UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

(Mark One)

[X]

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

For the fiscal year ended  March 31, 2009

[   ]

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

For the transition period from [   ] to [   ]

Commission file number  000-30193

|NATION ENERGY INC.                                    
|------------------------------------------------------
|(Exact name of registrant as specified in its charter)



|Wyoming                                                        |  | 59-2887569                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|Suite 900
609 West Hastings Street
Vancouver British Columbia |  | V6B 4W4   
|------------------------------------------------------------- |  | ----------
|(Address of principal executive offices)                      |  | (Zip Code)

Registrants telephone number  (800) 400-3969

Former Name, former address and former fiscal year, if changed since last report:  N/A

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

|Title of each classNone |  | Name of each exchange on which registeredNone
|----------------------- |  | ---------------------------------------------

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

|Common Stock, $0.001 par value per share
|----------------------------------------
|(Title of class)                        

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   
(Check one):   Yes [   ]   No [X].

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. .

(Check one):   Yes [   ];   No [X].

Indicate by checkmark whether the registrant has (1) 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 checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10K.   [   ]



Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definition of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



Large accelerated filer

[  ]

(Do not check if a smaller reporting company)

Accelerated filer

[  ]

Non-accelerated filer

[  ]

Smaller reporting company[X]



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  [ ]     No [ ]



Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ X ]     No [ ]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter:  $481,320 based on a price of $0.08 per share, being the price at which the common equity was last sold on March 31, 2009.

State issuer's revenues for its most recent fiscal year.  $100,371 for the year ended March 31, 2009

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS:

Indicate by checkmark whether the registrant has filed all documents and reports required to be filed by Section 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes [   ]     No [   ]   N/A

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrants classes of common stock, as of the latest practicable date.  16,020,000 common shares issued and outstanding as of February 8, 2011.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).





PART I

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" and the risks set out below, any of which may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.  These risks include, by way of example and not in limitation:

·

risks and uncertainties relating to the interpretation of drill results, the geology, range and continuity of mineral deposits;

·

results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with our expectations;

·

mining and development risks, including risks related to accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in production;

·

the potential for delays in exploration or development activities or the completion of feasibility studies;

·

risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;

·

risks related to commodity price fluctuations;

·

the uncertainty of profitability based upon our history of losses;

·

risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned exploration and development projects;

·

risks related to environmental regulation and liability;

·

risks that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;

·

risks related to tax assessments;

·

political and regulatory risks associated with mining development and exploration;

·

other risks and uncertainties related to our prospects, properties and business strategy; and

·

The Company is categorized as a shell company as that term is used in the Commissions rules.

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements.  These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

Forward looking statements are made based on managements beliefs, estimates, and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performances or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

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

As used in this annual report, the terms "we", "us", "our", and "Nation Energy" mean Nation Energy Inc., unless otherwise indicated.

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

ITEM 1.  BUSINESS

We were formed under the laws of the State of Florida on April 19, 1988 under the name Excalibur Contracting, Inc. and from that date until September 1998, we conducted no business and existed as a shell corporation.  After the restatement of our Articles of Incorporation on September 16, 1998, our main focus was the procurement of mineral leasehold interests, primarily for oil and gas exploitation rights.  We reincorporated as a Delaware corporation on February 2, 2000 and changed our name to Nation Energy, Inc. on February 15, 2000.   Following the change in our focus, we commenced corporate strategic development and explored potential oil and gas projects.  On June 13, 2003 we merged from the State of Delaware with Nation Energy Inc., a corporation organized and existing under the laws of the State of Wyoming, which we incorporated for the purposes of the merger, pursuant to which we have changed our domicile to the State of Wyoming.

Due to our oil and gas operations located in Alberta, Canada, we registered as an extra-provincial company in the province of Alberta on June 3, 2003.

Since the sale of all of our oil and gas operations effective June 1, 2008, we have existed as a shell corporation and have conducted no business.  We are currently reviewing new business opportunities in the resource sector.

Corporate History and General Overview

Since 2002 our business involved the development and exploration of our oil and gas properties located in the Smoky area near Grande Prairie, Alberta, Canada. We actively participated in drilling and testing programs in well bores 09-09-59-02-W6M and 08-09-50-02-W6M.  The 08-09-50-02-W6M well was tested as uneconomic in August 2003 and the 09-09-59-02-W6M well was turned to sales in June 2004.

On January 10, 2005, we entered into a farm-in agreement with Netco Energy Inc. as to certain interests in two sections at Boltan.  Under the terms of the agreement, Netco Energy Inc. earned 60% of our 15% working interest by paying for 100% of costs related to our interests in the drilling and development of exploratory well 14-10-59-2W6, a location offsetting the 09-09-59-02-W6M well bore.  At the time of the January 10, 2005 farm-in agreement with Netco Energy Inc., Accrete Energy was the operator.  Our remaining interests in the two sections of land and 14-10-59-2W6 well bore after payout were 6% at the time.

The 14-10-59-2W6 well was successfully drilled and completed in March 2005 and began producing in June 2005 and was renamed and designated the 13-10-59-2W6 well to correctly reflect the wells surveyed bottom hole location.  Compression facilities were installed November 2005 to enable the 13-10-59-2W6 and the 09-09-59-02-W6M well bores to flow on an unrestricted and uninterrupted basis into regional sales pipelines.

Effective January 1, 2006 Churchill Energy Inc. (Churchill Energy) assumed Accrete Energys interests and became operator of the Boltan property.

In November 2006 Churchill Energy issued an operations notice to recomplete and coming-le an undeveloped zone within the 13-10-59-2W6 well bore and in November 2006 the well was shut-in, recompleted and subsequently placed back on production on March 2007.

On November 29, 2006 we entered into a letter of intent with Netco Energy Inc. pursuant to which we granted Netco the right to earn 60% of our interest in a new exploratory well proposed at Boltan, well bore 1-16-59-2W6  (the Test Well) and the land,  Section 16, Twp 59, Rge 2 W6M, on which the well is located.  A farm-in agreement was made effective January 1, 2007 (the 1-16 Farm-in Agreement)

The 1-16 Farm-in Agreement provided that Netco Energy Inc. would acquire 60% of Nations 15% interest in the Test Well and the section of land where the Test Well is located by funding Nations share of related drilling and development costs.  Netco Energy Inc. would earn a 15% before payout (and 9% after payout) interest in the Test Well.  The 1-16-59-2W6M well reached a total depth of 3,585 meters in January 2007 and was cased as a potential gas well.  Completion operations commenced in early February 2007 and were suspended later that month due to early spring break up and road access bans.  Completion operations and tie-in of the Test Well resumed in July 2007 and the Test Well was placed in production to sales in November 2007.  Effective May  1, 2008, EnCana Oil and Gas Partnership (EnCana) purchased Churchill Energys interests in the Bolton properties and assumed operator ship.

Our Current Business

Sale of Bolton Property

On September 18, 2008, Nation Energy, Netco Energy Inc., and EnCana entered into a Petroleum, Natural Gas and Related Rights Conveyance pursuant to which Nation and Netco sold all of their interests in the leases and lands comprising the Bolton Property to EnCana.  As a condition of the agreement, EnCana agreed to terminate the payable owing by Nation to EnCana as successor in interest to Churchill Energy (as successor to Accrete Energy, Olympia Energys successor) pursuant to a participation agreement between the parties dated November 21, 2001.  In connection with the sale of the Bolton properties on September 26, 2008 we entered into a termination agreement with EnCana pursuant to which we agreed to terminate the Joint Operating Agreement between Nation, High Point Resources Inc. and Churchill Energy (as Olympia Energys successor) effective June 1, 2008 and assigned all of our rights under all operating contracts relating to the Bolton Property to EnCana.  The sale of the oil and gas assets closed on September 30, 2008 with a second closing in April 2009 for total net proceeds to Nation of CDN $1,102,939 (US $1,029,385 from Encana, plus an additional CDN $160,000 (US $129,324) from Netco Energy.

The proceeds of the sale of the Bolton Property were used to partially repay amounts owed to Caravel Management Corp. under a demand promissory note dated March 31, 2006 in the original amount of CDN $980,905 (US $840,464).  Caravel Management Corp, is a private management services company wholly-owned by our sole director and officer.  As of December 31, 2010, the remaining principal and accrued interest due to Caravel totalled CDN $659,093 (US $662,671).

We currently have no business and operate as a shell company.  We are in the process of evaluating the merits of joint venture opportunities in the resource sector.

Competition

The oil and gas industry is intensely competitive.  Conducting our business in an environment that is highly competitive and unpredictable we may become involved in an acquisition with more risk or obtain financing on less favourable terms.  In seeking out prospective properties, we have encountered intense competition in all aspects of our proposed business as we compete directly with other development companies as well as established international companies.  Many of our competitors are national or international companies with far greater resources, capital and access to information than us.  Accordingly, these competitors may be able to spend greater amounts on the acquisition of prospective properties and on the exploration and development of such properties.  In addition, they may be able to afford greater geological expertise in the exploration and exploitation of mineral and oil and gas properties.  This competition could result in our competitors having resource properties of greater quality and attracting prospective investors to finance the development of such properties on more favourable terms.

Compliance with Governmental Regulations

Oil and gas operations are subject to various governmental regulations.  Matters subject to regulations 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 and local laws and regulations relating primarily to the protection of human health and the environment.  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 various interpretations.  We are unable to predict the ultimate cost of compliance or its effect on any future operations.

Employees

We have no employees other than John Hislop, our president, chief executive officer, chief financial officer and sole director.  Mr. Hislop also acts as our secretary and treasurer.  We anticipate that we will be conducting most of our business through agreements with consultants and third parties.   On January 1, 2009 we entered into a written contract with Caravel Management Corp., to provide office rent, reception, compliance and accounting services for $7,865 per month.  The agreement commenced on January 1, 2009 and continues on a month to month basis unless terminated by the parties.  The agreement may be terminated by either party upon 30 days notice.  One year following the effective date of the agreement, the monthly fee increases by 3% subject to any required regulatory or stock exchange approval.  We presently have no other employment or consulting agreements.  The agreement was amended effective November 1, 2010 to reduce the fees for administrative services to $3,500 per month.

Environment

Our prior oil and gas business was subject to laws and regulations that controlled the discharge of materials into the environment and the proper handling and disposal of waste materials. In operating and owning petroleum interests, we may be liable for damages and the costs of removing hydrocarbon spills for which we are held responsible.  Laws relating to the protection of the environment have in many jurisdictions become more stringent in recent years and may, in certain circumstances, impose strict liability, rendering our company liable for environmental damage without regard to actual negligence or fault.  Such laws and regulations may expose us to liability for the conduct of, or conditions caused by, others or for acts of our company.  We believe that we have complied in all material respects with applicable environmental laws and regulations.

ITEM 1A.  RISK FACTORS

Much of the information included in this annual report includes or 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 past or future business operations.  While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgement 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 as outlined below.  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".

Our shares of common stock are considered speculative while we continue our search for a new business opportunity.  Prospective investors should consider carefully the risk factors set out below.

We have had negative cash flows from operations and if we are not able to obtain further financing, our business operations may fail.

We had a working capital deficit of $330,790 as of March 31, 2009.  Accordingly, we will require additional funds, either from equity or debt financing, to maintain our daily operations and to continue to evaluate joint venture opportunities.  Obtaining additional financing is subject to a number of factors, including market prices, investor acceptance of any venture we may acquire in the future and investor sentiment.  If we are unable to raise additional funds when required, we may be forced to delay our plan of operation and our entire business may fail.

Because of the early stage of development and the nature of our business, our securities are considered highly speculative.

Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of our development. We were engaged in the business of exploring and, if warranted, developing commercial reserves of oil and gas. Our properties were in the exploration, development and production stage and had proven reserves of oil and gas as at March 31, 2008.   Accordingly, we realized limited revenues and profit from our operations.  Any profitability in the future will be dependent upon acquiring a new business opportunity.  In September 2008, we closed the sale of all of our oil and gas assets in the Smoky Hill area of Alberta.  The sale was effective June 1, 2008.  We are now actively looking for a new business opportunity, primarily in the resource sector.

The Company is categorized as a shell company as that term is used in the Commissions rules.

The Commissions rules prohibit the use of Form S-8 by a shell company, and require a shell company to file a Form 8-K to report the same type of information that would be required if it were filing to register a class of securities under the Exchange Act whenever the shell company is reporting the event that caused it to cease being a shell company. Being a shell company may adversely impact our ability to offer our stock to officers, directors and consultants, and thereby make it more difficult to attract and retain qualified individuals to perform services for the Company, and will likely increase the costs of registration compliance following the completion of a business combination.

A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital.  Any reduction in our ability to raise equity capital in the future could have a significant negative effect on our business plans and our ability to develop new products.  If our stock price declines, we may not be able to raise additional capital sufficient to acquire new business.

Our accounts are subject to currency fluctuations which may materially affect our financial position and results of operations.

As a result of maintaining some of our accounts in Canadian currency; we are subject to foreign exchange fluctuations.  Such fluctuations may materially affect our financial position and results of operations. We do not engage in currency hedging activities.

We may not be able to manage the significant strains that future growth may place on our administration infrastructure, systems and controls.

In the event we are able to acquire a new joint venture and experience any rapid expansion over current levels, we could experience rapid growth in revenues, personnel, complexity of administration and in other areas.  There can be no assurance that we will be able to manage the significant strains that future growth may place on our administrative infrastructure, systems, and controls.  If we are unable to manage future growth effectively, our business, operating results and financial condition may be materially adversely affected.

The loss of John Hislop would have an adverse impact on future development and could impair our ability to succeed.

We are dependent on our ability to hire and retain highly skilled and qualified personnel. We face competition for qualified personnel from numerous industry sources, and there can be no assurance that we will be able to attract and retain qualified personnel on acceptable terms. We do not have key man insurance on our employees. The loss of the services of Mr. Hislop could have a material adverse effect on our operations or financial condition.

Our management currently engages in other oil and gas businesses and, as a result, conflicts could arise.

In addition to their interest in our company, our management currently engages, and intends to engage in the future, in the oil and gas business independently of our company. As a result, conflicts of interest between us and the management of our company might arise.

Trading of our stock may be restricted by the SECs Penny Stock regulations which may limit a stockholders ability to buy and sell our stock.

The U.S. Securities and Exchange Commission has adopted regulations which generally define penny stock to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions.  Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to person other than established customers and accredited investors.  The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the 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 sales person compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customers confirmation.  In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchasers written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules.  Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities.  We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

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

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

Since our shares are thinly traded, and trading on the OTC Bulletin Board may be limited and sporadic because it is not an exchange, stockholders may have difficulty reselling their shares or liquidating their investments.

Our shares of common stock are currently listed for public trading on the Pink OTC Markets Inc.  The trading price of our shares of common stock has been subject to wide fluctuations.  Trading prices of our shares of common stock may fluctuate in response to a number of factors, many of which will be beyond our control.  The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation.  There can be no assurance that trading prices and price earnings ratios previously experienced by shares of our common stock will be matched or maintained.  These broad market and industry factors may adversely affect the market price of the shares of our common stock, regardless of our operating performance.

In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted.  Such litigation, if instituted, could result in substantial costs for us and a diversion of management's attention and resources.

Our By-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.

Our By-laws contain provisions with respect to the indemnification of our officers and directors against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment on transactions, actually and reasonably incurred by him, including an amount paid to settle an action or satisfy a judgement in a civil, criminal or administrative action or proceeding to which he is made a party by reason of his being or having been one of our directors or officers.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of our company under Wyoming law or otherwise, we have been advised that the opinion of the Securities and Exchange Commission is that such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

Investors interests in our company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities.

Our constating documents authorize the issuance of 50,000,000 shares of common stock, each with a par value of $0.001.  In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold.  If we issue any such additional shares, such issuances also will cause a reduction in the proportionate ownership and voting power of all other shareholders.  Further, any such issuance may result in a change in our control.

Our by-laws do not contain anti-takeover provisions which could result in a change of our management and directors if there is a take-over of our company.

We do not currently have a shareholder rights plan or any anti-takeover provisions in our By-laws.  Without any anti-takeover provisions, there is no deterrent for a take-over of our company, which may result in a change in our management and directors.

Since our director and officer is not a resident of the United States, investors may find it difficult to enforce, within the United States, any judgments obtained against our company or our director and officer.

We do not currently maintain a permanent place of business within the United States. In addition, our director and officer is not a resident of 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.

Risks Relating to the Industry

As our properties were primarily in the exploration and, development stage there can be no assurance that we will establish further commercial discoveries.

Exploration for economic reserves of oil and gas is subject to a number of risk factors.  While the rewards to an investor can be substantial if an economically viable discovery is made, few of the properties that are explored are ultimately developed into producing oil and/or gas wells.  There can be no assurance that we will establish further commercial discoveries.

A decline in oil and natural gas prices would have an adverse impact on our operations.

Our revenues, cash flows and profitability were substantially dependent upon prevailing prices for oil and natural gas.  In recent years, oil and natural gas prices and, therefore, the level of drilling, exploration, development and production, have been extremely volatile.  Any significant or extended decline in oil or natural gas prices would have a material adverse effect on our business, financial condition and results of operations and could impair access to future sources of capital.  Volatility in the oil and natural gas industry results from numerous factors, over which we have no control, including:

·

the level of oil and natural gas prices, expectations about future oil and natural gas prices and the ability of international cartels to set and maintain production levels and prices;

·

the cost of exploring for, producing and transporting oil and natural gas;

·

the domestic and foreign supply of oil and natural gas;

·

domestic and foreign governmental regulation;

·

the level and price of foreign oil and natural gas transportation;

·

available pipeline and other oil and natural gas transportation capacity;

·

weather conditions;

·

international political, military, regulatory and economic conditions;

·

the level of consumer demand;

·

the price and the availability of alternative fuels;

·

the effect of worldwide energy conservation measures; and

·

the ability of oil and natural gas companies to raise capital.

Significant declines in oil and natural gas prices for an extended period may:

·

impair our financial condition, liquidity, ability to finance future plans;

·

reduce the amount of oil and natural gas that we could produce economically;

·

cause us to delay or postpone some of our capital projects;

·

reduce our revenues, operating income and cash flow; and

·

reduce the carrying value of oil and natural gas properties.

No assurance can be given that current levels of oil and natural gas prices will continue.  We expect oil and natural gas prices, as well as the oil and natural gas industry generally, to continue to be volatile.

Continued financial success depends on our ability to replace our reserves in the future.

Our future success depends upon our ability to find, develop and acquire oil and natural gas reserves that are profitable.  Oil and natural gas are depleting assets, and production from oil and natural gas from properties declines as reserves are depleted with the rate of decline depending on reservoir characteristics.  If we are unable to conduct successful exploration or development activities or acquire properties containing proved reserves our cash flows will be adversely affected.  Acquiring reserves through exploration or development activities or acquisitions will require significant capital which may not be available to us.

Reserve estimates depend on many assumptions that may turn out to be inaccurate.

The process of estimating natural gas and oil reserves is complex.  It requires interpretations of available technical data and various assumptions, including assumptions relating to economic factors.  Any significant inaccuracies in these interpretations or assumptions could materially affect the estimated quantities and present value of reserves shown in this annual report.  In order to prepare these estimates, we must project production rates and timing of development expenditures.  We must also analyze available geological, geophysical, production and engineering data, and the extent, quality and reliability of this data can vary.  The process also requires economic assumptions relating to matters such as oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds.

Actual future production, oil and natural gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable oil and natural gas reserves most likely will vary from our estimates.  Any significant variance could materially affect the estimated quantities and pre-tax net present value of reserves shown in this annual report.  In addition, we may adjust estimates of proved reserves to reflect production history, results of exploration and development, prevailing oil and natural gas prices and other factors, many of which are beyond our control.

The potential profitability of oil and gas ventures depends upon factors beyond the control of our company.

The potential profitability of oil and gas properties is dependent upon many factors beyond our control.  For instance, world prices and markets for oil and gas are unpredictable, highly volatile, potentially subject to governmental fixing, pegging, controls, or any combination of these and other factors, and respond to changes in domestic, international, political, social, and economic environments.  Additionally, due to worldwide economic uncertainty, the availability and cost of funds for production and other expenses have become increasingly difficult, if not impossible, to project.  These changes and events may materially affect our financial performance.

Adverse weather conditions can also hinder drilling operations.  A productive well may become uneconomic in the event water or other deleterious substances are encountered which impair or prevent the production of oil and/or gas from the well.  In addition, production from any well may be unmarketable if it is impregnated with water or other deleterious substances.  The marketability of oil and gas which may be acquired or discovered will be affected by numerous factors beyond our control.  These factors include the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection. The extent of these factors cannot be accurately predicted but the combination of these factors may result in our company not receiving an adequate return on invested capital.

Competition in the oil and gas industry is highly competitive and there is no assurance that we will be successful in acquiring desirable oil and gas leases.

The oil and gas industry is intensely competitive. We compete with numerous individuals and companies, including many major oil and gas companies, which have substantially greater technical, financial and operational resources and staffs.  Accordingly, there is a high degree of competition for desirable oil and gas leases, suitable properties for drilling operations and necessary drilling equipment, as well as for access to funds.  We cannot predict if the necessary funds can be raised or that any project work will be completed.  Acreage may not become available or if it is available for leasing we may not be successful in acquiring the leases.

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

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

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

Oil and gas operations are subject to federal and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment.  Oil and gas operations are also subject to federal and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment.  Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received.  Environmental standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities.  Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us.

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

In general, our exploration and production activities are subject to certain federal and local laws and regulations relating to environmental quality and pollution control.  Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuance of a given operation.  Compliance with these laws and regulations did not have a material effect on our operations or financial condition to date.  Legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of state authorities.  However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance.  Generally, environmental requirements have not appeared to affect us any differently or to any greater or lesser extent than other companies in the industry. We believe that our operations complied, in all material respects, with all applicable environmental regulations. Our operating partners maintained insurance coverage customary to the industry; however, we are not fully insured against all environmental risks.

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

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

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

The laws, regulations, policies or current administrative practices of any governmental body, organization or regulatory agency in the United States or any other jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on its business. The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on our company.  Any or all of these situations may have a negative impact on our ability to operate and/or become profitable.

ITEM 1B.   UNRESOLVED STAFF COMMENTS.

None

ITEM 2.  PROPERTIES

Our principal executive office is located at Suite 900, 609 West Hastings Street, Vancouver, British Columbia, Canada V6B 4W4.  We occupy the Vancouver premises on a proportional cost basis for office rent and administration services and expenses, on a month to month basis.   We currently have a management services agreement in effect that among other administration and office services and supplies provides for office space.  At March 31, 2008 the monthly fee was $4,250 per month.  Effective January 1, 2009 the fee increased to $7,865 per month.  The fee decreased effective November 1, 2010 to $3,500 per month.  At the present time, we do not have any oil and gas holdings and there are no plans to acquire any real property interests.

ITEM 3.  LEGAL PROCEEDINGS

We know of no material, active or pending legal proceeding against our company, nor are we involved as a plaintiff in any material proceedings or pending litigation where such claim or action involves damages for more than 10% of our current assets.  There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholders are an adverse party or have a material interest adverse to us.

ITEM 4.  (REMOVED AND RESERVED)

None

PART II

ITEM 5.  MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for Securities

Our common stock is quoted for trading on the on the OTCBB under the symbol "NEGY".  Prior to March 13, 2000, our common stock traded on the OTCBB under the symbol "XCNT", which was a result of a change in our name from Excalibur Contracting, Inc. to our current name. On August 17, 2006 our stock symbol was deleted from the OTC Bulletin Board and resumed trading on the Pink OTC Markets Inc.  The following quotations (obtained from Stockwatch) reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.  The high and low prices of our common stock for the periods indicated below are as follows:



|Quarter Ended      | High   | Low   
|------------------ | ------ | ------
|December 31, 2010  | $0.010 | $0.006
|September 30, 2010 | $0.020 | $0.010
|June 30, 2010      | $0.010 | $0.010
|March 31, 2010     | $0.090 | $0.010
|December 31, 2009  | $0.090 | $0.012
|September 30, 2009 | $0.020 | $0.012
|June 30, 2009      | $0.080 | $0.020



Our shares of common stock are issued in registered form. Interwest Transfer Co., Inc., of 1981 Murray Holladay Road, Suite 100, P.O. Box 17136, Salt Lake City, UT 84117 (Telephone: 801.272.9294, facsimile: 801.277.3147) is the registrar and transfer agent for our shares of common stock.

Holders of our Common Stock

As of January 31, 2011, we had 16,020,000 shares of common stock outstanding and approximately 23 stockholders of record.  This number of stockholders does not include stockholders who hold our securities in street name.

Recent Sales of Unregistered Securities

None.

Dividend Policy

We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock.  Our future dividend policy will be determined from time to time by our board of directors.

Securities Authorized for Issuance under Equity Compensation Plans

We adopted our current stock option plan, entitled the 1999 Stock Option and Incentive Plan, on May 6, 1999 which was subsequently approved by over 50% of the shares of common stock held by stockholders of our company.  The plan authorized up to 2,500,000 shares of our common stock to be granted as incentive options.  On February 26, 2003, options to purchase 225,000 common shares were granted to the Companys Chief Executive Officer and Chief Financial Officer and vested immediately upon grant.  The options were granted at an exercise price of $0.10 expiring February 26, 2008.  The remaining options under this grant expired unexercised during the year ended March 31, 2008.  The following table provides a summary of the number of options granted under our stock option plan, the weighted average exercise price and the number of options remaining available for issuance as at March 31, 2009.

|Number of Common Shares to be issued upon exercise of outstanding options | Weighted-Average exercise price of outstanding options | Number of options remaining available for further issuance
|------------------------------------------------------------------------- | ------------------------------------------------------ | ----------------------------------------------------------
|-                                                                         | -                                                      | 2,500,000                                                 

Recent Sales of Unregistered Securities

We did not issue any shares during the fiscal years ended March 31, 2009 and 2008.

ITEM 6.   SELECTED FINANCIAL DATA

Not applicable

ITEM 7.  MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this annual report.  The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those discussed in the forward looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" found under "Item 1.  Description of Business".

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

Plan of Operation

For the next twelve months we plan to continue to evaluate joint venture opportunities and oil and gas development and production opportunities.

Cash Requirements

Over the next twelve months we intend to use funds to evaluate new business acquisitions, as follows:

Estimated Funding Required During the Next Twelve Months



|General and Administrative | $70,000 
|-------------------------- | --------
|                           |         
|Professional Fees          | 60,000  
|                           |         
|                           |         
|Total                      | $130,000

We have suffered recurring losses from operations.  The continuation of our company as a going concern is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. Management's plan in this regard is to raise additional capital through a debt or an equity offering.  The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our company discontinue operations.

Due to the uncertainty of our ability to meet our current operating expenses noted above, in their report on the annual financial statements for the year ended March 31, 2009, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern.  Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

The continuation of our business is dependent upon obtaining further financing, a successful program of exploration, and, finally achieving a profitable level of operations.  The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders.  Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further funds required for our continued operations.  We are pursuing various financing alternatives to meet our immediate and long-term financial requirements.  There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms.  If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due.  In such event, we will be forced to scale down or perhaps even cease our operations.

Disclosure of Outstanding Share Data

As at the date of this annual report, we had 16,020,000 shares of common stock issued and outstanding.  We do not have any warrants, options or shares of any other class issued and outstanding as at the date of this annual report.

RESULTS OF OPERATIONS  Years Ended March 31, 2009 and 2008

The following summary of our results of operations should be read in conjunction with our financial statements for the year ended March 31, 2009, which are included herein.

Our operating results for the year ended March 31, 2009, for the year ended March 31, 2008 and the changes between those periods for the respective items are summarized as follows:



|                                         | Year Ended March 31, 2009 | Year Ended March 31, 2008 | Difference Increase/(Decrease) %
|---------------------------------------- | ------------------------- | ------------------------- | --------------------------------
|Revenue                                  | $100,371                  | $266,037                  | (62.3)%                         
|Miscellaneous income                     | $Nil                      | $9,394                    | (100)%                          
|Depletion, depreciation and amortization | $Nil                      | $119,578                  | (100)%                          
|General and administrative               | $101,221                  | $91,422                   | 10.7%                           
|Interest expense                         | $147,543                  | $166,729                  | (11.5)%                         
|Oil and gas operating expenses           | $59,926                   | $91,180                   | (34.3)%                         
|Royalty expense                          | $6,023                    | $12,615                   | (52.3)%                         
|(Loss) on sale of properties             | ($46,899)                 | $Nil                      | 100%                            
|Gain on relief of debt                   | $480,507                  | $Nil                      | 100%                            
|Interest income                          | $932                      | $936                      | (0.4)%                          
|Net income (loss)                        | $220,198                  | $(205,157)                | 207.3%                          

We generated net income of $220,198 for the year ended March 31, 2009 compared to a net loss of $205,157 for the year ended March 31, 2008.  Net earnings (loss) per common share for the year ended March 31, 2009 was $0.01 compared to $(0.01) per common share for the year ended March 31, 2008.  We determined there was no impairment for the year ended March 31, 2008 and effective June 1, 2008 we sold all of our oil and gas properties resulting in no further impairment, depletion, depreciation or amortization expenses.  Based on an independent evaluation of our reserves depletion, depreciation and amortization expense amounts totalled $119,578 for the year ended March 31, 2008.  Revenues for the period ended March 31, 2009 decreased to $100,371 from $266,037 for the year ended March 31, 2008.  The decrease was a due to the sale of the oil and gas producing properties.  As a result of the sale, royalty and operating expenses decreased as well to $6,023 and $59,926 for the year ended March 31, 2009 from $12,615 and $91,180 respectively in the prior year.    General and administrative expenses increased to $101,221 from $91,422.

Interest expense for fiscal 2009 totalled $147,543 compared to $166,729 for fiscal 2008.  The decrease reflected the lower average outstanding balance of shareholder loans in fiscal 2009 versus fiscal 2008.

We reported a foreign currency translation gain of $19,768 in fiscal 2009 compared to a loss of $123,486 in fiscal 2008.  Our revenues and expenses are incurred in Canadian dollars while the reporting currency is the US dollar.  The value of the Canadian dollar in the current fiscal year ended March 31, 2009 remained fairly consistent compared to a sharp rise in the value of the Canadian dollar during the prior fiscal year ended March 31, 2008.  The rise in fiscal 2008 resulted in a foreign currency translation loss primarily as a result of our loans payable being due in Canadian dollars.  The Canadian dollar remained fairly consistent, dropping slightly in value during fiscal 2009 resulting in a gain on translation.

The major components of our general and administrative expenses for the year are outlined in the table below:



|                             | Year Ended March 31, 2009 | Year Ended March 31, 2008 | Difference Increase/(Decrease) %
|---------------------------- | ------------------------- | ------------------------- | --------------------------------
|Administration fees          | $62,575                   | $50,761                   | 23.3%                           
|Office & MIS                 | $4,944                    | $3,819                    | 29.5%                           
|Consulting Fees              | $3,186                    | $3,148                    | 1.2%                            
|Legal fees                   | $7,799                    | $2,746                    | 184.0%                          
|Transfer Agent & Filing Fees | $4,117                    | $6,862                    | (40.0)%                         
|Accounting                   | $18,600                   | $24,086                   | (22.8)%                         
|Total Expenses               | $101,221                  | $91,422                   | 10.7%                           

General and administrative expenses increased to $101,222 in fiscal 2009 from $91,422 in fiscal 2008.  General expenses included an increase in administration fees to $62,575 in fiscal 2009 from $50,761 in fiscal 2008.  Consulting fees rose slightly to $3,186 for the year ended March 31, 2009 from $3,148 for the prior year ended March 31, 2008.  Office expenses and Management Information System fees increased to $4,946 in fiscal 2009 from $3,819 due primarily to travel charges incurred during the current fiscal period of $1,831.  Legal fees increased to $7,799 in fiscal 2009 from $2,746 in the prior fiscal year mainly due to legal fees associated with the sale of our oil and gas properties.  Filing fees and transfer agent fees decreased to $4,117 in fiscal 2009 from $6,862 in the prior fiscal period.  Accounting fees decreased to $18,600 for the year ended March 31, 2009 from $24,086 in the prior year ended March 31, 2008.  The decrease in filing and accounting fees was due to fewer filings and accounting reviews booked in the current year.

Liquidity and Financial Condition

Working Capital

|                             | Year Ended March 31, 2009 | Year Ended March 31, 2008
|---------------------------- | ------------------------- | -------------------------
|Current Assets               | $125,003                  | $797,671                 
|Current Liabilities          | $455,793                  | $2,263,456               
|Working Capital (Deficiency) | ($330,790)                | ($1,465,785)             



Cash Flows

|                                                      | Year Ended March 31, 2009 | Year Ended March 31, 2008
|----------------------------------------------------- | ------------------------- | -------------------------
|Cash flows (used in) Operating Activities             | $(645,791)                | $(42,534)                
|Cash flows provided by (used in) Investing Activities | $1,070,021                | $(52,944)                
|Cash flows provided by (used in) Financing Activities | $(454,877)                | $151,459                 
|Effect of exchange rate changes on cash               | $19,768                   | $(24,260)                
|Net increase (decrease) in Cash                       | $(10,879)                 | $31,721                  

Operating Activities

Net cash (used in) operating activities was ($645,791) in the year ended March 31, 2009 compared with net cash (used in) operating activities of ($42,534) in the same period in 2008.  The increase in cash (used in) operating activities of $603,257 is mainly attributed to a decrease in accounts payable of $334,418 and a further decrease of $183,789 in loans payable due to a related party.  Partially offsetting the decrease in accounts payable was net income for the current year of $220,198 compared to a (loss) of ($205,157) for the prior fiscal year ended March 31, 2008, as well as gain on the relief of debt of $480,507, compared to $Nil in the prior year.

Investing Activities

Net cash (used in) investing in our Companys oil and gas properties decreased from ($52,945) for the year ended March 31, 2008 to proceeds from the sale of our properties providing cash of $1,070,021in the year ended March 31, 2009.

Financing Activities

Net cash (used in) financing activities was ($454,877) in the year ended March 31, 2009 compared to $151,459 provided by financing activities in the year ended March 31, 2008.  The difference resulted from payments on the loan amounting to $454,877 for the year ended March 31, 2009 compared to loan proceeds of $151,459 during the year ended March 31, 2008.

Loans Payable

On March 31, 2006, we entered into a revised loan agreement with a related party.  The loan bears interest at 15% per annum, calculated and compounded monthly and payable quarterly.  Any principal amount outstanding under the loan is payable upon demand.  The loan payable is in Canadian dollars and is secured by a Promissory Note.  As of March 31, 2007, the balance of the loan and accrued interest payable, converted to US dollars was $851,967.  During the year ended March 31, 2008, we borrowed an additional CDN $160,000 (US $151,459) and together with interest the balance of the loan and accrued interest was CDN $1,314,101 (US $1,278,433).  During the year ended March 31, 2009 payments applied to our loan amounted to CDN $565,089 (US $454,877).  At March 31, 2009 the loan together with interest totalled CDN $516,127 (US $409,560).  During the year ended March 31, 2010 we paid an additional CDN $60,603 (US $53,190) and borrowed an additional CDN $4,169 (US $3,915) bringing the total, with accrued interest to CDN $510,239 (US $502,402) at March 31, 2010.  We borrowed an additional CDN $85,094 (US $83,270) and together with accrued interest the loan balance totalled CDN $659,093 (US $662,671) at December 31, 2010.



Going Concern

The audited financial statements accompanying this report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business.  Our Company has incurred losses since inception in excess of $7 million and has only generated modest profitable operations when we commenced gas production in fiscal 2006.  We have relied solely on shareholder advances to participate and continue operations.

Our companys ability to continue as a going concern is contingent upon being able to secure financing and attain profitable operations.  Our company is currently evaluating business opportunities and will require financing for acquisition of any new business venture.

Net cash (used in) operating activities in fiscal 2009 totalled ($645,791) versus net cash (used in) operating activities of ($42,534) in fiscal 2008.  Cash balances were $35,973 and $46,852, as of March 31, 2009 and March 31, 2008, respectively.

We entered into bridge loan agreements with a related party, in 2003 and 2004 to fund operations.  The terms of these bridge loan agreements provided that any principal amount outstanding is payable upon demand and bears interest at 15% per annum, payable quarterly. On March 31, 2006, we consolidated and restructured our loans with the related party.  As part of the restructuring, we borrowed an additional CDN $250,000 (US $203,932).  The new loan bears interest at 15% per annum, calculated and compounded monthly and is payable quarterly. Any principal amount outstanding under the loan is payable upon demand.  The loan is payable in Canadian dollars and is secured by a Promissory Note.

We made payments that were applied to the loan of CDN $565,089 (US $454,877) in fiscal 2009, compared to receiving net proceeds of CDN $160,000 (US $151,459) in fiscal 2008.  Accordingly, the principal balances outstanding under the loan agreement totalled $393,443 at March 31, 2009 versus $1,032,109 at March 31, 2008.  At December 31, 2010 the balance of principal and accrued interest was CDN $659,093 (US $662,671).

We have limited operating history.  We can only estimate the future needs for capital based on the current status of our operations, our current plans and current economic condition.  Due to the uncertainties regarding our future activities, we are unable to predict precisely what amount will be used for any particular purpose.

Future Financings

As of December 31, 2010, we had cash of US $1,800.  We currently do not have sufficient funds to acquire and develop any future joint ventures.  We anticipate continuing to rely on shareholder loans or equity sales of our common stock in order to fund our business operations.   Issuances of additional shares will result in dilution to our existing stockholders.  There is no assurance that we will achieve any additional sales of our equity or arrange for more debt or other financing to fund any future activities.

Off-Balance Sheet Arrangements

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

New Accounting Pronouncements



In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles.  SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States.  It is effective 60 days following the SECs approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.  The adoption of this statement did not have a material effect on our companys financial statements.



In May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts  An interpretation of FASB Statement No. 60.  SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation.  It also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities, and requires expanded disclosure about financial guarantee insurance contracts.  It is effective for financial statements issued for fiscal years beginning after December 15, 2008, except for some disclosures about the insurance enterprises risk-management activities.  SFAS 163 requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period beginning after issuance.  Except for those disclosures, earlier application is not permitted.  The adoption of this statement did not have a material effect on our companys financial statements.



In October 2008, the FASB issued FSP FAX 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active (FSP FAX 157-3), to help constituents measure fair value in markets that are not active.  FSP FAX 157-3 is consistent with the joint press release the FASB issued with the Securities and Exchange Commission (SEC) on September 30, 2008, which provides general clarification guidance on determining fair value under SFAS No. 157 when markets are inactive.  FSP FAS 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued.  The adoption of FSP 157-3 did not have a material impact on the Companys financial statements.



In December 2008, the SEC adopted major revisions to its rules governing oil and gas company reporting requirements.  These include the provisions that permit the use of new technologies to determine proved reserves and allow companies to disclose their probable and possible reserves to investors.  These disclosure requiremtnes also require companies to report the independence and qualifications of the person primarily responsible for the preparation or audit of reserve estimates, and to file reports when a third party is relied upon to prepare or audit reserves estimates.  The new rules also require that oil and gas reserves be reported and the full-cost ceiling value calculated using an average price based upon the prior 12-month period.  The new oil and gas reporting requirements are effective for annual reports on Form 10K for fiscal years ending on or after December 31, 2009, with early adoption not permitted.  Adoption did not have a material impact on our financial position, results of operations and financial disclosures.



In April 2009, the FASB issued two FASB Staff Positions (FSP) intended to provide additional application guidance and enhanced disclosures regarding fair value measurements and impairments of securities.  FSP No. FAS 157-4, Determining Fair Value When the Volume or Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, as codified in FASB ASC topic Fair Value Measurement and Disclosure, provides additional guidelines for estimating fair value in accordance with FASB SFAS No. 157, Fair Value Measurements (SFAS 157).  Adoption did not have a material impact on our financial position, results of operations and financial disclosures.



In May 2009, FASB issued ASC 855, Subsequent Events, which establishes general standards for the evaluation, recognition and disclosure of events and transactions that occur after the balance sheet date.  Although there is new terminology, the standard is based on the same principles as those that currently exist in the auditing standards.  The standard is effective for interim or annual periods ending after June 15, 2009.  The adoption of ASC 855 did not have a material effect on our companys financial statements.



In June 2009, the FASB issued Accounting Standards Codified (ASC) 855 (previously SFAS 165. Subsequent Events) which establishes general standards for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or available to be issued. It is effective for interim and annual periods ending after June 15, 2009. Adoption did not have a material impact on our financial statements.



In June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for determining whether to consolidate a variable interest entity.  These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary.  This Statement is effective for reporting periods beginning after November 15, 2009.  Adoption of this ASC did not have a material impact on our financial statements.



In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, as codified in FASB ASC topic Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162.  This standard establishes only two levels of GAAP, authoritative and non-authoritative.  This ASC was not intended to change or alter existing GAAP, and the Companys adoption effective September 1, 2009, did not have a material impact on our financial statements other than to modify certain existing disclosures.



In June 2009, the FASB issued guidance now codified as ASC subtopic 105-10, Generally Accepted Accounting Principles as the single source of authoritative accounting principles to be applied by non-government entities in the preparation of financial statements in conformity with U.S. GAAP, aside from those issued by the SEC.  This ASU reflected the issuance of FASB Statement No. 168.  The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place.  The Codification is effective for interim and annual periods ending after September 15, 2009, and as of the effective date, all existing accounting standard documents are superseded.



In June 2009, the FASB issued Accounting Standards Update (ASU) 2009-02, Omnibus Update-Amendments to Various Topics for Technical Corrections.  The omnibus ASU detailed amendments to various topics for technical corrections.  The adoption of ASU 2009-02 did not have a material impact on our financial statements.



In August 2009, the FASB issued ASU 2009-03, SEC Update-Amendments to Various Topics Containing SEC Staff Accounting Bulletins.  This ASU updated cross-referenced to Codification text.  The adoption of ASU 2009-03 did not have a material impact on our financial statements.



In August 2009, the FASB issued ASU 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value.  These amended standards clarify that in circumstances in which a quoted price in an active market for the identical liabilities is not available, we are required to use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, or quoted prices for similar liabilities when traded as assets.  If those quoted prices are not available, we are required to use another valuation technique, such as income approach or a market approach.  These amended standards are effective from October 1, 2009, and did not have a significant impact on our financial statements.



In September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740), Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Non-public Entities, which provides implementation guidance on accounting for uncertainty in income taxes, as well as eliminates certain disclosure requirements for non-public entities.  This update is effective for interim and annual periods ending after September 15, 2009.  The adoption of this standard did not have an impact on the Companys financial position and results of operations since it provides only implementation and disclosure amendments.



In September 2009, the FASB issued ASU 2009-07, Technical Corrections to SEC Paragraphs.  This corrected various SEC paragraphs to comment letters.  The adoption of ASU 2009-07 did not have a material impact on our financial statements.



In September 2009, the FASB issued ASU 2009-12, Fair Value Measurements and Disclosures (Topic 820)  Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent).  This ASU amends Subtopic 820-10, Fair Value Measurements and Disclosures  Overall, to permit a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent).  This ASU also requires new disclosures, by major category of investments including the attributes of investments within the scope of this amendment to the Codification.  The guidance in this update is effective for interim and annual periods ending after December 15, 2009.  The adoption of this standard did not have an impact on the Companys financial position and results of operations.



In October 2009, the FASB issued guidance on revenue recognition that will become effective for the company beginning April 1, 2010, with earlier adoption permitted.  Under the new guidance on arrangements that include software elements, tangible products that have software components that are essential to the functionality of the tangible product will no longer be within the scope of the software revenue recognition guidance, and software-enabled products will now be subject to other relevant revenue recognition guidance.  In addition, the FASB issued guidance on revenue arrangements with multiple deliverables that are outside the scope of the software revenue recognition guidance.  Under the new guidance, when vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangements consideration using the relative selling price method.  The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition.  Adoption of this new guidance did not have a material impact on our financial statements.



In December 2009, the FASB issued ASU 2010-06 Fair Market Value Measurements and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements.  This ASU requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement as set for the in ASC Subtopic 820-10.  The FASBs objective is to improve these disclosures and, thus, increase the transparency in financial reporting.  The adoption of this ASU did not have a material impact on our financial statements.



In January 2010, the FASB issued ASU 2010-03, Oil and Gas Reserve Estimation and Disclosures (ASU 2010-03), which provides amendments to ASC topic Extractive Activities-Oil and Gas.  The objective of ASU 2010-03 is to align the oil and gas reserve estimation and disclosure requirements of the ASC with the requirements of the SECs Modernization of Oil and Gas Reporting:  Final Rule.  Similar to the SEC requirements, the FASB requirements were effective for periods ending on or after December 31, 2009.  The SEC introduced a new definition of oil and gas producing activities which allows companies to include volumes in their reserve base from unconventional resources.  The FASB also addresses the impact of changes in the SECs rules and definitions on accounting for oil and gas producing activities.  Initial adoption did not have an impact on our Companys financial statements because we had sold our oil and gas interests prior to adoption.



In January 2010, the FASB issued ASU 2010-04, Accounting for Various Topics  Technical Corrections to SEC Paragraphs.  ASU 2010-04 makes technical corrections to existing SEC guidance, including the following topics:  accounting for subsequent investments termination of an interest rate swap, issuance of financial statements  subsequent events, use of residential method to value acquired assets other than goodwill, adjustments in assets and liabilities for holdings for holding gains and losses, and selections of discount rate used for measuring defined benefit obligation.  Adoption did not have a material impact on our financial statements.



In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements (ASU 2010-06), which provides amendments to ASC topic Fair Value Measurements and Disclosures.  This will provide more robust disclosures about (i) the different classes of assets and liabilities measured at fair value, (ii) the valuation techniques and inputs used, (iii) the activity in Level 3 fair value measurements, and (iv) the transfers between Levels 1, 2 and 3.  ASU 2010-06 is effective for fiscal years and interim periods beginning after December 15, 2009.  Adoption did not have a material impact on our financial statements.



In February 2010, the FASB issued ASU 2010-09, Subsequent Events (Topic 855).  The amendments remove the requirements for an SEC filer to disclose a date, in both issued and revised financial statements, through which subsequent events have been reviewed.  Revised financial statements include financial statements revised as a result of either correction or an error or retrospective application of U.S. GAAP.  ASU 2010-09 is effective for interim or annual financial periods ending after June 15, 2010.  The provisions of ASU 2010-09 did not have a material effect on the financial position, results of operations or cash flows of the Company.



In April 2010, the FASB issued ASU 2010-12, Income Taxes  (Topic 740).  ASU 2010-12 amends FASB Accounting Standard Codification subtopic 740-10 Income Taxes to include paragraph 740-10-599-4.  On March 30, 2010 The President signed the Health Care & Education Affordable Care Act reconciliation bill that amends its previous Act signed on March 23, 2010.  FASB ASC topic 740, Income Taxes, requires the measurement of current and deferred tax liabilities and assets to be based on provisions of enacted tax law.  The effects of future changes in tax laws are not anticipated.  Therefore, the different enactment dates of the Act and reconciliation measure may affect registrants with a period end that falls between March 23, 2010 (enactment date of the Act), and March 30, 2010 (enactment date of the reconciliation measure). However, the announcement states that the SEC would not object if such registrants were to account for the enactment of both the Act and the reconciliation measure in a period ending on or after March 23, 2010, but notes that the SEC staff does not believe that it would be appropriate for registrants to analogize to this view in any other fact patterns.  The adoption of this standard did not have a material impact on our financial position and results of operations.



In April 2010, the FASB issued ASU 2010-14, Accounting for Extractive Activities  Oil and Gas.  ASU 2010-14 amends paragraph 932-10-599-1 due to SEC Release No. 33-8995, Modernization of Oil and Gas Reporting.  The amendments to the guidance on oil and gas accounting are effective August 31, 2010, and did not have a significant impact on the Companys financial position, as effective June 1, 2008, the Company sold its oil and gas properties in the Smoky Hill Area of Alberta, Canada.



In May 2010, the FASB issued ASU 2010-19 (ASU 2010-19), Foreign Currency (Topic 830):  Foreign Currency Issues:  Multiple Foreign Currency Exchange Rates.  The amendments in this update are effective as of the announcement date of March 18, 2010.  The provisions of ASU 2010-19 did not have a material effect on the financial position, results of operations or cash flows of the Company.



On August 12, 2010, the FASB issued ASU 2010-21, Accounting for Technical Amendments to Various SEC Rules and Schedules  Amendments to SEC Paragraphs Pursuant to Release No. 33-9026:  Technical Amendments to Rules, Forms, Schedules and Consolidation of Financial Reporting Policies.  The ASU reflects changes made by the SEC in Final Rulemaking Release No. 33-9026, which was issued in April 2009 and amended SEC requirements in Regulation S-X (17 CFR 210.1-01 et seq.) and Regulation S-K (17 CFR 229.10 et seq.) and made changes to financial reporting requirements in response to the FASBs issuance of SFAS No. 141(R), Business Combinations (ASC 805), and SFAS No. 160 Non-controlling Interests in Consolidated Financial Statements  an amendment of ARB No. 51 (FASB ASC 810).  The provisions of ASU 2010-21 did have a material impact on its financial statements.



In December 2010, the FASB issued ASU 2010-29 Business Combinations (Topic 805): Disclosure of Supplementary Pro-Forma Information for Business Combinations. This amendment affects any public entity as defined by Topic 805, Business Combinations that enters into any business combinations on an individual or aggregate basis. The comparative financial statements should present and disclose  revenue and earnings of the combined entity as though the business combination(s) that occurred during the current period had occurred as of the beginning of the comparable prior annual reporting period only.The amendment also expands the supplemental pro-forma disclosures to include a description of the nature and amount of material, non-recurring pro-forma adjustments directly attributable to the business combination included in the reported pro-forma revenue and earnings. The amendment is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The adoption of ASU 2010-26 will not have a material effect on the Companys financial statements.



There were  various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Companys financial position, results of operations or cash flows.





Application of Critical Accounting Policies

The financial statements of our company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. The financial statements have, in managements opinion, been properly prepared within reasonable limits of materiality and within the framework of the critical accounting policies summarized below:

Estimates

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used in the United States.  Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses.  These estimates and assumptions are affected by managements application of accounting policies.  We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.  Actual results could differ from those estimates.

Fair Value of Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2009. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts payable, and accounts payable to a related party. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

Long-Lived Assets

In accordance with ASU 360-10-45, Accounting for the Impairment or Disposal of Long-Lived Assets, the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment.  We recognize impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset.  Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.

Oil and Gas Properties

We followed the full cost method of accounting for oil and gas operations whereby all costs associated with the exploration for and development of oil and gas reserves, whether productive or unproductive, were capitalized. Such expenditures include land acquisition costs, drilling, exploratory dry holes, geological and geophysical costs not associated with a specific unevaluated property, completion and costs of well equipment. Internal costs were capitalized only if they could be directly identified with acquisition, exploration, or development activities. As of March 31, 2009, we have not capitalized any internal costs.

The capitalized costs included in the full cost pool are subject to a ceiling test, which limits such costs to the aggregate of the estimated present value, using a ten percent discount rate, of the future net revenues from proved reserves, based on current economic and operating conditions plus the lower of cost and estimated net realizable value of unproven properties.  Expenditures that are considered unlikely to be recovered are written off.

On September 30, 2008, we closed on the sale of our oil and gas properties located in the Smoky Hill area of Alberta Canada.  The sale was effective June 1, 2008.

On a quarterly basis our board of directors assess whether or not there is an asset impairment.  The former oil and gas activities were considered to be in the exploration, development and production stage.

We periodically review the carrying amount of our unproved oil and gas properties to determine whether current events or circumstances warrant adjustments to such carrying amounts.  In the year ended March 31, 2003, we recognized an impairment loss related to the abandonment of an initial test well.  In the year ended March 31, 2007, our company obtained an independent evaluation of its reserves and, as a consequence, determined that there was an impairment and recognized an impairment loss.

Depletion and depreciation of the capitalized costs for producing oil and gas properties will be provided by the unit-of-production method based on proved oil and gas reserves.  The Company obtained an independent evaluation as of March 31, 2008 which established proved reserves.  As a consequence, our company initiated charging depletion and depreciation in the year ended March 31, 2006.

Revenue Recognition

Oil and natural gas revenues were recorded using the sales method whereby our company recognized oil and natural gas revenue based on the amount of oil and gas sold to purchasers when title passes, the amount is determinable and collection is reasonably assured.  Actual sales of gas are based on sales, net of the associated volume charges for processing fees and for costs associated with delivery, transportation, marketing, and royalties in accordance with industry standards.  Operating costs and taxes are recognized in the same period of which revenue is earned.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

The following audited financial statements are filed as part of this annual report:

Report of Independent Registered Public Accounting Firm, dated January 11, 2011

Balance Sheets at March 31, 2009 and 2008

Statements of Operations and Comprehensive Income (Loss) for the years ended March 31, 2009 and 2008, and Cumulative Amounts from June 1, 2008 (Inception of the Development Stage) through March 31, 2009

Statements of Changes in Stockholders' Equity (Deficit) for the years ended March 31, 2009 and 2008, and Cumulative Amounts from June 1, 2008 (Inception of the Development Stage) through March 31, 2009

Statements of Cash Flows for the years ended March 31, 2009 and 2008, and Cumulative Amounts from June 1, 2008 (Inception of the Development Stage) through March 31, 2009

Notes to the Financial Statements





StarkSchenkein, LLP

BUSINESS ADVISORS & CPAs



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Shareholders and Board of Directors

Nation Energy, Inc.



We have audited the accompanying balance sheets of Nation Energy, Inc., as of March 31, 2009 and 2008, and the related statements of operations, stockholders' (deficit), and cash flows for the years then ended and the development stage period of June 1, 2008, to March 31, 2009.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.



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



The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, has no current source of operating revenues, and needs to secure financing to remain a going concern.  These factors raise substantial doubt about the Companys ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nation Energy, Inc., as of March 31, 2009 and 2008, and the results of its operations, stockholders' (deficit), and its cash flows for the years then ended and the period June 1, 2008, to March 31, 2009, in conformity with accounting principles generally accepted in the United States of America.



StarkSchenkein, LLP



Denver, Colorado

January 11, 2011











|Nation Energy, Inc.                                  
|-----------------------------------------------------
|(A Development Stage Company)                        
|Balance Sheets                                       
|March 31, 2009 and 2008                              
|                                                     
|ASSETS                                               
|                                                     
|                                                     
|                                                     
|                                                     
|Current assets:                                      
|Cash                                                 
|Accounts receivable                                  
|Prepaid expenses                                     
|Total current assets                                 
|                                                     
|Oil and gas properties, net - full cost method       
|                                                     
|                                                     
|                                                     
|                                                     
|LIABILITIES AND STOCKHOLDERS' (DEFICIT)              
|                                                     
|Current liabilities:                                 
|Accounts payable                                     
|Accounts payable and accrued expenses - related party
|Loans payable - related party                        
|Total current liabilities                            
|                                                     
|Asset retirement obligation                          
|                                                     
|                                                     
|Stockholders' (deficit)                              
|Preferred stock, $.001 par value; 5,000,000          
|shares authorized; none outstanding                  
|Common stock, $.001 par value; 50,000,000            
|shares authorized; 16,020,000 shares issued          
|and outstanding                                      
|Additional paid-in capital                           
|Accumulated (deficit) prior to the development stage 
|Accumulated (deficit) during the development stage   
|Accumulated comprehensive (loss):                    
|Foreign currency translation                         
|                                                     
|                                                     
|                                                     



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

F-1











|Nation Energy, Inc.                                                          
|-----------------------------------------------------------------------------
|(A Development Stage Company)                                                
|Statements of Operations and Comprehensive Income (Loss)                     
|For the Years Ended March 31, 2009 and 2008                                  
|and Cumulative Amounts from June 1, 2008 (Inception of the Development Stage)
|to March 31, 2009                                                            
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Revenue:                                                                     
|Direct expenses:                                                             
|Royalties                                                                    
|Operating                                                                    
|Depletion, depreciation and amortization                                     
|                                                                             
|                                                                             
|Operating income                                                             
|                                                                             
|General and administrative                                                   
|                                                                             
|(Loss) before other income (expense)                                         
|                                                                             
|Other income (expense)                                                       
|(Loss) on sale of properties                                                 
|Gain on relief of debt                                                       
|Interest expense                                                             
|Miscellaneous income                                                         
|Interest income                                                              
|                                                                             
|Net income (loss)                                                            
|                                                                             
|Foreign currency translation gain (loss)                                     
|                                                                             
|Comprehensive income (loss)                                                  
|                                                                             
|Per share information:                                                       
|                                                                             
|Weighted average number of common                                            
|shares outstanding - basic and diluted                                       
|                                                                             
|Net earnings (loss) per common share - basic and diluted                     



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

F-2











|Nation Energy, Inc.                                                          
|-----------------------------------------------------------------------------
|(A Development Stage Company)                                                
|Statement of Changes in Stockholders' (Deficit)                              
|for the Years Ended March 31, 2008 and 2009                                  
|and Cumulative amounts from June 1, 2008 (Inception of the Development Stage)
|to March 31, 2009                                                            
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Balance at March 31, 2007                                                    
|                                                                             
|Comprehensive (loss)                                                         
|                                                                             
|Net (loss)                                                                   
|                                                                             
|Balance at March 31, 2008                                                    
|                                                                             
|Comprehensive income                                                         
|                                                                             
|Net income (loss)                                                            
|                                                                             
|Balance at March 31, 2009                                                    



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

F-3











|Nation Energy, Inc.                                                          
|-----------------------------------------------------------------------------
|(A Development Stage Company)                                                
|Statements of Cash Flows                                                     
|For the Years Ended March 31, 2009 and 2008                                  
|and Cumulative Amounts from June 1, 2008 (Inception of the Development Stage)
|to March 31, 2009                                                            
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Cash flows from operating activities:                                        
|Net income (loss)                                                            
|Adjustments to reconcile net income (loss) to net cash                       
|(used in) operating activities:                                              
|Depletion and depreciation                                                   
|Loss on sale of properties                                                   
|(Gain) on relief of debt                                                     
|Changes in working capital:                                                  
|(Increase) decrease in accounts receivable                                   
|Decrease in prepaid expenses                                                 
|Increase (decrease) in accounts payable                                      
|Increase (decrease) in accounts payable - related party                      
|Net cash (used in) operating activities                                      
|                                                                             
|Cash flows from investing activities:                                        
|(Additions) to oil and gas properties                                        
|Proceeds from sale of properties                                             
|Net cash provided by (used) in investing activities                          
|                                                                             
|Cash flows from financing activities:                                        
|Proceeds from loan payable - related party                                   
|Payments on loan payable - related party                                     
|Net cash provided by (used in) financing activities                          
|                                                                             
|Effect of currency rate change                                               
|                                                                             
|Net increase (decrease) in cash                                              
|                                                                             
|Beginning balance, cash                                                      
|                                                                             
|Ending balance, cash                                                         
|                                                                             
|Supplemental cash flow information:                                          
|Cash paid for interest                                                       
|Cash paid for income taxes                                                   
|                                                                             
|Non-cash investing and financing activities:                                 
|Accounts receivable pursuant to sale of properties                           
|Accounts receivable given up pursuant to sale of properties                  
|Oil and gas properties sold                                                  
|Accounts payable relieved pursuant to sale of properties                     



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

F-4









Nation Energy Inc.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2009 and 2008



Note 1.  NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN



Nation Energy Inc. (the Company), was incorporated on April 19, 1988, in the State of Florida as Excalibur Contracting, Inc.  The Company was reincorporated as a Delaware corporation and changed its name to Nation Energy, Inc. in February 2000. On June 13, 2003, the Company reincorporated as a Wyoming corporation.  The Company was an oil and gas exploration, development and production company with properties located in Alberta Canada. Effective June 1, 2008, the Company sold all of its oil and gas properties in the Smoky Hill area of Alberta and is currently reviewing other prospects (see Note 3).  To implement any new business plan, significant financing will be required and the Company will need to be successful in its efforts to identify, acquire and develop a new business venture.



The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern.  The Company has incurred (losses) since inception of ($7,039,079), has a working capital deficit of ($330,790) and is reliant on raising capital to implement its business plan.



The Company is currently in the development stage as defined by Accounting Standards Codification subtopic 915-10 Development Stage Entities (ASC 915-10).  Upon the sale of all of its oil and gas assets, the Company re-entered the exploration stage.   Consequently, its operations are subject to all the risks inherent in the establishment of a new business enterprise.  For the period from inception through June 1, 2008, the Company has accumulated a (deficit) of ($6,839,714) and a (deficit) accumulated during the development stage of ($199,365).



The Companys ability to continue as a going concern is contingent upon being able to secure financing and attain sustained profitable operations.  The Company is pursuing financing for its operations.



The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.



Certain prior year amounts have been reclassified for comparative purposes.



Note 2.  SIGNIFICANT ACCOUNTING POLICIES



Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.



Estimates



The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  The Company regularly evaluates estimates and assumptions.  The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.  The exact results experienced by the Company may differ materially and adversely from the Companys estimates.



Foreign Currency Translation



The Companys reporting currency is the United States dollar.  The functional currency of the Company is the Canadian dollar.  Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date.  Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses.  Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.



Fair Value of Financial Instruments



Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2009.  The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts receivable, accounts payable and loans payable.  Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand.



Net Income (Loss) Per Common Share



Basic earnings (loss) per common share calculations are determined by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year.  Diluted earnings (loss) per common share calculations are determined by dividing net income (loss) by the weighted average number of common shares and dilutive common share equivalents outstanding.  During the periods when they are anti-dilutive, common stock equivalents, if any, are not considered in the computation.



Oil and Gas Properties



The Company followed the full cost method of accounting for oil and gas operations whereby all costs associated with the acquisition, exploration for and development of oil and gas reserves, whether productive or unproductive, were capitalized. Such expenditures include land acquisition costs, drilling, exploratory dry holes, geological and geophysical costs not associated with a specific unevaluated property, completion and costs of well equipment.  Internal costs were capitalized only if they were directly identified with acquisition, exploration, or development activities.  The Company did not capitalized any internal costs.



Effective June 1, 2008, the Company sold its oil and gas properties in the Smoky Hill Area of Alberta, Canada, and from such date is considered a shell company (see Note 3).



Other Comprehensive Income (Loss)



The Company follows SFAS No. 130, Reporting Comprehensive Income, which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. For the years ended March 31, 2009 and 2008, the only components of comprehensive (loss) were foreign currency translation adjustments.



Segment Reporting



The Company follows SFAS No.131, Disclosure about Segments of an Enterprise and Related Information. Certain information is disclosed, per SFAS 131, based on the way management organizes financial information for making operating decisions and assessing performance.  The Company currently operates in one business segment and will evaluate additional segment disclosure requirements as it expands operations.



Stock-Based Compensation

The Company has a stock based compensation plan whereby stock options are granted in accordance with the policies of regulatory authorities.  On January 1, 2006, the Company adopted the provisions of SFAS No.123(R), "Share Based Payments." SFAS 123(R) requires that the cost of share-based payment transactions (including those with employees and non-employees) be recognized in the financial statements. SFAS 123(R) applies to all share-based payment transactions in which an entity acquires goods or services by issuing (or offering to issue) its shares, share options, or other equity instruments (except for those held by an ESOP) or by incurring liabilities (1) in amounts based (even in part) on the price of the entitys shares or other equity instruments, or (2) that require (or may require) settlement by the issuance of an entitys shares or other equity instruments.  There was no material effect on the financial statements.

Accounts Receivable

The Company uses the direct write off method for bad debts. This method expenses uncollectible accounts when they become unrealizable.  Any difference between this method and the allowance method is not material.

Revenue Recognition



Revenues from the sale of oil and gas production were recognized when title passed, generally in the month of production.



Recent Pronouncements



With the exception of those listed below, there have been no recent accounting pronouncements or changes in accounting pronouncements, since the date of these financial statements, that are of material significance or have potential material significance, to the Company.



In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles.  SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States.  It was effective 60 days following the SECs approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.  The adoption of this statement did not have a material effect on our companys financial statements.



In May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts  An interpretation of FASB Statement No. 60.  SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation.  It also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities, and requires expanded disclosure about financial guarantee insurance contracts.  It is effective for financial statements issued for fiscal years beginning after December 15, 2008, except for some disclosures about the insurance enterprises risk-management activities.  SFAS 163 requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period beginning after issuance.  Except for those disclosures, earlier application is not permitted.  The adoption of this statement did not have a material effect on our companys financial statements.



In October 2008, the FASB issued FASB Staff Position (FSP) FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (FSP FAS 157-3), to help constituents measure fair value in markets that are not active. FSP FAS 157-3 is consistent with the joint press release the FASB issued with the Securities and Exchange Commission (SEC) on September 30, 2008, which provides general clarification guidance on determining fair value under SFAS No. 157 when markets are inactive. FSP FAS 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The adoption of FSP 157-3 did not have a material impact on the Companys financial statements.



In December 2008, the SEC adopted major revisions to its rules governing oil and gas company reporting requirements. These include provisions that permit the use of new technologies to determine proved reserves and that allow companies to disclose their probable and possible reserves to investors. These disclosure requirements also require companies to report the independence and qualifications of the person primarily responsible for the preparation or audit of reserve estimates, and to file reports when a third party is relied upon to prepare or audit reserves estimates. The new rules also require that oil and gas reserves be reported and the full-cost ceiling value calculated using an average price based upon the prior 12-month period. The new oil and gas reporting requirements are effective for annual reports on Form 10-K for fiscal years ending on or after December 31, 2009, with early adoption not permitted. Adoption did not have a material impact on our financial position, results of operations and financial disclosures, as we disposed of our oil and gas interests effective June 1, 2008 (see Note 3)).



In April 2009, the FASB issued two FSPs intended to provide additional application guidance and enhanced disclosures regarding fair value measurements and impairments of securities.  FSP No. FAS 157-4, Determining Fair Value When the Volume or Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, as codified in FASB ASC topic Fair Value Measurement and Disclosure, provides additional guidelines for estimating fair value in accordance with FASB SFAS No. 157, Fair Value Measurements (SFAS 157).  Adoption did not have a material impact on our financial position, results of operations and financial disclosures.

In June 2009, the FASB issued Accounting Standards Codification (ASC) 855 (previously SFAS No. 165, Subsequent Events), which establishes general standards for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or available to be issued.  It is effective for interim and annual periods ending after June 15, 2009.  There was no material impact on the Companys financial statements, upon the adoption of this standard.

In June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for determining whether to consolidate a variable interest entity.  These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favour of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary.  This Statement is effective for reporting periods beginning after November 15, 2009.  Adoption of this ASC did not impact our financial statements.



In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, as codified in FASB ASC topic Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162.  This standard establishes only two levels of GAAP, authoritative and non-authoritative.  This ASC was not intended to change or alter existing GAAP, and the Companys adoption effective September 1, 2009, did not have any impact on its financial statements other than to modify certain existing disclosures.



In June 2009, the FASB issued Accounting Standards Update (ASU) 2009-02, Omnibus UpdateAmendments to Various Topics for Technical Corrections.  This omnibus ASU detailed amendments to various topics for technical corrections.  The adoption of ASU 2009-02 did not have a material impact on our financial statements.



In August 2009, the FASB issued ASU  2009-03, SEC Update  Amendments to Various Topics Containing SEC Staff Accounting Bulletins.  This ASU updated cross-references to Codification text.  The adoption of ASU 2009-03 did not have a material impact on our financial statements.



In August 2009, the FASB issued ASU 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value.  These amended standards clarify that in circumstances in which a quoted price in an active market for the identical liabilities is not available, we are required to use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, or quoted prices for similar liabilities when traded as assets.  If these quoted prices are not available, we are required to use another valuation technique, such as income approach or a market approach.  These amended standards are effective from October 1, 2009, and did not have a significant impact on our financial statements.



In September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740), Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Non-public Entities, which provides implementation guidance on accounting for uncertainty in income taxes, as well as eliminates certain disclosure requirements for non-public entities.  This update is effective for interim and annual periods ending after September 15, 2009. The adoption of this standard did not have an impact on the Companys financial position and results of operations since it provides only implementation and disclosure amendments.



In September 2009, the FASB issued ASU  2009-07, Technical Corrections to SEC Paragraphs.  This corrected various SEC paragraphs in response to comment letters.  The adoption of ASU 2009-07 did not have material impact on our financial statements.



In September 2009, the FASB issued ASU  2009-12, Fair Value Measurements and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This ASU amends Subtopic 820-10, Fair Value Measurements and Disclosures  Overall, to permit a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent). This ASU also requires new disclosures, by major category of investments including the attributes of investments within the scope of this amendment to the Codification. The guidance in this update is effective for interim and annual periods ending after December 15, 2009. The adoption of this standard did not have a material impact on the Companys financial position and results of operations.



In October 2009, the FASB issued guidance on revenue recognition that became effective for the Company beginning April 1, 2010, with earlier adoption permitted.  Under the new guidance on arrangements that include software elements, tangible products that have software components that are essential to the functionality of the tangible product will no longer be within the scope of the software revenue recognition guidance, and software-enabled products will now be subject to other relevant revenue recognition guidance.  In addition, the FASB issued guidance on revenue arrangements with multiple deliverables that are outside the scope of the software revenue recognition guidance.  Under the new guidance, when vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangements consideration using the relative selling price method.  The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition.  Adoption of this new guidance did not have a material impact on our financial statements.



In December 2009, the FASB issued ASU 2010-06 Fair Market Value Measurements and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements.  This ASU requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement as set forth in ASC Subtopic 820-10.  The FASBs objective is to improve these disclosures and, thus, increase the transparency in financial reporting.  The adoption of this ASU did not have a material impact on the Companys financial statements.



In January 2010, the FASB issued ASU 2010-03, Oil and Gas Reserve Estimation and Disclosures (ASU 2010-03), which provides amendments to ASC topic Extractive Activities-Oil and Gas. The objective of ASU 2010-03 is to align the oil and gas reserve estimation and disclosure requirements of the ASC with the requirements in the SECs Modernization of Oil and Gas Reporting: Final Rule. Similar to the SEC requirements, the FASB requirements were effective for periods ending on or after December 31, 2009.  The SEC introduced a new definition of oil and gas producing activities which allows companies to include volumes in their reserve base from unconventional resources.  The FASB also addresses the impact of changes in the SECs rules and definitions on accounting for oil and gas producing activities.  Initial adoption did not have an impact on our Companys financial statements as we disposed of our oil and gas interests effective June 1, 2008 (see Note 3).



In January 2010, the FASB issued ASU 2010-04, Accounting for Various Topics  Technical Corrections to SEC Paragraphs. ASU 2010-04 makes technical corrections to existing SEC guidance, including the following topics: accounting for subsequent investments, termination of an interest rate swap, issuance of financial statements - subsequent events, use of residential method to value acquired assets other than goodwill, adjustments in assets and liabilities for holding gains and losses, and selections of discount rate used for measuring defined benefit obligation. The adoption of ASU 2010-04 did not have a material impact on the Companys financial statements.



In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements (ASU 2010-06), which provides amendments to ASC topic Fair Value Measurements and Disclosures. This will provide more robust disclosures about (i) the different classes of assets and liabilities measured at fair value, (ii) the valuation techniques and inputs used, (iii) the activity in Level 3 fair value measurements, and (iv) the transfers between Levels 1, 2 and 3.  ASU 2010-06 is effective for fiscal years and interim periods beginning after December 15, 2009.  Adoption did not have a material impact on our financial statements.



In February 2010, the FASB issued ASU 2010-09 (ASU 2010-09), "Subsequent Events (Topic 855)."  The amendments remove the requirements for an SEC filer to disclose a date, in both issued and revised financial statements, through which subsequent events have been reviewed.  Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP.  ASU 2010-09 is effective for interim or annual financial periods ending after June 15, 2010.  Adoption of ASU 2010-09 did not have a material effect on the financial position, results of operations or cash flows of the Company.



In April 2010, the FASB issued ASU 2010-12. Income Taxes (Topic 740). ASU No.2010-12 amends FASB Accounting Standard Codification subtopic 740-10 Income Taxes to include paragraph 740-10-S99-4. On March 30, 2010 The President signed the Health Care & Education Affordable Care Act reconciliation bill that amends its previous Act signed on March 23, 2010. FASB ASC topic 740, Income Taxes, requires the measurement of current and deferred tax liabilities and assets to be based on provisions of enacted tax law. The effects of future changes in tax laws are not anticipated. Therefore, the different enactment dates of the Act and reconciliation measure may affect registrants with a period-end that falls between March 23, 2010 (enactment date of the Act), and March 30, 2010 (enactment date of the reconciliation measure). However, the announcement states that the SEC would not object if such registrants were to account for the enactment of both the Act and the reconciliation measure in a period ending on or after March 23, 2010, but notes that the SEC staff does not believe that it would be appropriate for registrants to analogize to this view in any other fact patterns. The adoption of this standard did not have a material impact on the Companys financial position and results of operations.



In April 2010, the FASB issued ASU 2010-14, "Accounting for Extractive Activities  Oil & Gas."  ASU 2010-14 amends paragraph 932-10-S99-1 due to SEC Release No. 33-8995, "Modernization of Oil and Gas Reporting.  The amendments to the guidance on oil and gas accounting are effective August 31, 2010, and did not have a significant impact on the Company's financial position, as effective June 1, 2008, the Company sold its oil and gas properties in the Smoky Hill Area of Alberta, Canada (see Note 3).



In May 2010, the FASB issued ASU 2010-19 (ASU 2010-19), Foreign Currency (Topic 830): Foreign Currency Issues: Multiple Foreign Currency Exchange Rates. The amendments in this update are effective as of the announcement date of March 18, 2010. The provisions of ASU 2010-19 did not have a material effect on the financial position, results of operations or cash flows of the Company.

On August 2, 2010, the FASB issued ASU 2010-21, Accounting for Technical Amendments to Various SEC Rules and SchedulesAmendments to SEC Paragraphs Pursuant to Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies. The ASU reflects changes made by the SEC in Final Rulemaking Release No. 33-9026 , which was issued in April 2009 and amended SEC requirements in Regulation S-X ( 17 CFR 210.1-01 et seq.) and Regulation S-K ( 17 CFR 229.10 et seq.) and made changes to financial reporting requirements in response to the FASB's issuance of SFAS No. 141(R) , Business Combinations (ASC 805), and SFAS No. 160,Non-controlling Interests in Consolidated Financial Statementsan amendment of ARB No. 51 ( FASB ASC 810 ).   The provisions of ASU 2010-21 did not have a material impact on its financial statements.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.



Note 3.  Oil and Gas Properties

On September 18, 2008, Nation and Netco Energy, Inc., entered into a sales and purchase agreement to sell their assets in the Smoky Area of Alberta for total net proceeds of CDN $1,600,000.  The agreement was effective June 1, 2008. The sale of the oil and gas assets closed September 18, 2008, with a second closing in April 2009, for total net proceeds to Nation of CDN $1,102,939 (US $1,029,385) from Encana, plus CDN $160,000 (US $ 129,324) from Netco.  The Company is now considered a shell company.



Note 4.  Stockholders Equity (Deficit)



Equity Incentive Plan



On May 6, 1999 the Board of Directors adopted a stock option plan (The Plan) which was subsequently approved by over 50% of our shareholders.  The Plan allows for the issuance of incentive stock options to employees, consultants, directors, and others providing service of special significance to our company.  The Plan is administered by the Board of Directors.  The Plan provides for the issuance of up to 2,500,000 options.  The exercise price of each option shall be determined by the Board or by the CEO with reference to such factors as current fair market value of the common stock, net book value per share, other remuneration already being received by the optionee.  No option may be exercised more than five years from the date of grant and they vest on the date granted.  The Plan does not have an expiry date.



On February 26, 2003, options to purchase a total of 225,000 shares of Common Stock at an exercise price of $0.10 per share were granted to two officers pursuant to the Plan.  Subsequently, on January 20, 2004, the Company cancelled 150,000 share options previously granted to one of the officers.  The Companys Common Stock was trading at $0.115 per share on the date of the grant.  The fair value of the options was estimated on the date of the grant utilizing the Black-Scholes option pricing model with the following weighted average assumptions: expected life of the options of 5-years, expected volatility of 114.65%, risk-free interest rate of 4.2%, and no dividend yield.  The weighted average fair value for the options granted was approximately $0.12 per share.



The changes in the outstanding stock options during the years ended March 31, 2009 and March 31, 2008 are summarized as follows:



|                  | March 31, 2009 | March 31, 2008
|----------------- | -------------- | --------------
|                  |                | Weighted      
|                  |                | Average       
|                  |                | Exercise      
|                  | Shares         | Price         
|Beginning of year | Nil            |               
|Granted           | Nil            |               
|Exercised         | Nil            |               
|Expired           | Nil            |               
|End of period     | Nil            |               

At March 31, 2009 and 2008, there were no options outstanding.  The options expired on February 26, 2008.



Note 5.  Income Taxes



The Company accounts for income taxes under SFAS 109, "Accounting for Income Taxes", which requires use of the liability method.  SFAS 109 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.  Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.



The provision (benefit) for income taxes consists of the following components:



|         |  |   | March 31, | 
|-------- |  | - | --------- | 
|         |  |   | 2009      | 
|Current  |  | $ | ---       | 
|Deferred |  | $ | ---       | 



The tax effects of temporary differences and carry forwards that give rise to significant portions of deferred tax assets and liabilities consist of the following:



|                                 |   | March 31,  |  
|-------------------------------- | - | ---------- | -
|                                 |   | 2009       |  
|Deferred tax assets:             |   |            |  
|Net operating loss carryforwards | $ | $1,799,000 | $
|                                 |   |            |  
|Less valuation allowance         |   | (1,799,000 | )
|                                 | $ | ---        | $





A reconciliation of the statutory U.S. federal rate and effective rates is as follows:



|Statutory U.S. federal rate | 34.00%
|--------------------------- | ------
|State income taxes          | --- % 
|Total                       | 34.00%



The Companys provision for income taxes differs from applying the statutory United States federal income tax rate to income before income. The primary differences result from net operating losses.



Net operating loss carryforwards of approximately $5,290,000 will expire through 2029.  The deferred tax asset has been fully reserved at March 31, 2009.  The change in the valuation allowance during the year ended March 31, 2009 was $(75,000).



Note 6.  Related Party Transactions



(a)

Administrative Services Agreement

During March 2002, the Company entered into a verbal agreement with a related party, Caravel Management Corp. (Caravel), in which Caravel will provide administrative services on a month-to-month basis.  On January 1, 2009, the Company entered into a written agreement revising the previous verbal agreement with Caravel (see Note 7).  The agreement provides for administrative services, office rent and supplies for US $7,865 per month.  Total expenses recognized under this agreement for the years ended March 31, 2009 and 2008 were $62,575 and $50,760 respectively.



(b) Loans Payable  Related Party

On March 31, 2006, the Company entered into a revised Demand Promissory Note, which replaces all previous loan agreements with a related party.  The Demand Promissory Note, in the amount of CDN $980,905 bears interest at 15% per annum, calculated and compounded monthly, and is payable quarterly.  Any principal amount outstanding under the loan is payable upon demand.  The loan is payable in Canadian dollars.  During the year ended March 31, 2009, the Company repaid a portion of the Demand Note in the aggregate amount of CDN $1,115,000 (US $813,478), allocating US $454,877 to principal and US $358,601 to accrued interest.  As of March 31, 2009, the balance of the loan payable was CDN $477,175 (US $393,443).



Note 7.  Concentration of Customers



Prior to June 1, 2008, the Company marketed all of its products through one customer, Churchill Energy.  Churchill Energy was the operator of the Bolton Property. As discussed in Note 3, effective June 1, 2008, the Company sold its oil and gas assets and has no further operations.



Note 8.  Subsequent Events



In April 2009, the Company received its final payment from Encana pursuant to the sale of its oil and gas properties, of CDN $150,894 (US $ 88,689).



During May and June 2009, the Company made aggregate payments to related party Caravel of CDN  $110,000, allocated in US$ to the payment of accounts payable of $26,030, loan principal of $53,190 and accrued interest of $16,117.

Effective November 1, 2010 the Company revised its agreement with Caravel to provide administrative services for $3,500 per month.



The Company has evaluated all subsequent transactions from the balance sheet date through the date of issuance of this report, and has determined that all material subsequent events have been disclosed above.



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A (T).  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures and remediation

As required by Rule 13a-15 under the Securities Exchange Act,in connection with this annual report on Form 10-K, under the direction of our Chief Executive Officer and Chief Financial Officer, we have evaluated our disclosure controls and procedures as of March 31, 2009, including the remedial actions discussed below, we have concluded that, as of March 31, 2009, our disclosure controls and procedures were ineffective as discussed in greater detail below.  As of the date of this filing, we are still in the process of remediating such material weaknesses in our internal controls and procedures.  Additionally, we are currently inactive as we seek new business opportunities.

It should be noted that while our management believes our disclosure controls and procedures provide a reasonable level of assurance, they do not expect that our disclosure controls and procedures or internal controls will prevent all error and all fraud.  A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.  These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.  The design of any system of internal control is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Managements annual report on internal control over financial reporting

Management is responsible for establishing and maintaining internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).  Our management evaluated, under the supervision and with the participation of our Chief Executive Officer, the effectiveness of our internal control over financial reporting as of March 31, 2009.

Based on its evaluation under the framework in Internal Control  Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission, our management concluded that our internal control over financial reporting was not effective as of March 31, 2009, due to the existence of significant deficiencies constituting material weaknesses, as described in greater detail below.  A material weakness is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

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

Limitations on Effectiveness of Controls

Our Chief Executive Officer and Chief Financial Officer do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.  Additional controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Material Weaknesses Identified

In connection with the preparation of our financial statements for the year ended March 31, 2009, certain significant deficiencies in internal control became evident to management that represent material weaknesses, including:

i.

Lack of a sufficient number of independent directors for our board and audit committee.  We currently have no independent director on our board, which is comprised of one director.  As a publicly-traded company, we strive to have a majority of our board of directors be independent;

ii.

Insufficient segregation of duties in our finance and accounting functions due to limited personnel.  During the year ended March 31, 2009, we had limited staff that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statement.  This creates certain incompatible duties and a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC.  These control deficiencies could result in a material misstatement of our interim or annual financial statements that would not be prevented or detected;

iii.

Insufficient corporate governance policies.  Although we have a code of ethics which provides broad guidelines for corporate governance, our corporate governance activities and processes are not always formally documented.  Specifically, decisions made by the board to be carried out by management should be documented and communicated on a timely basis to reduce the likelihood of any misunderstandings regarding key decisions affecting our operations and management; and

Plan for Remediation of Material Weaknesses

We intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies.  We intend to consider the results of our remediation efforts and related testing as part of our year-end 2010 assessment of the effectiveness of our internal control over financial reporting.

Subject to receipt of additional financing, we intend to undertake the below remediation measures to address the material weaknesses described in this annual report.  Such remediation activities include the following:

1.

We continue to recruit at least one, preferably two or more, additional independent board members to join our board of directors and audit committee at such time as additional board members are retained; and

2.

We intend to continue to update the documentation of our internal control processes, including formal risk assessment of our financial reporting processes.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting during the fourth quarter of our fiscal year ended March 31, 2009 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.  OTHER INFORMATION

None

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers



|Name           | Position Held with our Company                                                                             | Age | Date First
Elected or Appointed
|-------------- | ---------------------------------------------------------------------------------------------------------- | --- | -------------------------------
|John R. Hislop | Chairman of the Board, President, Chief Executive Officer, Chief Financial Officer, Secretary and Director | 58  | June 4, 1999                   



Summary Background

The following is a brief account of the education and business experience during the past five years of each director and executive officer, indicating the principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

John R. Hislop, chairman of the board, president, chief executive officer, chief financial officer, secretary and director



Mr. Hislop has been the President and Chief Executive Officer of our company since October 22, 2003 and the Chairman, Chief Financial Officer, Secretary and a Director of our company since June 1999.  Since 1990, Mr. Hislop has been working as an independent financial consultant and has served as an officer and director of various emerging growth companies.  Mr. Hislop is currently serving as a Director and/or Officer on the following companies: Director of Q Investments Ltd., (formerly Cubix Investments Ltd.), an investment holding company for various public oil and gas companies, since February 1994; Director of XXL Energy Corp. (formerly Exxel Energy Corp.) since October 15, 2001, Chairman of the Board of XXL Energy Corp. (formerly Exxel Energy Corp.) since July 27, 2006, President and Chief Executive Officer of XXL Energy Corp. (formerly Exxel Energy Corp.) since December 31, 2008; and has also served as President and Chief Executive Officer of XXL Energy Corp. (formerly Exxel Energy Corp.) from October 15, 2001 to July 27, 2006 and served as Chief Financial Officer of XXL Energy Corp. (formerly Exxel Energy Corp.) from October 15, 2001 to October 2, 2003; Director of Patriot Petroleum Corp. since April 7, 1999 and served as President and Chief Executive Officer of Patriot Petroleum Corp. from October 22, 2003 to November 26, 2010.  In the past five years, Mr. Hislop has also served as a director of the following companies: Warrior Energy N.V. (formerly Luxmatic Technologies N.V) from October 1997 to February 2008 (Mr. Hislop also served as President from October 1997 to February 2008 and Chief Executive Officer from November 2003 to February 2008); and Bucking Horse Energy Inc. (formerly NRG Investments Inc.) from April 2006 to March 2008 (Mr. Hislop also served as President and Chief Executive Officer from April 2006 to March 2008).  Mr. Hislop trained as a Chartered Accountant with Ernst & Young and has a bachelor of Commerce in Finance from the University of British Columbia.



We believe Mr. Hislop is qualified to serve on our board of directors because of his knowledge of our companys history and current operations, which he gained from working for our company as described above, in addition to his education and business experience as described above.

Term of Office

The directors serve until their successors are elected by the shareholders.  Vacancies on the Board of Directors may be filled by appointment of the majority of the continuing directors.  The executive officers serve at the discretion of the Board of Directors.

Committees of the Board

We do not have an audit or compensation committee at this time.

Family Relationships

None

Significant Employees

We have no significant employees other than the sole director and officer described above.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not been involved in any of the following events during the past ten years:

1.

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2.

any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

3.

being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

4.

being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

5.

being the subject of, or party to, any federal or state judicial or administrative order, judgment, decree, or finding not subsequently reversed, suspended or vacated relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

6.

being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a) (26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a) (29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Audit Committee Financial Expert

We are a reporting issuer in the Province of British Columbia, National Instrument 52-110 of the Canadian Securities Administrators requires our company, as a venture issuer, to disclose annually in our annual report certain information concerning the constitution of our audit committee and our relationship with our independent auditor.  Our board of directors has determined that it does not have an audit committee member who qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K.  Our audit committee is composed of our directors and officers.  We believe that the audit committee members are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.  In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have generated minimum revenues to date.

Since the commencement of our companys most recently completed financial year, our company has not relied on the exemptions contained in sections 2.4 or 8 of National Instrument 52-110.  Section 2.4 (De Minimis Non-audit Services) provides an exemption from the requirement that the audit committee must pre-approve all non-audit services to be provided by the auditor, where the total amount of fees relates to the non-audit services are not expected to exceed 5% of the total fees payable to the auditor in the fiscal year in which the non-audit services were provided.  Section 8 (Exemptions) permits a company to apply to a securities regulatory authority for an exemption from the requirements of National Instrument 52-110 in whole or in part.

The audit committee has adopted specific policies and procedures for the engagement of non-audit services as set out in the Audit Committee Charter of our company.  A copy of our companys Audit Committee Charter is filed as an exhibit to this annual report on Form 10-K.

Code of Ethics

Effective July 13, 2004, our company's board of directors adopted a Code of Business Conduct and Ethics that applies to, among other persons, members of our board of directors, our company's officers including our president (being our principal executive officer) and our company's chief financial officer (being our principal financial and accounting officer), contractors, consultants and advisors.  As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:

(1)  honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

(2)  full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;

(3)  compliance with applicable governmental laws, rules and regulations;

(4)  the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and

(5)  accountability for adherence to the Code of Business Conduct and Ethics.

Our Code of Business Conduct and Ethics requires, among other things, that all of our company's personnel shall be accorded full access to our president and secretary with respect to any matter which may arise relating to the Code of Business Conduct and Ethics.  Further, all of our company's personnel are to be accorded full access to our company's board of directors if any such matter involves an alleged breach of the Code of Business Conduct and Ethics by our company officers.

In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal, provincial and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate supervisor or to our company's president or secretary.  If the incident involves an alleged breach of the Code of Business Conduct and Ethics by the president or secretary, the incident must be reported to any member of our board of directors.  Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter.  It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company's Code of Business Conduct and Ethics by another.

Our Code of Business Conduct and Ethics was filed with the Securities and Exchange Commission as Exhibit 14.1 to our annual report on Form 10-KSB filed on July 15, 2004.  We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request.  Requests can be sent to: Nation Energy Inc., Suite 900 - 609 West Hastings Street, Vancouver, British Columbia, V6B 4W4.

Section 16(a) Beneficial Ownership Compliance

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

To the best of our knowledge, based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that all filing requirements applicable to our executive officers, directors and greater than 10% shareholders were complied with other than as disclosed in the table below



|Name          | Number of Late Reports | Number of Transactions Not Reported on a Timely Basis | Failure to File Requested Forms
|------------- | ---------------------- | ----------------------------------------------------- | -------------------------------
|John R Hislop | 3                      | 3                                                     | -                              

ITEM 11.  EXECUTIVE COMPENSATION

The following table summarizes the compensation paid to our president and chief executive officer during the last fiscal year.  No other officers or directors received annual compensation in excess of $100,000 during the last three complete fiscal years.

|                                                                                                  |      | Annual Compensation | Long Term Compensation(1) | Pay-outs                    
|------------------------------------------------------------------------------------------------- | ---- | ------------------- | ------------------------- | ----------------------------
|Name and Principal Position                                                                       | Year | Salary              | Bonus                     | Other Annual Compensation(1)
|John Hislop(2)President, Chief Executive Officer, Secretary, Chief Financial Officer and Director | 2009 | Nil                 | Nil                       | $62,575(3)                  
|2008                                                                                              | Nil  | Nil                 | $50,760(3)                | Nil                         
|2007                                                                                              | Nil  | Nil                 | $51,000(3)                | Nil                         

(1) The value of perquisites and other personal benefits, securities and property for the named executive officers that do not exceed the lesser of $50,000 or 10% of the total of the annual salary and bonus is not reported herein.

(2) Mr. Hislop was appointed the president and chief executive officer of our company on October 22, 2003.

(3)On March 31, 2008, a verbal arrangement was effective with Mr. Hislop, for Caravel Management Corp. to receive remuneration in the amount of $4,230 per month for services, office rent, administration and supplies. During the fiscal year ended March 31, 2009 Mr. Hislop received $4,250 per month until January 1, 2009.  January 1, 2009 through March 31, 2009 he received $7,865.  This arrangement was between our company and Caravel Management Corp., a private management company owned by Mr. Hislop.

As of the date of this annual report, we have no compensatory plan or arrangement with respect to any officer that results or will result in the payment of compensation in any form from the resignation, retirement or any other termination of employment of such officer's employment with our company, from a change in control of our company or a change in such officer's responsibilities following a change in control.

Employment or Consulting Agreements

Other than as described below, we have not entered into any employment or consulting agreements with any of our current officers, directors or employees.

On January 1, 2009 we entered into a written contract with Caravel Management Corp., to provide office rent, reception, compliance and accounting services for $7,865 per month.  The agreement commenced on January 1, 2009 and continues on a month to month basis unless terminated by the parties.  The agreement may be terminated by either party upon 30 days notice.  After one year following the effective date of the agreement, the monthly fee increases by 3% subject to any required regulatory or stock exchange approval.  Prior to January 1, 2009, we had a verbal contract with Caravel Management Corp., to provide these services for a fee of $4,250 per month.

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers may receive stock options at the discretion of our board of directors.  Other than the management agreements discussed above, we do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.

Stock Options/SAR Grants

There were no stock options or stock appreciation rights made during the fiscal year ended March 31, 2009.

Stock Options/SAR Exercise

There were no stock options or stock appreciation rights exercised during the fiscal year ended March 31, 2009.

Long-Term Incentive Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers may receive stock options at the discretion of our board of directors.  We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.

We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.

Directors Compensation

We reimburse our directors for expenses incurred in connection with attending board meetings but did not pay director's fees or other cash compensation for services rendered as a director in the year ended March 31, 2009.

No cash compensation was paid to any of our directors for the director's services as a director during the fiscal year ended March 31, 2009.  We have no standard arrangement pursuant to which our directors are compensated for their services in their capacity as directors except for the granting from time to time of incentive stock options.  The board of directors may award special remuneration to any director undertaking any special services on behalf of our company other than services ordinarily required of a director.  Other than indicated below, no director received and/or accrued any compensation for his services as a director, including committee participation and/or special assignments.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

As of January 31, 2011 there were 16,020,000 shares of our common stock outstanding.  The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of that date by (i) each of our directors, (ii) each of our executive officers, and (iii) all of our directors and executive officers as a group.  Except as set forth in the table below, there is no person known to us who beneficially owns more than 5% of our common stock





|Title of Class  | Name & Address of Beneficial Owner                               | Amount and Nature of Beneficial Ownership(1) | Percent
of Class(2)
|--------------- | ---------------------------------------------------------------- | -------------------------------------------- | -------------------
|Common          | John Hislop (3)1589 Marpole Avenue
Vancouver, BC, Canada
V6J 2R9 | 10,003,500Direct                             | 62.44%             
|Common          | All Directors and Officers as a class (1)                        | 10,003,500                                   | 62.44%             
|5% Stockholders |                                                                  |                                              |                    
|Common          | John Hislop (3)1589 Marpole Avenue
Vancouver, BC, Canada
V6J 2R9 | 10,003,500Direct                             | 62.44%             
|Common          | Jeffery Taylor
401-325 Howe Street
Vancouver, BC, Canada
V6C 1Z7 | 920,000 Direct                               | 5.74%              

Notes:

(1)

Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract arrangement, understanding, relationship, or otherwise has or shares:  (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares.  Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares).  In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided.  In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.

(2)

The percentage of class is based on 16,020,000 shares of common stock issued and outstanding as of March 31, 2010.

(3)

John Hislop directly owns 228,000 shares of common stock of the Company and has voting and investment power over an additional 9,775,500 shares of common stock of the Company which he holds indirectly.

Changes in Control

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

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Except as otherwise indicated below, we have not been a party to any transaction, proposed transaction, or series of transactions in which the amount involved exceeds $120,000, and in which, to our knowledge, any of our directors, officers, five percent beneficial security holder, or any member of the immediate family of the foregoing persons has had or will have a direct or indirect material interest.

We receive administrative services and back office support under a formal written management services agreement with Caravel Management Corp., pursuant to which we are charged $7,865 per month. Caravel Management Corp. is a private management company that is wholly-owned by John Hislop, our chairman, president, chief executive officer, secretary and chief financial officer.  Effective November 1, 2010, the Company revised its agreement with Caravel Management to provide management services for $3,500 per month.  The agreement with Caravel Management Corp. is on a month to month basis.

On March 31, 2006, we entered into a revised loan agreement with Caravel Management Corp.  The loan bears interest at 15% per annum, calculated and compounded monthly and is payable quarterly.  Any principal amount outstanding under the loan is payable upon demand.  The loan in payable in Canadian dollars and is secured by a Promissory Note.

During the year ended March 31, 2008, we borrowed an additional CDN $160,000 (US$151,459) and together with interest the balance of the loan and accrued interest was CDN $1,314,101 (US$1,278,433).  During the year ended March 31, 2009 we made payments that were applied to our totalling CDN $565,089 (US $454,876) and together with interest the balance at March 31, 2009 of principal and accrued interest totalled CDN $516,127 (US $409,560).  During the year ended March 31, 2010 we paid an additional CDN 60,603 (US $53,190) and borrowed an additional CDN $4,169 (UIS $3,915) and with accrued interest brought the total loan balance to CDN $510,239 (US $502,402) at March 31, 2010.  During the period ended December 31, 2010, we borrowed an additional CDN $85,094 (US $83,270).  The total loan with accrued interested at December 31, 2010 was CDN $659,093 (US $662,671).

National Instrument 58-101

We are a reporting issuer in the Province of British Columbia.  National Instrument 58-101 of the Canadian Securities Administrators requires our company, as a venture issuer, to disclose annually in our annual report certain information concerning corporate governance disclosure.

Board of Directors

Our board of directors facilitates its exercise of independent supervision over management by endorsing the guidelines for responsibilities of the board as set out by regulatory authorities on corporate governance in the United States.   Our boards primary responsibilities are to supervise the management of our company, to establish an appropriate corporate governance system, and to set a tone of high professional and ethical standards.

The board is also responsible for:

·

Selecting and assessing members of the Board;

·

Choosing, assessing and compensating the Chief Executive Officer of our company, approving the compensation of all executive officers and ensuring that an orderly management succession plan exists;

·

Reviewing and approving our companys strategic plan, operating plan, capital budget and financial goals, and reviewing its performance against those plans;

·

Adopting a code of conduct and a disclosure policy for our company, and monitoring performance against those policies;

·

Ensuring the integrity of our companys internal control and management information systems;

·

Approving any major changes to our companys capital structure, including significant investments or financing arrangements; and

·

Reviewing and approving any other issues which, in the view of the Board or management, may require Board scrutiny.

Orientation and Continuing Education

We have an informal process to orient and educate new recruits to the board regarding their role of the board, our committees and our directors, as well as the nature and operations of our business.  This process provides for an orientation with key members of the management staff, and further provides access to materials necessary to inform them of the information required to carry out their responsibilities as a board member.  This information includes the most recent board approved budget, the most recent annual report, the audited financial statements and copies of the interim quarterly financial statements.

The board does not provide continuing education for its directors.  Each director is responsible to maintain the skills and knowledge necessary to meet his or her obligations as directors.

Nomination of Directors

The board is responsible for identifying new director nominees.  In identifying candidates for membership on the board, the board takes into account all factors it considers appropriate, which may include strength of character, mature judgement, career specialization, relevant technical skills, diversity and the extent to which the candidate would fill a present need on the board.  As part of the process, the board, together with management, is responsible for conducting background searches, and is empowered to retain search firms to assist in the nominations process.  Once candidates have gone through a screening process and met with a number of the existing directors, they are formally put forward as nominees for approval by the board.

Assessments

The board intends that individual director assessments be conducted by other directors, taking into account each directors contributions at board meetings, service on committees, experience base, and their general ability to contribute to one or more of our companys major needs.  However, due to our stage of development and our need to deal with other urgent priorities, the board has not yet implemented such a process of assessment.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

Our company booked the following aggregate fees billed by StarkSchenkein LLP for professional services rendered for the audit of our annual financial statements included in our Annual Report on Form 10-K for the fiscal years ended March 31, 2009 and 2008 and for the review of quarterly financial statements included in our Quarterly Reports were as follows:



|                   | Year Ended March 31, 2009 | Year Ended March 31, 2008
|------------------ | ------------------------- | -------------------------
|Audit Fees         | $18,600                   | $24,086                  
|Audit Related Fees | $Nil                      | $Nil                     
|Tax Fees           | $Nil                      | $Nil                     
|All Other Fees     | $Nil                      | $Nil                     
|Total              | $18,600                   | $24,086                  

In the above table, audit fees are fees billed by our companys external auditor for services provided in auditing our companys annual financial statements for the subject year along with reviews of interim quarterly financial statements and involvement with various filings in arrears filed earlier in 2008.  The fees recorded in the above noted table may not reflect the fees charged for that period due to the various filings that are in arrears, the figures in the table reflect all fees billed, not accrued, for reporting period.  Audit-related-fees are fees not included in audit fees that are billed by the auditor for assurance and related services that are reasonably related to the performance of the audit review of our companys financial statements.  Tax fees are fees billed by the auditor for professional services rendered for tax compliance, tax advice and tax planning.  All other fees are fees billed by the auditor for products and services not included in the foregoing categories.

Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors

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

The board of directors has considered the nature and amount of fees billed by StarkSchenkein LLP and believes that the provision of services for activities unrelated to the audit is compatible with maintaining StarkSchenkein LLP as auditors.

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Exhibits Required by Item 601 of Regulation S-K

Exhibit Number and Description

(3)

Articles of Incorporation/Bylaws

3.4

Certificate of Merger (Delaware) effective June 12, 2003 (incorporated by reference from our Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on August 19, 2003)

3.5

Certificate of Merger (Wyoming) effective June 13, 2003 (incorporated by reference from our Quarterly Report on Form 10-qSB filed with the Securities and Exchange Commission on August 19, 2003)

3.6

Amended & Restated Bylaws (Wyoming) (incorporated by reference from our Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on November 14, 2003)

3.7

Certificate of Incorporation (incorporated by reference from our Annual Report on Form 10K filed with the Securities and Exchange Commission on August 13, 2010).

(10)

Material Contracts

10.1

1999 Stock Option Plan (incorporated by reference from our Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on March 31, 2000)

10.2

Farm-in Agreement with Olympia Energy Inc., dated November 21, 2001 (incorporated by reference from our Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on February 14, 2002).

10.3

Agreement with Netco Energy Inc. dated January 10, 2005 (incorporated by reference from our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 28, 2005).

10.4

Demand Promissory Note issued to Caravel Management Corp., dated March 31, 2006 (incorporated by reference from our Annual Report on Form 10K filed with the Securities and Exchange Commission on August 13, 2010).

10.5

Petroleum, Natural Gas and Related Rights Conveyance dated September 18, 2008 between Nation Energy Inc., Netco Energy Inc. and EnCana Oil & Gas Partnership (incorporated by reference from our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 24, 2008).

10.6

Termination Agreement dated September 26, 2008 between Nation Energy Inc., and EnCana Oil and Gas Partnership (incorporated by reference from our Annual Report on Form 10K filed with the Securities and Exchange Commission on August 13, 2010).

10.7

Management Services Agreement dated January 1, 2009 between Nation Energy Inc., and Caravel Management Corp. (incorporated by reference from our Annual Report on Form 10K filed with the Securities and Exchange Commission on August 13, 2010).

10.8

Management Services Agreement dated November 1, 2010 between Nation Energy Inc. and Caravel Management Corp.  (incorporated by reference from our Annual Report on Form 10K filed with the Securities and Exchange Commission on December 2, 2010).



(14)

Code of Ethics

14.1

Code of Business Conduct and Ethics (incorporated by reference from our Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on July 15, 2004).

(31)

Section 302 Certifications

31.1*

Section 302 Certification under Sarbanes-Oxley Act of 2002

(32)

Section 906 Certifications

32.1*

Section 906 Certification under Sarbanes-Oxley Act of 2002

99.1*

Audit Committee Charter

*Filed herewith

SIGNATURES

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

NATION ENERGY INC.

By:    John R HislopJohn Hislop, President, Chief Executive Officer, 
Chief Financial Officer, Secretary, and Director 
(Principal Executive Officer, Principal Financial Officer  and Principal Accounting Officer)

Date:    February 9, 2011









Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a) OR 15d-14(a) UNDER THE SECURITIES EXHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, John Hislop, Principal Executive Officer and Principal Financial Officer, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Nation Energy Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and



5.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function):



(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls over financial reporting.



Date: February 9, 2011



John R Hislop___________________________John Hislop, President and Secretary 
(Principal Executive Officer and Principal Financial Officer)













EXHIBIT 32.1



CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



I, John Hislop, President, Chief Executive Officer, Chairman of the Board and Chief Financial Officer, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



(a)

the Annual Report on Form 10-K of Nation Energy Inc. for the year ended March 31, 2009 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(b)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Nation Energy Inc.



|Dated:  February 9, 2011 |  |                                                                                      
|------------------------ |  | -------------------------------------------------------------------------------------
|                         |  |                                                                                      
|                         |  |                                                                                      
|                         |  | John R Hislop                                                                      
|                         |  | John Hislop                                                                          
|                         |  | President, Chief Executive Officer, Chairman of
the Board and Chief Financial Officer
|                         |  | Nation Energy Inc.                                                                   
|                         |  |                                                                                      
|                         |  |                                                                                      
|                         |  |                                                                                      
|                         |  |                                                                                      
|                         |  |                                                                                      
|                         |  |                                                                                      





A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Nation Energy Inc. and will be retained by Nation Energy Inc. and furnished to the Securities and Exchange Commission or its staff upon request.