Edgar Filing: True North Energy CORP

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB/A

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2006

o 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 000-51519

TRUE NORTH ENERGY CORPORATION
(Exact name of small business issuer as specified in its charter)

Nevada		98-043482
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

2 Allen Center, 1200 Smith Street, 16^th Floor Houston, Texas 77002
(Address of principal executive offices)

(713) 353-3948
(Registrant’s telephone number, including area code)

______________________________
(Former address if changed since last report)

Check whether the issuer (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, and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2). Yes x No o

As of August 24, 2006, there were 62,350,000 shares of the issuer’s common stock, par value $0.001, issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes x No o

TRUE NORTH ENERGY CORPORATION

JULY 31, 2006 QUARTERLY REPORT ON FORM 10-QSB

TABLE OF CONTENTS

		PAGE

	Explanatory Note	3

	Special Note Regarding Forward Looking Information	3

	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	4

Item 2.	Plan of Operation	15

Item 3.	Controls and Procedures	17

	PART II - OTHER INFORMATION

Item 2.	Changes in Securities and Use of Proceeds	17

Item 6.	Exhibits	18

EXPLANATORY NOTE

We have amended the financial statements and notes thereto contained in our previously filed Quarterly Report on Form 10-QSB to report stock-based compensation expenses associated with the June 1, 2006 grant of restricted stock to our President and Chief Executive Officer. This amended report also reflects the accrual of certain general and administrative expenses incurred during the three months ended July 31, 2006 but not paid until the following three-month period.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

To the extent that the information presented in this Quarterly Report on Form 10-QSB for the quarter ended July 31, 2006 discusses financial projections, information or expectations about our products, markets, revenues, or anticipated results, or otherwise makes statements about future events, such statements are forward-looking. We are making these forward-looking statements in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section "Plan of Operation". You should carefully review the risks described in our Annual Report and in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These factors include, among others:

·	The risks associated with oil and gas exploration;

·	Our ability to raise capital to fund capital expenditures;

·	Our ability to find, acquire, market, develop and produce new properties;

·	Oil and gas price volatility;

·	Uncertainties in the estimation of proved reserves and in the projection of future rates of production and timing of development expenditures;

·	Operating hazards attendant to the natural gas and oil business;

·	Downhole drilling and completion risks that are generally not recoverable from third parties or insurance;

·	Availability and cost of material and equipment;

·	Delays in anticipated start-up dates;

·	Actions or inactions of third-party operators of our properties;

·	Our ability to find and retain skilled personnel;

·	Regulatory developments;

·	Environmental risks; and

·	General economic conditions.

PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

	PAGE
Balance Sheets as at July 31, 2006 (Unaudited) and April 30, 2006 (Audited)		5

Statements of Operations for the three months ended July 31, 2006 and 2005 (Unaudited) and for the period from April 7, 2004 (inception) to July 31, 2006 (Unaudited)		6

Statements of Cash Flows for the three months ended July 31, 2006 and 2005 (Unaudited) and for the period from April 7, 2004 (inception) to July 31, 2006 (Unaudited)		7

Notes to Financial Statements (Unaudited)		8

TRUE NORTH ENERGY CORPORATION

(An Exploration Stage Company)

BALANCE SHEETS

	July 31,			April 30,
	2006			2006
	(unaudited)
ASSETS

CURRENT ASSETS
Cash	$	161,946		$	37,223
Accounts Receivable		500,000			-
Total Current Assets		661,946			37,223

OTHER ASSETS
Website development, net of accumulated amortization		16,438			4,817
Unproven oil & gas properties, using successful efforts accounting		1,086,261			373,775
Total Other Assets		1,102,699			378,592

ASSETS FROM DISCONTINUED OPERATIONS		-			-

TOTAL ASSETS	$	1,764,645		$	415,815

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and accrued liabilites	$	61,756		$	16,097
Deposits on stock purchase		-			50,000
Total Current Liabilities		61,756			66,097

LIABILITIES FROM DISCONTINUED OPERATIONS		15,000			15,000

COMMITMENTS AND CONTINGENCIES		-			-

STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value; 20,000,000 shares
authorized, 0 and 0 shares issued and outstanding		-			-
Common stock, $0.0001 par value; 100,000,000 shares
authorized, 60,100,000 and 50,000,000 shares issued
and outstanding, respectively		6,200			6,010
Additional paid-in capital		2,431,464			481,654
Pre-exploration stage accumulated deficit		(72,350	)		(72,350	)
Accumulated deficit during exploration stage		(677,425	)		(80,596	)
Total Stockholders' Equity		1,687,889			334,718

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,764,645		$	415,815

See accompanying notes to financials statements

TRUE NORTH ENERGY CORPORATION

(An Exploration Stage Company)

STATEMENTS OF OPERATIONS (unaudited)

	Three Months Ended			Three Months Ended			From April 7, 2004
	July			July			(Inception) to
	2006			2005			July 31, 2006

REVENUES	$	-		$	336		$	-

OPERATING EXPENSES
Geological and Geophysical costs		101,605			-			101,605
General and administrative		86,291			1,694			97,954
Investor Relations		65,739			-			65,739
Officers and directors fees		313,184			-			333,184
Legal and Professional Fees		31,839			12,100			80,170
Amortization		951			602			1,553
TOTAL OPERATING EXPENSES		599,609			14,396			680,205

Other Income
Interest Income		2,780			-			2,780


NET LOSS	$	(596,829	)	$	(14,060	)		(677,425	)

NET LOSS PER COMMON SHARE,
BASIC AND DILUTED	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES
OUTSTANDING, BASIC AND DILUTED		61,255,978			10,000,000

See accompanying notes to financials statements

TRUE NORTH ENERGY CORPORATION

(An Exploration Stage Company)

STATEMENTS OF CASH FLOWS (unaudited)

	Three months Ended July 31,						From April 7, 2004 (Inception) to July 31,
CASH FLOWS FROM OPERATING ACTIVITIES:	2006			2005			2006
Net loss	$	(596,829	)	$	(14,060	)	$	(718,028	)
Discontinued operations		-						40,603
Net loss from continuing operations		(596,829	)		(14,060	)		(677,425	)

Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Amortization		951			602			1,553
Stock-based compensation		250,000						250,000
Increase (decrease) in:								-
Accounts payable		(6,562	)		(2,000	)		9,470
Accrued liabilities		52,221			(2,521	)		52,221
Liability from discontinued operations		-			-			(33,346	)
Net cash provided (used) by operating activities		(300,219	)		(17,979	)		(397,527	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Oil & Gas Property		(712,486	)		-			(712,486	)
Website Development		(12,572	)		-			(12,572	)
Net cash provided (used by investing activites)		(725,058	)		-			(725,058	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		1,150,000			-			1,250,000
Net cash provided (used) by financing activities		1,150,000			162			1,250,000

Net increase in cash and cash equivalents		124,723			(17,817	)		127,415

Cash, beginning of period		37,223			34,531			34,531

Cash, end of period	$	161,946		$	16,714		$	161,946
		-
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-

NON-CASH INVESTING AND FINANCING ACTIVITIES:	$	-		$	-

See accompanying notes to financials statements

TRUE NORTH ENERGY CORPORATION

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - NATURE AND CONTINUANCE OF OPERATIONS

The accompanying unaudited interim financial statements of True North Energy Corporation have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in True North Energy Corporation’s Annual Report filed with the SEC on Form.10-KSB In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal April 30, 2006 as reported in the Form 10-KSB have been omitted.

NOTE 2 - GOING CONCERN

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations. As at April 30, 2006, the Company had no revenues, had negative working capital, and had accumulated losses since inception. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

NOTE 3 - STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation in accordance with Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment.” SFAS 123(R) revised SFAS No. 123, “Accounting for Stock-Based Compensation” and superseded APB Opinion No. 25, “Accounting for Stock Issued to Employees.” In accordance with SFAS 123(R), stock-based compensation recognized during the three months ended July 31, 2006 includes compensation expense for all share-based payments based on the grant date fair value. Such compensation expense is recognized over the related service period.

TRUE NORTH ENERGY CORPORATION

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

Stock-based compensation expense resulting from restricted stock granted to employees totaled $250,000 during the three months ended July 31, 2006.

A summary of restricted stock grant activity during the three months ended July 31, 2006 is as follows:

	Shares		Grant Date Fair Value
Outstanding on April 30, 2006		-	$	-
Granted		5,000,000		7,500,000
Vested		-		-
Forfeited/canceled		-		-
Outstanding on July 31, 2006		5,000,000	$	7,500,000

NOTE 4 - CAPITAL STOCK

On May 9, 2006, the Company sold 1,250,000 units at a price of $0.80 per unit or $1,000,000 on an aggregate basis to one person in reliance on Regulation S under the Securities Act of 1933, as amended. Each unit consists of one share of the Company’s common stock and one common stock purchase warrant exercisable for the purchase of an additional share of common stock. Each warrant is exercisable for a period of 3 years at an exercise price of $1.60 per share. The relative fair value of the common stock is $618,232 and the relative fair vale of the warrants is $381,768.

Effective May 9, 2006, the Company entered into a purchase agreement (the “Agreement”) and acquired rights in State of Alaska oil and gas leases ADL 390834, 390839, 390840 and 390841 (the “Un-Issued Leases”) from two unrelated persons (the “Sellers”). The total purchase price for the Un-Issued Leases pursuant to the Agreement is $276,480 (the “Purchase Price”). The Un-Issued Leases cover an aggregate of approximately 10,000 acres of land on the North Slope of Alaska. The Sellers are reported to have submitted the winning bids for the unissued leases but as of the date of the agreement, the State of Alaska, Department of Natural Resources, has not issued a high bidder notice or an award notice to the Sellers. Upon receipt of an award notice, the Sellers have 30 days within which to pay the remaining 80% of the bid amount for the Un-Issued Leases together with the first year annual rentals due thereon. It is not presently known when or if the Un-Issued Leases will be issued to Sellers.

At such time that the Un-Issued Leases are issued to Sellers, Sellers shall own or otherwise have the right to assign and convey or cause to be assigned and conveyed the Un-Issued Leases, all of which shall be free and clear of any liens and encumbrances and provide for a net revenue interest to Sellers of not less than 83.33334% prior to reservation of a 5% overriding royalty which overriding royalty shall also apply to all renewals and extensions of the Un-Issued Leases.

TRUE NORTH ENERGY CORPORATION

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

Pursuant to the Agreement, the Company has delivered an aggregate amount of $286,720 to an escrow account. At closing, $81,920 of the escrowed funds shall be used to pay to the State of Alaska all balances due on the Un-Issued Leases and $10,240 of the escrowed funds shall be used to pay to the State of Alaska the first year of rental payments due on the Un-Issued Leases.

Effective June 1, the Company’s president and chief executive officer resigned. On the same date, an outside party was appointed to those positions and was also appointed as a director.

Effective June 7, 2006, the Company entered into oil and gas well participation agreements with Bayou City Exploration, Inc. ("Bayou City") whereby the Company agreed to participate with Bayou City in the drilling of a test well on each of three oil and gas prospects including the Jaboncillo Windfall Prospect and Frost National Bank Deep Prospect, each located in Live Oak County Texas and the Zodiac II Prospect located in Jeff Davis and Calcasieu Parishes in Louisiana.

On July 27, 2006 the Company agreed to sell 650,000 units at a price of $1.00 per unit or $650,000 on an aggregate basis to one person in reliance on Regulation S under the Securities Act of 1933, as amended. Each unit consists of one share of our common stock and one common stock purchase warrant exercisable for the purchase of an additional share of common stock. Each warrant is exercisable for a period of 3 years at an exercise price of $1.70 per share. The relative fair value of the common stock is $381,246 and the relative fair vale of the warrants is $268,754. Of the total proceeds, $150,000 was received on July 31, 2006, and $500,000 was received on August 30, 2006.

On July 28, 2006, the Company entered into a participation agreement with Whitmar Exploration Company (“Whitmar”) respecting our participation in the drilling of a 13,000 foot test well to test the Yegua Sands on the Deweyville Prospect located in Newton County, Texas and Calcasieu Parish, Louisiana.

TRUE NORTH ENERGY CORPORATION

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

NOTE 5 - OIL AND GAS LEASE

On January 23, 2006 we acquired rights in State of Alaska Oil and Gas Leases ADL 389208, 389932, 390087, 390383, 390567, and 390572 (the “Issued Leases”) from Massimiliano Pozzoni pursuant to an Asset Purchase Agreement (the “Agreement”) among us, Massimiliano Pozzoni and Kevin Moe. We are presently working to have the leases registered in our name and expect to complete this process in the near future. Pursuant to the Agreement, we also acquired Massimiliano Pozzoni’s rights in State of Alaska Oil and Gas Leases ADL 390722, 390723 and 390745 (the “Un-Issued Leases”). The Issued Leases and Un-Issued Leases involve land in the Cook Inlet area of Alaska. The Un-Issued Leases have not been issued by the State of Alaska as of the date hereof but are expected to be issued in the near future. Upon issuance and payment of related bid amounts and rental fees, we will start the process of having the Un-Issued Leases assigned to us and registered in our name. Rental fees are due on a yearly basis. The Issued Leases are in full force and effect and are free and clear of any liens or encumbrances. They provide for a net revenue interest of 87.5% prior to an overriding 5% royalty. If and when assigned to us, our rights in the Un-Issued Leases will be the same as our rights in the Issued Leases.

In connection with the acquisition, we have also assumed obligation to drill or cause to be drilled, at our sole expense, within 5 years of November 28, 2005, a test well, to completion or abandonment, on at least one of ADL 390087, ADL 390722 or ADL 390723, to a bottomhole depth and location at least sufficient to test both the West Foreland and Hemlock Formations. Failure to drill the test well by November 27, 2010 to completion or abandonment will result in our forfeiture of leases ADL 390087, AL 390722, and ADL 390723. The closing of the Agreement took place on January 27, 2006.

Effective May 9, 2006 we entered into a Purchase Agreement (the “Agreement”) whereby we acquired rights in State of Alaska Oil and Gas Leases ADL 390834, 390839, 390840 and 390841 (the “Un-Issued Leases”) from two unrelated persons (the “Sellers”). The Agreement was amended July 31, 2006 to extend certain timelines contained therein. The total purchase price for the Un-Issued Leases pursuant to the Agreement was $276,480 (the “Purchase Price”). The Un-Issued Leases cover an aggregate of approximately 10,000 acres of land, both onshore and offshore in the Beaufort Sea area on the North Slope of Alaska. The Sellers received a High Bidder Notice from the State of Alaska, Department of Natural Resources in or about June 26, 2006 with respect to the Un-Issued Leases and expect to receive an Award Notice on or before October 2006.

If the closing of the transaction does not occur by the close of business on December 31, 2006, Anchorage, Alaska time, the Agreement shall be null and void and we and Sellers shall have no further rights or obligations under the Agreement. Pursuant to the Agreement we have delivered the Purchase Price and an additional $10,240 (being an aggregate amount of $286,720) to an escrow account. At Closing $81,920 of the escrowed funds shall be used to pay to the State of Alaska all balances due on the Un-Issued Leases and $10,240 of the escrowed funds shall be used to pay to the State of Alaska the first year of rental payments due on the Un-Issued Leases.

TRUE NORTH ENERGY CORPORATION

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

Effective June 7, 2006 we entered into oil and gas well participation agreements with Bayou City Exploration, Inc. ("Bayou City") whereby we agreed to participate with Bayou City in the drilling of a test well on each of three (3) oil and gas prospects including the Jaboncillo Windfall Prospect (“the Jaboncillo Windfall Prospect”) and Frost National Bank Deep Prospect (the “Frost National Bank Deep Prospect”), each located in Live Oak County Texas and the Zodiac II Prospect (the “Zodiac Prospect”) located in Jeff Davis and Calcasieu Parishes in Louisiana.

The agreement terms with respect to the two (2) Live Oak County Prospects (the "Live Oak Prospects") are that by participating in the drilling of a test well we will earn a 16.67% working interest in the Live Oak Prospects before payout and a 12.5% working interest after payout. “Payout” is defined as that point in time when there has been recovered from one hundred percent (100%) of production, less only royalties, overriding royalties and production taxes an amount of money equal to one hundred percent (100%) of the drilling, completing and operating costs (during the payout period) of the initial test well.

We have further agreed to pay 16.67% of all well costs to the initial casing point on the initial test well drilled on each Live Oak Prospect, to pay 16.67% of all well completion costs and to pay our proportionate share of the prospect costs including geological and geophysical costs, third party prospect fees, land brokerage costs, lease bonus and all other costs associated with the respective Live Oak Prospects. These prospect costs were $20,375 with regard to the Jaboncillo Windfall Prospect and $94,888 with regard to the Frost National Bank Deep Prospect, all of which have been paid.

The agreement terms with respect to the Zodiac Prospect are that we will earn a 25% working interest in the initial test well drilled on the Zodiac Prospect at such time as the test well has reached the objective depth. We have further agreed to pay 33.33% of well costs to the casing point on the test well drilled on the Zodiac Prospect, to pay 25% of all well completion costs and to pay our proportionate share of prospect costs including geological and geophysical costs, third party prospect fees, land brokerage costs, lease bonus and all other similar costs associated with the Zodiac Prospect. Our prospect costs with regard to the Zodiac Prospect are $267,056, which have not yet been paid.

The entire prospect costs for each prospect are fully refundable in the event the applicable agreement is rescinded by Bayou City for any reason or Bayou City fails to cause the initial test well to be drilled for any reason.

Drilling has been completed on the Frost National Bank Deep Prospect. To date we have paid $132,000 in drilling costs and $226,000 in completion costs related to the Frost National Bank Deep Prospect. The well was completed and fracture stimulated. During the initial production tests, the well produced gas in excess of 1 million cubic feet of gas per day and approximately 1,000 barrels of water per day. The well is currently being evaluated to determine if the well is commercial and capable of economic gas production. Determining factors in the evaluation will be the estimate of recoverable reserves, sustainability of gas flow rates and an economic disposal of produced water.

TRUE NORTH ENERGY CORPORATION

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

Subject to rig availability and resolution of a land/lease issue, drilling is expected to commence on the Jaboncillo Windfall Prospect on or before January 31, 2007. Drilling had been expected to commence by August 1, 2006 but has been delayed due to an illegal lease trespass by a third party that the current lease owner is presently working to resolve. Subject to rig availability, drilling is expected to commence on the Zodiac Prospect on or before December 31, 2006.

On July 28, 2006 we entered into a participation agreement (the “Participation Agreement”) with Whitmar Exploration Company (“Whitmar”) respecting our participation in the drilling of a 13,000 foot test well to test the Yegua Sands on the Deweyville Prospect located in Newton County, Texas and Calcasieu Parish, Louisiana. Thereunder we paid Whitmar, within 5 days of the date of the Participation Agreement $42,500 representing our proportionate share of leasehold costs and an additional $57,500 representing a deposit on our share of drilling costs for the test well. Our participation will involve a 10% working interest and 72% net revenue interest whereby we will pay 12.5% of drilling costs to the casing point and 10% of all costs after the casing point. Our estimated shares of such costs is $552,000 for drilling and, if applicable, $114,000 for completion. We paid Whitmar, within 15 days of the date of the Participation Agreement, an additional $494,500 representing the balance of our share of estimated drilling costs. Under the agreement, we also have the right to participate in one additional well on the prospect on a proportionate basis.

As of September 13, 2006, the test well has reached the target drill depth of 13,000 feet. The well was logged and was deemed non-commercial. The operator will plug and abandon the well.

NOTE 6 - RELATED PARTY TRANSACTIONS

The Company had a balance due to the former president of the Company of $15,000 on April 30, 2006. The debt was unsecured, non-interest bearing and due on demand.

The Company repaid the outstanding balance of $15,000 due to the former president of the Company on August 27, 2006.

NOTE 7 - SUBSEQUENT EVENTS

On August 11, 2006 the Company sold 350,000 units at a price of $1.00 per unit or $350,000 on an aggregate basis to one person in reliance on Regulation S under the Securities Act of 1933, as amended. Each unit consists of one share of our common stock and one common stock purchase warrant exercisable for the purchase of an additional share of common stock. Each warrant is exercisable for a period of 3 years at an exercise price of $1.70 per share. The relative fair value of the common stock is $198,147 and the relative fair vale of the warrants is $151,853.

TRUE NORTH ENERGY CORPORATION

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

On August 27, 2006 the Company agreed to sell 555,555 units at a price of approximately $3.60 per unit or $2,000,000 on an aggregate basis to one person in reliance on Regulation S under the Securities Act of 1933, as amended. Each unit consists of one share of our common stock and one common stock purchase warrant exercisable for the purchase of an additional share of common stock. Each warrant is exercisable for a period of 3 years at an exercise price of $5.00 per share. Of the total proceeds, $500,000 was received on August 30, 2006 and $1,500,000 has yet to be received. The relative fair value of the common stock is $1,198,496 and the relative fair vale of the warrants is $801,504.

ITEM 2. PLAN OF OPERATION

We began operations as an oil and gas exploration and development company in January 2006. We are in the development stage as an oil and gas exploration company and are presently engaged in oil and gas activities in Texas, Louisiana and Alaska.

We had minimal operations and generated no revenues during the fiscal year ended April 30, 2006. Our ability to develop and maintain a meaningful level of revenues from operations is dependent on our ability to successfully drill exploration and development wells and complete producing property acquisitions.

At the present time, we have no developed properties and no production.

In January 2006 and May 2006, we negotiated acquisition of oil and gas leases consisting of approximately 25,000 acres in the Cook Inlet basin, Alaska and approximately 10,000 acres in the North Slope basin, Alaska. We anticipate closing the related purchase and sale agreements and registering all the leases in our name by October of 2006. We will have a 100% working interest ownership in the Alaska leases, except to the extent we determine to sell off parts of our interests.

Our current business plan strategy is to develop these properties and any other prospects that we may acquire interests in. We intend to fund any additional lease acquisitions and any additional seismic costs needed to further define the prospects from existing working capital and additional financing. No assurance can be given that such additional financing will be available to us as and when needed or, if available, the terms on which it will be available.

We also intend to continue reviewing other potential acreage in Texas, Louisiana, Alaska and Canada. We will continue to review prospects generated by outside parties and if the economics fit into our business plan, participating in these projects. Our efforts currently are focused in on-shore Texas and Louisiana properties. Our current activities are concentrated in the Texas counties of Live Oak and Newton, and in Louisiana in Jefferson Davis and Calcasieu Parishes.

At July 31, 2006, we have a 12.5% working interest in a well in Live Oak County Texas. The well, McLean #1 Well was completed and fracture stimulated. During the initial production tests, the well produced gas in excess of 1 million cubic feet of gas per day and approximately 1,000 barrels of water per day. The well is currently being evaluated to determine if the well is commercial and capable of economic gas production. Determining factors in the evaluation will be the estimate of recoverable reserves, sustainability of gas flow rates and an economic disposal of produced water.

As of September 13, 2006 our second prospect, Hankamer #1 Well at Deweyville in the Newton County Texas has reached projected drilling depth of 13,000 feet. The well was drilled to test the productivity of Yegua Sands. The well has been logged and deemed to be non-commercial. The operator will plug and abandon the well. We had a 10.0% working interest in the prospect earned by paying a 12.5% of the well drilling cost. All costs incurred by us with respect to this well were incurred after the period covered by this report.

We plan to spend approximately $1,500,000 during 2006 and 2007 on exploration and development activities such as seismic data acquisition, additional lease acquisition, technical studies and participating in joint venture development and exploration drilling. We do not anticipate any drilling on our Alaska properties over the next twelve months. Our primary effort in Alaska will be to acquire additional seismic data, conduct additional technical evaluation of our Alaska leases and to find compatible partners by selling down our 100% working interest to reduce our risk level and financial exposure.

We will require financing to meet working capital costs, including the cost of reviewing and negotiating transactions and other ordinary general and administrative costs such as regulatory compliance, investor relations, advisory services, Internet/web-hosting, officer's salaries, director's fees, office and general expenses, professional fees, travel and entertainment and rent and related expenses. We estimate that the level of working capital needed for these general and administrative costs for the next twelve months will be approximately $750,000. However, this estimate is subject to change, depending on the number of transactions in which we ultimately become involved. In addition, funding will be required for follow-on development of working interest obligations of any successful exploration prospects.

Oil and gas exploration requires significant outlays of capital and in many situations may offer a limited probability of success. We hope to enhance our chances for success by effectively using available technology, rigorously evaluating sub-surface data, and, to the extent possible, managing dry-hole and financial risks.

We intend to rely on synergistic partnering with sophisticated industry partners. The ideal partner would tend to be a regionally focused independent which has a large seismic database, a solid grasp on the play's history, and a lead in understanding technology to exploit the play. However, there is no assurance that we will be able to successfully negotiate any such partnering agreement or raise the necessary financing to invest in such a venture, or that any such venture will yield us any revenues or profits.

In addition, we are targeting selected, negotiated acquisitions of proved on-shore properties in the United States and Canada. Our management is biased toward acquisitions of long-lived reserves. We intend to target negotiated acquisitions and to avoid more competitive bidding situations that are the norm for the sale of assets.

We will face competition from firms that are well-established, successful, better capitalized and, in many instances, willing to pay more for properties than what we might consider prudent. Thus, our success will depend on the execution of our business model to

·	identify available transactions;

·	quickly evaluate which transactions are most promising; and

·	negotiate a creative transaction structure.

Presently our staff consists of our two executive officers. We expect to be expanding the executive leadership of the Company during the next twelve months.

We intend to contract out certain technical and administrative functions on an as-needed basis in order to conduct our operating activities. Our management team will select and hire these contractors and manage and evaluate their work performance.

Additionally, we intend to form an advisory board with experienced independent and unrelated industry veterans to assist us with corporate governance, compliance, deal flow, financing efforts and technical matters such as geoscience, drilling, engineering and risk management.

ITEM 3. CONTROLS AND PROCEDURES

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

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II

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

On August 27, 2006 we agreed to sell 555,555 units at a price of approximately $3.60 per unit or $2,000,000 on an aggregate basis to one person in reliance on Regulation S under the Securities Act of 1933, as amended. Each unit consists of one share of our common stock and one common stock purchase warrant exercisable for the purchase of an additional share of common stock. Each warrant is exercisable for a period of 3 years at an exercise price of $5.00 per share. Of the total proceeds, $500,000 was received on August 30, 2006 and $1,500,000 has yet to be received.

On August 11, 2006 we sold 350,000 units at a price of $1.00 per unit or $350,000 on an aggregate basis to one person in reliance on Regulation S under the Securities Act of 1933, as amended. Each unit consists of one share of our common stock and one common stock purchase warrant exercisable for the purchase of an additional share of common stock. Each warrant is exercisable for a period of 3 years at an exercise price of $1.70 per share.

On July 27, 2006 we agreed to sell 650,000 units at a price of $1.00 per unit or $650,000 on an aggregate basis to one person in reliance on Regulation S under the Securities Act of 1933, as amended. Each unit consists of one share of our common stock and one common stock purchase warrant exercisable for the purchase of an additional share of common stock. Each warrant is exercisable for a period of 3 years at an exercise price of $1.70 per share. Of the total proceeds, $150,000 was received on July 31, 2006, and $500,000 was received on August 30, 2006.

On May 9, 2006 we sold 1,250,000 units at a price of $0.80 per unit or $1,000,000 on an aggregate basis to one person in reliance on Regulation S under the Securities Act of 1933, as amended. Each unit consists of one share of our common stock and one common stock purchase warrant exercisable for the purchase of an additional share of common stock. Each warrant is exercisable for a period of 3 years at an exercise price of $1.60 per share.

ITEM 6. EXHIBITS

(a) Exhibits.

Exhibit No.		Description
31.1		Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive Officer
31.2		Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Financial Officer
32.1		Rule 1350 Certification of Chief Executive Officer
32.2		Rule 1350 Certification of Chief Financial Officer

SIGNATURES

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


	TRUE NORTH ENERGY CORPORATION

Dated: December 14, 2006	By:	/s/ John Folnovic
		John Folnovic
		President, Chief Executive Officer