UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


___________________________


FORM 10-Q


___________________________





|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended September 30, 2010





OR





|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934





For the transition period from ______ to ______





Commission file number   000-52725





NORTHERN EMPIRE ENERGY CORP.


(Exact name of registrant as specified in its charter)





Nevada
20-4765268(State of incorporation)
(I.R.S. Employer ID No.)





Suite 201 – 55 York Street, Toronto, Ontario, Canada, M5J 1R7


(Address of Principal Executive Offices)





(416) 903-0059


(Issuer’s Telephone Number)





118 8th Ave. NW, Calgary, Alberta, T2M 0A4, Canada


(Former name or former address if changed since last report)





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





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





Large Accelerated Filer
|_|
Accelerated Filer
|_|Non-accelerated Filer (Do not check if smaller reporting company)
|_|
Smaller Reporting Company
|X|





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


Yes |_|  No |X|





At September 30, 2010, the Registrant had 20,827,216 common shares and 62,500 preferred shares outstanding.











Table of  ContentsNorthern Empire Energy Corp.Index To Form 10-QFor the Quarterly Period Ended September 30, 2010PagePART I
FINANCIAL INFORMATIONItem 1
Financial StatementsCondensed Balance Sheets as of September 30, 2010 and December 31, 2009
1Condensed Statements of  Operations for the three and nine months ended September 30, 2010 and 2009
2Condensed Statements of Cash Flows for the nine months ended September 30, 2010 and 2009
3Notes to the Condensed Financial Statements
4Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operation
10Item 3
Quantitative and Qualitative Disclosures About Market Risk
14Item 4T
Controls and Procedures
14PART II
OTHER INFORMATIONItem 1
Legal Proceedings
15Item 1A
Risk Factors
15Item 2
Unregistered Sales of  Equity Securities and Use of Proceeds
15Item 3
Defaults Upon Senior Securities
15Item 4
Submission of Matters to a Vote of Security Holders
15Item 5
Other Information
15Item 6
Exhibits
16Signatures

17




















PART I.  FINANCIAL INFORMATION





ITEM 1.            FINANCIAL STATEMENTS




NORTHERN EMPIRE ENERGY CORP.(An Exploration Stage Company)Condensed Balance SheetsAs of


As ofSeptember 30, 2010


December 31, 2009(Unaudited)


(Audited & Restated)ASSETSCURRENT ASSETSCash and cash equivalents

$
163


$
35,855TOTAL CURRENT ASSETS


163



35,855PROPERTY AND EQUIPMENT, netDeposits


-



-Oil and gas properties


1



1TOTAL OTHER ASSETS


1



1TOTAL ASSETS

$
164


$
35,856LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)CURRENT LIABILITIESAccounts payable

$
19,354


$
19,969Accounts payable - related party


95,557



76,256TOTAL CURRENT LIABILITIES


114,911



96,225STOCKHOLDERS’ EQUITY (DEFICIT)Preferred Stock, $0.001 par value, 5,000,000 shares

authorized, 62,500 shares issued and outstanding as of

September 30, 2010 and December 31, 2009


63



63Common stock; $0.001 par value; 195,000,000 shares

authorized; 20,827,216 shares issued and outstanding as of

September 30, 2010 and December 31, 2009


20,827



20,827Stock payable; 615,347 shares


615



615Additional paid-in capital


659,427



659,427Deficit accumulated during exploration stage


(795,679
)


(741,301
)TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)


(114,747
)


(60,369
)TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

$
164


$
35,856























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











1


NORTHERN EMPIRE ENERGY CORP.(An Exploration Stage Company)Statements of OperationsThree Months


Nine Months


April 24, 2006Ended


Ended


Ended


Ended


(inception) toSeptember 30,


September 30,


September 30,


September 30,


September 30,2010


2009


2010


2009


2010REVENUES

$
-


$
-


$
-


$
-


$
19,491OPERATING EXPENSESGeneral and administrative


197



8,281



35,435



93,687



265,336Exploration costs


-



5,346



-



5,346



5,346Professional fees


-



28,758



17,000



28,758



76,496TOTAL OPERATING EXPENSES


197



42,385



52,435



127,791



347,178LOSS FROM OPERATIONS


(197
)


(42,385
)


(52,435
)


(127,791
)


(327,687
)OTHER EXPENSES:Foreign currency transaction gain (loss)


185



9,748



9,747



9,748



3,531Loss on impairment of oil and gas rights


-



-



-



-



(471,523
)TOTAL OTHER EXPENSES


185



9,748



9,747



9,748



(467,992
)NET LOSS


(12
)


(32,637
)


(42,688
)


(118,043
)


(795,679
)NET LOSS PER SHARE - BASIC

$
(0.00
)

$
(0.00
)

$
(0.00
)

$
(0.01
)WEIGHTED AVERAGE COMMON EQUIVALENTSHARES OUTSTANDING - BASIC AND DILUTED


20,827,216



18,994,971



20,827,216



19,306,280























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




















2


NORTHERN EMPIRE ENERGY CORP.(An Exploration Stage Company)Statements of Cash FlowsApril 24, 2006Nine Months Ended


(inception) toSeptember 30,


September 30,


September 30,2010


2009


2010CASH FLOW FROM OPERATING ACTIVITIES:Net loss

$
(42,688
)

$
(118,043
)

$
(795,679
)Adjustment to reconcile net loss to net cashused in operating activities:Depreciation


-



-



2,750Beneficial conversion feature


-



-



7,500Impairment of asset


-



-



471,523Changes in operating assets and liabilities:Increase in:Increase (decrease) in accounts payable and accrued expenses


18,686



(5,859
)


114,911Net cash used in operating activities


(24,002
)


(123,902
)


(198,995
)CASH FLOW FROM INVESTING ACTIVITIES:Cash paid for prior ownership


-



-



(50,000
)Deposits for purchase of oil and gas properties


-



40,435



(471,524
)Net cash used in investing activities


-



40,435



(521,524
)CASH FLOW FROM FINANCING ACTIVITIES:Contributed capital from officer


-



-



1,425Common stock issued for cash


-



369,208



719,257Net cash provided by financing activities


-



369,208



720,682NET INCREASE (DECREASE) IN CASH


(24,002
)


285,741



163EFFECT OF FOREIGN CURRENCY TRANSLATION ADJUSTMENT


(11,690
)


9,748



-CASH AND CASH EQUIVALENTS, Beginning of period


35,855



49,688



-CASH AND CASH EQUIVALENTS, End of period

$
163


$
345,177


$
163























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




















3


NORTHERN EMPIRE ENERGY CORP.


(An Exploration Stage Company)


Notes to the Financial Statements








NOTE 1 – BUSINESS AND ORGANIZATION





Northern Empire Energy Corporation (The Company) was organized on April 24, 2006, under the laws of the State of Nevada. The Company is engaged in the acquisition with the intent to develop mineral properties. Pursuant to Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 915-10 (“ASC 915-10”), “Development Stage Entities,” the Company is classified as an exploration stage company.








NOTE 2 – CONDENSED FINANCIAL STATEMENTS





The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2010 and for all periods presented have been made.





Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2009 audited financial statements.  The results of operations for the period ended September 30, 2010 are not necessarily indicative of the operating results for the full year.








NOTE 3 – GOING CONCERN





These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of September 30, 2010, the Company has accumulated operating losses of approximately $795,679 since inception.  The Company’s ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations.  Management plans to raise equity capital to finance the operating and capital requirements of the Company.  Amounts raised will be used to further development of the Company’s products, to provide financing for marketing and promotion, to secure additional property and equipment, and for other working capital purposes.  While the Company is putting forth its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.





These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments that might arise from this uncertainty.








NOTE 4 – SIGNIFICANT ACCOUNTING POLICIES





The Company’s financial statements are prepared using the accrual method of accounting.  The Company has elected a December 31 year-end.








4


NORTHERN EMPIRE ENERGY CORP.


(An Exploration Stage Company)


Notes to the Financial Statements








NOTE 4 – SIGNIFICANT ACCOUNTING POLICIES (continued)





Use of Estimates





The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.





Revenue Recognition





The Company recognizes revenue on an accrual basis. Revenue is generally realized or realizable and earned when all of the following criteria are met:  1) persuasive evidence of an arrangement exists between the Company and our customer(s); 2) services have been rendered; 3) our price to our customer is fixed or determinable; and 4) collectability is reasonably assured.





Advertising





Advertising is expensed when incurred.  There has been no advertising during the period.





Income taxes





The Company accounts for its income taxes in accordance with FASB ASC Topic 740-10, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.





Net Loss Per Common Share





FASB ASC Topic 260-10, “Earnings per Share”, requires presentation of “basic” and “diluted” earnings per share on the face of the statements of operations for all entities with complex capital structures. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.





Oil and Gas Properties





The Company follows the full cost method of accounting for its oil and gas operations whereby all costs related to the acquisition of methane, petroleum, and natural gas interests are capitalized. Under this method, all productive and non-productive costs incurred in connection with the exploration for and development of oil and gas reserves are capitalized. Such costs include land and lease acquisition costs, annual carrying charges of non-producing properties, geological and geophysical costs, costs of drilling and equipping productive and non-productive wells, and direct exploration salaries and related benefits.


5


NORTHERN EMPIRE ENERGY CORP.


(An Exploration Stage Company)


Notes to the Financial Statements








NOTE 4 – SIGNIFICANT ACCOUNTING POLICIES (continued)





Oil and Gas Properties (continued)





Proceeds from the disposal of oil and gas properties are recorded as a reduction of the related capitalized costs without recognition of a gain or loss unless the disposal would result in a change of 20 percent or more in the depletion rate.  The Company currently operates solely in the U.S.





Depreciation and depletion of proved oil and gas properties is computed on the units-of-production method based upon estimates of proved reserves, as determined by independent consultants, with oil and gas being converted to a common unit of measure based on their relative energy content.





The costs of acquisition and exploration of unproved oil and gas properties, including any related capitalized interest expense, are not subject to depletion, but are assessed for impairment either individually or on an aggregated basis. The costs of certain unevaluated leasehold acreage are also not subject to depletion. Costs not subject to depletion are periodically assessed for possible impairment or reductions in recoverable value. If a reduction in recoverable value has occurred, costs subject to depletion are increased or a charge is made against earnings for those operations where a reserve base is not yet established.





Estimated future removal and site restoration costs are provided over the life of proven reserves on a units-of-production basis.  Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards.  The charge is included in the provision for depletion and depreciation and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.





The Company applies a ceiling test to capitalized costs which limits such costs to the aggregate of the estimated present value, using a ten percent discount rate of the estimated future net revenues from production of proven reserves at year end at market prices less future production, administrative, financing, site restoration, and income tax costs plus the lower of cost or estimated market value of unproved properties.  If capitalized costs are determined to exceed estimated future net revenues, a write-down of carrying value is charged to depletion in the period.





Fixed Assets





Furniture, fixtures and equipment are stated at cost less accumulated depreciation. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives, principally on a straight-line basis.





Stock-Based Compensation





The Company has adopted FASB ASC Topic 718-10, “Compensation- Stock Compensation” (“ASC 718-10”) which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors. Under the fair value recognition provisions of ASC 718-10, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period.





Determining the fair value of stock-based awards at the grant date requires considerable judgment, including estimating the expected future volatility of our stock price, estimating the expected length of term of granted options and selecting the appropriate risk-free rate. There is no established trading market for our stock.


6


NORTHERN EMPIRE ENERGY CORP.


(An Exploration Stage Company)


Notes to the Financial Statements








NOTE 4 – SIGNIFICANT ACCOUNTING POLICIES (continued)





Financial instruments





The fair value of the Company’s financial assets and financial liabilities approximate their carrying values due to the immediate or short-term maturity of these financial instruments.





Foreign Currency Translation





The Company’s functional and reporting currency is the United States dollar. Occasional transactions may occur in Canadian dollars and management has adopted FASB ASC topic 830 “Foreign Currency Matters”). 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. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.








NOTE 5 – RELATED PARTY TRANSACTIONS





As of September 30, 2010 and December 31, 2009, a company affiliated with an officer of the Company and the officer was owed a total of $95,557 and $76,256, respectively, for consulting related fees and various expenses paid on the Company’s behalf. The unsecured obligations are due on demand and are non-interest bearing. The obligations are included in the accompanying financial statements as accounts payable – related party.








NOTE 6 – CONCENTRATION OF CREDIT RISK





Cash Balances





The Company maintains its cash in various financial institutions in both the United States and Canada.  Balances maintained in the United States are insured by the Federal Deposit Insurance Corporation (FDIC).  This government corporation insured balances up to $100,000 through October 13, 2008.  As of October 14, 2008 all non-interest bearing transaction deposit accounts at an FDIC-insured institution, including all business checking deposit accounts that do not earn interest, are fully insured for the entire amount in the deposit account.  This unlimited insurance coverage is temporary and will remain in effect for participating institutions until December 31, 2009.  All other deposit accounts at FDIC-insured institutions are insured up to at least $250,000 per depositor until December 31, 2013.  Balances maintained in Canada are insured by the Canada Deposit Insurance Corporation for balances up to $100,000 at each bank. As of September 30, 2010, the Company did not have any cash balances that were greater than the insured amount for both the FDIC and CDIC.














7


NORTHERN EMPIRE ENERGY CORP.


(An Exploration Stage Company)


Notes to the Financial Statements








NOTE 7 – OIL AND GAS PROPERTIES





On December 16, 2009, the Company entered into a “Formal option to Purchase and Sale Agreement of Petroleum and Natural Gas Rights” with Angels Exploration Fund, Inc., an Alberta Corporation. The Company agreed to purchase certain petroleum and natural gas rights within the Province of Alberta for a total purchase price of $471,524 ($500,000 Canadian Dollars). The properties are not producing as of September 30, 2010 and have not yet been amortized on the balance sheet. As a part of the agreements, the Company has a minimum lease rental fee obligation of $8,064 per year for 5 years, starting December 18, 2009 and ending December 18, 2014.





The Company believes the property is located in a merited geological setting with complete infrastructures, pipelines within the area. The Company needs to be successful in raising additional capital in order to conduct exploration and drill wells on the property, until this happens we have no way of projecting cash flows without a test well. Therefore, as of December 31, 2009, the property was written down/impaired to $1 and a loss was recognized in the financial statements in the amount of $471,523.








NOTE 8 – STOCKHOLDER’S EQUITY





As of September 30, 2010 there were 20,827,216 shares of common stock issued and outstanding, 615,347 shares of common stock issuable and 62,500 shares of preferred stock issued and outstanding.





On April 24, 2006 (inception), the Company issued 361,900 shares of its common stock at $0.01 per share to its sole shareholder for $3,619.





On April 24, 2006, the Company issued 75,000 shares of its preferred stock in exchange for telephone calling equipment valued at $7,500.  Each share of the Convertible Preferred Stock can be exchanged for two hundred (200) shares of Common Stock of the corporation.  This Series A preferred stock was issued with a beneficial conversion feature totaling $7,500. If the preferred stock were to be converted into common stock, the common stock would be increased by 15,000,000 shares.





On December 31, 2006, the Company issued 61,200 shares of its common stock at $0.10 per share pursuant to a regulation 504 offering for $6,120.





On November 17, 2008, the Company issued 18,000,000 shares of its common stock at $0.01 per share for $180,000 in cash to the CEO of the Company.





On January 30, 2008, the Company initiated a ten-for-one reverse stock split for its issued and outstanding common and preferred stock.  This reverse stock split had no effect on the authorized number of common shares or preferred shares, and did not affect the par value of the stock. The financial statements reflect the reverse stock split on a retroactive basis.





On November 17, 2008, David Gallagher, a former officer and director of the Company, returned his 361,900 restricted shares of common stock to the corporate treasury in exchange for $50,000 and the Company’s specialized phone equipment with a book value of $4,750.  The shares were then cancelled by the Company’s transfer agent.





On February 27, 2009, 8,000 preferred shares of stock were converted into 1,600,000 shares of common stock at a conversion rate of 200 to 1.





8


NORTHERN EMPIRE ENERGY CORP.


(An Exploration Stage Company)


Notes to the Financial Statements








NOTE 8 – STOCKHOLDER’S EQUITY (continued)





On September 10, 2009, the Company conducted a private placement of 615,347 shares of common stock at $0.60 per share for a total of $369,208. As of September 30, 2010, the shares had not yet been issued by the transfer agent and are recorded as stock payable on the Statement of Stockholder’s Equity. The principal amount of each Unit of this offering includes a Unit which consists of one common share of the Company at $0.60 per share and one warrant to purchase a Common Share for two years at $1.00 per share.





On October 2, 2009, 4,500 preferred shares of stock were converted into 900,000 shares of common stock at a conversion rate of 200 to 1.





In December 2009, the Company conducted a private placement of 266,016 shares of common stock at $0.60 per share for a total of $160,310. The principal amount of each Unit of this offering includes a Unit which consists of one common share of the Company at $0.60 per share and one warrant to purchase a Common Share for two years at $1.00 per share.








NOTE 9 – RECENT ACCOUNTING PRONOUNCEMENTS





The Company has evaluated all recent accounting pronouncements and believes that none of them will have a material effect on the Company’s financial statements.








NOTE 10 – SUBSEQUENT EVENTS





The Company has evaluated subsequent events through the date the financial statements are issued and believes there are no events to disclose.




















9


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





Forward-Looking Information





The Company may from time to time make written or oral “forward-looking statements” including statements contained in this report and in other communications by the Company, which are made in good faith by the Company pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.





These forward-looking statements include statements of the Company’s plans, objectives, expectations, estimates and intentions, which are subject to change based on various important factors (some of which are beyond the Company’s control).  The following factors, in addition to others not listed, could cause the Company’s actual results to differ materially from those expressed in forward looking statements: the strength of the domestic and local economies in which the Company conducts operations, the impact of current uncertainties in global economic conditions and the ongoing financial crisis affecting the domestic and foreign banking system and financial markets, including the impact on the Company’s suppliers and customers, changes in client needs and consumer spending habits, the impact of competition and technological change on the Company, the Company’s ability to manage its growth effectively, including its ability to successfully integrate any business which it might acquire, and currency fluctuations. All forward-looking statements in this report are based upon information available to the Company on the date of this report.  The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.





Limited Operating History





There is limited historical financial information about our company upon which to base an evaluation of our future performance.  We are an exploration stage corporation and have generated limited revenues from operations.  We cannot guarantee that we will be successful in our business operations.  We are subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible delays in the exploitation of business opportunities.  We may fail to adopt a business model and strategize effectively or fail to revise our business model and strategy should industry conditions and competition change.





We have limited resources and there is no assurance that future financing will be available to us on acceptable terms. Additional equity financing could result in dilution to existing shareholders.





Overview of Operations





History and Organization





The Company was organized April 24, 2006 (date of inception) under the laws of the State of Nevada, as Political Calls, Inc.   The original business plan of the Company consisted of marketing telephone broadcasting messages for political campaigns.  On November 23, 2008, the Board of Directors and the majority vote of the Company’s shareholders voted and approved a name change of the Company from Political Calls, Inc. to Northern Empire Energy Corp., to better reflect the Company’s new business direction in oil and gas exploration.





Our common stock is quoted for trading on the OTC Bulletin Board under the symbol NOEE.  Our principal executive offices are located at Suite 201 – 55 York Street, Toronto, Ontario, Canada, M5J 1R7.  Our telephone number is (416) 903-0059.








10


Our Business





Northern Empire Energy Corp. is an emerging oil and gas exploration company that focuses on the acquisition of oil and natural gas interests; including leases, wells, mineral rights, working interests, royalty interests, overriding royalty interests, net profits interests, and production payments in Canada.  We intend to pursue prospects in partnership with other companies with exploration, development and production expertise. We will also pursue alliances with partners in the areas of geological and geophysical services and prospect generation, evaluation and prospect leasing.  The acquisition, drilling and development of oil and gas is capital intensive and the level of performance and outcome attainable by an oil and gas company is proportional to the amount of available capital.  Therefore, a principal part of our plan of operations is to acquire the additional capital required to finance our future operations.





Business Strategy





In pursuing our operations strategy, our primary focus will be directed towards the following:





Exploration Activities





We intend to conduct exploration and development programs to grow proven reserves, production and cash flow. We participate by acquiring working interests in our projects and we continually review opportunities generated by industry partners.





Strategic Acquisitions





We plan to review opportunities to acquire (i) producing properties in our target areas that contain proved reserve value as well as meaningful exploitation and exploration upside potential; and (ii) small to mid-size energy companies that, along with our current management expertise, would display profitability, strong revenue growth and significant cash flows.





We intend to use the services of independent consultants and contractors to perform various professional services, including reservoir engineering, land, legal, and environmental services. As a non-operator working interest owner, we intend to rely on the services private contractors to drill, produce and market our natural gas and oil.





Seasonality





The exploration for oil and natural gas reserves depends on access to areas where operations are to be conducted. Seasonal weather variations, including freeze-up and break-up affect access in certain circumstances.  Natural gas is used principally as a heating fuel and for power generation.  Accordingly, seasonal variations in weather patterns affect the demand for natural gas. Depending on prevailing conditions, the prices received for sales of natural gas are generally higher in winter than summer months, while prices are generally higher in summer than spring and fall months.





Our Exploration Property





In November 2008, we entered into an Option Agreement with Maguire Resources Ltd., a corporation having an office at 300-840 6th Ave SW in Calgary, Alberta, Canada.  Maquire granted an option to the Company to earn a 40% interest in the Turin Project by incurring 100% of the drilling and completion costs up to a five well drilling program. This a non-operating working interest and/or royalty owner participation position in oil and gas project, is located in the Turin area of south-east Alberta, Canada, specifically section 28, township 10, range 19 west of the 4th meridian.  The option interest consists of several potential hydrocarbon zones in the area including (starting from the shallowest formation), the Milk River, Second White Specks, Barons, Bow Island, Glauconite and the Lower Mannville sandstones plus the Livingston Carbonate.





11


The option, if exercised, would allow the Company to acquire up to a 40% non-operating working interest, subject to a 31% G.O.R. (Gross Overriding Royalty) by incurring expenditures of $2 million, 100% of the drilling and a completion costs in a five well drilling program.  By drilling an initial well on the Turin Project the Company could earn 25% of a shut-in gas well subject to a 31% G.O.R. (Gross Overriding Royalty) by incurring 100% of completion and tie in costs, located in the land of interest.





After completing a detailed geological, geophysical and seismic review, including current project economics, the Company has decided it is not in its best interests to proceed with its option to earn a 45% interest in the Turin Prospect.





On December 16, 2009 the Company entered into a “Formal Option to Purchase and Sale Agreement of Petroleum and Natural Gas Rights” with Angels Exploration Fund, Inc., an Alberta Corporation.  Northern Empire Energy Corp. agreed to purchase from Angels Exploration Fund Inc. certain petroleum and natural gas rights within the Province of Alberta for a total purchase price of $471,524 ($500,000.00 Canadian Dollars).  The Company believes the property is located in a merited geological setting with complete infrastructures and pipelines within the area.  The Redwater Atoll Reef is classified as one of the major petroleum fields in the world, of Leduc age and a prolific oil reservoir. In excess of 700 million barrels of oil have been produced from the Redwater oil field to date.





The Company needs to be successful in raising additional capital in order to conduct exploration and drill wells on the property.  Until this happens we have no way of projecting cash flows without a test well. At December 31, 2009 the property was written down/impaired to $1 and a loss was recognized in the financial statements in the amount of $471,523.





On January 27, 2010, the Company announced it had acquired 100% of the Petroleum and Natural Gas lease rights on nine sections in the Redwater Region, north-east of Edmonton Alberta, Canada; the “Waskatenau Prospect”, consisting of 5760 acres located 15 miles North East of the giant Redwater Oil Field.  Several (12) geophysical targets have been identified throughout the Wasatenau Prospect and the Company’s 2010 Exploration Program plans to define and prioritize these targets.





Liquidity and Capital Resources





The Company has limited financial resources available, which has had an adverse impact on the Company’s liquidity, activities and operations.  These limitations have adversely affected the Company’s ability to obtain certain projects and pursue additional business.  Management anticipates the Company will need to raise at least $2,000,000. There is no assurance that we will have revenue in the future or that we will be able to secure the necessary funding to develop our business.  Without additional funding, it is most likely that our business model will not succeed, and we shall be forced to curtail or even cease our operations.





As of September 30, 2010, the Company has current assets of $163 and current liabilities of $114,911. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern.  In order for the Company to remain a Going Concern it will need to find additional capital.  Additional working capital may be sought through additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or stockholders), or from other available funding sources at market rates of interest, or a combination of these.  The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought.  No assurances can be given that any necessary financing can be obtained on terms favorable to the Company, or at all.





Future funding could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or amortization expenses related to goodwill and other intangible assets, which could materially adversely affect the Company’s business, results of operations and financial condition.








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As a result of the Company’s current limited available cash, no officer or director received compensation through the nine months ended September 30, 2010.  No officer or director received stock options or other non-cash compensation since the Company’s inception through September 30, 2010.  The Company has no employment agreements in place with its officers.  Nor does the Company owe its officers any accrued compensation, as the Officers agreed to work for company at no cost, until the company can become profitable on a consistent Quarter-to-Quarter basis.





Plan of Operation





Management does not believe that the Company will be able to generate any significant profit during the coming year.  Management believes that general and administrative costs and well as building its infrastructure will most likely curtail any significant profits.





Management believes the Company can sustain itself for the next twelve months. Management has agreed to keep the Company funded at its own expense, without seeking reimbursement for expenses paid.  The Company’s need for capital may change dramatically if it can generate additional revenues from its operations. In the event the Company requires additional funds, the Company will have to seek loans or equity placements to cover such cash needs.  There are no assurances additional capital will be available to the Company on acceptable terms.





Results of Operations for the three months ended September 30, 2010





During the three months ended September 30, 2010, the Company had a net loss of $(12) versus a net loss of $(32,637) for the same period last year.  For the three months ending September 30, 2010 the Company incurred general and administrative expenses of $197.





During the three months ended September 30, 2010 and 2009, the company did not generate any revenue.





Results of Operations for the nine months ended September 30, 2010





During the nine months ended September 30, 2010, the Company had a net loss of $(42,688) versus a net loss of $(118,043) for the same period last year.  For the nine months ending September 30, 2010, the Company incurred general and administrative expenses of $35,435 and professional fees of $17,000.





For the period since inception through September 30, 2010, we generated limited revenues of $19,491.  Since our inception on April 24, 2006 we experienced an accumulated net loss of $(795,679).  We anticipate our operating expenses will increase as we increase operations.  We also anticipate that our ongoing operating expenses will increase since we are a reporting company under the Securities Exchange Act of 1934.





Going Concern





Going Concern - The Company experienced operating losses since its inception on April 24, 2006 through the period ended September 30, 2010.  The financial statements have been prepared assuming the Company will continue to operate as a going concern which contemplates the realization of assets and the settlement of liabilities in the normal course of business.  No adjustment has been made to the recorded amount of assets or the recorded amount or classification of liabilities which would be required if the Company were unable to continue its operations (see Financial Footnote 3).





Expected purchase or sale of plant and significant equipment





We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.





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Significant changes in the number of employees





As of September 30, 2010, we did not have any employees.  We are dependent upon our sole officer and director for our future business development.  As our operations expand we anticipate the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable at this time.





Off-Balance Sheet Arrangements





We do not have any 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 or operations, liquidity, capital expenditures or capital resources that is material to investors.





Critical Accounting Policies





There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Registration Statement for the fiscal year ended December 31, 2009.





New Accounting Standards





The Company has evaluated all recent accounting pronouncements and believes that none of them will have a material effect on the Company’s financial statements.








ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





Not applicable.








ITEM 4T.   CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures





In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by our management, with the participation of our Principal Executive Officer who also serves as our Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of September 30, 2010.





Based on that evaluation, our Principal Executive Officer and our Principal Financial Officer has concluded that, as of September 30, 2010, our disclosure controls and procedures were not effective to detect the inappropriate application of US GAAP rules. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.





Such material weaknesses include: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the  establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.





As of September 30, 2010 the deficiencies have not been remedied due to our lack of sufficient capital resources.  We are working to remedy our deficiencies.


14


Changes in Internal Control Over Financial Reporting





As of September 30, 2010, there have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period ended September 30, 2010, that materially affected, or are reasonably likely to materially affect, our company’s internal control over financial reporting.








PART II. OTHER INFORMATION








ITEM 1.            LEGAL PROCEEDINGS





From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business.  However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.





We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.








ITEM 1A.         RISK FACTORS





See Risk Factors set forth in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and the discussion in Item 1, above, under “Liquidity and Capital Resources.”








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





None.








ITEM 3.            DEFAULTS UPON SENIOR SECURITIES





None.








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





None.








ITEM 5.            OTHER INFORMATION





None.











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ITEM 6.            EXHIBITS





Incorporated by referenceExhibit
Document Description
Form
Date
Number
Filed

herewith3.1
Articles of Incorporation, as currently in effect
SB-2
02/21/2007
3.13.2
Bylaws as currently in effect
SB-2
02/21/2007
3.23.3
Amended Articles of Incorporation
SB-2
02/21/2007
3.33.4
Amended Articles of Incorporation
8-K
11/19/2008
3.410.1
Option Agreement dated November 17, 2008
8-K
11/19/2008
10.231.1
Certification of Principal Executive Officer and Principal

Financial Officer pursuant to 15d-15(e), promulgated

under the Securities and Exchange Act of 1934, as

amended



X32.1
Certification pursuant to 18 U.S.C. Section 1350, as

adopted pursuant to Section 906 of the Sarbanes-Oxley

Act of 2002 (Chief Executive Officer and Chief

Financial Officer)



X























16


SIGNATURES





Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned, hereunto duly authorized.








NORTHERN EMPIRE ENERGY CORP.RegistrantBY:
/s/ RANIERO CORSINIRaniero Corsini, Chief  Executive & Chief Financial OfficerDATED:
February 4, 2014












































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