SurgePays, Inc. — Interim / Quarterly Report 2011

Sep 13, 2010

10-Q 1 v196501_10q.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: July 31, 2010

File No. 000-52522

North American Energy Resources, Inc.

(Name of small business issuer in our charter)

Nevada	98-0550352
(State
or other jurisdiction of	(IRS
Employer
incorporation
or organization)	Identification
No.)

11005 Anderson Mill Road, Austin, Texas 78750

(Address of principal executive offices) (Zip Code)

Registrant's telephone number: (512) 944-9115

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

Indicate by check mark whether the registrant 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ 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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 17,375,539 shares of common stock outstanding as of August 31, 2010.

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("Commission"). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, contained in North American Energy Resources, Inc.’s Form 10-K dated April 30, 2010.

TABLE OF CONTENTS

		Page
PART
I – FINANCIAL INFORMATION (Unaudited)
Item
1:	Condensed
Consolidated Financial Statements	3
Item 2:	Management's
Discussion and Analysis of Financial Condition and Results of
Operations	16
Item
3:	Quantitative
and Qualitative Disclosures About Market Risk	19
Item 4T:	Controls
and Procedures	19
PART
II - OTHER INFORMATION		20
Item 1:	Legal
Proceedings	20
Item
1A:	Risk
Factors	20
Item 2:	Unregistered
Sales of Equity Securities and Use of Proceeds	20
Item 3:	Defaults
upon Senior Securities	20
Item 4:	Submission
of Matters to a Vote of Security Holders	20
Item 5:	Other
Information	20
Item 6:	Exhibits	20

2

PART I - FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

NORTH AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Balance Sheets

July 31, 2010 (Unaudited) and April 30, 2010

	July 31, — 2010	2010
ASSETS
Current
assets:
Cash
and cash equivalents	$ 649	$	3,026
Accounts
receivable, net of allowance of $10,000	10,766		13,150
Prepaid
expenses	137,106		250,733
Total
current assets	148,521		266,909
Properties
and equipment, at cost:
Proved
oil and natural gas properties and equipment	71,317		68,424
Accumulated
depreciation and amortization	(16,888	)	(16,174	)
Total
properties and equipment	54,429		52,250
Deposits
and other assets	1,864		5,864
Total
assets	$ 204,814	$	325,023
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
Current
liabilities:
Accounts
payable
Trade	$ 26,144	$	13,554
Oil
and gas proceeds due others	5,874		4,990
Advances
received from joint interest participants	29,880		33,056
Accrued
expenses - other	10,000		-
Accrued
interest - related parties	65,059		49,618
Convertible
notes payable - principally related parties	510,476		510,476
Total
current liabilities	647,433		611,694
Commitments
and contingencies
Stockholders'
equity (deficit):
Preferred
stock: $0.001 par value; 100,000,000 shares authorized; no
shares issued and outstanding	-		-
Common
stock: $0.001 par value; 100,000,000 shares authorized; 17,375,539 shares
issued and outstanding at July 31, 2010 and April 30, 2010,
respectively	17,376		17,376
Additional
paid in capital	2,219,708		2,219,708
Prepaid
officer compensation	-		(12,129	)
Other
comprehensive loss	(5,000	)	(1,000	)
Deficit
accumulated during the exploration stage	(2,674,703	)	(2,510,626	)
Total
stockholders' equity (deficit)	(442,619	)	(286,671	)
Total
liabilities and stockholders' equity (deficit)	$ 204,814	$	325,023

See accompanying notes to financial statements

3

NORTH AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Statements of Condensed Consolidated Operations

For the three months ended July 31, 2010 and 2009

and the period from inception (August 18, 2006) through July 31, 2010

(Unaudited)

					Inception
					(August 18, 2006)
					through
					January 31,
	2010		2009		2010
Oil
and natural gas sales	$ 1,905		$ 1,614		$ 40,920
Pipeline
fees	-		-		2,450
Total
revenues	1,905		1,614		43,370
Costs
and expenses
Oil
and natural gas production taxes	137		116		2,947
Oil
and natural gas production expenses	2,644		4,850		100,947
Depreciation
and amortization	714		1,599		15,300
Asset
impairment	-		-		863,820
Compensation	123,879		128,701		1,271,416
Bad
debt expense	-		-		86,000
General
and administrative expense, net of operator's overhead
fees	23,167		26,771		311,994
	150,541		162,037		2,652,424
Loss
from operations	(148,636	)	(160,423	)	(2,609,054	)
Other
income (expense):
Other
income	-		-		320
Interest
income	-		300		900
Interest
expense	(15,441	)	(12,075	)	(66,869	)
Total
other income (expense)	(15,441	)	(11,775	)	(65,649	)
Net
loss	(164,077	)	(172,198	)	(2,674,703	)
Other
comprehensive loss
Unrealized
loss on available for sale securities	(4,000	)	-		(5,000	)
Net
comprehensive loss	$ (168,077	)	$ (172,198	)	$ (2,679,703	)
Net
loss per common share, basic and diluted	$ (0.01	)	$ (0.01	)
Weighted
average common shares outstanding	17,375,539		15,027,713

See accompanying notes to condensed consolidated financial statements.

4

NORTH AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Consolidated Statements of Stockholders' Deficit

For the years ended April 30, 2010 and 2009 and the period

from inception (August 18, 2006) through April 30, 2010

				Additional	Value of
		Common stock		Paid in	Common
	Date	Shares	Amount	Capital	Stock Options
BALANCE
August 18, 2006		-	$ -	$ -	$	-
Common
stock issued for net assets	9/1/2006	11,264,485	11,265	88,735		-
Common
stock issued for cash	9/7/2006	1,126,448	1,126	8,874		-
Common
stock issued for cash	9/11/2006	1,126,448	1,126	8,874		-
Net
loss		-	-			-
BALANCE
April 30, 2007		13,517,381	13,517	106,483		-
Net
loss		-	-			-
BALANCE
April 30, 2008		13,517,381	13,517	106,483		-
Acquisition
of North American Energy Resources, Inc.	7/28/2008	177,000	177	119,653		-
Conversion
of note payable and accrued interest for common stock	7/31/2008	153,000	153	35,377		-
Common
stock options granted for:
350,000
shares at $1.00 per share	8/1/2008	-	-	178,000		(178,000	)
50,000
shares at $1.25 per share	8/1/2008	-	-	27,096		(27,096	)
Exercise
common stock options:
for
$1.25 per share	9/22/2008	100	-	6,250		-
for
$1.00 per share	9/22/2008	1,000	1	49,999		-
for
$1.25 per share	10/13/2008	100	-	6,250		-
for
$1.00 per share	10/13/2008	70	-	3,500		-
Accounts
payable paid with common stock	10/14/2008	90	-	9,016		-
Amortize
intrinsic value of options	10/31/2008	-	-	-		17,091
Cancel
common stock options	11/5/2008	-	-	(188,005	)	188,005
Common
stock issued for compensation	11/7/2008	100	-	6,250		-
Common
stock issued for accounts payable	11/7/2008	60	-	3,000		-
Common
stock issued for consulting service	11/12/2008	3,000	3	310,497		-
Common
stock issued for accounts payable	11/17/2008	400	1	24,999		-
Capital
contribution by shareholder in cash	11/30/2008	-	-	50,000		-
Common
stock issued for:
Compensation	12/9/2008	338	-	5,000		-
Accounts
payable	12/9/2008	300	-	1,200		-
Accounts
payable	12/9/2008	400	-	6,000		-
Compensation	1/5/2009	500	1	4,999		-
Accounts
payable	1/5/2009	800	1	3,199		-
Accounts
payable	1/5/2009	400	1	3,999		-
Accounts
payable	1/19/2009	4,000	4	14,996		-
Compensation	1/26/2009	1,500	2	4,998		-
Accounts
payable	2/24/2009	6,000	6	9,761		-
Compensation	2/24/2009	1,000	1	1,999		-
Compensation	3/4/2009	4,000	4	4,996		-
Compensation	4/6/2009	4,000	4	5,996		-
Officer
compensation	4/21/2009	160,000	160	145,440		-
Net
loss		-	-	-		-
BALANCE
April 30, 2009		14,035,539	$ 14,036	960,948		-
					(Continued)

See accompanying notes to consolidated financial statements.

5

NORTH AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Consolidated Statements of Stockholders' Deficit, continued

For the years ended April 30, 2010 and 2009 and the period

from inception (August 18, 2006) through April 30, 2010

				Deficit
		Accumulated		Accumulated
	Prepaid	Other		During the
	Officer	Comprehensive		Development
	Compensation	Loss		Stage		Total
BALANCE
August 18, 2006	$ -	$	-	$ -		$ -
Common
stock issued for net assets	-		-	-		100,000
Common
stock issued for cash	-		-	-		10,000
Common
stock issued for cash	-		-	-		10,000
Net
loss	-		-	(5,379	)	(5,379	)
BALANCE
April 30, 2007	-		-	(5,379	)	114,621
Net
loss	-		-	(24,805	)	(24,805	)
BALANCE
April 30, 2008	-		-	(30,184	)	89,816
Acquisition
of North American Energy Resources, Inc.	-		-	-		119,830
Conversion
of note payable and accrued interest for common stock	-		-	-		35,530
Common
stock options granted for:
350,000
shares at $1.00 per share	-		-	-		-
50,000
shares at $1.25 per share	-		-	-		-
Exercise
common stock options:
for
$1.25 per share	-		-	-		6,250
for
$1.00 per share	-		-	-		50,000
for
$1.25 per share	-		-	-		6,250
for
$1.00 per share	-		-	-		3,500
Accounts
payable paid with common stock	-		-	-		9,016
Amortize
intrinsic value of options	-		-	-		17,091
Cancel
common stock options	-		-	-		-
Common
stock issued for compensation	-		-	-		6,250
Common
stock issued for accounts payable	-		-	-		3,000
Common
stock issued for consulting service	-		-	-		310,500
Common
stock issued for accounts payable	-		-	-		25,000
Capital
contribution by shareholder in cash	-		-	-		50,000
Common
stock issued for:
Compensation	-		-	-		5,000
Accounts
payable	-		-	-		1,200
Accounts
payable	-		-	-		6,000
Compensation	-		-	-		5,000
Accounts
payable	-		-	-		3,200
Accounts
payable	-		-	-		4,000
Accounts
payable	-		-	-		15,000
Compensation	-		-	-		5,000
Accounts
payable	-		-	-		9,767
Compensation	-		-	-		2,000
Compensation	-		-	-		5,000
Compensation	-		-	-		6,000
Officer
compensation	(84,933	)	-	-		60,667
Net
loss	-		-	(1,097,468	)	(1,097,468	)
BALANCE
April 30, 2009	(84,933	)	-	(1,127,652	)	$ (237,601	)
						(Continued)

See accompanying notes to consolidated financial statements.

6

NORTH AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Consolidated Statements of Stockholders' Deficit, continued

For the years ended April 30, 2010 and 2009 and the period

from inception (August 18, 2006) through April 30, 2010

					Intrinsic
				Additional	Value
of
		Common
stock		Paid
in	Common
	Date	Shares	Amount	Capital	Stock
Options
BALANCE
April 30, 2009		14,035,539	$ 14,036	$ 960,948	$ -
Common
stock issued for:
consulting
agreement	5/1/2009	400,000	400	419,600	-
consulting
agreement	5/1/2009	200,000	200	209,800	-
oil
and gas non-producing property	6/9/2009	700,000	700	125,300	-
accounts
payable	7/27/2009	10,000	10	4,990	-
consulting
agreement	7/27/2009	30,000	30	14,970	-
consulting
agreement	7/27/2009	30,000	30	14,970	-
oil
and gas producing property	9/25/2009	350,000	350	192,150	-
consulting
contract	9/25/2009	300,000	300	182,700	-
cash	2/23/2010	200,000	200	5,800	-
consulting
agreement	2/24/2010	400,000	400	31,600	-
consulting
agreement - director fees	2/24/2010	450,000	450	35,550	-
consulting
agreement - director fees	2/24/2010	150,000	150	11,850	-
officer
compensation - director fees	2/24/2010	120,000	120	9,480	-
Other
comprehensive loss on available-for-sale securities		-	-	-	-
Amortize
officer compensation		-	-	-	-
Net
loss		-	-	-	-
BALANCE
April 30, 2010		17,375,539	17,376	2,219,708	-
Other
comprehensive loss on available-for-sale securities		-	-	-	-
Amortize
officer compensation		-	-	-	-
Net
loss		-	-	-	-
BALANCE
July 31, 2010		17,375,539	$ 17,376	$ 2,219,708	$ -
					(Continued)

See accompanying notes to consolidated financial statements.

7

NORTH AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Consolidated Statements of Stockholders' Deficit, continued

For the years ended April 30, 2010 and 2009 and the period

from inception (August 18, 2006) through April 30, 2010

					Deficit
			Accumulated		Accumulated
	Prepaid		Other		During the
	Officer		Comprehensive		Development
	Compensation		Loss		Stage		Total
BALANCE
April 30, 2009	$ (84,933	)	$ -		$ (1,127,652	)	$ (237,601	)
Common
stock issued for:
consulting
agreement	-		-		-		420,000
consulting
agreement	-		-		-		210,000
oil
and gas non-producing property	-		-		-		126,000
accounts
payable	-		-		-		5,000
consulting
agreement	-		-		-		15,000
consulting
agreement	-		-		-		15,000
oil
and gas producing property	-		-		-		192,500
consulting
contract	-		-		-		183,000
cash	-		-		-		6,000
consulting
agreement	-		-		-		32,000
consulting
agreement - director fees	-		-		-		36,000
consulting
agreement - director fees	-		-		-		12,000
officer
compensation - director fees	-		-		-		9,600
Other
comprehensive loss on available-for-sale securities	-		(1,000	)	-		(1,000	)
Amortize
officer compensation	72,804		-		-		72,804
Net
loss	-		-		(1,382,974	)	(1,382,974	)
BALANCE
April 30, 2010	(12,129	)	(1,000	)	(2,510,626	)	(286,671	)
Other
comprehensive loss on available-for-sale securities	-		(4,000	)	-		(4,000	)
Amortize
officer compensation	12,129		-		-		12,129
Net
loss	-		-		(164,077	)	(164,077	)
BALANCE
July 31, 2010	$ -		$ (5,000	)	$ (2,674,703	)	$ (442,619	)

See accompanying notes to consolidated financial statements.

8

NORTH AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Statements of Condensed Consolidated Cash Flows

For the three months ended July 31, 2010 and 2009

and the period from inception (August 18, 2006) through July 31, 2010

(Unaudited)

					Inception
					(August 18, 2006)
					through
					July 31,
	2010		2009		2010
Operating
activities
Net
loss	$ (164,077	)	$ (172,198	)	$ (2,674,703	)
Adjustments
to reconcile net loss to net cash used in operating activities:
Depreciation
and amortization	714		1,599		15,300
Non-cash
compensation	123,879		128,701		1,271,416
Bad
debt expense	-		10,000		91,415
Asset
impairment	-		-		863,820
Increase
(decrease) in:
Accounts
receivable	(30,672	)	(18,086	)	(127,050	)
Interest
accrued on loan to related party	-		(300	)	(900	)
Prepaid
expenses and other assets	1,877		1,717		(3,595	)
Accounts
payable	12,589		5,344		286,643
Accrued
interest - related parties	15,441		12,075		65,339
Accrued
expenses	10,000		-		10,000
Related
party advances for working capital	-		-		2,000
Oil
and gas proceeds due others	884		-		5,874
Advances
from joint interest owners	29,881		38,382		21,464
Net
cash from (used in) operating activities	516		7,234		(172,977	)
Investing
activities
Payments
for oil and natural gas properties and equipment	(2,893	)	(95	)	(164,311	)
Cash
received in excess of cash paid in reverse acquisition of North American
Energy Resources, Inc.	-		-		119,830
Loan
to related party	-		-		(19,993	)
Proceeds
from sale of oil and gas properties	-		-		7,500
Payments
for pipeline	-		-		(7,500	)
Net
cash used in investing activities	(2,893	)	(95	)	(64,474	)
Financing
activities
Loan
proceeds	-		-		48,750
Shareholder
contribution	-		-		50,000
Loans
from related parties	-		-		113,350
Sale
of common stock	-		-		26,000
Net
cash provided by financing activities	-		-		238,100
Net
increase in cash and cash equivalents	(2,377	)	7,139		649
Cash
and cash equivalents, beginning of period	3,026		27,966		-
Cash
and cash equivalents, end of period	$ 649		$ 35,105		$ 649
					(Continued)

See accompanying notes to condensed consolidated financial statements.

9

NORTH AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Statements of Condensed Consolidated Cash Flows, Continued

For the three months ended July 31, 2010 and 2009

and the period from inception (August 18, 2006) through July 31, 2010

(Unaudited)

			Inception
			(August 18, 2006)
			through
			July 31,
	2010	2009	2010
Supplemental
cash flow information
Cash
paid for interest and income taxes:
Interest	$ -	$ -	$ 1,094
Income
taxes	-	-	-
Non-cash
investing and financing activities:
Common
stock issued for:
Notes
receivable			$ 76,000
Oil
and gas properties			303,670
Interest
in pipeline			100,000
Loans
to shareholders assumed			(371,000	)
Advance
from joint interest participant assumed			(8,670	)
			$ 100,000
Acquisition
of North American Energy Resources, Inc. in reverse
acquisition:
Assets
acquired, other than cash			$ -
Liabilities
assumed			(30,170	)
			(30,170	)
Common
stock issued			150,000
Cash
received in excess of cash paid			$ 119,830
Exchange
of joint interest receivable for oil and natural gas
properties	$ -	-	$ 53,068
Convertible
note payable and accrued interest exchanged for 1,000 shares of North
American Exploration, Inc. common stock	-	-	35,530
Common
stock options granted	-	-	205,096
Common
stock options cancelled	-	-	188,005
Common
stock issued for:
Consulting
agreements	-	630,000	902,600
Unevaluated
oil and natural gas properties	-	126,000	126,000
Proven
oil and natural gas properties	-	-	192,500
Accounts
payable	-	-	106,183
Chief
executive officer compensation	-	-	155,200
Credit
balance transferred from accounts receivable to accounts
payable	-	-	1,068
Accounts
receivable applied as payment on note payable to related
party	-	-	4,572
Option
exercises paid by reducing note payable related party	-	-	75,250
Advance
from shareholder converted to note	-	-	2,000

See accompanying notes to condensed consolidated financial statements.

10

NORTH AMERICAN ENERGY RESOURCES, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Notes to Condensed Consolidated Financial Statements

NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

The consolidated financial statements include the accounts of North American Energy Resources, Inc. (“NAER”) and its wholly owned subsidiary, North American Exploration, Inc. (“NAE”) (collectively the “Company”).

NAER was incorporated in Nevada on August 22, 2006 as Mar Ked Mineral Exploration, Inc. and changed its name to North American Energy Resources, Inc. on August 11, 2008. NAE was incorporated in Nevada on August 18, 2006 as Signature Energy, Inc. and changed its name to North American Exploration, Inc. on June 2, 2008.

The condensed consolidated financial statements included in this report have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and include all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation. These condensed consolidated financial statements have not been audited.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations for interim reporting. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading. However, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report for the year ended April 30, 2010, which is included in the Company’s Form 10-K dated April 30, 2010. The financial data for the interim periods presented may not necessarily reflect the results to be anticipated for the complete year.

Acquisition

On July 28, 2008, the shareholders of NAE entered into a stock purchase agreement with NAER. NAER issued 420,000 restricted shares of its common stock to the shareholders of NAE in exchange for 100% of the issued and outstanding stock of NAE. Completion of the stock purchase agreement resulted in the shareholders of NAE having control of NAER. Accordingly, the transaction was recorded for accounting purposes as the acquisition of NAE by NAER with NAE as the acquirer (reverse acquisition). The financial statements of the Company prior to July 28, 2008 are those of NAE.

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Business

NAE is an independent oil and natural gas company engaged in the acquisition, exploration and development of oil and natural gas properties and the production of oil and natural gas. The Company operates in the upstream segment of the oil and gas industry with activities, including the drilling, completion and operation of oil and gas wells in Oklahoma. The Company also has an interest in a pipeline in its area of operations which could be used for gathering its gas and the gas production of other producers. The Company's gas production has been shut-in due to low prices since February 2009.

Exploration stage

The Company is in the exploration stage and has realized only nominal revenue to date. The decline in gas prices has placed the Company's original gas development plans in Washington County, Oklahoma on hold. The Company has plans to raise funds in order to develop or acquire additional oil leases. Accordingly, the operation of the Company is presented as those of a development stage enterprise, from its inception (August 18, 2006).

Going concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company commenced operations in September 2006.

At July 31, 2010 and April 30, 2010 the Company had a working capital deficit of $511,040 and $344,785, respectively. The Company has an accumulated deficit of $2,674,702 which includes a loss of $164,077 during the three months ended July 31, 2010, which includes stock compensation in the amount of $123,879. The Company's note payable to a shareholder with a balance of $384,428 at July 31, 2010, was due May 1, 2010 and remains unpaid. The Company expects to extend the note or convert it to common stock.

The Company had relied on receiving an additional $1,300,000 from the prior shareholders to fund its planned drilling and development program. As discussed in Note 3, the prior shareholders defaulted on their agreement. Accordingly, the Company will plan to meet its capital requirements for the next year with private placements of its common stock or advances from related parties.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that may result from the outcome of these uncertainties.

Fiscal year

2011 refers to periods ending during the fiscal year ending April 30, 2011 and 2010 refers to periods ended during the fiscal year ended April 30, 2010.

Reclassification

Certain reclassifications have been made in the financial statements at July 31, 2009 and for the periods then ended to conform to the July 31, 2010 presentation. The reclassifications had no effect on net loss.

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Recent adopted and pending accounting pronouncements

Below is a listing of the most recent accounting standards and their effect on the Company, as issued by the Financial Accounting Standards Board ("FASB") in the form of Accounting Standards Updates ("ASU"). We have evaluated all recent accounting pronouncements through August 23, 2010 and find none that would have a material impact on the financial statements of the Company, except for those detailed below.

In February 2010, the FASB issued ASU 2010-09, "Subsequent Events (Topic 855)." The amendments remove the requirements for an SEC filer to disclose a date, in both issued and revised financial statements through which subsequent events have been reviewed. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP. ASU 2010-09 is effective for interim or annual financial periods ending after June 15, 2010. The Company adopted ASU 2010-09 with no effect on its financial position or results of operation at July 31, 2010.

NOTE 2: RELATED PARTY TRANSACTIONS

The Company sells its gas pursuant to a contract with a gathering system principally owned by a related party. The Company receives a price equal to 70% of the posted price, which is the same rate charged to third parties. The related party retains the other 30% of the posted price for gathering fees and marketing fees. The gathering system is currently inactive due to low gas prices.

Convertible notes payable includes convertible notes payable to shareholders and others in the total amount of $510,476 at January 31, 2010 April 30, 2010. One note with a balance of $384,428 at July 31, 2010 and April 30, 2010 was due May 1, 2010 and remains past due. The note is convertible into the Company's common stock at a price of $1.50 per share. The remaining notes in the total amount of $126,048 are due in March and April 2011, including interest at 12% and are convertible into the Company's common stock at a price ranging from $0.03 to $1.00 per share.

NOTE 3: STOCKHOLDER’S EQUITY

PREFERRED STOCK

The Company has 100,000,000 shares of its $0.001 par value preferred stock authorized. At July 31, 2010 and April 30, 2010, the Company had no shares issued and outstanding.

COMMON STOCK

The Company has 100,000,000 shares of its $0.001 par value common stock authorized. At July 31, 2010 and April 30, 2010 the Company has 17,375,539 shares issued and outstanding.

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REVERSE SPLIT

At a special meeting of shareholders held on April 23, 2009, 63% of our shareholders, either in person or by proxy, voted to approve a 1:50 reverse split of the Company's common stock. This amendment to the Company's Articles of Incorporation was filed with the Nevada Secretary of State and became effective on April 27, 2009. Accordingly, all references to shares of our common stock included herein have been retroactively restated to give effect to the reverse split.

CONTINGENT SHARES

On July 28, 2008, the Company acquired 100% of the outstanding stock of NAE for 420,000 shares of our common stock pursuant to a Stock Purchase Agreement ("SPA"). Completion of the SPA resulted in the shareholders of NAE having control of NAEY.

The SPA provided that NAEY was to have $1,500,000 in cash and no liabilities at closing. At July 28, 2008, the closing date, NAEY had $150,000 of the required cash and on August 28, 2008, the parties to the SPA entered into a Modification Agreement ("MA") which provided an extension until January 27, 2009 for the additional cash to be contributed to the Company. At January 27, 2009, the Company had received an additional $50,000 and was still short $1,300,000 of the agreed amount. The MA provided that the Buyer would make contingent issuances of shares to the Seller equal to 95% of all the outstanding stock after issuance. Accordingly, effective April 30, 2009, an additional 13,250,381 shares were issued to the Sellers.

COMMON STOCK OPTIONS

The North American Energy Resources, Inc. 2008 Stock Option Plan ("Plan") was filed on September 11, 2008 and reserves 2,500,000 shares for awards under the Plan. The Company's Board of Directors is designated to administer the Plan and may form a Compensation Committee for this purpose. The Plan terminates on July 23, 2013.

Options granted under the Plan may be either "incentive stock options" intended to qualify as such under the Internal Revenue Code, or "non-qualified stock options." Options outstanding under the Plan have a maximum term of up to ten years, as designated in the option agreements. No options are outstanding at July 31, 2010. At July 31, 2010, there are 1,242,333 shares available for grant.

NOTE 4: PREPAID EXPENSES

The Company recorded prepaid expenses from the issue of its common stock for consulting services. The cost, based on the trading price of the stock at the time of the transaction, is amortized to expense over the term of the contracts. The unamortized balances at July 31, 2010 and April 30, 2010 are as follows:

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| | July 31, | April 30, | | --- | --- | --- | | | 2010 | 2009 | | Current asset | | | | Stockholder relations firm | $ 105,000 | $ 168,000 | | Consulting firm assisting with listing common stock on the Frankfort Exchange | 22,875 | 68,625 | | Administrative management | 6,500 | 9,500 | | Other prepaid expense | 2,731 | 4,608 | | | $ 137,106 | $ 250,733 | | Component of stockholders' deficit | | | | Chief executive officer compensation | $ - | $ 12,129 |

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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This statement contains forward-looking statements within the meaning of the Securities Act. Discussions containing such forward-looking statements may be found throughout this statement. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including the matters set forth in this statement.

Our plan of operation for the next twelve months is to obtain funding from private placements of our common stock and acquire additional leases.

COMPARISON OF THREE MONTHS ENDED JULY 31, 2010 AND 2009

Revenues during the three months ended July 31, 2010 and 2009 were as follows:

	2010	2009
Oil
production	$ 1,905	$ 1,614

Oil revenues included 31 net barrels sold in 2010 and 32 net barrels of oil sold in 2009. Due to low prices, the Company shut-in its gas production during January 2009. The Company's oil prices per barrel averaged $61.94 during 2010 and $49.74 during 2009.

Costs and expenses during the three months ended July 31, 2010 and 2009 were as follows:

	2010	2009
Oil
and natural gas production taxes	$ 137	$ 116
Oil
and natural gas production expenses	2,644	4,850
Depreciation
and amortization	714	1,599
Non-cash
compensation	123,879	128,701
Other
general and administrative expense, net of operator's overhead
fee	23,167	26,771
Total	$ 150,541	$ 162,037

Oil and natural gas production expenses were $2,644 in 2010, principally on the Company's producing oil wells. In 2009, the cost was $4,850 and included repair costs associated with corrosive water damage.

Non-cash compensation in 2010 and 2009 represents the current period charge for stock which has been issued for consulting contracts.

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Other income (expense) during the three months ended July 31, 2010 and 2009 is as follows:

| Interest

income	2010 — $ -		2009 — $ 300
Interest
expense	(15,441	)	(12,075	)
Total	$ (15,441	)	$ (11,775	)

The interest bearing debt increased as of the end of the 2010 period as compared to the 2009 period.

LIQUIDITY, CAPITAL RESOURCES AND PLAN OF OPERATIONS

At July 31, 2010, we had $649 in cash and a working capital deficit of $511,040. Comparatively, we had cash of $3,026 and a working capital deficit of $344,785 at April 30, 2010. The principal element of the change in working capital was an increase in prepaid consulting contracts of $113,627 and other losses incurred during the period.

We estimate that our total planned cash expenditures over the next twelve months will be approximately $120,000 for corporate overhead. We expect to utilize excess funds, when available, to acquire additional acreage for future drilling operations and plan to issue our common stock for certain services when possible. The Company's note payable to a shareholder with a balance of $384,428 at July 31, 2010, was due May 1, 2010 and remains unpaid. The Company expects to extend the note or convert it to common stock.

The Company will plan to meet its capital requirements for the next year with private placements of its common stock or advances from related parties.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that may result from the outcome of these uncertainties.

CASH FROM OPERATING ACTIVITIES

Cash from operating activities was $516 for the three-month period ended July 31, 2010 and cash from operations was $7,234 for the comparable 2009 period. There has been only nominal activity with a significant portion of the operating loss being paid with common stock.

CASH USED IN FINANCING ACTIVITIES

We incurred capital costs of $2,893 and $95 in the three months ended July 31, 2010 and 2009, respectively.

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CASH FROM FINANCING ACTIVITIES

No activity during the three months ended July 31, 2010 and 2009.

GOING CONCERN

We have not attained profitable operations and are dependent upon obtaining a replacement for the shareholder contributions to pursue our business plan. For these reasons, there is substantial doubt we will be able to continue as a going concern, since we are dependent upon an as yet unknown source to provide sufficient funds to finance future operations until our revenues are adequate to fund our cost of operations.

OFF-BALANCE SHEET ARRANGEMENTS

None.

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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4T: CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 240.13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) as of July 31, 2010. Based on that review and evaluation, which included inquiries made to certain other consultants of the Company, the CEO and CFO concluded that the Company’s current disclosure controls and procedures, as designed and implemented, are not effective, due to a lack of segregation of duties, in ensuring that information relating to the Company required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including insuring that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls

There have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation described above, including any corrective actions with regard to significant deficiencies and material weaknesses.

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PART II - OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

None

ITEM 1A: RISK FACTORS

Not applicable.

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

None during the quarter ended July 31, 2010.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES.

None

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

None

ITEM 5: OTHER INFORMATION.

None

ITEM 6: EXHIBITS

Exhibit 31 Certification pursuant to 18 U.S.C. Section 1350 Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32 Certification pursuant to 18 U.S.C. Section 1350 Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| | NORTH AMERICAN ENERGY RESOURCES, INC. | | --- | --- | | Date: September 9, 2010 | | | By: /s/ | Ross E. Silvey | | | President, Chief Executive Officer and | | | Acting Chief Financial Officer |

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