Force Minerals (NUNC) 10-Q 2010 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 August 31, 2010
[  ]	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from __________ to__________
	Commission File Number:  000-52494

Force Energy Corp.

(Exact name of registrant as specified in its charter)

Nevada	98-0462664
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

1400 16th Street, Suite 400, Denver, CO 80202

(Address of principal executive offices)

720-470-1414

(Registrant’s telephone number)

_______________________________________________________________

(Former name, former address and former fiscal year, 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 [X] Yes    [ ] No

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    [X] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

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

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

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 51,237,267 common shares as of September 7, 2010.

	TABLE OF CONTENTS	Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	7
Item 4T:	Controls and Procedures	7
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	9
Item 1A:	Risk Factors	9
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	9
Item 3:	Defaults Upon Senior Securities	9
Item 4:	Removed and Reserved	9
Item 5:	Other Information	9
Item 6:	Exhibits	9

2

PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements

Our financial statements included in this Form 10-Q are as follows:
F-1	Interim Consolidated Balance Sheet as of August 31, 2010 (unaudited) and November 30, 2009 (audited);
F-2	Interim Consolidated Statements of Operations and Comprehensive Loss for the nine and three months ended August 31, 2010 and 2009 and period from November 1, 2006 (Inception) to August 31, 2010 (unaudited);
F-3	Interim Consolidated Statements of Cash Flows for the nine months ended August 31, 2010 and 2009 and period from November 1, 2006 (Inception) to August 31, 2010 (unaudited);
F-4	Interim Consolidated Statements of Stockholders’ Equity for period from November 1, 2006 (Inception) to August 31, 2010 (unaudited);
F-5	Notes to Interim Consolidated Financial Statements;

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included.  Operating results for the interim period ended August 31, 2010 are not necessarily indicative of the results that can be expected for the full year.

3

FORCE ENERGY CORP.

 (A Development Stage Company)

INTERIM CONSOLIDATED BALANCE SHEETS

August 31, 2010 and November 30, 2009

(Stated in US Dollars)

(Unaudited)

	August 31 2010			November 30 2009
ASSETS
Current
Cash	$	17,962		$	162,458
Prepaid expenses – Note 7		4,607			1,216
		22,569			163,674
Property and equipment – Note 4		-			1,741
Oil and gas properties,  full cost method of accounting
Unproved Properties – Note 5		135,427			504,162
	$	157,996		$	669,577
LIABILITIES
Current
Accounts payable and accrued liabilities	$	18,547		$	58,798
Due to related parties - Note 7		3,125			113,550
		21,672			172,348
Asset retirement obligation – Note 8		11,477			10,225
		33,149			182,573
STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value 10,000,000 shares authorized, none outstanding
Common stock, $0.001 par value – Note 9 270,000,000 shares authorized 51,237,267 shares issued (November 30, 2009, - 47,344,000 shares issued)		51,237			47,344
Additional paid in capital		2,574,876			1,717,952
Deferred stock compensation		(236,200	)		-
Deficit accumulated during the development stage		(2,265,066	)		(1,278,292)
		124,847			487,004
	$	157,996		$	669,577
Nature of Operations and Ability to Continue as a Going Concern – Note 2

F-1

 FORCE ENERGY CORP.

 (A Development Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

for the three and nine month periods ended August 31, 2010 and August 31, 2009, and

for the period from November 1, 2006 (Date of Inception)

to August 31, 2010

(Stated in US Dollars)

(Unaudited)

	Nine months ended August 31,						Three months ended August 31,						November 1, 2006 (Date of Inception) to August 31,
	2010			2009			2010			2009			2010
													(cumulative)
Expenses
Accounting and audit fees	$	74,427		$	74,414		$	11,450		$	32,110		$	248,457
Accretion expense		1,192			365			410			313			2,520
Bank charges		476			842			149			108			2,572
Consulting fees		-			-			-			-			408,500
Depreciation		1,741			1,746			577			582			4,651
Investor relations		-			18,000			-			-			51,443
Legal fees		22,709			29,598			8,550			5,853			162,891
Management fees – Note 6		417,675			141,750			323,175			47,250			764,175
Mineral property option costs		59,600			-			59,600			-			59,600
Office expenses		7,852			14,831			2,285			9,543			31,464
Oil and Gas exploration costs		-			15,000			-			-			15,000
Tax, penalties and Interest		-			(50,000	)		-			(50,000	)		-
Rent – Note 6		6,711			15,685			411			3,149			40,655
Transfer and filing fees		7,616			9,629			3,142			3,877			67,050
Travel		839			2,406			-			-			10,341
Write-off of oil and gas costs		398,039			20,000			398,039			-			418,039
Loss before other items		(998,877	)		(294,266	)		(807,788	)		(52,785	)		(2,287,358)
Other items:
Debt forgiveness		14,676			-			14,676			-			15,286
Foreign exchange gain (loss)		(2,706	)		(5,656	)		(1,287	)		(5,151	)		6,873
Interest income		133			-			133			-			133
		12,103			(5,656	)		13,522			(5,151	)		22,292
Net loss and comprehensive loss for the period	$	(986,774	)	$	(299,922	)	$	(794,266	)	$	(57,936	)	$	(2,265,066)
Basic loss per share	$	(0.02	)	$	(0.01	)	$	(0.02	)	$	(0.00	)
Weighted average number of shares outstanding		47,878,191			44,994,546			48,934,959,			44,994,546

F-2

FORCE ENERGY CORP.

(A Development Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

for the nine month periods ended August 31, 2010 and August 31, 2009, and

for the period from November 1, 2006 (Date of Inception)

to August 31, 2010

(Stated in US Dollars)

(Unaudited)

	Nine Months Ended August 31,						Period from November 1, 2006 (Date of Inception) to August 31,
	2010			2009			2010
							(cumulative)
Cash Flows provided by (used in) Operating Activities
Net loss for the period	$	(986,774	)	$	(299,922	)	$	(2,265,022)
Adjustments to reconcile net loss to net cash used in operating activities:
Consulting fees paid in stock		-			-			405,000
Share based compensation		313,800			-			313,800
Debt forgiveness		(14,676	)		-			(15,286)
Accretion expense		1,252			365			2,580
Depreciation		1,741			1,746			4,651
Write-off of oil and gas costs		398,039			20,000			418,039
Changes in non-cash working capital items related to operations:
Deposits		-			11,817			-
Prepaid expenses		359			268			(857)
Accounts payable and accrued liabilities		(25,575	)		16,108			(5,929)
Net cash used in operating activities		(311,834	)		(249,618	)		(1,143,068)
Cash Flows used in Investing Activities
Advance of loan receivable		-			-			-
Acquisition of property and equipment		-			-			(4,651)
Acquisition and development costs of oil and gas properties		(29,304	)		(206,038	)		(387,517)
Net cash used in investing activities		(29,304	)		(236,038	)		(392,168)
Cash Flows provided by Financing Activities
Capital stock issued		150,000			-			1,369,000
Due to related parties		46,642			-			160,192
Cash acquired on reverse acquisition		-			-			37,058
Net cash provided by financing activities		196,642			-			1,566,250
Effect of foreign currency translation		-			525			(13,052)
Increase (decrease) in cash during the period		(144,496	)		(455,131	)		17,962
Cash, beginning of the period		162,458			458,940			-
Cash, end of the period	$	17,962		$	3,809		$	17,962
Supplemental Cash Flow Information – Note 10

F-3

FORCE ENERGY CORP.

 (A Development Stage Company)

INTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

for the period from November 1, 2006 (Date of Inception) to August 31, 2010

(Stated in US Dollars)

(Unaudited)

		Common Shares				Additional Paid-in		Deferred Stock		Deficit Accumulated During the Development
		Number		Par Value		Capital		Compensation		Stage		Total
Capital stock issued for cash	– at $0.005		23,000,000	$	23,000	$	92,000	$	-	$	-	$	115,000
Less: commissions			-		-		(8,000)		-		-		(8,000)
Net loss and comprehensive loss for the period			-		-		-		-		(8,944)		(8,944)
Balance, November 30, 2006			23,000,000		23,000		84,000		-		(8,944)		98,056
Pursuant to agreement of merger and plan of reorganization			21,354,000		21,354		(24,058)		-		-		(2,704)
Capital stock issued for cash	– at $0.25		240,000		240		59,760		-		-		60,000
– at $0.50			100,000		100		49,900		-		-		50,000
Net loss and comprehensive loss for the year			-		-		-		-		(79,859)		(79,859)
Balance November 30, 2007			44,694,000		44,694		169,602		-		(88,803)		125,493
Capital stock issued for cash	– at $0.75		1,000,000		1,000		749,000		-		-		750,000
Pursuant to consulting service agreements	– at $1.35		300,000		300		404,700		-		-		405,000
Net loss and comprehensive loss for the year			-		-		-		-		(786,407)		(786,407)
Balance November 30, 2008			45,994,000		45,994		1,323,302		-		(875,210)		494,086
Capital stock issued for cash	- at 0.28		900,000		900		251,100		-		-		252,000
Capital stock issued for oil and gas property – Note 5(b)			450,000		450		143,550		-		-		144,000
Net loss and comprehensive loss for the year			-		-		-		-		(403,082)		(403,082)
Balance November 30, 2009			47,344,000	$	47,344	$	1,717,952	$	-	$	(1,278,292)	$	487,004

F-4

FORCE ENERGY CORP.

 (A Development Stage Company)

INTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

for the period from November 1, 2006 (Date of Inception) to August 31, 2010

(Stated in US Dollars)

(Unaudited)

		Common Shares				Additional Paid-in		Deferred Stock			Deficit Accumulated During the Development
		Number		Par Value		Capital		Compensation			Stage			Total
Balance November 30, 2009			47,344,000	$	47,344	$	1,717,952	$	-		$	(1,278,292	)	$	487,004
Capital stock issued for cash	- at 0.20		500,000		500		99,500		-			-			100,000
Capital stock issued pursuant to management services contract	- at 0.22		2,500,000		2,500		547,500		(264,000	)		-			286,000
Capital stock issued for debt settlement	- at 0.25		643,267		643		160,174		-			-			160,817
Capital stock issued for cash	- at 0.20		250,000		250		49,750		-			-			50,000
Amortization of deferred compensation			-		-		-		27,800			-			27,800
Net loss and comprehensive loss for the year			-		-		-		-			(986,774	)		(986,774)
Balance August 31, 2010			51,237,267	$	51,237	$	2,574,876	$	(236,200	)	$	(2,265,066	)	$	124,847

F-5

FORCE ENERGY CORP.

(A Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2010

(Stated in US Dollars)

(Unaudited)

Note 1 Interim Reporting

The unaudited financial information furnished herein reflects all adjustments, which in the opinion of management are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented.  All adjustments are of a normal recurring nature.  These interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s audited consolidated financial statements for the fiscal year ended November 30, 2009.  The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal period and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context.  Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s audited consolidated financial statements for the fiscal year ended November 30, 2009, has been omitted.  The results of operations for the nine-month period ended August 31, 2010 are not necessarily indicative of results for the entire year ending November 30, 2010.

Note 2 Nature of Operations and Ability to Continue as a Going Concern

The Company was incorporated in the state of Nevada, United States of America on November 1, 2006.  The Company was formed for the purpose of acquiring exploration and development stage natural resource properties.  The Company’s year-end is November 30.

Effective December 28, 2006, the Board of Directors authorized a 3 for 1 forward stock split on the common shares.  The authorized number of common shares increased from 90,000,000 to 270,000,000 common shares with a par value of $0.001.

On February 12, 2008, the Company acquired 100% of the common shares of Force Energy Corp. an inactive company incorporated in Nevada on July 19, 2005, for $100, to effect a name change of the Company.  On February 12, 2008, the Company and Force Energy Corp filed articles of merger with the Secretary of State of Nevada to effectuate a merger between the two companies.  The surviving entity of the merger was the Company.  Immediately thereafter the Company changed its name to Force Energy Corp.

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months.  Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At August 31, 2010, the Company has a working capital deficiency of $897. The Company has yet to achieve profitable operations, has accumulated losses of $2,265,066 since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern.  The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable terms, if at all.

F-6

FORCE ENERGY CORP.

(A Development Stage Company)

Notes to the Interim Consolidated Financial Statements

August 31, 2010

(Stated in US Dollars)

Note 3 New Accounting Standards

Mineral Exploration and Acquisition Costs

The Company has chosen to expense all mineral acquisition and exploration costs as incurred given that it is still in the development stage. Once the Company has identified proven and probable reserves in its investigation of its properties and upon development of a plan for operating a mine, it would enter the development stage and capitalize future costs until production is established. When a property reaches the production stage, the related capitalized costs will be amortized, using the units of production method on the basis of periodic estimates of ore reserves. When the Company has capitalized mineral properties, these properties will be periodically assessed for impairment of value and any diminution in value.

Recently adopted accounting pronouncements

On December 1, 2009 the Company adopted the guidance in Accounting Standards Codification (“ASC”) 805, “Business Combinations”.  ASC 805 establishes principles and requirements for how the acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired business; (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.  The adoption of this statement had no effect on the Company̵ 7;s reported financial position or results of operations.

On December 1, 2009, the Company adopted the newly ratified guidance which is part of ASC 815-40, “Contracts in Entity’s Own Equity”. ASC 815-40 provides guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock. The adoption of this statement had no effect on the Company’s reported financial position or results of operations.

On December 1, 2009, the Company became subject to revised reporting requirements relating to oil and natural gas reserves that a company holds, which were prescribed by the SEC.  Included in the new rule entitled ―Modernization of Oil and Gas Reporting Requirements”, are the following changes: 1) permitting use of new technologies to determine proved reserves, if those technologies have been demonstrated empirically to lead to reliable conclusions about reserve volumes; 2) enabling companies to additionally disclose their probable and possible reserves to investors, in addition to their proved reserves; 3) allowing previously excluded resources, such as oil sands, to be classified as oil an d natural gas reserves rather than mining reserves; 4) requiring companies to report the independence and qualifications of a preparer or auditor, based on current Society of Petroleum Engineers criteria; 5) requiring the filing of reports for companies that rely on a third party to prepare reserve estimates or conduct a reserve audit; and 6) requiring companies to report oil and natural gas reserves using an average price based upon the prior 12-month period, rather than year-end prices. The new reporting requirements are applicable to registration statements filed on or after January 1, 2010, and for annual reports on Form 10K for fiscal years ending on or after December 31, 2009.  As at August 31, 2010, the Company has no proved or probable reserves and is therefore not subject to the reporting requirement.  The adoption of these reporting requirements will result in increased disclosures to the financial statements once the Company has proved and probable reserves.

F-7

FORCE ENERGY CORP.

(A Development Stage Company)

Notes to the Interim Consolidated Financial Statements

August 31, 2010

(Stated in US Dollars)

Note 3 New Accounting Standards – (cont’d)

On December 1, 2009 Accounting Standards Update (ASU) No. 2010-03 ― “Oil and Gas Reserve Estimation and Disclosures.” became effective for the Company.  The guidance requires additional disclosures to be made relating to current oil and gas reserve estimation.  The adoption of these reporting requirements will result in increased disclosures to the financial statements once the Company has proved and probable reserves.

Note 4 Property and Equipment

Property and equipment consists of the following:

	August 31 2010		November 30 2009
Computer equipment and software	$	4,275	$	4,275
Less: Accumulated depreciation		(4,275)		(2,675)
		-		1,600
Office equipment		376		376
Less: Accumulated depreciation		(376)		(235)
		-		141
	$	-	$	1,741

Note 5 Oil and Gas Properties

	August 31, 2010
	United States		Canada		Total
Unproved properties
- acquisition costs	$	369,000	$	119,640	$	488,640
- development costs		29,039		7,365		36,404
- asset retirement obligation		-		8,422		8,422
		398,039		135,427		533,466
Written off		(398,039)		-		(398,039)
	$	-	$	135,427	$	135,427

F-8

FORCE ENERGY CORP.

(A Development Stage Company)

Notes to the Interim Consolidated Financial Statements

August 31, 2010

(Stated in US Dollars)

Note 5 Oil and Gas Properties - (cont’d)

	November 30, 2009
	United States		Canada		Total
Unproved properties
- acquisition costs	$	369,000	$	119,640	$	488,640
- development costs		-		7,100		7,100
- asset retirement obligation		-		8,422		8,422
	$	369,000	$	135,162	$	504,162

a)      Hayter Prospect, Alberta, Canada

By a participation agreement dated December 21, 2006, Nuance Exploration Ltd. (“NEL”), a wholly owned subsidiary of the Company acquired a 100% ownership in the interpretation of 3D seismic data covering four sections of certain land, known as the Hayter Prospect, located in the province of Alberta, Canada by paying $82,650 (CDN$95,000) in costs of acquiring and interpreting the seismic data.

On October 15, 2007, prior to the evaluation of the 3D seismic data, NEL sold to the original grantor (the Grantor) its 100% interest in the subject property and received as consideration a non-interest bearing promissory note for $111,144 (CDN$110,000) to be repaid by November 30, 2007.

On November 30, 2007, the Grantor did not pay the promissory note and NEL and the Grantor entered into a Participation Agreement whereby NEL accepted a 20% interest of the Grantor’s working interest in the County Line 10D Hayter 10-8-40-1 W4M well as full and final settlement of the promissory note totalling $95,702 after considering the effects of the foreign exchange on the note.

On October 16, 2009, the Company entered into an amendment to its Participation Agreement pursuant to which it acquired an additional 30% working interest in the Hayter Well in consideration of a release by Force from an amount of $23,938 owed by the Grantor to the Company. The Company holds a 50% working interest of the Grantor’s interest in the Hayter Well.  The addendum was subsequently amended by the parties on February 1, 2010 to replace the reference to the Company in the agreement with Nuance Exploration Ltd., the Company’s wholly owned subsidiary.

During the nine month period ended August 31, 2010 the Company incurred $265 (year ended November 30, 2009 - $7,100) of development costs.

As at August 31, 2010, the 50% working interest of the Hayter Well was recorded at $135,427 (November 30, 2009:- $135,162).  The company also recorded $11,477 (November 30, 2009 - $10,225) as an asset retirement obligation (Note 8).

b)      Diamond Springs Prospect, Wyoming

By a letter agreement dated March 11, 2008, the Company agreed to purchase a 5% working interest in the Diamond Springs Prospect (the “Prospect”) and acquire an option to purchase an additional 20% working interest in the Prospect.

F-9

FORCE ENERGY CORP.

(A Development Stage Company)

Notes to the Interim Consolidated Financial Statements

August 31, 2010

(Stated in US Dollars)

Note 5 Oil and Gas Properties – (cont’d)

As consideration, the Company issued a $50,000 Promissory Note without interest due on or before April 30, 2008 (settled April 16, 2008), and agreed to pay $300,000 within 90 days of the execution of an acquisition agreement (see agreement related to Diamond Springs Prospect below), at which time the Company would earn a 75% net revenue interest in the initial well.  The Company is responsible for 100% of the costs of the drilling and testing of the initial well on the Prospect.

Upon drilling of the initial well, the Company would issue to the vendor 250,000 common shares of the Company as payment in full for a 5% working interest in all subsequent wells drilled on the Prospect. These shares were not issued and the commitment to issue these shares was superseded in June, 2009 as described below. The Vendor granted the Company the option to purchase up to an additional 20% working interest in all subsequent wells drilled on the Prospect for $100,000 per 1% of working interest.  This option expired unexercised on December 15, 2008.

In December 2008, the Company advanced an additional $175,000, pursuant to the loan agreement dated March 11, 2009, to the vendor of the Diamond Springs Prospect with the intention that this loan, together with the original payment of $50,000, are to be included as part of the purchase price included in a definitive agreement in respect to the acquisition by the Company of a working interest in the Prospect.

In June 2009, the parties entered into the assignment agreement, which replaced and superseded all prior agreements between the parties.  The Company received a 50% interest in the Diamond Springs Prospect for $225,000. In connection with the assignment agreement the Company agreed to sign a release in favour of the assignor, releasing them from all further obligations under the loan agreement and the letter agreement.

On September 16, 2009, the Company acquired a further 25% interest in the Diamond Springs Prospect for consideration consisting of 450,000 common shares with a fair value of $144,000.

During the year ended November 30, 2009, $20,000 in development costs relating to Diamond Springs Prospect were written off.

During the nine month period ended August 31, 2010, the Company incurred $29,039 of exploration expenditures on the Diamond Springs Prospect.  Following a review exploration results to date the Company abandoned its interest in the prospect during the quarter ended August 31, 2010 and wrote off acquisition costs of $369,000 and exploration expenditures of $29,039.

F-10

FORCE ENERGY CORP.

(A Development Stage Company)

Notes to the Interim Consolidated Financial Statements

August 31, 2010

(Stated in US Dollars)

Note 6 Mineral Property

On July 6, 2010, the Company entered into a Property Option Agreement to acquire an option to purchase a 100% interest in the property known as the Zoro 1 property, a mineral property comprising 52 hectares in the Snow Lake region of Manitoba Canada.  In order to exercise the option, the Company must pay the following monies to the Optionor by the following dates:

i)$59,600 (Cdn$62,000) on signing the agreement (paid)

ii)$94,958 (Cdn$100,000) on or before June, 15, 2011

iii)$189,915 (Cdn$200,000) on or before June, 15, 2012

iv)$379,831 (Cdn$400,000) on or before June, 15, 2013

Note 7 Related Party Transactions

Amounts due from/to related parties comprise:

	August 31 2010		November 30 2009
Amounts due from Director
Management fee paid in advance	$	3,750	$	-
Amounts due to Director
Management fees	$	3,125	$	-
Amounts due to former director and Company controlled by former director
Management fee s	$	-	$	111,500
Rent		-		2,050
	$	3,125	$	113,550

All amounts due to related parties are unsecured, non-interest bearing and have no specific terms for repayment.

On July 23, 2010, the Company entered into an employment contract with a director which expires July 22, 2011.  Pursuant to the contract the Director will receive $5,000 per month remuneration.

On July 23, 2010, the Company entered into an employment contract with the Company President which expires July 22, 2011.  Pursuant to the contract the President received 2,500,000 common shares having a fair value of $550,000.  Should the contract be terminated prior to completion the President will return 100,000 shares to treasury for each unfulfilled month of the employment contract.  The President will also receive $2,500 per month for months 1-3; $4,000 per month for months 4-6 and $5,000 per month for months 7-12 of the contract.  

F-11

FORCE ENERGY CORP.

(A Development Stage Company)

Notes to the Interim Consolidated Financial Statements

August 31, 2010

(Stated in US Dollars)

Note 7 Related Party Transactions – (cont’d)

The fair value of 1,300,000 shares issued which are earned immediately have been expensed as stock based compensation of $286,000. The fair value of the remaining 1,200,000 shares issued which are to be earned over the term of the contract will be charged to operations over the life of the employment contract.  This portion of the stock award is accounted for as deferred compensation whereby the fair value of the award is recorded as a component of stockholders’ equity until earned.  Pursuant to this stock award the Company recorded management fees of $27,800 in the three and nine month periods ended August 31, 2010.

On August 4, 2010, the Company entered into a share for debt settlement agreement with the Company’s former President whereby 643,267 common shares were issued with a deemed value of $0.25, to settle in full management fees of $154,600 rent expense of $1,000 and other expenses owing of $5,216, an aggregate amount of $160,817.

During the three and nine month periods ended August 31, 2010, total management fees pursuant to employment contracts charged by the Company’s directors were $323,175 and $323,175 respectively (three and nine month period ended August 31, 2009: $nil and $nil). The total management fees charged by a company controlled by the former director for the three and nine month periods ended August 31, 2010 were $nil and $94,500 respectively (three and nine month period ended August 31, 2009: $47,250 and $141,750).  Rent expenses reimbursed to the company controlled by the Company’s former director during the three and nine month periods ended August 31, 2010 were $nil and $6,300 (three and nine month period ended August 31, 2009: $3,150 and $5,250).

Note 8 Asset Retirement Obligation

Total future asset retirement obligations were estimated by management based on the Company’s net ownership interest, estimated costs to reclaim and abandon the wells and the estimated timing of the costs to be incurred in future periods. The Company has estimated the net present value of its total assets retirement obligations at November 30, 2009 to be $10,255 (November 30, 2008 - $nil), based on a total undiscounted liability of $16,645 (Cdn$17,500) in the Hayter Prospect, Alberta, Canada.  These payments are expected to be made over the next nine years, with the majority of the cost incurred between 2016 and 2019.  The Company’s credit adjusted risk free rate of 15% and an inflation rate of 8% were used to calculate the present value of the asset retirement obligation.

	August 31 2010		November 30 2009
Balance, beginning of period	$	10,225	$	-
Liabilities incurred		-		8,422
Accretion expense		1,252		1,328
Effect of foreign exchange		-		475
	$	11,477	$	10,225

F-12

FORCE ENERGY CORP.

(A Development Stage Company)

Notes to the Interim Consolidated Financial Statements

August 31, 2010

(Stated in US Dollars)

Note 9 Capital Stock

During the period ended November 30, 2006, the Company issued 23,000,000 common shares at $0.005 for total proceeds of $115,000.  The Company paid commissions of $8,000 for net proceeds of $107,000.

On December 29, 2006, the Company issued 21,354,000 common shares as a result of the reverse merger and recapitalization.

On April 5, 2007, the Company issued 240,000 common shares at $0.25 per share for total proceeds of $60,000 pursuant to a private placement.

On November 30, 2007, the Company issued 100,000 common shares at $0.50 per share for total proceeds of $50,000 pursuant to a private placement.

On April 16, 2008, the Company agreed to issue 300,000 common shares (issued May 2008) with a fair value of $1.35 per share totalling $405,000 pursuant to three consultancy contracts.

On April 17, 2008, the Company issued 1,000,000 common shares at $0.75 per share for total proceeds of $750,000 pursuant to a private placement.

On September 19, 2009, the Company issued 450,000 common shares pursuant to the Diamond Springs Prospect property agreement with a fair value of $144,000.

On October 30, 2009, the Company issued 900,000 common shares at $0.28 per share for total proceeds of $252,000 pursuant to a private placement.

On July 9, 2010, the Company issued 500,000 common shares at $0.20 per share for gross proceeds of $100,000.

On July 23, 2010, the Company issued 2,500,000 common shares pursuant to an employment contract with the Company President.  The fair value of the shares issued was $550,000.

On August 4, 2010, the Company issued 643,267 common shares pursuant to a debt settlement agreement, in settlement of amounts owing to the Company’s former president in the amount of $160,817

On August 11, 2010, the Company issued 250,000 common shares for aggregate proceeds of $50,000.

Note 10 Supplemental Disclosure with Respect to Cash Flows

During the nine month period ended August 31, 2010, the following non-cash investing and financing activities occurred:

i) 2,500,000 common shares were issued with a fair value of $550,000 pursuant to an employment contract.

ii) 643,267 common shares were issued pursuant to a debt settlement agreement, in settlement of amounts owing to the Company’s former president in the amount of $160,817.

F-13

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.   These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continu e,” “will likely result,” and similar expressions.  We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions.  Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.  Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Company Overview

We are currently engaged in the business of identifying, evaluating, and qualifying potential natural gas and oil wells; investing in interests in those wells with the goal of producing commercially marketable quantities of oil and natural gas. The majority of our business is derived from projects identified by our principals. Our strategy is to identify low to moderate risk oil and natural gas reserves by reviewing and reprocessing previously recorded seismic data with a view to a deeper target in our analysis than when the data was originally recorded. This approach allows us to evaluate potential oil and natural gas sites for development without the operational and financial commitment which would be required to record new seismic data on comparable sites. By entering into participation agreements with companies which have possession o f such seismic data, our operational costs are limited to the cost of analysis until such time as we have identified reserves for development. We intend to expand our operations into these areas of activity should we establish sufficient cash flows in the next twelve months to support these activities. We presently hold a 50% working interest of the County Line Energy Corp. interest in the Hayter Well located in Alberta, Canada.

4

County Line Energy Corp. is the operator of the Hayter well. As of the date of this quarterly report, the Hayter well has been cased and cemented in anticipation of the completion of the drill program. County Line plans to enter the Hayter well, perforate the potential pay zone(s) and conduct regular production testing of the zone(s). Should the testing confirm adequate oil reserves and potential economic flow rates, County Line is expected to install adequate pumping equipment and other surface facilities in anticipation of the projected flow rates. Currently, there are no known oil reserves on the Hayter well.

Until the current reporting period, we held a 75% working interest in the Diamond Springs Prospect located within the Wind River Basin, Wyoming. We were the operator of the Diamond Springs Prospect. We incurred $29,039 of exploration expenditures on the Diamond Springs Prospect during the nine month period ended August 31, 2010.  However, following a review of the exploration results on the prospect, we decided to abandon our interest in the prospect.

We also have an option to acquire a 100% net undivided interest in the property known as the Zoro 1 mineral claim near the East Shore of Wekusko Lake in west-central Manitoba, Canada. We may exercise the option by making cash payments under the following schedule:

Amount of Payment	Date Payment is Due
$59,600	July 6, 2010 (paid)
$94,958	June 15, 2011
$189,915	June 15, 2012
$379,831	June 15, 2013

We have no rights to the Zoro 1 mineral claim unless and until we exercise the option. We acquired the option to explore the potential for deposits of lithium on the Zoro 1 mineral claim.  We intend to explore for the potential of lithium on the Zoro 1 mineral claim, but have not made any definite plans to do so as of the date of this filing.  Management is considering options on how to best go about exploring property.

Results of operations for the nine and three months ended August 31, 2010 and 2009, and for the period from Inception (November 1, 2006) to August 31, 2010

We did not earn any revenues during the nine months ended August 31, 2010. We do not anticipate earning revenues until identifiable reserves are discovered and exploited from the Hayter well, or we are able to locate and exploit deposits of lithium on the Zoro 1 mineral claim.

We incurred operating expenses in the amount of $998,977 for the nine months ended August 31, 2010, compared with operating expenses of $294,266 for the nine months ended August 31, 2009. The increase in operating expenses for the nine months ended August 31, 2010 from the prior year period resulting in a difference of $704,611 is mainly attributable to an increase in the write-off of our Diamond Springs Prospect of $378,039, an increase in management fees of $275,925, and the option payment of $59,600 that we made on the Zoro 1 mineral claim.

5

We incurred operating expenses in the amount of $807,788 for the three months ended August 31, 2010, compared with operating expenses of $52,785 for the three months ended August 31, 2009. The increase in operating expenses for the three months ended August 31, 2010 from the prior year period resulting in a difference of $755,003 is mainly attributable to the write-off of our Diamond Springs Prospect of $398,039, an increase in management fees of $275,925, and the option payment of $59,600 that we made on the Zoro 1 mineral claim.

We incurred operating expenses in the amount of $2,287,358 for the period from November 1, 2006 (Inception) to August 31, 2010.

We experienced other income of $12,103 for the nine months ended August 31, 2010, mainly as a result of debt forgiveness of $14,676 offset by $2,706 in foreign exchange losses.  This compared with other expenses of $5,656 for the nine months ended August 31, 2009, based entirely on foreign exchange losses. We experienced other income of $13,522 for the three months ended August 31, 2010, mainly as a result of debt forgiveness of $14,676 offset by $1,287 in foreign exchange losses.  This compared with other expenses of $5,151 for the three months ended August 31, 2009, based entirely on foreign exchange losses.

We incurred a net loss in the amount of $986,774 for the nine months ended August 31, 2010, as compared with a net loss in the amount of $299,922 for the nine months ended August 31, 2009. We incurred a net loss in the amount of $794,266 for the three months ended August 31, 2010, as compared with a net loss in the amount of $57,936 for the three months ended August 31, 2009. We incurred a net loss in the amount of $2,265,066 for the period from November 1, 2006 (Inception) to August 31, 2010. Our losses for each period are attributable to operating expenses together with a lack of any revenues.

Liquidity and Capital Resources

As of August 31, 2010, we had total current assets of $22,569. Our total current liabilities as of August 31, 2010 were $21,672. As a result, we had working capital of $897 as of August 31, 2010.

Operating activities used $311,834 in cash for the nine months ended August 31, 2010. Our net loss of $986,774 for this period was the main component of our negative operating cash flow, offset mainly by $313,800 in share based compensation and $398,039 in the write-off of our Diamond Springs Prospect. Investing activities used $29,304 in cash for the nine months ended August 31, 2010 as a result of the acquisition of development costs of oil and gas properties.  Financing activities provided $196,642 in cash as a result of $150,000 in proceeds from the sale of stock and $46,642 in related party advances.

We will depend almost exclusively on outside capital to pay for the continued exploration and development of our properties. Such outside capital may include the sale of additional stock and/or commercial borrowing. Capital may not continue to be available if necessary to meet these continuing development costs or, if the capital is available, that it will be on terms acceptable to us. The issuance of additional equity securities by us would 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.

If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business and as a result may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some or all of their investment.

6

Off Balance Sheet Arrangements

As of August 31, 2010, there were no off balance sheet arrangements.

Going Concern

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months.  Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At August 31, 2010, the Company has a working capital deficiency of $897. The Company has yet to achieve profitable operations, has accumulated losses of $2,265,066 since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern.  The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable terms, if at all.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

Item 4T.     Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such informati on is accumulated and communicated to our company's management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

7

We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending November 30, 2010, subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation eff orts may be adversely affected in a material manner.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, 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.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended August 31, 2010 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

8

PART II – OTHER INFORMATION

Item 1.     Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 1A:  Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

On July 9, 2010, we closed a private placement consisting of 500,000 shares at a price of $0.20 per share for aggregate proceeds of $100,000. We issued 500,000 shares to one (1) non U.S. person (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On July 23, 2010, we issued 2,500,000 common shares pursuant to an employment contract with our President.  The fair value of the shares issued was $550,000. We issued the shares relying on Section 4(2) of the Securities Act of 1933.

On August 4, 2010, we issued 643,267 common shares pursuant to a debt settlement agreement, in settlement of amounts owing to our former president in the amount of $160,817. We issued the shares to non U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On August 11, 2010, we issued 250,000 common shares for aggregate proceeds of $50,000. We issued the shares to non U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

Item 3.     Defaults upon Senior Securities

None

Item 4.     Removed and Reserved

Item 5.     Other Information

None

Item 6.      Exhibits

Exhibit  Number	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

9

SIGNATURES

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Force Energy Corp.
Date:	October 12, 2010
	By:       /s/ Tim DeHerrera                                                                               Tim DeHerrera Title:    Chief Executive Officer and Director