,600,000
                  
                  
                  $
                  0.07
                  
                  February
      5, 2014
                  
                  
                  62,400February
      25, 2009 private placement (note d)
                  
                  
                  1,000,256
                  
                  
                  $
                  0.07
                  
                  February
      25, 2014
                  
                  
                  24,006February
      27, 2009 acquisition (note e)
                  
                  
                  8,910,564
                  
                  
                  $
                  0.07
                  
                  February
      27, 2014
                  
                  
                  213,853February
      27, 2009 debt settlement (note f)
                  
                  
                  1,250,000
                  
                  
                  $
                  0.07
                  
                  February
      27, 2014
                  
                  
                  30,000Balance
      at August 31, 2009
                  
                  
                  16,335,820
                  
                  
                  
                  
                  
                  
                  
                  $
                  431,134
 
 The fair
value of the warrants issued during the year ended August 31, 2009 and 2008 were
estimated using the Black-Scholes pricing model, using the following
assumptions:
 
 2009
                      
                      
                      2008Fair
      value per warrant
                      
                      $
                      0.05
                      
                      
                      $
                      0.06Risk-free
      interest rate
                      
                      
                      3
                      %
                      
                      
                      3
                      %Expected
      volatility
                      
                      
                      170
                      %
                      
                      
                      129
                      %Expected
      life (years)
                      
                      
                      4
                      
                      
                      
                      3
 
 Weighted Average Shares
      Outstanding
                  
                  2009
                  
                  
                  2008
                  
                  
                  2007Weighted
      average shares outstanding, basic
                  
                  
                  17,646,295
                  
                  
                  
                  7,955,482
                  
                  
                  
                  6,396,739Dilutive
      effect of warrants
                  
                  
                  9,749,557
                  
                  
                  
                  1,009,467
                  
                  
                  
                  -Weighted
      average shares outstanding, diluted
                  
                  
                  27,395,852
                  
                  
                  
                  8,964,949
                  
                  
                  
                  6,396,739
 
 The
effects of any potential dilutive instruments on loss per share related to the
outstanding warrants are anti-dilutive and therefore have been excluded from the
calculation of diluted loss per share.
 
 Stock
Option Plan
 
 The
Company has a stock option plan to provide incentives for directors, officers
and consultants of the Company.  The maximum number of shares, which
may be set aside for issuance under the stock option plan, is 1,275,000 common
shares.  To date, no options have been issued.
  F -
18
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 9.
              Share
      Capital and Contributed
  Surplus   (cont’d)
 
 Contributed
Surplus
 
 As part
of the April 14, 2008 debt conversion, Ms. Hall the President of the Company
converted $50,000 of debt through the issuance of 500,000 common shares at an
attributed value of $0.10 per share and forgave $38,000 of debt owed to her by
the Company, which was recorded as an increase to contributed
surplus.
 
 10.
              Related
      Party Transactions and Balances
 
 The
following transactions with an individual related to the Company which arose in
the normal course of business have been accounted for at the exchange amount
being the amount agreed to by the related parties, which approximates the arms
length equivalent value:
 
 2009
                  
                  
                  2008
                  
                  
                  2007Management
      fees to the President and Director of the Company
                  
                  $
                  18,000
                  
                  
                  $
                  12,000
                  
                  
                  $
                  12,000
 
 The
following balances owing to an individual related to the Company are included in
accounts payable  and advances payable and are unsecured, non-interest
bearing and due on demand:
 
 2009
                  
                  
                  2008
                  
                  
                  2007Management
      fees to the President and Director of the Company
                  
                  $
                  14,700
                  
                  
                  $
                  6,000
                  
                  
                  $
                  82,000
 
 Beginning
May 1, 2009 the Company increased the management fee from $1,000 to $2,500 per
month to the President of the Company.
 
 On
February 5, 2009, a corporation in which the Company’s President has voting and
investment power, acquired 1,600,000 Units at a price of $0.05 per unit. 
Each unit was comprised of one common share and one common share purchase
warrant.  Each warrant is exercisable until February 5, 2014, to purchase
one common share at a purchase price of $0.07 per share.
 
 On
February 25, 2009, the Company’s President acquired 600,000 Units at a price of
$0.05 per Unit.  Each unit was comprised of one common share and one common
share purchase warrant.  Each warrant is exercisable until February 25,
2014 to purchase one common share at a purchase price of $0.07 per
share.
 
 On
February 25, 2009, a director of the Company acquired 50,000 Units at a price of
$0.05 per Unit.  Each unit was comprised of one common share and one common
share purchase warrant.  Each warrant is exercisable until February 25,
2014 to purchase one common share at a purchase price of $0.07 per
share.
 
 On
February 27, 2009, Eugenic acquired the issued and outstanding shares of 1354166
Alberta Ltd. for total consideration of $445,528 satisfied by the issuance of
8,910,564 units of the Company at $0.05 per unit.   Following the
closing, the Company paid to note holders of 1354166 the amount of $118,000 by
cash payment.
  F -
19
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 11.
              Loans
      Payable
 
 The loans
payable in the amount of $167,500 are unsecured, non-interest bearing and
repayable on demand. The amount of $110,000 is due to an arms length party.
On  February 27, 2009, the Company entered into an agreement to settle
$62,500 of the $120,000 loan through the issuance of a total of 1,250,000 units
at an attributed value of $0.05 per unit.  Each unit was comprised of
one common share and one common share purchase warrant.  Each warrant
is exercisable until February 27, 2014 to purchase one common share at a
purchase price of $0.07 per share. The balance of the loan payable to a
shareholder is $57,500.
 
 12.
              Seasonality
      and Trend Information
 
 The
Company’s oil and gas operations is not a seasonal business, but increased
consumer demand or changes in supply in certain months of the year can influence
the price of produced hydrocarbons, depending on the circumstances. Production
from the Company’s oil and gas properties is the primary determinant for the
volume of sales during the year.
  There are
a number of trends that have been developing in the oil and gas industry during
the past several years that appear to be shaping the near future of the
business.
 
 The first
trend is the volatility of commodity prices. Natural gas is a commodity
influenced by factors within North America. A tight supply demand balance for
natural gas causes significant elasticity in pricing, whereas higher than
average storage levels tend to depress natural gas pricing. Drilling activity,
weather, fuel switching and demand for electrical generation are all factors
that affect the supply-demand balance. Recently, liquefied natural gas shipments
to North America have also resulted in natural gas supply and natural gas
pricing being based more on factors other than supply and demand in North
America. Changes to any of these or other factors create price
volatility.
 
 Crude oil
is influenced by the world economy, Organization of the Petroleum Exporting
Countries' ("OPEC") ability to adjust supply to world demand and weather.
Political events also trigger large fluctuations in price levels. The current
global financial crisis has reduced liquidity in financial markets thereby
restricting access to financing and has caused significant volatility to
commodity prices. Petroleum prices are expected to remain volatile for the
remainder of 2009 as a result of market uncertainties over the supply and demand
of these commodities due to the current state of the world economies, OPEC
actions and the ongoing global credit and liquidity concerns.
 
 The
impact on the oil and gas industry from commodity price volatility is
significant. During periods of high prices, producers generate sufficient cash
flows to conduct active exploration programs without external capital. Increased
commodity prices frequently translate into very busy periods for service
suppliers triggering premium costs for their services. Purchasing land and
properties similarly increase in price during these periods. During low
commodity price periods, acquisition costs drop, as do internally generated
funds to spend on exploration and development activities. With decreased demand,
the prices charged by the various service suppliers also
decline.
  F -
20
 
 Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 12.
              Seasonality
      and Trend
Information   (cont’d)
 
 World oil
and gas prices are quoted in United States dollars and the price received by
Canadian producers is therefore effected by the Canadian/U.S. dollar exchange
rate, which will fluctuate over time. Material increases in the value of the
Canadian dollar may negatively impact production revenues from Canadian
producers. Such increases may also negatively impact the future value of such
entities' reserves as determined by independent evaluators. In recent years, the
Canadian dollar has increased materially in value against the United States
dollar although the Canadian dollar has recently decreased from such
levels.
 
 A second
trend within the Canadian oil and gas industry is the "renewal" of private and
small junior oil and gas companies starting up business. These companies often
have experienced management teams from previous industry organizations that have
disappeared as a part of the ongoing industry consolidation. Many are able to
raise capital and recruit well qualified personnel. To the extent that this
trend continues, we will have to compete with these companies and others to
attract qualified personnel.
 
 A third
trend currently affecting the oil and gas industry is the impact on capital
markets caused by investor uncertainty in the global economy. The capital market
volatility in Canada has also been affected by uncertainties surrounding the
economic impact that the Kyoto Protocol and other environmental initiatives will
have on the sector and, in more recent times, by the tax changes relating to
income trusts and other "specified investment flow-through" entities ("SIFTs")
and by the NRF and new Alberta government royalty programs implemented along
with the NRF. The impact of the NRF and these new royalty programs is still
being determined and will vary company to company based on the percentage of
production in Alberta, their commodity mix and depths of production, among other
things. The amount and degree of these impacts have yet to be
determined.
 
 Pursuant
to the existing provisions of the Tax Act, to the extent that a SIFT has any
income for a taxation year after certain inclusions and deductions, the SIFT
will be permitted to deduct all amounts of income which are paid or become
payable by it to unitholders in the year. Under the legislation which received
Royal Assent on June 22, 2007, SIFTs will be liable for tax at a rate consistent
with the taxes currently imposed on corporations commencing in January 2011,
provided that the SIFT experiences only "normal growth" and no "undue expansion"
before then, in which case the tax could be imposed prior to the January 2011
deadline. Although the tax changes will not affect the method in which the
Company will be taxed, it may have an impact on the ability of a SIFT to
purchase producing assets from oil and gas exploration and production companies
(as well as the price that a SIFT is willing to pay for such an acquisition)
thereby affecting exploration and production companies' ability to be sold to a
SIFT which has been a key "exit strategy" in recent years for oil and gas
companies. This may be a benefit for the Company as it will compete with SIFTs
for the acquisition of oil and gas properties from junior producers. However, it
may also limit the Company’s ability to sell producing properties or pursue an
exit strategy.
  F -
21
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 13.
              Financial
      Instruments and Risk Factors
 
 The
Company is exposed to financial risk, in a range of financial instruments
including cash, other receivables and accounts payable and income taxes payable
and loans payable. The Company manages its exposure to financial risks by
operating in a manner that minimizes its exposure to the extent practical. The
main financial risks affecting the Company are discussed below:
 
 The fair
value of financial instruments at August 31, 2009 and 2008 is summarized as
follows:
 
 2009
                    
                    
                    2008Amount
                    
                    
                    Fair
      Value
                    
                    
                    Amount
                    
                    
                    Fair
      ValueFinancial
      assetsHeld
      for tradingCash
      and cash equivalents
                    
                    $
                    172,905
                    
                    
                    $
                    172,905
                    
                    
                    $
                    202,726
                    
                    
                    $
                    202,726Loans
      and receivablesOther
      receivables
                    
                    $
                    20,421
                    
                    
                    $
                    20,421
                    
                    
                    $
                    5,311
                    
                    
                    $
                    5,311Financial
      liabilitiesAccounts
      payable
                    
                    $
                    152,984
                    
                    
                    $
                    152,984
                    
                    
                    $
                    71,672
                    
                    
                    $
                    71,672Income
      Taxes Payable
                    
                    $
                    10,215
                    
                    
                    $
                    10,215
                    
                    
                    $
                    -
                    
                    
                    $
                    -Loans
      payable
                    
                    $
                    167,500
                    
                    
                    $
                    167,500
                    
                    
                    $
                    230,000
                    
                    
                    $
                    230,000
 
 (a)
              Credit
      Risk
 
 Credit
risk arises when a failure by counter parties to discharge their obligations
could reduce the amount of future cash inflows from financial assets on hand at
the balance sheet date. Receivables from natural gas marketers are collected on
the 25th day of
each month following production. The Company’s policy to mitigate credit risk
associated with these balances is to establish relationships with credit-worthy
marketers. The majority of the Company’s natural gas is marketed through a major
international energy company. There are no other material accounts receivable at
August 31, 2009 that the Company deemed uncollectible.
 
 (b)
              Foreign
      Exchange Risk
 
 The
prices received by the Company for the production of natural gas and natural gas
liquids are primarily determined in reference to U.S. dollars but are settled
with the Company in Canadian dollars. The Company’s cash flow for commodity
sales will therefore be impacted by fluctuations in foreign exchange rates. The
Company considers this risk to be limited.
 
 (c)
              Interest
      Rate Risk
 
 Interest
rate risk refers to the risk that the value of a financial instrument or cash
flows associated with the instrument will fluctuate due to changes in market
interest rates. The Company is not exposed to interest rate
risk.
  F -
22
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 13.
              Financial
      Instruments and Risk
  Factors   (cont’d)
 
 Based on
management's knowledge and experience of the financial markets, the Company
believes that the movements in interest rates that are reasonably possible over
the next twelve month period will not have a significant impact on the
Company.
 
 (d)
              Liquidity
      Risk
 
 Liquidity
risk includes the risk that, as a result of our operational liquidity
requirements:
 
 • The
Company will not have sufficient funds to settle transaction on the due
date;
 • The
Company will be forced to sell financial assets at a value which is less than
what they are worth; or
 • The
Company may be unable to settle or recover a financial asset at
all.
 
 The
Company considers this risk to be limited.
 
 (e)
              Commodity
      Price Risk
 
 Commodity
price risk is the risk that the fair value or future cash flows will fluctuate
as a result of changes in commodity prices. Commodity prices for petroleum and
natural gas are impacted by world economic events that dictate the levels of
supply and demand.
 
 The
Company believes that movement in commodity prices that are reasonably possible
over the next twelve month period will not have a significant impact on the
Company.
 
 (f)
              Commodity
      Price Sensitivity
 
 The
following table summarizes the sensitivity of the fair value of the Company’s
risk management position for the year ended August 31, 2009 and 2008 to
fluctuations in natural gas prices, with all other variables held constant. When
assessing the potential impact of these price changes, the Company believes that
10 percent volatility is a reasonable measure. Fluctuations in natural gas
prices potentially could have resulted in unrealized gains (losses) impacting
net income as follows:
 
 2009
                    
                    
                    2008Increase 10%
                    
                    
                    Decrease 10%
                    
                    
                    Increase 10%
                    
                    
                    Decrease 10%Revenue
                    
                    $
                    61,819
                    
                    
                    $
                    50,579
                    
                    
                    $
                    321
                    
                    
                    $
                    263Net
      loss
                    
                    $
                    (323,241
                    )
                    
                    $
                    (334,481
                    )
                    
                    $
                    (50,485
                    )
                    
                    $
                    (50,443
                    )
 
 (g)
              Market
      Risk
 
 Market
risk represents the risk of loss that may impact our financial position, results
of operations, or cash flows due to adverse changes in financial market prices,
including interest rate risk, foreign currency exchange rate risk, commodity
price risk, and other relevant market or price risks. We do not have activities
related to derivative financial instruments or derivative commodity instruments.
We hold equity securities which have been written down to $1 on our consolidated
balance sheet.  Our primary risk relates to commodities price
risk.
  F -
23
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 13.
              Financial
      Instruments and Risk
  Factors   (cont’d)
 
 (g)
              Market
      Risk   (cont’d)
 The oil
and gas industry is exposed to a variety of risks including the uncertainty of
finding and recovering new economic reserves, the performance of hydrocarbon
reservoirs, securing markets for production, commodity prices, interest rate
fluctuations, potential damage to or malfunction of equipment and changes to
income tax, royalty, environmental or other governmental
regulations.
 
 We
mitigate these risks to the extent we are able by:
 
 •   utilizing
competent, professional consultants as support teams to company
staff.
 •   performing
careful and thorough geophysical, geological and engineering analyses of each
prospect.
 •   focusing
on a limited number of core properties.
 
 Market
risk is the possibility that a change in the prices for natural gas, natural gas
liquids, condensate and oil, foreign currency exchange rates, or interest rates
will cause the value of a financial instrument to decrease or become more costly
to settle.
 
 The
global financial crisis is expected to cause petroleum and natural gas prices to
remain volatile for the near future. Recent market events and conditions,
including disruptions in the international credit markets and other financial
systems and the deterioration of global economic conditions, have caused
significant volatility to commodity prices. These conditions worsened in 2008
and are continuing in 2009, causing a loss of confidence in the broader U.S. and
global credit and financial markets and resulting in the collapse of, and
government intervention in, major banks, financial institutions and insurers and
creating a climate of greater volatility, less liquidity, widening of credit
spreads, a lack of price transparency, increased credit losses and tighter
credit conditions. Notwithstanding various actions by governments, concerns
about the general condition of the capital markets, financial instruments,
banks, investment banks, insurers and other financial institutions caused the
broader credit markets to further deteriorate and stock markets to decline
substantially. These factors have negatively impacted company valuations and
will impact the performance of the global economy going forward. Petroleum and
natural gas prices are expected to remain volatile for the near future as a
result of market uncertainties over the supply and demand of these commodities
due to the current state of the world economies, OPEC actions and the ongoing
global credit and liquidity concerns.
 
 14.
              Capital
      Management
 
 The
Company’s objectives when managing capital is to safeguard the entity’s ability
to continue as a going concern. The Company sets the amount of capital in
proportion to risk. The Company manages the capital structure and makes
adjustments to it in light of changes in economic conditions and the risk
characteristics of any underlying assets. The board of directors does not
establish quantitative return on capital criteria for management, but rather
relies on the expertise of the Company's management to sustain future
development of the business.
  F -
24
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 14.
              Capital
      Management   (cont’d)
  Currently,
the Company does not have any operational cash requirements other than
administrative expenditures. The Company’s revenue producing properties are
fully developed and there are no further outlays or expenses projected to
develop these properties at this time.
 
 Management
reviews its capital management approach on an ongoing basis and believes that
this approach, given the relative size of the Company, is
reasonable.
 
 There
were no changes in the Company’s capital management during the period ended
August 31, 2009.
 
 The
Company is not subjected to any externally imposed capital
requirements.
 
 15.
              Income
      Taxes
 
 The
Company has capital losses in the amount of approximately $195,852 (2008 -
$195,852) which may be carried forward indefinitely to offset future capital
gains, and non-capital losses in the amount of approximately $525,825 (2008 -
$299,583) available for carry forward purposes.  The non-capital
losses expire as follows:
 
 2010
                    
                    $
                    40,8462014
                    
                    
                    46,5012015
                    
                    
                    47,4342026
                    
                    
                    54,2872027
                    
                    
                    43,4652028
                    
                    
                    65,2142029
                    
                    
                    228,078$
                    525,825
 
 The
Company has provided a full valuation allowance against future tax assets at
August 31, 2009, due to uncertainties in the Company's ability to utilize its
net operating losses.
 
 A
reconciliation between income taxes provided at actual rates and at the basic
rate ranging from 25% to 29% (2008 and 2007 – 34.5%) for federal and provincial
taxes is as follows:
 
 2009
                    
                    
                    2008
                    
                    
                    2007Taxes
      at statutory rates
                    
                    $
                    (88,792
                    )
                    
                    $
                    (17,427
                    )
                    
                    $
                    (14,398
                    )Non-taxable
      items and others
                    
                    
                    47,326
                    
                    
                    
                    -
                    
                    
                    
                    (35
                    )Change
      in tax rate
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Change
      in valuation allowance
                    
                    
                    41,466
                    
                    
                    
                    17,427
                    
                    
                    
                    14,433$
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
  F -
25
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 15.
              Income
      Taxes   (cont’d)
 
 The
significant components of the Company's future tax asset are summarized as
follows:
 
 2009
                  
                  
                  2008Operating
      loss carry forwards
                  
                  $
                  149,197
                  
                  
                  $
                  101,373Share
      issue costs
                  
                  
                  5,792
                  
                  
                  
                  -Marketable
      securities
                  
                  
                  1,701
                  
                  
                  
                  2,024Capital
      losses carry forwards
                  
                  
                  28,399
                  
                  
                  
                  33,784Oil
      and gas interests
                  
                  
                  20,594
                  
                  
                  
                  27,222Cumulative
      eligible capital
                  
                  
                  1,685
                  
                  
                  
                  1,499207,368
                  
                  
                  
                  165,902Valuation
      allowance
                  
                  
                  (207,368
                  )
                  
                  
                  (165,902
                  )$
                  -
                  
                  
                  $
                  -
 
 16.
              Reconciliation
      to Accounting Principles Generally Accepted in the United
      States
 
 The
Company's accounting policies do not differ materially from accounting
principles generally accepted in the United States ("US GAAP") except for the
following:
 
 Oil and
Gas Interest
 
 In
applying the full cost method under US GAAP (Regulation S-X Article 4-10), the
Company performs a ceiling test based on the same calculations used for Canadian
GAAP except the Company is required to discount future net revenues from proved
reserves at 10% as opposed to utilizing the fair market value and probable
reserves are excluded. During the year an impairment loss of $179,443 for US
GAAP and an impairment loss of $105,805 was recorded for Canadian
GAAP.
 
 If US
GAAP was followed, the effect on the consolidated balance sheet would be as
follows:
 
 2009
                  
                  
                  2008Total
      assets according to Canadian GAAP
                  
                  $
                  600,327
                  
                  
                  $
                  208,486Additional
      impairment of oil and gas interests
                  
                  
                  (73,638
                  )
                  
                  
                  -Total
      assets according to US GAAP
                  
                  $
                  526,689
                  
                  
                  $
                  208,486
 
 2009
                  
                  
                  2008Total
      shareholders’ equity (deficiency) according to Canadian
    GAAP
                  
                  $
                  265,994
                  
                  
                  $
                  (93,186
                  )Deficit
      adjustment per US GAAPAdditional
      impairment of oil and gas interests
                  
                  
                  (73,638
                  )
                  
                  
                  -Total
      shareholders’ equity (deficiency) according to US GAAP
                  
                  $
                  192,356
                  
                  
                  $
                  (93,186
                  )
  F -
26
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 
 For the years ended August 31, 2009, 2008 and
      2007
 
 16.
              Reconciliation
      to Accounting Principles Generally Accepted in the United States
      (cont’d)
 
 If US
GAAP was followed, the effect on the consolidated statements of loss and
comprehensive loss would be as follows:
 
 2009
                  
                  
                  2008
                  
                  
                  2007Net
      loss, comprehensive loss according to Canadian GAAP
                  
                  $
                  328,861
                  
                  
                  $
                  50,514
                  
                  
                  $
                  39,945Add:   Additional
      impairment of oil and gas interests
                  
                  
                  73,638
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      loss, comprehensive loss according to US GAAP
                  
                  $
                  402,499
                  
                  
                  $
                  50,514
                  
                  
                  $
                  39,945Loss
      per share, basic and diluted
                  
                  $
                  (0.023
                  )
                  
                  $
                  (0.006
                  )
                  
                  $
                  (0.006
                  )Shares
      used in the computation of loss per share
                  
                  
                  17,646,295
                  
                  
                  
                  7,955,482
                  
                  
                  
                  6,396,739
 
 Recently
Issued United States Accounting Standards:
 
 In July
2006, the Financial Accounting Standards Board ("FASB") has published FASB
Interpretation No. 48 ("FIN No.48), Accounting for Uncertainty in Income Taxes,
to address the non-comparability in reporting tax assets and liabilities
resulting from a lack of specific guidance in FASB Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, on the
uncertainty in income taxes recognized in an enterprise's financial statements.
FIN No. 48 will apply to fiscal years beginning after December 15, 2006, with
earlier adoption permitted. The adoption of FIN 48 did not have a material
effect on the Company's financial condition or results of
operations.
 
 In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." SFAS
No. 157 clarifies the principle that fair value should be based on the
assumptions market participants would use when pricing an asset or liability and
establishes a fair value hierarchy that prioritizes the information used to
develop those assumptions. Under the standard, fair value measurements would be
separately disclosed by level within the fair value hierarchy. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years, with early
adoption permitted. The adoption of SFAS No. 157 did not have a material impact
on the consolidated financial statements.
 
 In
September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements
No. 87, 88, 106, and 132(R)”. This statement requires employers to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit organization. This
statement also requires an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. The provisions of SFAS No. 158 are effective for employers with
publicly traded equity securities as of the end of the fiscal year ending after
December 15, 2006. The adoption of this statement did not have a material effect
on the Company’s financial position or results of operations.
  F -
27
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 For the years ended August 31, 2009, 2008 and
      2007
 
 16.
              Reconciliation
      to Accounting Principles Generally Accepted in the United
      States   (cont’d)
  In
September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
Accounting Bulletin No. 108 (Topic 1N), “Quantifying Misstatements in Current
Year Financial Statements” (“SAB No. 108”). SAB No.108 addresses how the effect
of prior year uncorrected misstatements should be considered when quantifying
misstatements in current year financial statements. SAB No. 108 requires SEC
registrants (i) to quantify misstatements using a combined approach which
considers both the balance sheet and income statement approaches; (ii) to
evaluate whether either approach results in quantifying an error that is
material in light of relevant quantitative and qualitative factors; and (iii) to
adjust their financial statements if the new combined approach results in a
conclusion that an error is material. SAB No. 108 addresses the mechanics of
correcting misstatements that include effects from prior years. It indicates
that the current year correction of a material error that includes prior year
effects may result in the need to correct prior year financial statements even
if the misstatement in the prior year of years is considered immaterial. Any
prior year financial statements found to be materially misstated in years
subsequent to the issuance of SAB No. 108 would be restated in accordance with
SFAS No. 154, “Accounting Changes and Error Corrections”. Because the combined
approach represents a change in practice, the SEC staff will not require
registrants that followed an acceptable approach in the past to restate prior
years’ historical financial statements. Rather, these registrants can report the
cumulative effect of adopting the new approach as an adjustment to the current
year’s beginning balance of retained earnings. If the new approach is adopted in
a quarter other than the first quarter, financial statements for prior interim
periods within the year of adoption may need to be restated. SAB No. 108 is
effective for fiscal years ending after November 15, 2006, which for the Company
would be its fiscal year beginning April 1, 2007. The implementation of SAB No.
108 did not have a material impact on the Company’s results of operations and
financial condition.
 
 In
February 2007, the FASB issued SFAS No. 159 (“SFAS 159”) – the fair value option
for financial assets and liabilities including an amendment of SFAS 115. This
Statement permits entities to choose to measure many financial instruments and
certain other items at fair value. The objective is to improve financial
reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This statement is
expected to expand the use of fair value measurement objectives for accounting
for financial instruments. This statement is effective as of the beginning of an
entity’s first fiscal year that begins after November 15, 2007, and interim
periods within those fiscal years. Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007, provided
the entity also elects to apply the provisions of FASB Statement No. 157, “Fair
Value Measures”. The adoption of of SFAS No. 159 did not have a material impact
on its consolidated financial statements.
 
 In
December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in
Consolidated Financial Statements-An Amendment of ARB No. 51" ("SFAS
160"). SFAS 160 establishes accounting and reporting standards for the
non-controlling interest in a subsidiary (previously referred to as minority
interests). SFAS 160 also requires that a retained non-controlling interest upon
the deconsolidation of a subsidiary be initially measured at its fair value.
Upon adoption of SFAS 160, the Company would be required to report any
non-controlling interests as a separate component of stockholders' equity. The
Company would also be required to present any net income allocable to non-
controlling interests and net income attributable to the stockholders of the
Company separately in its consolidated statements of operations. SFAS 160 is
effective for annual periods beginning after December 15, 2008.  The
adoption of SFAS 160 is not expected to have a material impact on the company’s
financial statements.
  F -
28
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 For the years ended August 31, 2009, 2008 and
      2007
  16.
              Reconciliation
      to Accounting Principles Generally Accepted in the United
      States   (cont’d)
  In March
2008, the FASB issued FAS No. 161, “Disclosure about Derivative
Instruments and Hedging Activities”(“FAS 161”). FAS 161 changes the
disclosure requirements for derivative instruments and hedging activities by
requiring enhanced disclosures about how and why an entity uses derivatives
instruments, how derivative instruments and related hedged items affect an
entity’s operating results, financial position, and cash flows. FAS No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. Early adoption is permitted. The provisions
of FAS 161 are only related to disclosure of derivative and hedging
activities.  The adoption of SFAS 161 will not have a material impact
on its consolidated operating results, financial position or cash
flows.
  May 2008,
the FASB issued SFAS No. 162,
The Hierarchy of Generally Accepted Accounting Principles ("SFAS No.
162"). The new standard is intended to improve financial reporting by
identifying a consistent framework, or hierarchy, for selecting accounting
principles to be used in preparing financial statements that are presented in
conformity with U.S. generally accepted accounting principles (GAAP) for
nongovernmental entities. SFAS No. 162 is effective 60 days following the
Securities and Exchange Commission's approval of the Public Company Accounting
Oversight Board Auditing amendments to AU Section 411, The Meaning of Present
Fairly in Conformity with Generally Accepted Accounting Principles. The Company
is currently evaluating the impact of adoption of SFAS No. 162 but does not
expect adoption to have a material impact on results of operations, cash flows
or financial position.
  In May
2008, the FASB issued SFAS No.
163, Accounting for Finance Guarantee Insurance Contracts – an interpretation of
FASB Statement No. 60.The premium revenue
recognition approach for a financial guarantee insurance contract links premium
revenue recognition to the amount of insurance protection and the period in
which it is provided. For purposes of this statement, the amount of insurance
protection provided is assumed to be a function of the insured principal amount
outstanding, since the premium received requires the insurance enterprise to
stand ready to protect holders of an insured financial obligation from loss due
to default over the period of the insured financial obligation. This Statement
is effective for financial statements issued for fiscal years beginning after
December 15, 2008. The adoption of SFAS No. 163 is not expected to have a
material effect on the Company’s financial statements.
  In May
2009, the Financial Accounting Standards Board (“FASB”) issued Statement No.
165, Subsequent Events
(SFAS 165), addressing accounting and disclosure requirements related to
subsequent events. SFAS 165 requires management to evaluate subsequent events
through the date the financial statements are either issued or available to be
issued, depending on the company’s expectation of whether it will widely
distribute its financial statements to its shareholders and other financial
statement users. Companies will be required to disclose the date through which
subsequent events have been evaluated. Statement 165 is effective for interim or
annual financial periods ending after June 15, 2009 and should be applied
prospectively. The adoption of SFAS 165 did not have a material effect on the
Company’s financial statements.
  F -
29
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 For the years ended August 31, 2009, 2008 and
      2007
 
 16.
              Reconciliation
      to Accounting Principles Generally Accepted in the United
      States   (cont’d)
 
 On June
12, 2009, the FASB issued FAS No. 166, which amends the de-recognition guidance
in FAS No. 140. FAS No. 166 eliminates the concept of a QSPE (Qualified Special
Purpose Entity) and eliminates the exception from applying FIN 46(r),
Consolidation of Variable Interest Entities to QSPE’s. Additionally, this
Statement clarifies that the objective of paragraph 9 of FAS 140 is to determine
whether a transferor has surrendered control over transferred financial assets.
That determination must consider the transferor’s continuing involvements in the
transferred financial asset, including all arrangements or agreements made
contemporaneously with, or in contemplation of, the transfer, even if they were
not entered into at the time of the transfer. This Statement modifies the
financial-components approach used in Statement 140 and limits the circumstances
in which a financial asset, or portion of a financial asset, should be
derecognized when the transferor has not transferred the entire original
financial asset to an entity that is not consolidated with the transferor in the
financial statements being presented and/or when the transferor has continuing
involvement with the transferred financial asset. It defines the term
“participating interest” to establish specific conditions for reporting a
transfer of a portion of a financial asset as a sale. Under this statement, when
the transfer of financial assets are accounted for as a sale, the transferor
must recognize and initially measure at fair value all assets obtained and
liabilities incurred as a result of the transfer. This includes any retained
beneficial interest. The implementation of this standard materially effects the
securitization process in general, as it eliminates off-balance sheet
transactions when an entity retains any interest in or control over assets
transferred in this process. However, we do not believe the implementation of
this standard will materially effect our reporting as we have no legacy QSPE’s
and it is our intent to treat securitizations as financings. The effective date
for FAS 166 is January 1, 2010. The adoption of SFAS No. 166 is not expected to
have a material effect on the Company’s financial statements.
 
 In
conjunction with FAS No. 166, FASB issued FAS 167 which amends FASB
Interpretation No. 46(R), (FIN 46(R)). This statement requires an enterprise to
perform an analysis to determine whether the enterprise’s variable interest or
interests give it a controlling financial interest in a variable interest
entity. The analysis identifies the primary beneficiary of a variable interest
entity (VIE) as the enterprise that has both: a) the power to direct the
activities that most significantly impact the entity’s economic performance and
b) the obligation to absorb losses of the entity or the right to receive
benefits from the entity which could potentially be significant to the VIE. With
the removal of the QSPE exemption, established QSPE’s must be evaluated for
consolidation under this statement. This statement requires enhanced disclosures
to provide users of financial statements with more transparent information about
and enterprises involvement in a VIE. Further, this statement also requires
ongoing assessments of whether an enterprise is the primary beneficiary of a
VIE. Should we treat securitizations as sales in the future, we will analyze the
transactions under the guidelines of FAS No, 167 for consolidation. The
effective date for FAS 167 is January 1, 2010. The adoption of SFAS No. 167 is
not expected to have a material effect on the Company’s financial
statements.
 
 In June
2009, the FASB issued Statement of Financial Accounting Standards No. 168,
“The FASB Accounting Standards CodificationTM and
“The Hierarchy of Generally
Accepted Accounting Principles—a replacement of FASB Statement
No. 162” (“FASB 168”). FAS 168 identifies the sources of accounting
principles and the framework for selecting the accounting principles used in
preparing financial statements of nongovernmental entities that are presented in
conformity with U.S. GAAP. SFAS 168 will be effective for financial statements
that cover interim and annual periods ending after September 15,
2009.  The adoption of SFAS 168 is not expected to have a material
effect on the company’s financial statements.
  F -
30
  Eagleford
Energy Inc.
 (Formerly:
Eugenic Corp.)
 Notes
to Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 For the years ended August 31, 2009, 2008 and
      2007
 
 16.
              Reconciliation
      to Accounting Principles Generally Accepted in the United
      States   (cont’d)
 
 In
December 2008, the SEC published its final rule, (SAB 113) Modernization of Oil
and Gas reporting requirements, to modernize and update oil and gas disclosure
requirements and align them with current practice and change in
technology.  The Final Rule is effective for registration statements
filed on or after January 1, 2010 and for annual reports on Forms 10-K and 20-F
for fiscal years ending on or December 31, 2009.  The company will be
assessing the impact of this Final Rule on its financial reporting for fiscal
2010.
 
 17.
              Subsequent
      Events
 
 On
November 12, 2009 the Company’s wholly owned subsidiary 1406768 Ontario Inc.,
filed Articles of Amendment changing its name to Eagleford Energy Inc. Effective
November 30, 2009, the Company amalgamated with its wholly owned subsidiary
Eagleford Energy Inc., and upon the amalgamation the entity's new name is
Eagleford Energy Inc. The Company has evaluated subsequent events through to
December 28, 2009.
  F -
31




INDEX
TO EXHIBITS




1.1*
              Certificate of Incorporation of
      Bonanza Red Lake Explorations Inc. (presently known as Eagleford Energy
      Inc.) dated September 22,
1978*
 
 1.2*
              Articles of Amendment dated
      January 14, 1985*
 
 1.3*
              Articles of Amendment dated
      August 16, 2000*
 
 1.4*
              Bylaw No 1 of Bonanza Red Lake
      Explorations Inc. (presently known as Eagleford Energy
      Inc.)*
 
 1.5*
              Special By-Law No 1 – Respecting
      the borrowing of money and the issue of securities of Bonanza Red Lake
      Explorations Inc. (presently known as Eagleford Energy
      Inc.)*
 
 1.6***
              Articles
      of Amalgamation dated November 30,
2009
 
 4.1*
              2000 Stock Option
      Plan*
 
 4.2*
              Code of Business Conduct and
      Ethics*
 
 4.3*
              Audit Committee
      Charter*
 
 4.4*
              Petroleum and Natural Gas
      Committee Charter*
 
 4.5*
              Compensation Committee
      Charter*
 
 4.6*
              Purchase and Sale Agreement dated
      February 5, 2008 among Eugenic Corp. (presently known as Eagleford Energy
      Inc.), 1354166 Alberta Ltd., and the Vendors of 1354166 Alberta
      Ltd.*
 
 4.7**
              Amended Audit Committee
      Charter*
 
 4.8
              Amended
      Stock Option Plan
  8.1
              Subsidiary
      of Eagleford Energy Inc.
 12.1/12.2
                  Section
      302 Certification of Chief Executive and Financial
    Officer
 
 13.1/13.2
                  Section 906
      Certification of Chief Executive and Financial
  Officer
 15.1
              Consent
      of Schwartz Levitsky Feldman LLP with respect to the report dated December
      18, 2009 to the consolidated financial statements of Eagleford Energy Inc.
      for the years ended August 31, 2009, 2008 and
  2007.





*
              Previously
      filed on April 29, 2009 by Registrant as part of Registration Statement on
      Form 20-F (SEC File No. 0-53646)


**
            Previously
      Filed by Registrant as part of Amendment #2 to Registration Statement on
      Form 20F/A on July 14, 2009 (SEC File No.
  0-53646)




***
            Previously
      Filed by Registrant on Form 6 K on December 1,
  2009