UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended: September 30, ~~2011~~2012

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: 000-53683

(Exact name of registrant as specified in its charter)

Nevada		26-0693872
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

16 Market Square Center

1400 16th Street Suite 400

Denver, CO 80202

(Address of principal executive offices)

Tel: 720.932.8389

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

[ ] Yes [X] No

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

[ ] Yes [X] No

Indicate by checkmark 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). [X] Yes [ ] No

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

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

Large accelerated filer	[ ]
Accelerated filer	[ ]
Non-accelerated filer	[ ] (Do not check if a smaller reporting company)
Smaller reporting company	[X]

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

[ ] Yes [X] No

As of March 31, ~~2011~~2012, the aggregate market value of the shares of the registrant’s common stock held by non-affiliates was approximately $356,~~147~~997,~~904~~259. As of March 31, ~~2011~~2012, American Power’s stock was trading at $0.8014 per share and the Company had 4349,~~934~~980,~~880~~419 shares outstanding held by non-affiliates. Shares of the registrant’s common stock held by each executive officer and director and each by each person who owns 10% or more of the outstanding common stock have been excluded from the calculation in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

There were 96102,~~429~~512,909 ~~358~~ shares of the registrant’s common stock outstanding as of December 29 27, ~~2011~~2012.

DOCUMENTS INCORPORATED BY REFERENCE

None.

AMERICAN POWER CORPORATION

TABLE OF CONTENTS

Page PART I 4

PART I			4
ITEM 1.	BUSINESS	4
	ITEM 1.	BUSINESS	4
ITEM 1A.	RISK FACTORS	9
	ITEM 1A.	RISK FACTORS	5
ITEM 1B.	UNRESOLVED STAFF COMMENTS	15
	ITEM 1B.	UNRESOLVED STAFF COMMENTS	12
ITEM 2.	PROPERTIES	15
	ITEM 2.	PROPERTIES	12
ITEM 3.	LEGAL PROCEEDINGS	20
	ITEM 3.	LEGAL PROCEEDINGS	13
ITEM 4.	MINE SAFETY DISCLOSURES	20
	ITEM 4.	(Removed and Reserved)	13
PART II			14
	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	14
	ITEM 6.	SELECTED FINANCIAL DATA	14
	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	16
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	16
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	16
	ITEM 9A.	CONTROLS AND PROCEDURES	16
	ITEM 9B.	OTHER INFORMATION	17
PART III			17
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	17
	ITEM 11.	EXECUTIVE COMPENSATION	19
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	20
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	21
	ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	21
PART IV			22
	ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	22

iPART II 21

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	21
ITEM 6.	SELECTED FINANCIAL DATA	21
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	24
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	24
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	24
ITEM 9A.	CONTROLS AND PROCEDURES	24
ITEM 9B.	OTHER INFORMATION	25

PART III

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	25
ITEM 11.	EXECUTIVE COMPENSATION	27
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	28
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	29
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	29

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact, contained in this report, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should” or “will” or the negative of these terms or other comparable terminology. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors” or elsewhere in this report, which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. The factors affecting these risks and uncertainties include, but are not limited to:

●· estimated quantities and quality of coal, oil and natural gas reserves;

●· fluctuations in the price of coal, oil, and natural gas;

●· inability to efficiently manage our operations;

●· the inability of management to effectively implement our strategies and business plans;

●· potential default under our secured obligations or material debt agreements;

●· inability to hire or retain sufficient qualified personnel;

●· inability to attract and obtain additional development capital;

●· increases in interest rates or our cost of borrowing;

●· deterioration in general economic conditions;

●· the occurrence of natural disasters, unforeseen weather conditions, or other events or circumstances that could impact our operations or could impact the operations of companies or contractors we depend upon in our operations;

●· inability to achieve future sales levels or other operating results; and

●· changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate.

You should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this report. Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this report to conform our statements to actual results or changed expectations.

AVAILABLE INFORMATION

We file annual, quarterly and other reports and other information with the U.S. Securities and Exchange Commission ("SEC"). You can read these SEC filings and reports on ~~over~~ the ~~Internet at the~~ SEC’s website at www.sec.gov. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for further information on the operations of the public reference facilities. We will provide a copy of our annual report to security holders, including audited financial statements, at no charge upon receipt of a written request to us at American Power Corporation, 16 Market Square Center, 1400 16th Street Suite 400, Denver, CO 80202.

INDUSTRY AND MARKET DATA

The market data and certain other statistical information used throughout this report are based on independent industry publications, government publications, reports by market research firms or other published independent sources. In addition, some data is based on our good faith estimates.

USE OF TERMS

Except as otherwise indicated by the context, all references in this report to “we,” “us,” “our,” the “Company,” “AMPW,” and “American Power” refer to American Power Corporation, unless the context requires otherwise. We report our financial information on the basis of a September 30 fiscal year end.

PART I

ITEM 1.BUSINESS.

Overview

The Company was incorporated in the State of Nevada as a for-profit company on August 7, 2007. At the time of our incorporation, we were incorporated under the name “Teen Glow Makeup, Inc.” and our original business plan was to create a line of affordable teen makeup for girls. On November 20, 2009, Johannes Petersen acquired the majority of the shares of our issued and outstanding common stock in accordance with two stock purchase agreements by and between Mr. Petersen and Ms. Pamela Hutchinson and Ms. Andrea Mizushima, respectively. On March 30, 2010, we changed our intended business purpose to that of coal, oil, and natural gas exploration, development and production.

Our current primary business focus is to acquire, explore and develop coal, oil and gas properties in the United States, with a particular focus on the Rocky Mountains region. On March 30, 2010, our Board of Directors approved the proposal to change the Company’s name and to effect a 340 -for -1 forward stock split. The Certificate of Change for the forward stock split was filed and approved by the Nevada Secretary of State on April 28, 2010. Also on April 28, 2010, Articles of Amendment were filed and approved with the Nevada Secretary of State to change the name of the Corporation to American Power Corporation. The Articles of Amendment also changed the authorized amount of capital stock to Five Hundred Million (500,000,000) shares of Common Stock, par value $0.001.

Business Description and Plan of Operation

We have acquired certain coal and minerals rights located in the Judith Basin County, Montana, collectively described as the “PACE Coal ~~Project~~Property.” Our PACE Coal Property and other uncontrolled properties make up the “PACE Coal Project." These rights are speculative in nature and additional exploration work is required to determine their value. Our plan of operation is to explore the PACE Coal Project and acquire and explore new properties which we believe are prospective for coal and/or hydrocarbons. To December 2011, the Company had completed a total of 14,076 feet of drilling ~~for~~and ~~all~~18 ~~three~~drill ~~phases~~sites ofhave ~~its~~been ~~exploration drilling program at the PACE Coal Project~~completed. All drill locations corresponding to Phases I and II ~~had~~have been fully completed while one drill location corresponding to Phase III ~~had~~has been completed. Drilling operations were suspended in December 2011 due to weather considerations and are expected to resume in the spring of ~~2012~~2013 after finding capable drilling contractors and securing adequate financing. ~~The~~Our ~~Company~~technical isteam ~~currently~~has ~~evaluating~~designated ~~the~~14 ~~preparation~~Phase ofIII adrill ~~reserve~~holes ~~study~~as ~~and~~priority ~~mining~~drill ~~plan~~holes. ~~for~~These ~~the~~priority ~~PACE~~drill ~~Coal~~holes ~~property~~are ~~with~~expected ~~the~~to ~~existing~~further ~~project~~define mineralization, provide additional coal quality data, and provide information to determine if any remaining Phase III drill holes will require coring. Although we have obtained encouraging preliminary results from the first two phases of the exploration drilling program at the PACE Coal Project, there can be no assurance that an economic coal and/or hydrocarbon reserve exists on the PACE Coal Project or on any other the exploration prospects we could eventually acquire.

We commissioned the preparation of a preliminary Mine Feasibility Study for the PACE Coal Project with the project data obtained during the 2011 drilling season and data from previous exploration work carried out by Mobil Oil Co. This preliminary study was completed by our engineering consultant Weir International, Inc. (“Weir”) in September 2012. Controlled property in the PACE Coal Project is comprised of acreage where the Company owns the coal and mineral rights but not the surface rights. Uncontrolled property in the PACE Coal Project is comprised of acreage where the Company owns neither the coal and mineral rights nor the surface rights; thus, the uncontrolled property will have to be successfully acquired by purchase or lease to develop the mine plan. The Mine Feasibility Study includes information on the geology and mineralization of the PACE Coal Project, a mine plan suitable to geology and production requirements and projections for production capacity, productivity, staffing levels, equipment and facilities, capital expenditures, operating costs and coal sales. According to the preliminary Mine Feasibility Study, 191.3 million tons of coal are expected to be produced over a 15-year mine life. At full production, the mine plan projects annual production of thermal coal at 7.9 million saleable tons (14.9 million ROM tons) per year, utilizing three continuous miner units and one longwall mining unit. Capital expenditures are estimated at approximately $402 million for future initial mine development and $730 million for sustaining capital over the 15-year mine plan. In addition, we estimate the cost of leasing uncontrolled coal properties to be $5.5 million plus royalties to be calculated as a percentage of actual production. The PACE Coal Project clean coal quality, based on the exploration data, is projected to be 11,750 Btu/lb and 2.28 percent sulfur (3.88 Lbs SO2/MBtu). The calorific value (Btu/lb) is among the highest in the major coal producing regions in the western United States.

Upon completion of Phase III of our planned exploration drilling program, we expect to obtain a final reserve study setting forth the quantity and classification of proven and probable coal reserves and a valuation thereof and final mine feasibility study by the summer of 2013. These final studies will incorporate the drilling results of all three phases of the exploration program.

Even if we complete our proposed exploration programs and are successful in identifying the presence of coal and/or hydrocarbons, we will have to spend substantial funds on further drilling, engineering studies, environmental and mine feasibility studies before we will know if we have a commercially viable coal, oil, and gas deposit or reserve.

Market Overview for Plan of Operation

Coal production in the United States in 2010 reached a level of 1,084.4 million short tons (537.3 million short tons between January and June of 2011) according to data from the Energy Information Administration (EIA), an increase of 0.9% from the 2009 level. Exclusive of refuse production, the Interior and Western Regions had increases in their production levels in 2010 of 7.4% and 1.1% respectively, while the Appalachian Region had a decrease of 2.1% compared to the 2009 level. Wyoming continued to be the largest coal producing State with 442.5 million short tons, 2.6% higher than the 2009 level. By rank, bituminous coal represented 46.9% of total coal production in 2010, followed closely by subbituminous with 46.2%, while lignite and anthracite coal represented 6.7% and 0.2%, respectively.

Coal consumption in the United States rebounded in 2010, reaching a level of 1,051.3 million short tons (497.5 million short tons between January and June of 2011), an increase of 5.1% from the 2009 level, with all coal-consuming sectors, except commercial and institutional users, having higher consumption for the year. The 2010 increase in consumption, over 2009, restored about 40% of the previous drop in consumption in 2009 from 2008 levels. The electric power sector (electric utilities and independent power producers), which consumes about 93% of all coal in the US, is the overriding force for determining total domestic coal consumption. In 2010, the turnaround in the economy led to a large increase in coal consumption for the sector. Coal consumption in the electric power sector increased 4.4% to end 2010 at 975.1 million short tons (458.8 million short tons between January and June of 2011), while coal-based electricity generation in kilowatt hours increased at a slightly higher rate of 5.2%. The higher rate of production growth occurred because power plants consumed more high-Btu bituminous coal purchased from the Interior production region and out of stocks in areas predominantly burning bituminous coal to generate electricity. Coal consumption in the non-electric power sector (comprised of other industrial, coking coal, and the commercial and institutional sectors) increased in 2010 as the economy rebounded. Coal consumption at coke plants increased by 37.6% to end 2010 at 21.1 million short tons (10.6 million short tons between January and June of 2011).

~~Total~~Market ~~coal~~Overview ~~stocks~~for ~~fell~~Plan ~~to 233.6 million short tons at the end~~ of ~~2010, compared to 244.8 million short tons at the end of 2009. Except for 2009 when stocks were slightly higher, the 2010 stocks surpassed stocks in all years dating back to 1980.~~Operation

InCoal ~~2010,~~production ~~most~~in ~~domestic coal prices continued to increase, rising for~~ the ~~seventh~~United ~~consecutive~~States ~~year. The majority of coal sold~~ in ~~the~~2011 ~~electric~~reached ~~power sector is through long-term contracts (covering~~ a ~~time~~level ~~period~~ of ~~one year or longer)~~1,095.6 inmillion ~~conjunction~~short ~~with~~tons ~~spot purchases to supplement the demand~~(1,084.4 Asmillion ~~contracts~~short ~~expire~~tons ~~and~~in ~~are~~2010) ~~renegotiated~~according ~~the prevailing spot price influences the contract price. According~~ to ~~preliminary~~ data ~~for~~from ~~2010,~~the ~~coal~~Energy ~~prices~~Information atAdministration ~~electric utilities~~ (~~a subset of the electric power sector~~EIA) ~~increased for a tenth consecutive year~~, ~~to $45.09 per short ton,~~ an increase of 1.40% ~~over~~from the ~~2009~~2010 ~~price,~~level asdriven ~~compared to the previous year when these prices increased~~ by 8export demand.~~3%.~~ ~~Coal~~Wyoming ~~prices~~continued atto ~~independent~~be ~~power~~the ~~producers~~largest ~~for~~coal-producing ~~2010~~state ~~increased~~with ~~to $41~~438.497 ~~per~~million short ~~ton~~tons, ~~an increase of 3~~0.9%. ~~The~~lower ~~average~~than ~~delivered~~the ~~price~~2010 oflevel. ~~coal~~By torank, ~~the~~bituminous ~~other~~coal ~~industrial~~represented ~~sector decreased by 1~~48.0% ~~to an average price~~ of ~~$64.24~~total ~~per~~coal ~~short~~production ~~ton~~ in ~~2010. In 2010~~2011, ~~the~~followed ~~delivered~~by ~~price~~subbituminous of coal towith ~~US coke plants increased by 7~~44.4%, towhile ~~reach~~lignite anand ~~average~~anthracite ~~price~~coal ofrepresented ~~$153~~7.594% ~~per~~and ~~short ton~~0.2% ~~The average delivered price~~ of ~~coal to~~ the ~~commercial~~total, ~~and institutional sector fell in 2010 by 9~~respectively.~~1% to $88.42 per short ton.~~

~~According~~Coal toconsumption ~~data~~in ~~for~~the ~~2010,~~United ~~domestic~~States ~~coal~~in ~~prices~~2011 ~~averaged~~reached ~~$35~~a level of 1,002.619 ~~per~~million short ~~ton~~tons (1,048.5 Bymillion short tons in 2010), a decrease of 4.4% from the 2010 level, with all coal-consuming ~~rank~~sectors, except coke users, having lower consumption for the ~~average~~year. ~~price~~The electric power sector (electric utilities and independent power producers), which consumes about 93% of all coal in ~~2010~~the US, is the overriding force for ~~bituminous~~determining total domestic coal ~~was~~consumption. ~~$60~~Coal consumption in the electric power sector decreased 4.884% ~~per~~to end 2011 at 932.5 million short ~~ton,~~tons ~~$14~~(975.111 ~~per~~million short ~~ton~~tons ~~for~~in ~~subbituminous~~2010). In 2011, ~~$18~~domestic consumption of metallurgical coal by the coking industry rose 1.766% ~~per~~to 21.4 million short ~~ton~~tons ~~for~~(21.1 ~~lignite~~million short tons in 2010). In contrast, consumption of steam coal by the electric power, industrial, and ~~$59~~commercial and institutional sectors decreased 4.514%, ~~per~~6.2%, ~~short~~and ~~ton~~9.3%, ~~for~~respectively. ~~anthracite~~Mild winter weather led to a decline in total electricity generation, leaving high stock levels. Natural gas prices also declined during 2011, allowing facilities that can use both coal and natural gas to alternate between fuels and company that have portfolios of coal and natural gas plants to utilize their gas plants more.

Total coal stocks increased to 231.9 million short tons at the end of 2011, compared to 231.7 million short tons at the end of 2010 (equivalent to a 0.1% increase from the 2010 level).

According to data for 2011, the average sales price of coal increased 15.2 % to $41.01 per short ton. However, the change in average sales price of coal from underground mines was greater (16.0%) than the change in average sales price of coal from surface mines (11.9%).

Western Region (includes Montana)

The Western Region is the largest coal-–producing region in the US. In ~~2010~~2011, coal production ~~increased by 1.1% to a total of 591.6 million short tons. Even with the increase~~ in ~~production,~~ the ~~production level was still below the 2008 level of 633.6 million short tons. Of all the coal-producing States in the~~ Western Region, ~~Alaska, with one mine, has the smallest level~~ of ~~production. However, in 2010, it had~~ the ~~largest~~United ~~percentage~~States ~~increase in production, increasing 0~~(587.36 million short tons,) ordeclined 150.67% ~~and~~from ~~ended the year with a total of 2~~2010.2 ~~million~~The ~~short tons. Wyoming~~region, ~~the~~which ~~largest~~includes ~~coal-producing State in the nation~~Wyoming, awas ~~position~~affected itby ~~has held for two decades, continues to dominate~~ the USdecrease ~~coal production picture. In 2010, coal production rose~~ in ~~Wyoming after falling for the first time in 17 years in 2009. Total~~ coal-fired ~~production~~electricity ingeneration ~~Wyoming~~and inlimited ~~2010~~access ~~was 442.5 million short tons, equivalent~~ to 74foreign markets.8% ~~of the~~ Western ~~Region~~ production ~~total~~during or2011 ~~40%~~was ofalso ~~the~~affected ~~total~~by USflooding ~~coal~~in ~~production for 2010~~Montana.

In ~~2010~~2011, Montana, the second largest coal-–producing ~~State~~state in the Western ~~Region~~region, produced a total of 4442.70 million short tons, ~~an increase of 13~~(44.3%7 ~~or 5.2~~ million short tons. Ain ~~total~~2010), a sharp decrease of ~~six~~6.1%. ~~mines~~In in2011, ~~Montana~~surface ~~produced~~production 44totaled 36.49 million short tons ~~of subbituminous coal and 0~~(40.3 million short tons ~~of lignite coal~~ in 2010.) ~~Three~~while ~~mines~~underground ~~had large increases in coal~~ production intotaled ~~2010,~~5.1 ~~which~~million ~~were~~short ~~more~~tons ~~than enough to offset the decrease of 1~~(4.54 million short tons atin ~~Decker Coal Company’s Decker mine~~2010). ~~Spring~~A ~~Creek~~total ~~Coal’s~~of ~~Spring~~six ~~Creek~~mines ~~mine~~in ~~had~~Montana anproduced ~~increase of 1~~36.75 million short tons, ~~Western~~of ~~Energy’s~~subbituminous ~~Rosebud~~coal, ~~mine had an increase of 1~~5.91 million short tons ~~and~~of ~~Signal~~bituminous ~~Peak~~coal ~~Energy’s~~and ~~Bull Mountain No~~0.14 ~~mine~~million ~~had~~short antons ~~increase~~ of ~~3.6~~lignite ~~million~~coal ~~short~~in ~~tons~~2011.

According to data from the EIA, domestic coal prices in 2011 averaged $41.01 per short ton. By coal rank, the average price in 2011 for bituminous coal was $68.50 per short ton, $14.07 per short ton for subbituminous coal, $18.77 per short ton for lignite coal and $75.70 per short ton for anthracite coal.

The following chart shows the average market price by coal rank for the period 2006–2011:

Due to its characteristics (i.e., bituminous coal, high energy content and sulfur content), we consider the coal in the PACE Coal property to be more comparable to the Illinois Basin coal. According to the EIA, the Illinois Basin coal price (11,800 Btu, 5.0 SO2) was $47.90 per short ton on December 14, 2012.

Internationally, Atlantic prices have declined as reduced European imports combined with warmer than expected Northern Hemisphere winter and falling industrial production, leaving power plants with ample inventory. At the same time, the U.S. domestic market’s depression exacerbated the supply–side issues in the form of increased U.S. exports and decreased U.S. imports. This freed up additional tonnage from Colombia, as it exported almost 4.5Mt less coal to the U.S. in 2011 than 2010. China and India will likely be the key drivers of the global seaborne market, where robust electricity generation continues to drive strong thermal coal demand.

Upon completion of the final reserve and mine feasibility studies, we will consider commissioning a market study to determine the relevant market price for our coal as well as the impact of transportation costs, access to ports and export facilities, among other variables, on the final sale price for both domestic and overseas markets.

Government Approvals

The Company requires to obtain drilling permits from the Montana Department of Environmental Quality in order to carry out drilling operations on its PACE Coal Project. In 2011, the Company received drilling permits that allowed it to carry out exploration activities on the project. Further drilling, or modifications to our drilling plan will require modification of our drilling permits by the Montana Department of Environmental Quality. The Company would also require additional permits from the state and federal governments once it moves, if at all, to the development and mining phase of the project.

We are required to obtain drilling permits from the Montana Department of Environmental Quality (“Montana DEQ”) in order to carry out drilling operations on our PACE Coal Project. In 2011, we received Prospecting Permit No. X2011335, which allowed us to carry out exploration activities on the project from July 29, 2011 to July 29, 2012. We applied for two amendments to the original exploration permit to obtain permits for Phase II and Phase III drill holes. The permits were obtained on September 12, 2011 and October 25, 2011.

The current Prospecting Permit ID: X2011335 (and the Notice of Intent Permit ID: N2011007), which was issued, and renewed, by the Montana DEQ per a letter dated April 24, 2012, affects only privately owned surface and private minerals. Because both the mineral and surface ownership are privately owned, the only governmental permit that is required for our current exploration activities is by the Montana DEQ, and no additional permits are required by the Bureau of Land Management (BLM) or U.S. Forest Service.

Further drilling, or modifications to our drilling plan, will require modification of our drilling permits by the Montana DEQ. We would also be required to obtain additional permits from the state and federal governments if we move to the development and mining phase of the project.

Existing or Probable Governmental Regulations

~~The~~Federal, ~~Company~~state ~~complies~~and local authorities regulate the U.S. coal mining industry with ~~all~~respect ~~relevant~~to ~~government~~matters ~~regulations~~such atas ~~the~~employee ~~federal~~health and safety, ~~state~~permitting and ~~local~~licensing ~~level.~~requirements, ~~The~~air ~~Company~~quality isstandards, ~~familiar~~water ~~with~~pollution, ~~the~~plant ~~relevant~~and ~~government~~wildlife ~~regulations~~protection, ~~laws,~~reclamation and ~~policies~~restoration ~~concerning~~of mining properties after mining has been completed, discharge of materials into the ~~coal~~environment, surface subsidence from underground mining and ~~energy~~the ~~industries~~effects of mining on groundwater quality and availability. Numerous federal, state and local governmental permits and approvals are required for coal mining activities.

We comply with all relevant government regulations at the federal, state and local level. We believe that we have obtained all permits currently required to conduct our mining exploration activities. We do not believe there are any matters that pose a material risk to maintaining our existing permits or that materially hinder our ability to secure future permits.

If we are able to move forward with the development and eventual operation of the PACE Coal Project, we would be subject to the following regulatory requirements.

Mine Safety and Health. Companies are subject to health and safety standards both at the federal and state level. The regulations are comprehensive and affect numerous aspects of mining operations, including training of mine personnel, mining procedures, blasting, the equipment used in mining operations and other matters. The Mine Safety and Health Administration (MSHA) is the agency responsible for monitoring compliance with the federal mine health and safety standards. MSHA has various enforcement tools that it can use, including the issuance of monetary penalties and orders of withdrawal from a mine or part of a mine. MSHA has recently taken a number of actions to identify mines with safety issues, and has engaged in targeted enforcement, awareness, outreach and rulemaking activities to reduce the number of mining fatalities, accidents and illnesses. There has also been an industry–wide increase in the monetary penalties assessed for citations of a similar nature.

Black Lung. Under the Black Lung Benefits Revenue Act of 1977 and the Black Lung Benefits Reform Act of 1977, as amended in 1981, each U.S. coal mine operator must pay federal black lung benefits and medical expenses to claimants who are current and former employees and last worked for the operator after July 1, 1973. Coal mine operators must also make payments to a trust fund for the payment of benefits and medical expenses to claimants who last worked in the coal industry prior to July 1, 1973. Historically, less than 7% of the miners currently seeking federal black lung benefits are awarded these benefits. The trust fund is funded by an excise tax on U.S. production of up to $1.10 per ton for deep–mined coal and up to $0.55 per ton for surface–mined coal, neither amount to exceed 4.4% of the gross sales price.

Environmental Laws. Coal companies are subject to various federal and state environmental laws. Some of these laws, discussed below, would place many requirements on any future coal mining operation. Federal and state regulations require regular monitoring of mines and other facilities to ensure compliance.

Surface Mining Control and Reclamation Act. In the U.S., the Surface Mining Control and Reclamation Act of 1977 (SMCRA), which is administered by the Office of Surface Mining Reclamation and Enforcement (OSM), established mining, environmental protection and reclamation standards for all aspects of U.S. surface mining as well as many aspects of deep mining. Mine operators must obtain SMCRA permits and permit renewals for mining operations from the OSM. Where state regulatory agencies have adopted federal mining programs under SMCRA, the state becomes the regulatory authority.

The Abandoned Mine Land Fund, which is part of SMCRA, requires a fee on all coal produced in the U.S. The proceeds are used to rehabilitate lands mined and left unreclaimed prior to August 3, 1977 and to pay health care benefit costs of orphan beneficiaries of the Combined Fund created by the Coal Industry Retiree Health Benefit Act of 1992. The fee was $0.35 per ton of surface–mined coal and $0.15 per ton of deep–mined coal, effective through September 30, 2007. Pursuant to the Tax Relief and Health Care Act of 2006, from October 1, 2007 through September 30, 2012, the fee is $0.315 per ton of surface–mined coal and $0.135 per ton of underground mined coal. From October 1, 2012 through September 30, 2021, the fee will be reduced to $0.28 per ton of surface–mined coal and $0.12 per ton of underground-mined coal. SMCRA stipulates compliance with many other major environmental programs. These programs include the Clean Air Act; Clean Water Act; Resource Conservation and Recovery Act (RCRA); and Comprehensive Environmental Response, Compensation, and Liability Acts (CERCLA, commonly known as Superfund). Besides OSM, other federal regulatory agencies are involved in monitoring or permitting specific aspects of mining operations. The U.S. Environmental Protection Agency (EPA) is the lead agency for states or tribes with no authorized programs under the Clean Water Act, RCRA and CERCLA. The U.S. Army Corps of Engineers regulates activities affecting navigable waters and waters of the U.S., including wetlands, and the U.S. Bureau of Alcohol, Tobacco and Firearms regulates the use of explosive blasting materials.

Clean Air Act. The Clean Air Act and the comparable state laws that regulate the emissions of materials into the air affect U.S. coal mining operations both directly and indirectly. Direct impacts on coal mining and processing operations may occur through the Clean Air Act permitting requirements and/or emission control requirements relating to particulate matter. It is possible that the more stringent national ambient air quality standards (NAAQS) will directly impact future mining operations by, for example, requiring additional controls of emissions from mining equipment and vehicles. In addition, in September 2009, the EPA adopted new rules tightening and adding additional particulate-matter emissions limits for coal preparation and processing plants constructed, reconstructed or modified after April 28, 2008. The Clean Air Act indirectly, but more significantly, affects the coal industry by extensively regulating the air emissions of sulfur dioxide, nitrogen oxides, mercury, particulate matter and other substances emitted by coal–based electricity generating plants. Air emissions programs that may affect future operations, directly or indirectly, include, but are not limited to, the Acid Rain Program, NOx SIP Call, the Clean Air Interstate Rule (CAIR), New Source Performance Standards (NSPS), Maximum Achievable Control Technology (MACT) emissions limits for Hazardous Air Pollutants, the Regional Haze program and New Source Review. In addition, in recent years, the EPA has adopted more stringent NAAQS for particulate matter, nitrogen oxide and sulfur dioxide. The EPA has also proposed a more stringent ozone standard but withdrew it last year; the ozone standard is due for reconsideration in 2013. Many of these programs and regulations have resulted in litigation, which has not been completely resolved.

On July 6, 2011, the EPA finalized its final Cross State Air Pollution Rule (CSAPR) to address interstate transport of emissions from coal–based electrical generation plants. The rule, which was developed to replace CAIR and includes a supplemental rulemaking finalized on December 15, 2011, imposes state–by–state budgets on nitrogen oxides and sulfur dioxide emissions from coal–based electrical generation plants in 23 states from Texas eastward (not including the New England states or Delaware) and provides for an allowance trading program to meet those budgets. While CSAPR has an initial compliance deadline of January 1, 2012, the rule was challenged and, on December 30, 2011, the U.S. Court of Appeals for the District of Columbia stayed CSAPR and advised that the EPA is expected to continue administering CAIR until the pending challenges are resolved. Expedited briefing on the merits of the challenge is underway. On December 16, 2011, the EPA issued the Mercury and Air Toxic Standards, which impose MACT emission limits on hazardous air emissions from new and existing coal–based electric generating plants. The rule also revised NSPS for nitrogen oxides, sulfur dioxides and particulate matter for coal–based electricity generating plants. The rule provides three years for compliance, or up to four years for existing sources if necessary. In December 2009, the EPA published its finding that atmospheric concentrations of greenhouse gases endanger public health and welfare within the meaning of the Clean Air Act, and that emissions of greenhouse gases from new motor vehicles and new motor vehicle engines are contributing to air pollution that is endangering public health and welfare within the meaning of the Clean Air Act. In May 2010, the EPA published final greenhouse gas emission standards for new motor vehicles pursuant to the Clean Air Act. Both the endangerment finding and motor vehicle standards are the subject of litigation.

Because the Clean Air Act specifies that the prevention of significant deterioration (PSD) program applies once emissions of regulated pollutants exceed either 100 or 250 tons per year (depending on the type of source), millions of sources previously unregulated under the Clean Air Act could be subject to greenhouse gas reduction measures. The EPA published a rule in June 2010 to limit the number of greenhouse gas sources that would be subject to the PSD program. In the so–called “tailoring rule,” the EPA limited the regulation of greenhouse gases from certain stationary sources to those that emit more than 75,000 tons of greenhouse gases per year (for sources that would be subject to PSD permitting regardless of greenhouse gas emissions due to other emissions) or 100,000 tons of greenhouse gases per year (for sources not subject to PSD permitting for any other air emissions), measured by “carbon dioxide equivalent.” Whether the EPA has the statutory authority under the Clean Air Act to adopt the tailoring rule is the subject of litigation. In December 2010, the EPA announced a settlement with states and environmental groups that had filed litigation challenges to the EPA’s decisions not to establish greenhouse gas emission standards for fossil fuel–fired power plants and for petroleum refineries under section 111 of the Clean Air Act. In the settlement, the EPA agreed (1) to sign proposed new source performance standards for new and modified electric utility steam generating units under section 111(b), as well as proposed guidelines for states’ development of emission standards for existing electric utility steam generating units under section 111(d), by July 26, 2011; and (2) to take final action on the proposed section 111(b) standards and section 111(d) guidelines by May 26, 2012. The EPA has not yet proposed these rules. Whatever the EPA determines the new source performance standards to be, this will then be the minimum requirement for best available control technology requirements under the PSD program.

Clean Water Act. The Clean Water Act of 1972 affects U.S. coal mining operations by requiring both technology–based and, if necessary, water quality–based effluent limitations and treatment standards for wastewater discharge through the National Pollutant Discharge Elimination System (NPDES). Regular monitoring, reporting requirements and performance standards are requirements of NPDES permits that govern the discharge of pollutants from mine–related point sources into water. Section 404 of the Clean Water Act requires mining companies to obtain U.S. Army Corps of Engineers permits to place material in streams for the purpose of creating slurry ponds, water impoundments, refuse areas, valley fills or other mining activities. States are empowered to develop and apply “in stream” water quality standards. These standards are subject to change and must be approved by the EPA. Discharges must either meet state water quality standards or be authorized through available regulatory processes such as alternate standards or variances. “In stream” standards vary from state to state. Additionally, through the Clean Water Act section 401 certification program, states have approval authority over federal permits or licenses that might result in a discharge to their waters. States consider whether the activity will comply with their water quality standards and other applicable requirements in deciding whether or not to certify the activity.

Resource Conservation and Recovery Act. RCRA, which was enacted in 1976, affects U.S. coal mining operations by establishing “cradle to grave” requirements for the treatment, storage and disposal of hazardous wastes. Typically, the only hazardous wastes generated at a mine site are those from products used in vehicles and for machinery maintenance. Coal mine wastes, such as overburden and coal cleaning wastes, are not considered hazardous wastes under RCRA. Subtitle C of RCRA exempted fossil fuel combustion wastes from hazardous waste regulation until the EPA completed a report to Congress and made a determination on whether the wastes should be regulated as hazardous. In a 1993 regulatory determination, the EPA addressed some high volume–low toxicity coal combustion materials generated at electric utility and independent power producing facilities. In May 2000, the EPA concluded that coal combustion materials do not warrant regulation as hazardous wastes under RCRA. The EPA has retained the hazardous waste exemption for these materials. The EPA is evaluating national waste guidelines for coal combustion materials placed at a mine. National guidelines for mine–fills may affect the cost of ash placement at mines. The EPA revisited its May 2000 determination and proposed new requirements for coal combustion residue (CCR) management on June 21, 2010. That proposal contains two options: (1) to continue to regulate CCR as a non–hazardous waste, or (2) to regulate CCR as special waste under the hazardous waste regulations.

CERCLA (Superfund). CERCLA affects U.S. coal mining and hard rock operations by creating liability for investigation and remediation in response to releases of hazardous substances into the environment and for damages to natural resources. Under CERCLA, joint and several liability may be imposed on waste generators, site owners or operators and others, regardless of fault. Under the EPA’s Toxic Release Inventory process, companies are required annually to report the use, manufacture or processing of listed toxic materials that exceed defined thresholds, including chemicals used in equipment maintenance, reclamation, water treatment and ash received for mine placement from power generation customers.

Endangered Species Act. The U.S. Endangered Species Act and counterpart state legislation is intended to protect species whose populations allow for categorization as either endangered or threatened. With respect to obtaining mining permits, protection of endangered or threatened species may have the effect of prohibiting, limiting the extent or causing delays that may include permit conditions on the timing of soil removal, timber harvesting, road building and other mining or agricultural activities in areas containing the affected species.

Use of Explosives. Surface mining operations are subject to numerous regulations relating to blasting activities. The storage of explosives is also subject to federal regulatory requirements.

Number of Employees

The Company has no employees and three consultants (of which two, Mr. Johannes Petersen and Mr. Alvaro Valencia, are directors).

ITEM 1A.RISK FACTORS.

We operate in a highly competitive environment in which there are numerous factors which can influence our business, financial position, or results of operations and which can also cause the market value of our common stock to decline. Many of these factors are beyond our control and therefore, are difficult to predict. The following section sets forth what we believe to be the principal risks that could affect us, our business or our industry, and which could result in a material adverse impact on our financial results or cause the market price of our common stock to fluctuate or decline.

RISKS ASSOCIATED WITH OUR BUSINESS

We have no history of revenues from operations, we may never operate profitably and investors may lose all of their investment in our company.

We have no history of revenues from operations. We are an exploration stage company with only a limited operating history upon which to base an evaluation of our current business and future prospects. Further, we do not have an established history of locating and developing mineral and oil and gas properties. As a result, the revenue and income potential of our business is unproven and there can be no assurance that we will ever operate profitably. The exploration and development of mineral properties requires substantial capital, often over a substantial period of time. We anticipate that we will incur increased operating expenses without realizing any revenues over the next several years. We therefore expect to incur significant losses into the foreseeable future. If we are unable to successfully develop the PACE Coal Property or other properties we acquire in the future, we will not be able to establish revenues, earn profits, or continue operations, and our stock may become worthless, causing our investors to lose all of their investment in our company.

WeOur ~~currently~~independent ~~own~~auditors ~~rights~~have ~~with~~raised ~~respect~~substantial doubt about our ability to acontinue ~~sole~~as ~~mineral~~a ~~property~~going concern.

~~The~~At ~~PACE~~June ~~Coal~~30, ~~Project~~2012, isMarch ~~currently~~31, ~~our~~2012 ~~sole~~and ~~project. The~~September ~~agreements~~30, ~~under~~2011, ~~which~~ we ~~acquired~~had ~~the~~net ~~PACE~~losses ~~property~~of ~~require~~$1,537,429, us$1,141,719 toand ~~make~~$1,952,064, ~~future~~respectively. As ~~payments~~such, toour ~~the~~independent ~~sellers~~auditors ofhave ~~the~~included ~~property,~~in ~~which~~their ~~payment~~auditor ~~obligations~~report ~~are~~an ~~secured~~explanatory byparagraph ~~the~~that ~~property,~~states ~~and~~that ~~complete~~our acontinuing ~~reserve~~losses ~~study~~from ~~and~~operations ~~mining~~raise ~~plan~~substantial bydoubt ~~April~~as ~~2012.~~to Ifour weability ~~are unable~~ to ~~make~~continue ~~these~~as ~~payments~~a orgoing ~~complete~~concern. Our ~~these~~ability ~~other~~to ~~obligations,~~continue weas ~~may~~a ~~lose~~going ~~our~~concern ~~interest~~is incontingent ~~the~~upon ~~property.~~our ~~The~~ability ~~Company plans~~ to ~~evaluate~~obtain ~~all~~additional ~~available~~financing ~~exploration~~as ~~data~~we tocontinue ~~delineate~~exploration ~~the extent~~ of the ~~potential~~PACE ~~resources,~~Coal ~~estimate~~Property. If ~~their~~we ~~recoverability,~~are ~~and~~unable ~~determine~~to ~~requirements~~obtain ~~for~~future ~~additional~~financing ~~exploration~~to ~~and~~meet ~~analytical~~our ~~testing.~~working ~~The~~capital ~~Company~~requirements, iswe ~~currently~~will ~~evaluating~~have ~~the~~to ~~preparation~~delay ofour aexploration ~~reserve study~~ and ~~mining~~development ~~plan~~plans ~~for~~or ~~the~~cease ~~PACE~~operations ~~Coal property with the existing project data~~altogether.

We currently own rights with respect to a sole mineral property which increases the risks associated with our operations.

The PACE Coal Project is currently our sole project. The agreements, as amended, under which we acquired the PACE Coal Property require us to make future payments to the sellers of the property, which payment obligations are secured by the property, and to complete of a final reserve study and mine feasibility study by April 9, 2013. With respect to the obligation to compete a final feasibility study, under our current drilling schedule, we believe we are unlikely to meet the April 9, 2013 deadline and plan to request an extension as our Phase II drilling progresses. If we are unable to make these payments or complete these other obligations and cannot obtain waivers or amendments to address these breaches, we may lose our interest in the property. In addition, we must acquire by purchase or lease the uncontrolled property in the PACE Coal Project necessary to develop the mine plan. The Company plans to evaluate all available exploration data to delineate the extent of the potential reserves and mineralized material, estimate their recoverability and determine requirements for additional exploration and analytical testing. The Company commissioned the preparation of a preliminary Mine Feasibility Study for the PACE Coal Project with the project data obtained during the 2011 drilling season. The studies were completed in September 2012.

We are subject to all of the risks inherent in the mining industry.

As an exploration stage company, our work is highly speculative and involves unique and greater risks than are generally associated with other businesses. There can be no assurance that the PACE Coal Project or any of the properties we acquire contain or will contain a commercially viable ore body or reserves until additional exploration work is done and an evaluation based on such work concludes that development of and production from the ore body is technically, economically, and legally feasible. We are subject to all of the risks inherent in the mining industry, including, without limitation, the following (some of which we discuss in more detail below):

● Success in discovering and developing commercially viable quantities of minerals is the result of a number of factors, including the quality of management, the interpretation of geological data, the level of geological and technical expertise, and the quality of land available for exploration;9

●· ~~Exploration~~Success ~~for~~in ~~minerals~~discovering isand ~~highly~~developing ~~speculative~~commercially ~~and~~viable ~~involves~~quantities ~~substantial~~of ~~risks,~~minerals ~~even~~is ~~when~~the ~~conducted~~result onof ~~properties~~a ~~known~~number toof ~~contain~~factors, ~~significant~~including ~~quantities~~the quality of ~~mineralization~~management, ~~and~~the ~~most~~interpretation ~~exploration~~of ~~projects~~geological dodata, ~~not~~the ~~result~~level inof ~~the~~geological ~~discovery~~and oftechnical ~~commercially~~expertise, ~~mineable~~and ~~deposits~~the quality of ~~ore~~land available for exploration;

●· ~~Operations~~Exploration ~~are~~for ~~subject~~minerals tois ahighly ~~variety~~speculative ~~of existing laws~~ and ~~regulations~~involves ~~relating~~substantial torisks, ~~exploration~~even ~~and~~when ~~development,~~conducted ~~permitting~~on ~~procedures,~~properties ~~safety~~known ~~precautions,~~to ~~property~~contain ~~reclamation,~~significant ~~employee~~quantities ~~health~~of ~~and safety~~mineralization, ~~air~~ and ~~water~~most ~~quality~~exploration ~~standards,~~projects ~~pollution~~do ~~and~~not ~~other~~result ~~environmental~~in ~~protection~~the ~~controls,~~discovery ~~all~~ of ~~which~~commercially ~~are~~mineable ~~subject~~deposits toof ~~change and are becoming more stringent and costly to comply with~~ore;

●· AOperations ~~large~~are ~~number~~subject ofto ~~factors~~a ~~beyond~~variety ~~our~~of ~~control,~~existing ~~including~~laws ~~fluctuations~~and inregulations ~~metal~~relating ~~prices~~to exploration and ~~production costs~~development, ~~inflation~~permitting procedures, ~~the~~safety ~~proximity~~precautions, ~~and~~property ~~liquidity~~reclamation, ofemployee ~~precious~~health ~~metals markets~~ and ~~processing equipment~~safety, ~~government~~air ~~regulations,~~and ~~including~~water ~~regulations~~quality ~~relating to prices~~standards, ~~taxes,~~pollution ~~royalties,~~and ~~land~~other ~~tenure,~~environmental ~~land~~protection ~~use~~controls, ~~importing~~all ~~and exporting~~ of ~~minerals,~~which ~~and~~are ~~environmental~~subject ~~protection,~~to change and ~~other~~are ~~economic~~becoming ~~conditions,~~more ~~will~~stringent ~~affect~~and ~~the~~costly ~~economic~~to ~~feasibility~~comply ~~of mining~~with;

●· ~~Once~~A ~~mineralization~~large isnumber ~~discovered~~of factors beyond our control, itincluding ~~may~~fluctuations ~~take~~in ~~several~~metal ~~years~~and ~~from~~minerals prices and production costs, inflation, the ~~initial~~proximity ~~phases~~and liquidity of ~~drilling~~minerals ~~until~~markets ~~production~~and isprocessing ~~possible~~equipment, ~~during~~government ~~which~~regulations, ~~time~~including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals, and environmental protection, and other economic conditions, will affect the economic feasibility of ~~production may change~~mining;

●· ~~Substantial~~Once ~~expenditures~~mineralization ~~are~~is ~~required~~discovered, toit ~~establish~~may ~~proven~~take ~~and~~several ~~probable~~years ~~ore~~from ~~reserves~~the ~~through~~initial ~~drilling,~~phases toof ~~determine~~drilling ~~metallurgical~~until ~~processes~~production tois ~~extract~~possible, ~~the~~during ~~metals~~which ~~from~~time the ~~ore~~economic ~~and,~~feasibility ~~in the case~~ of ~~new~~production ~~properties,~~may ~~to construct mining and processing facilities~~change; ~~and~~

6· Substantial expenditures are required to establish proven and probable ore reserves through drilling, to determine metallurgical processes to extract the metals or minerals from the ore and, in the case of new properties, to construct mining and processing facilities; and

●· If we proceed to development of a mining operation, our mining activities would be subject to substantial operating risks and hazards, including metal bullion losses, environmental hazards, industrial accidents, labor disputes, encountering unusual or unexpected geologic formations or other geological or grade problems, encountering unanticipated ground or water conditions, cave-ins, pit-wall failures, flooding, rock falls, periodic interruptions due to inclement weather conditions or other unfavorable operating conditions and other acts of God. Some of these risks and hazards are not insurable or may be subject to exclusion or limitation in any coverage which we obtain or may not be insured due to economic considerations.

Loss of key personnel and failure to attract qualified managers, technologists, independent engineers, and geologists could limit our growth and negatively impact our operations.

We depend upon our consultants to a substantial extent. In particular, we depend upon Mr. Alvaro Valencia, our President and Chief Executive Officer, and Mr. Johannes Petersen, our Secretary and Chief Financial Officer, for their skills, experience, knowledge of the company, and industry contacts. The loss of Mr. Valencia or Mr. Petersen could have a material adverse effect on our business, results of operations or financial condition.

As we grow, we may increasingly require field managers with experience in our industry and skilled engineers, geologists, and technologists to operate diagnostic, seismic, and 3D equipment. It is impossible to predict the availability of qualified managers, technologists, skilled engineers, and geologists or the compensation levels that will be required to hire them. In particular, there is a very high demand for qualified technologists who are particularly necessary to operate systems similar to the ones that we intend to operate. We may not be able to hire and retain a sufficient number of technologists, engineers, and geologists and we may be required to pay bonuses and higher independent contractor rates to our technologists, engineers, and geologists, which would increase our expenses. The loss of the services of any member of our senior management or our inability to hire qualified managers, technologists, skilled engineers, and geologists at economically reasonable compensation levels could adversely affect our ability to operate and grow our business.

Complying with federal and state regulations is an expensive and time-consuming process, and any failure to comply could result in substantial penalties.

Our exploration efforts are directly or indirectly subject to extensive and continually changing regulation affecting mining and the oil and natural gas industry. Many departments and agencies, both federal and state, are authorized by statute to issue, and have issued, rules and regulations binding on the mining and oil and natural gas industry and our individual participants. The failure to comply with such rules and regulations can result in substantial penalties. The regulatory burden on the mining and oil and natural gas industry increases our cost of doing business and, consequently, will affect our profitability.

If operations on the properties we acquire are found to be in violation of any of the laws and regulations to which we are subject, we may be subject to the applicable penalties associated with the violation, including civil and criminal penalties, damages, fines, and the curtailment of operations. Any penalties, damages, fines, or curtailment of operations, individually or in the aggregate, could adversely affect our ability to operate our business and our financial results. In addition, many of these laws and regulations have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action against us for violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert management’s attention from the operation of our business.

We may experience competition from other mining and energy exploration and production companies, and this competition could adversely affect our revenues and our business.

The market for coal, oil, and natural gas properties is generally highly competitive. Many existing competitors, as well as potential new competitors, have longer operating histories, greater name recognition, substantial track records, and significantly greater financial, technical, and technological resources than us. This may allow them to devote greater resources to the development and promotion of their coal, oil, and natural gas exploration and production projects. Many of these competitors offer a wider range of coal, oil, and natural gas opportunities not available to us and may attract business partners, consequently resulting in a decrease of our business opportunities. These competitors may also engage in more extensive research and development, adopt more aggressive strategies and make more attractive offers to existing and potential purchasers and partners. Furthermore, competitors may develop technology and exploration strategies that are equal or superior to us and achieve greater market recognition. In addition, current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to better address the needs of our target market. As a result, it is possible that new competitors may emerge and rapidly acquire significant market share.

There can be no assurance that we will be able to compete successfully against our current or future competitors or that competition will not have a material adverse effect on our business, results of operations and financial condition.

We will need to increase the size of our organization, and may experience difficulties in managing growth.

We expect to experience a period of significant expansion in headcount, facilities, infrastructure, and overhead and anticipate that further expansion will be required to address potential growth and market opportunities. Future growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain, and integrate additional independent contractors and managers. Our future financial performance and our ability to compete effectively will depend, in part, on our ability to manage any future growth effectively.

Coal, oil and natural gas prices are volatile, and low prices could have a material adverse impact on our business.

Our growth and future profitability and the carrying value of our properties depend substantially on prevailing coal, oil, and natural gas prices. Prices also affect the amount of cash flow available for capital expenditures, if any, and our ability to borrow and raise additional capital. The amount we will be able to borrow under any credit facility will be based in part on changing expectations of future prices. Lower prices may also reduce the amount of coal, oil, and natural gas that we can economically produce and have an adverse effect on the value of our properties. Prices for coal, oil, and natural gas have increased significantly and have been more volatile over the past twelve months. Historically, the markets for coal, oil, and natural gas have been volatile, and they are likely to continue to be volatile in the future. Among the factors that can cause volatility are:

●· the domestic and foreign supply of coal, oil, and gas;

●· the ability of members of the Organization of Petroleum Exporting Countries, or OPEC, and other producing countries to agree upon and maintain oil prices and production levels;

●· the level of consumer product demand;

●· the growth of consumer product demand in emerging markets, such as China and India;

●· labor unrest in coal, oil, and natural gas producing regions;

●· weather conditions, including hurricanes and other natural disasters;

●· the price and availability of alternative fuels;

●· the price of foreign imports; and

●· worldwide economic conditions.

These external factors and the volatile nature of the energy markets make it difficult to estimate future prices of coal, oil, and natural gas and our resulting ability to raise capital.

Assets we acquire may prove to be worth less than we paid because of uncertainties in evaluating recoverable reserves and potential liabilities.

Our initial growth is expected to result from acquisitions of mineral and oil and gas properties. Successful acquisitions require an assessment of a number of factors, including estimates of recoverable reserves, exploration potential, future energy prices, operating and capital costs, and potential environmental and other liabilities. Such assessments are inexact and their accuracy is inherently uncertain. Typically, we acquire interests in properties on an “as is” basis with limited remedies for breaches of representations and warranties.

As a result of these factors, we may not be able to acquire coal, oil, and natural gas properties that contain economically recoverable reserves or be able to complete such acquisitions on acceptable terms.

Actual future production, coal, oil, and natural gas prices, revenues, taxes, development expenditures, operating expenses, and quantities of recoverable coal, oil, and natural gas reserves will vary from those estimated. Any significant variance could materially affect the estimated quantities and the value of any potential reserves.

Exploration and development drilling efforts may not be successful.

We require significant amounts of undeveloped leasehold acreage in order to further our development efforts. Exploration, development, drilling, and production activities are subject to many risks, including the risk that commercially productive reservoirs will not be discovered. We invest in property, including undeveloped leasehold acreage, which we believe will result in projects that will add value over time. However, we cannot guarantee that all of our prospects will result in viable projects or that we will not abandon our initial investments. Additionally, we cannot guarantee that the leasehold acreage we acquire will be profitably developed, that new wells drilled on the properties will be productive or that we will recover all or any portion of our investment in such leasehold acreage, mines, or wells. Drilling for oil and natural gas may involve unprofitable efforts, not only from dry wells but also from wells that are productive but do not produce sufficient net reserves to return a profit after deducting operating and other costs. We rely to a significant extent on 3D seismic data and other advanced technologies in identifying leasehold acreage prospects and in determining whether or not to participate in a new well. The 3D seismic data and other technologies we use do not allow us to know conclusively prior to acquisition of leasehold acreage or the drilling of a well whether oil or natural gas is present or may be produced economically.

The unavailability or high cost of drilling rigs, equipment, supplies, personnel, and energy field services could adversely affect our ability to execute our exploration and development plans on a timely basis and within our budget.

Our industry is cyclical and, from time to time, there is a shortage of drilling rigs, equipment, supplies, or qualified personnel to operate our properties. During these periods, the costs and delivery times of rigs, equipment, and supplies are substantially greater. In addition, the demand for, and wage rates of, qualified drilling rig crews rise as the number of active rigs in service increases. As a result of increasing levels of exploration and production in response to strong prices of oil and natural gas, the demand for oilfield services has risen, and the costs of these services are increasing, while the quality of these services may suffer. If the unavailability or high cost of drilling rigs, equipment, supplies, or qualified personnel is particularly severe in Colorado and Montana, we could be materially and adversely affected because we expect our properties to be concentrated in those states.

Title to the properties in which we have, or will have, an interest in may be impaired by title defects.

We seek to confirm the validity of our rights to title to, or contract rights with respect to, each mineral property in which we have a material interest. Title insurance generally is not available, and our ability to ensure that we have obtained a secure claim to individual mineral properties or mining concessions is limited. We generally do not conduct surveys of our properties until they have reached the development stage, and therefore, the precise area and location of such properties could be in doubt. Accordingly, our mineral properties could be subject to prior unregistered agreements, transfers or claims, and title could be affected by, among other things, undetected defects. In addition, we might be unable to operate our properties as permitted or to enforce our rights with respect to our properties. Generally, under the terms of the operating agreements affecting our properties, any monetary loss is to be borne by all parties to any such agreement in proportion to their interests in such property. If there are any title defects or defects in the assignment of rights in properties in which we hold an interest, we will suffer a financial loss.

Our decision to acquire a property will depend in part on the evaluation of data obtained from engineering studies, geophysical and geological analyses, and seismic and other information, the results of which are often incomplete or inconclusive.

Our reviews of acquired properties may be inherently incomplete because it is not always feasible to perform an in-depth review of the individual properties involved in each acquisition. Even a detailed review of records and properties may not necessarily reveal existing or potential problems, nor will it permit a buyer to become sufficiently familiar with the properties to assess fully their deficiencies and potential. Inspections may not always be performed on every well and environmental problems, such as ground water contamination, plugging, or orphaned well liability are not necessarily observable even when an inspection is undertaken.

We are subject to complex laws and regulations, including environmental regulations, which can adversely affect the cost, manner, or feasibility of doing business.

The exploration and development of mineral and natural gas and oil properties in the United States is subject to extensive laws and regulations, including environmental laws and regulations. We may be required to make large expenditures to comply with environmental and other governmental regulations. Matters subject to regulation include, but are not limited to:

●· location and density of wells;

●· the handling of drilling fluids and obtaining discharge permits for drilling operations;

●· accounting for and payment of royalties on production from state, federal, and Indian lands;

●· bonds for ownership, development, and production of coal, natural gas, and oil properties;

●· transportation of natural gas and oil by pipelines;

●· operation of wells and reports concerning operations; and

9· taxation.

● taxation.

Under these laws and regulations, we could be liable for personal injuries, property damage, oil spills, discharge of hazardous materials, remediation and clean-up costs, and other environmental damages. Failure to comply with these laws and regulations also may result in the suspension or termination of our operations and subject us to administrative, civil, and criminal penalties. Moreover, these laws and regulations could change in ways that substantially increase our costs. Accordingly, any of these liabilities, penalties, suspensions, terminations, or regulatory changes could materially adversely affect our financial condition and results of operations enough to possibly force us to cease our business operations.

RISKS ASSOCIATED WITH OUR COMMON STOCK

The price of our common stock ~~may~~is be volatile and you may not be able to resell your shares at a favorable price.

Regardless of whether an active trading market for our common stock develops, the market price of our common stock ~~may~~is be volatile and you may not be able to resell your shares at or above the price you paid for such shares. The following factors could affect our stock price:

●· ~~our~~the ~~operating~~status ~~and~~of ~~financial~~the ~~performance~~PACE ~~and~~Coal ~~prospects~~Project;

●· ~~quarterly~~our ~~variations~~operating inand ~~the rate of growth of our~~ financial ~~indicators,~~performance ~~such as net income per share, net income,~~ and ~~revenues~~prospects;

●· ~~changes~~quarterly variations in ~~revenue~~the orrate ~~earnings~~of ~~estimates~~growth ~~or publication~~ of ~~research~~our ~~reports~~financial byindicators, ~~analysts~~such ~~about~~as usnet orincome ~~the~~per ~~coal~~share, ~~exploration~~net income, and ~~production industry~~revenues;

●· ~~potentially~~changes ~~limited~~in ~~liquidity~~revenue or earnings estimates or publication of research reports by analysts about us or the coal exploration and production industry;

●· ~~actual~~potentially orlimited ~~anticipated variations in our reserve estimates and quarterly operating results~~liquidity;

●· ~~changes~~actual or anticipated variations in ~~coal,~~our ~~natural~~reserve ~~gas,~~estimates and ~~oil~~quarterly ~~prices~~operating results;

●· ~~sales~~changes ofin ~~our~~coal, ~~common~~natural ~~stock~~gas, ~~by significant stockholders~~ and ~~future~~oil ~~issuances of our common stock~~prices;

●· ~~increases~~sales inof our ~~cost~~common stock by significant stockholders and future issuances of ~~capital~~our common stock;

~~● changes in applicable laws or regulations, court rulings, and enforcement and legal actions;~~13

●· ~~commencement~~increases ofin orour ~~involvement~~cost inof ~~litigation~~capital;

●· changes in ~~market~~applicable ~~valuations~~laws ofor ~~similar~~regulations, ~~companies~~court rulings, and enforcement and legal actions;

●· ~~additions~~commencement ~~or departures~~ of ~~key~~or ~~management~~involvement ~~personnel~~in litigation;

●· ~~general~~changes ~~market conditions, including fluctuations~~ in ~~and~~market ~~the~~valuations ~~occurrence~~ of ~~events~~similar ~~or trends affecting the price of natural gas and oil~~companies; ~~and~~

●· ~~domestic~~additions ~~and~~or ~~international~~departures ~~economic,~~of ~~legal,~~key ~~and~~management ~~regulatory factors unrelated to our performance.~~personnel;

·	general market conditions, including fluctuations in and the occurrence of events or trends affecting the price of natural gas and oil; and

·	domestic and international economic, legal, and regulatory factors unrelated to our performance.

We have no plans to pay dividends on our common stock.

We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance the expansion of our business. Our future dividend policy is within the discretion of our board of directors and will depend upon various factors, including our business, financial condition, results of operations, capital requirements, investment opportunities, and restrictions imposed by our debentures and credit facility.

Because our common stock is deemed a “penny stock,” an investment in our common stock should be considered high risk and subject to marketability restrictions.

Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) specified in Rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

10· Deliver to the customer, and obtain a written receipt for, a disclosure document;

●· ~~Deliver~~Disclose tocertain ~~the~~price ~~customer,~~information ~~and~~about ~~obtain~~the ~~a written receipt for, a disclosure document~~stock;

●· Disclose ~~certain~~the ~~price~~amount ~~information~~of ~~about~~compensation received by the ~~stock~~broker-dealer or any associated person of the broker-dealer;

●· ~~Disclose~~Send ~~the~~monthly ~~amount~~statements ofto ~~compensation~~customers ~~received~~with bymarket ~~the~~and ~~broker-dealer~~price orinformation ~~any~~about ~~associated person of~~ the ~~broker-dealer~~penny stock; and

●· ~~Send~~In ~~monthly~~some ~~statements~~circumstances, toapprove ~~customers~~the ~~with~~purchaser’s ~~market~~account under certain standards and ~~price~~deliver ~~information~~written ~~about~~statements to the ~~penny~~customer ~~stock;~~with ~~and~~information specified in the rules.

● In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board, which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Companies trading on the OTC Bulletin Board, such as us, must be reporting issuers under Section 12 of the Exchange Act and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. More specifically, FINRA has enacted Rule 6530, which determines the eligibility of issuers quoted on the OTC Bulletin Board by requiring an issuer to be current in its filings with the Commission. Pursuant to FINRA Rule 6530(e), if we file our reports late with the Commission three times in a two-year period or our securities are removed from the OTC Bulletin Board for failure to timely file twice in a two-year period then we will be ineligible for quotation on the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.

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

We will need additional capital to finance our planned growth, which we may not be able to raise or may only be available on terms unfavorable to us or our stockholders, which may result in our inability to fund our working capital requirements and harm our operational results.

We have and expect to continue to have substantial capital expenditure and working capital needs. We will need to rely on borrowings under our credit facility or raise additional cash to fund our exploration and acquisition plans, pay outstanding long-term debt, and implement our growth strategy.

If low coal, natural gas, and oil prices, operating difficulties or other factors, many of which are beyond our control, cause our revenues or cash flows from operations to decrease, we may be limited in our ability to spend the capital necessary to complete our development, production, and exploration programs. If our resources or cash flows do not satisfy our operational needs, we will require additional financing, in addition to anticipated cash generated from our operations, to fund our planned growth. Additional financing might not be available on terms favorable to us or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. In such a capital restricted situation, we may curtail our acquisition, drilling, development, and exploration activities or be forced to sell some of our assets on an untimely or unfavorable basis.

If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences, or privileges senior to those of existing stockholders.

ITEM 1B.UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 2.PROPERTIES.

OnOwnership ~~March 31, 2010, the Company entered into a series~~ of agreements to acquire all the mineral, oil, and gas rights of a mineral property located in Judith Basin County, Montana for a total consideration of $3,850,000 in cash payments and the issuance of 1,000,000 restricted shares. The PACE Coal property includes 28,591.67 acres of coal and other mineral interest rights, plus an additional 320 acres of all minerals except coal, subject to the exception of a total of 480 acres that may be owned by the Federal Government and 160.9 acres that may be owned by the State of Montana. In 2011, the Company signed access agreements with the surface landowners in order to access 61 drilling locations where the Company planned to conduct exploration activities.Rights

On March 31, 2010, the Company, Future Gas Holdings, Ltd. (“Future Gas”) and JBM Energy Company, LLC (“JBM Energy”) entered into an Assignment and Assumption of Coal Agreement (the “Assignment and Assumption of Coal Agreement”) to transfer and assign ~~to the Company~~ all of the rights and obligations of Future Gas ~~to purchase all coal mineral rights owned by JBM~~ under a Coal Buy and Sell Agreement, ~~(“Agreement”)~~ dated as of February 4, 2010~~. Pursuant to the Assignment and Agreement~~, ~~the Company paid $150,000 in cash to JBM and signed a 5% promissory note with a face value of $1,750,000 (“Promissory Note 1”) in favor of JBM and secured~~ by ~~the coal property transferred during the first 2 years, the note carries no interest. On July 9, 2010~~ and ~~January~~between 9,Future ~~2011~~Gas ~~additional cash payments of $200,000 were paid towards Promissory Note 1. An additional amount of $100,000 is to be paid 90 days following the completion of the reserve study~~ and mining plan, to be no later than April 9, 2012. Interest only payments on the $1,250,000 balance shall be made quarterly during the third and fourth years, starting July 9, 2012. Starting July 9, 2014, the principal balance of $1,250,000 shall be paid in eight equal quarterly installments, plus accrued interest on the unpaid principal balance to date of each principal payment. Should the Company make all necessary payments as indicated, up until April 9, 2012 and complete the reserve study and mining plan as anticipated in the Agreement, but default on the $1,250,000 balance, the coal property will be returned to JBM, ~~the~~Energy ~~Company will receive a 40% equity interest in JBM and~~ (the ~~$1,250,000~~“Coal ~~balance~~Buy ~~would be cancelled. Otherwise, if the Company defaults on Promissory Note 1, JBM at its option may terminate the Agreement~~ and~~/or~~ ~~initiate~~Sell ~~action for any other remedy under the law. At September 30, 2011, we owed $1,350,000 under Promissory Note 1. Under the~~ Agreement~~, JBM will be paid a royalty of $0~~”).~~25 per ton on all coal when and as mined from the coal property.~~

OnPursuant ~~March~~to ~~31, 2010,~~ the ~~Company,~~Coal ~~Future~~Buy ~~Gas Holdings, Ltd. (“Future Gas”)~~ and ~~Russell~~Sell ~~B. Pace~~Agreement, ~~Jr. (“Pace”) entered into an Assignment and Assumption of Mineral Agreement to transfer and assign to the Company all the rights and obligations of~~ Future Gas agreed to purchase all coal mineral rights ~~(except~~owned ~~coal)~~by ~~and~~JBM ~~oil~~Energy ~~and~~in ~~gas~~certain ~~rights~~real ~~owned~~property bylocated ~~Pace~~in ~~under~~Judith aBasin ~~Mineral~~County, ~~Buy~~Montana, ~~and~~as ~~Sell~~described ~~Agreement~~in ~~dated~~the ~~February~~quit 4,claim ~~2010.~~deed ~~Pursuant~~attached to the ~~Mineral~~Coal Buy and Sell Agreement, ~~the~~for ~~Company~~a ~~issued~~purchase price of $1,~~000~~950,000, ~~shares~~with ofJBM ~~its~~Energy ~~common~~retaining ~~stock~~a ~~valued~~royalty atinterest ~~$50,000~~of Twenty–Five Cents ($0.0525) per ~~share)~~ton on all coal when and ~~signed~~as amined 5%from ~~promissory~~the ~~note~~coal ~~with~~property. aThe ~~face~~purchase ~~value~~price of $1,950,000 ~~(“Promissory~~was ~~Note~~to ~~2”),~~be ~~secured~~paid by ~~the~~Future ~~mineral~~Gas ~~rights~~to ~~transferred.~~JBM OnEnergy ~~October~~on 9,the ~~2010~~following terms and ~~April~~schedules: 9,Fifty ~~2011~~Thousand ~~additional~~U.S. ~~cash~~Dollars ~~payments of~~ ($~~200~~50,000) ~~were~~upon ~~paid~~execution ~~towards~~of ~~Promissory~~the ~~Note~~Coal 2.Buy ~~Additional~~and ~~amounts~~Sell ofAgreement ~~$100,000~~ and ~~$200,000~~One ~~are~~Hundred toFifty beThousand ~~paid~~U.S. 90Dollars ~~days and 180 days~~($150,000) ~~respectively,~~on ~~following~~ the ~~completion~~closing date of the ~~Reserve~~Coal ~~Study~~Buy and ~~Mining~~Sell ~~Plan,~~Agreement. toThe beremaining nobalance ~~later~~of ~~than~~One ~~April~~Million 9,Seven ~~2012.~~Hundred ~~Interest~~Fifty ~~only~~Thousand ~~payments~~U.S. onDollars ~~the~~ ($1,~~250~~750,000) ~~balance~~was ~~shall~~to be ~~made~~paid ~~quarterly~~by ~~during~~Future ~~the~~Gas ~~third~~executing and ~~fourth~~delivering ~~years,~~to ~~starting~~JBM ~~July~~on 9,the ~~2012.~~closing ~~Starting,~~date ~~July~~of ~~9, 2014,~~ the ~~principal~~Coal ~~balance~~Buy ofand $1Sell Agreement,~~250,000~~ ~~shall~~a benegotiable ~~paid~~promissory innote ~~eight~~payable ~~equal~~to ~~quarterly installments~~JBM, ~~plus~~bearing ~~accrued~~ interest onat the ~~unpaid~~rate ~~principal~~of ~~balance~~five topercent ~~date~~(5%) ofper ~~each principal payment~~annum. Payments Ifunder the ~~Company~~Coal ~~defaults on Promissory Note 2, Pace at his option may terminate the Mineral~~ Buy and Sell Agreement and~~/or~~ ~~initiate~~the ~~action~~promissory ~~for~~note ~~any~~were ~~other~~to ~~remedy~~be ~~under~~secured ~~the~~by ~~law.~~a Atmortgage ~~September~~on ~~30, 2011,~~ the ~~Company~~coal ~~owed~~property ~~$1,550,000~~and ~~under Promissory Note 2. Under~~ the ~~Mineral~~other ~~Buy~~mineral ~~Sell~~property ~~Agreement,~~being ~~Pace~~conveyed isby ~~due~~JBM aEnergy ~~royalty equal~~ to ~~20%~~Future ofGas ~~all~~at ~~royalties~~closing. Pursuant ~~and~~to ~~other payments received by~~ the ~~Company~~Assignment asand aAssumption ~~result~~ of ~~any~~Coal ~~lease~~Agreement, ofon ~~the~~April ~~mineral~~9, ~~property~~2010, ~~conveyed~~we ~~and~~executed ~~20%~~a ofpromissory ~~all~~note ~~net~~in ~~cash~~favor ~~proceeds~~of ~~and/or~~JBM ~~other~~Energy ~~consideration~~on ~~received by~~ the ~~Company~~same ~~from~~terms ~~the~~described ~~sale~~above ~~or disposal of~~ (the ~~mineral,~~“JBM ~~oil, and gas property~~Note”).

~~Furthermore~~On March 26, 2012, we entered into an Amended and Restated Coal Buy Sell Agreement (the “Coal Amendment”), by and between the Company ~~issued~~and 1JBM Energy,~~000~~ amending and restating the terms of the Coal Buy and Sell Agreement. The Coal Amendment extended the date upon which we must complete a reserve study and mine feasibility study from April 9,~~000~~ ~~shares~~2012 to April 9, 2013. In connection with the Coal Amendment, we also entered into an amended and restated JBM Note as of ~~its~~March ~~common~~26, ~~stock~~2012, ~~valued~~with ata current principal balance of $501,350,000, ~~($0.05~~an interest rate of 5% per ~~share)~~annum. This tonote ~~Future~~was ~~Gas~~replaced ~~for~~by ~~the~~a ~~assignment~~second amended and restated promissory note in favor of ~~such~~JBM ~~agreements~~Energy on December 11, 2012 (the “Amended JBM Note”). The current principal balance under the Amended JBM Note is $ 1,350,000, and we are required to make the following additional payments:

~~On April 9~~(a) $100,000 ~~2010,~~upon the ~~Company~~earlier ~~agreed~~of to(i) ~~issue~~sixty ~~300,000~~(60) ~~common~~days ~~shares~~following ofthe ~~common~~effective ~~stock~~date ~~valued~~of atthe ~~$15,000~~registration ~~($0.05~~statement ~~per~~on ~~share),~~Form toS-1 ~~the~~which ~~parties~~we ~~involved~~are infiling ~~the~~under ~~Assignment~~that ~~and~~certain ~~the~~Amended ~~Assignment~~ and ~~Assumption~~Restated ofStandby ~~Mineral~~Equity Distribution Agreement, dated as ~~introduction~~of June 30, 2012, by and ~~assignment~~between ~~compensation.~~the ~~The~~Company ~~shares~~and ~~were~~YA ~~issued~~Global onMaster ~~August~~SPV 27Ltd. (the “Amended SEDA”) and (ii) March 9, ~~2010~~2013.

~~On August 3, 2010, the Company retained Weir International, Inc.~~ (~~“Weir”~~b) Commencing toon ~~prepare~~April an exploration drilling program for the PACE Coal Project and to supervise its execution. Weir is an internationally recognized consulting firm that has provided mining, geology, and energy consulting services to the US and international mining and energy industries for over 75 years. On September 9, ~~2010~~2013, the ~~Company~~remaining ~~approved~~principal anbalance ~~exploration drilling program consisting~~ of ~~61 drilling locations and a total of 52~~$1,~~740 feet in three phases. On July 29~~250,000 ~~2011,~~shall ~~the~~be ~~Coal~~paid ~~and~~in ~~Uranium~~twelve ~~Program~~monthly ofinstallments ~~the Montana Department~~ of Environmental Quality (“Montana DEQ”) approved the Prospecting Permit Application No. X2011335 which authorizes the Company to carry out the first phase of its planned exploration drilling program. On August 16$100,000 ~~2011~~each, ~~the~~plus ~~Company~~accrued ~~started~~interest ~~drilling~~on ~~operations for Phase I of~~ the ~~exploration~~unpaid ~~drilling~~principal ~~program. As of December 29~~balance, ~~2011,~~with the ~~Company~~final ~~had~~principal ~~completed~~payment ~~a total~~ of 14$50,~~076~~000 ~~feet~~due ofon ~~drilling~~April ~~for~~9, ~~all three phases of its exploration drilling program~~2014. ~~All drill locations corresponding to Phases I and II had been fully completed while one drill location corresponding to Phase III has been completed during 2011.~~

12(c) Interest payments are due on each of March 9, 2013 and April 9, 2013.

~~Due~~We tohave ~~adverse weather conditions in Central Montana,~~ the ~~Company~~right ~~decided~~ to ~~halt~~prepay ~~drilling~~all ~~operations~~or inany ~~December~~part ~~2011.~~of ~~The~~the ~~decision~~principal ~~took~~balance ~~into~~at ~~consideration~~any ~~the~~time ~~decreasing~~without ~~returns~~penalty. Upon inrepayment ~~productivity~~of ~~and~~the ~~increasing~~Amended ~~operating~~JBM ~~costs~~Note, ~~that~~a ~~prevail~~quit ~~when~~claim ~~drilling~~deed ~~activities~~will ~~occur~~be ~~with~~delivered ~~cold~~to ~~weather~~us ~~and~~conveying ~~snow on~~ the ~~ground.~~coal ~~The~~mineral ~~Company~~rights ~~plans~~which toare ~~resume~~the ~~drilling~~subject ~~activities for Phase III~~ of the ~~exploration~~Coal ~~drilling program in the spring of 2012~~Amendment.

We rent an office in Denver of approximately 131 square feet. We have a one-year lease ending July 31, 2012, on the property for $996 per month and it is located at 16 Market Square Centre, 1400 16th Street, Ste 400, Denver CO 80202.15

Ownership of Mineral Rights

On March 31, 2010, the Company, Mr. Russell Pace, Jr. (“Pace”) and Future Gas entered into an Assignment and Assumption of Mineral Agreement (the “Assignment and Assumption of Mineral Agreement”) to transfer and assign all of Future Gas’ rights and obligations under the Mineral Buy and Sell Agreement, dated February 4, 2010, by and between Pace and Future Gas (the “Mineral Buy and Sell Agreement”).

Pursuant to the Mineral Buy and Sell Agreement, Pace sold to Future Gas all of the oil, gas, iron ore and all other minerals of whatever nature, except coal, located in Judith Basin County, Montana, as described in the quit claim deed attached to the Mineral Buy and Sell Agreement, for a purchase price of $1,950,000, with Pace retaining a royalty interest equal to twenty percent (20%) of all royalties or other payments received by Future Gas as a result of any lease of the mineral property being conveyed to Future Gas in the Mineral Buy and Sell Agreement, or any portion thereof, and twenty percent (20%) of all net cash proceeds and/or other considerations received by Future Gas from the sale or other disposition of the mineral property being conveyed to Future Gas in the Mineral Buy and Sell Agreement or any portion thereof. The purchase price of $1,950,000 was to be paid by Future Gas executing and delivering to Pace on the closing date of the Mineral Buy and Sell Agreement a negotiable promissory note payable to Pace, bearing interest at the rate of five percent (5%) per annum. Payments under the Mineral Buy and Sell Agreement and the promissory note were to be secured by a mortgage on the coal property and the other mineral property being conveyed by Pace. Pursuant to the Assignment and Assumption of Mineral Agreement, on April 9, 2010, we executed a promissory note in favor of Pace on the same terms described above (the “Pace Note”).

On March 26, 2012, we entered into an Amended and Restated Mineral Buy Sell Agreement (the “Mineral Amendment”), by and between the Company and Pace, amending and restating the terms of the Mineral Buy and Sell Agreement. The Mineral Amendment extended the date upon which we must complete a reserve study and mine feasibility study from April 9, 2012 to April 9, 2013. In connection with the Mineral Amendment, we also entered into an amended and restated Pace Note as of March 26, 2012, with a current principal balance of $1,550,000 and an interest rate of 5% per annum. This promissory note was replaced by a second amended and restated promissory note in favor of Pace on December 11, 2012 (the “Amended Pace Note”). The current principal balance under the Amended Pace Note is $1,550,000, and we are required to make the following additional payments:

(a) $100,000 upon the earlier of (i) sixty (60) days following the effective date of the registration statement on Form S-1 which we are filing under the Amended SEDA and (ii) March 9, 2013.

(b) $200,000 upon the earlier of (i) ninety (90) days following the effective date of the registration statement on Form S-1 and (ii) March 9, 2013.

(c) Commencing on April 9, 2013, the remaining principal balance of $1,250,000 shall be paid in twelve monthly installments of $100,000 each, plus accrued interest on the unpaid principal balance, with the final principal payment of $50,000 due on April 9, 2014.

(d) Interest payments are due on each of March 9, 2013 and April 9, 2013.

We have the right to prepay all or any part of the principal balance at any time without penalty.

Upon repayment of the Amended Pace Note, a quit claim deed will be delivered to us conveying the mineral rights which are the subject of the Mineral Amendment.

Location and Access

The PACE Coal property, which comprises our sole coal and mineral rights, is located approximately 60 miles east of Great Falls, Montana and covers approximately 29,000 acres. The property is located in Townships 14, 15, 16 and 17 North, and in Ranges 11, 12, 13, 14 and 15 East. The property is situated to the southeast and east of the town of Stanford and surrounding the town of Windham, Montana. The property is situated in the Great Falls–Lewistown coalfield, long recognized by the Montana Bureau of Mines and Geology as having bituminous coal. The surface is owned by a small number of ranchers, some non–resident, who raise cattle, hay and some grain crops.

A main line of the Burlington Northern Santa Fe (BNSF) railroad runs through the property, as well as a major East–West highway, Route 87. Two electric transmission lines, a 230 KV and a 115 KV line, run through the south and northwest ends of the property, providing power for any future development and operating phases. Existing infrastructure includes a large interstate natural gas pipeline running east–west along Interstate 90, approximately 150 miles south of the property; Cenex crude oil pipeline running through the property to a refinery at Laurel, Montana; Conoco crude oil pipeline crossing the property; and other natural gas pipelines running approximately 140 and 60 miles from the property.

Below is a map showing the location of the property.

History of Property

A wholly–owned subsidiary of the Great Northern Railroad formerly operated the Lehigh Mine on a section of the Company’s property southwest of Windham, Montana between July 1915 and February 1921. While the operation was ultimately closed on account of the “general depression of business,” the mine did produce over 1.3 million tons of coal during its lifetime, and ended its run with a record of over 306,000 tons produced in its last year of operation, according to the Cottonwood Coal Company report located in Great Northern Railway files.

Thirty stratigraphic test wells were drilled by Mobil Oil Corporation around 1979 on the property to estimate the magnitude of the coal deposits. Cores were taken in nine of these wells with proximate and ultimate analyses performed as well as some float analyses and washability studies. These studies show the coal to be high volatile bituminous B. The test wells found coal thickness up to 15 feet with an average of about 8.6 feet.

Pace and JBM Energy acquired the PACE Coal property in October 1969 from Griffin Coal Mines Company by quit claim deed. We acquired our interests in the property in 2010 as described above. In August 2010, we retained Weir to prepare an exploration drilling program and to supervise its execution to evaluate the coal reserve potential on the property. The program’s aim is to place a significant portion of the coal holdings in the proven and probable reserve classification, with an ultimate goal of establishing enough resources to support a greater than 20-year mine life.

To date, the PACE Coal property in Judith Basin County, Montana is without known reserves and the proposed program is exploratory in nature.

Title Review

On November 21, 2008, Meadowlark Search, a land title search company based in East Helena, Montana, conducted a title search on all the coal and other mineral interests that were conveyed to Pace by quit claim deed dated March 1, 1965 and recorded on October 15, 1969 in Book 156, page 186, Judith Basin Clerk and Recorder’s Office by Giffen Coal Mines Company. Based on this search, Pace acquired title to 100% of all such coal and other mineral interests transferred, with the exception of 480 acres that may be owned by the federal government and 160.9 acres that may be owned by the State of Montana. Meadowlark Search did not attempt to resolve the identity of the correct owner of these conflicting interests. From the deed descriptions, Meadowlark Search calculated that Pace and JBM Energy have 28,591.67 acres of coal and other mineral interest rights, plus an additional 320 acres of all minerals except coal, subject to the exception of a total of 640.9 acres that may be owned by the federal government and the State of Montana.

Drilling Activities

The Company retained Weir International, Inc. (“Weir”) in 2010 to design and supervise our exploration drilling program in Judith Basin County. In addition, we retained Mission Engineering, Inc. to assist us with the prospecting permit application process with the Montana Department of Environmental Quality. In September 2010, Weir delivered the scope of work of the exploration drilling program to the Company. This exploration program was designed to determine the presence of mineable coal seams on the PACE Coal property and provide data that can be used to estimate the quantity and quality of potentially mineable reserves and resources. The exploration program was designed to provide information relative to coal seam thickness, depth of cover, expected top and bottom conditions and coal quality.

The exploration drilling program was planned in three phases. Phase I originally consisted of drilling nine holes, on wide centers, to confirm the potential of mineable coal in the designated mine block. All of the drill holes would be cored to obtain quality information for the coal seam. Phase I also included one drilling hole to evaluate the potential for coalbed methane. When actual drilling of Phase I occurred in 2011, nine drill locations were completed while five holes were cored. Our technical team decided to postpone for Phase III the hole to evaluate the potential for coalbed methane. Phase II originally consisted of drilling eleven holes that, when combined with the Phase I holes, would place a large percentage of the coal holdings in the designated mine block in the proven and probable reserve classifications. Seven of the 11 drill holes would be cored to increase the reliability of the coal quality information for the designated mine block. When actual drilling of Phase II occurred in 2011, eight drill locations were completed while three holes were cored. Phase III originally consists of drilling forty holes, 35 of which are required to place all of the reserves in the designated mine block in the proven and probable reserve classifications. Five holes would be drilled on Pace Coal-controlled properties outside of the designated mine block to determine coal reserve potential. Eight of the drill holes in Phase III within the designated mine block would be cored. Those eight core holes, combined with the core holes from Phase I and Phase II, would provide coal quality information on approximately one-mile spacing, within the designated mine block area. One drill hole outside the designated mine block would be cored to determine the coal quality. To date, only one drill hole of Phase III has been completed and cored. According to the original scope of work prepared by Weir, the results from the Phase I and Phase II drilling would be evaluated prior to conducting the Phase III drilling. It may be necessary to revise the location of some drill holes in Phase III, based on the results of the Phase I and Phase II drilling. The results from Phase I and Phase II would be utilized to determine the final number and location of the drill holes required for Phase III. In April 2012, our technical team at Weir designated 14 Phase III drill holes as priority drill holes. These priority drill holes are expected to further define mineralization, provide additional coal quality data, and provide information to determine if any remaining Phase III drill holes will require coring.

Preliminary Results

Preliminary laboratory results for five core samples corresponding to Phase I of the drilling program showed an energy content with a range of 11,462 and 13,081 Btu/lb measured on a moisture and ash free basis (“MAF Btu”). Sulfur content ranged from 2.0% to 3.7% on a dry basis while ash content ranged from 30.6% to 51.9% on a dry basis. Preliminary laboratory results for three core samples corresponding to Phase II of the drilling program showed an energy content with a range of 12,210 to 13,056 MAF Btu. Sulfur content ranged from 3.2% to 4.9% on a dry basis while ash content ranged from 30.2% to 43.9% on a dry basis. Preliminary laboratory results for one drill location corresponding to Phase III of the drilling program showed an energy content of 12,530 MAF Btu. Sulfur content and ash content showed an average of 3.7% and 35.4% on a dry basis, respectively. We instructed Standard Laboratories, Inc. in Casper, Wyoming to prepare a washability study, including float/sink analysis to be performed on the coal cores, according to ASTM standards. The washability study will determine the amount of ash and sulfur content that could be reduced from the coal seam in order to improve its quality. The following table summarizes the laboratory results for the core samples from nine drill locations analyzed to date.

Drill Hole	Thickness (feet)	Dry Basis			MAF Btu/lb
Drill Hole	Thickness (feet)	Ash (%)	Sulfur (%)	Btu/lb	MAF Btu/lb
PH1–1C	4.60	46.62	2.25	6,432	11,462
PH1–5C	10.20	30.55	3.74	9,093	13,081
PH1–6C	14.50	37.86	3.59	7,903	12,602
PH1–8C	1.95	43.92	2.01	7,027	12,530
PH1–9C	2.30	51.92	3.36	6,044	12,571
PH2–6C (1)	6.40	43.93	3.15	6,846	12,210
PH2–7C	12.50	40.92	3.43	7,439	12,214
PH2–8C (2)	4.10	30.18	4.87	9,116	13,056
PH3–21C	10.90	35.40	3.72	8,278	12,530

(1) Thickness of the sample does not represent full seam thickness based on the geophysical log. There was an approximate 57.6% core recovery.

(2) Thickness of the sample does not represent full seam thickness based on the geophysical log. There was an approximate 43.6% core recovery.

Preliminary results from the first two phases of the exploration drilling program were encouraging in terms of coal thickness and high energy content; however, there can be no assurance that an economic coal and/or hydrocarbon reserve exists on the PACE Coal Project or on any other exploration projects we could eventually acquire. Even if we complete our proposed exploration programs and are successful in identifying the presence of coal and/or hydrocarbons, we will have to spend substantial funds on further drilling, engineering studies, environmental and mine feasibility studies before we will know if we have a commercially viable coal, oil and gas deposit or reserve.

Quality Assurance and Quality Control Protocols

To assure the adequacy of the sample collection, sample preparation and the analytical procedures used to develop our analytical results to date, we retained an experienced field geologist who was present during the first two phases of the drilling program. In addition to the general supervision of the project, the responsibility of the field geologist included, but was not limited to, the following: liaison among the Company, drilling contractors, geophysical logging contractor and contract coal quality laboratory personnel; log all drill cuttings and core samples; prepare core samples for laboratory analysis and transport samples from the field to a central location for shipment to the laboratory; maintain comprehensive records of drill holes, core logs, geophysical logs and daily activity; collect coal core from the designated hole for methane desorption testing and record results of the desorption tests; verify that all drill holes have been properly plugged and the drill sites reclaimed.

All recovered cores were logged by the field geologist and digital photographs taken of the cores, with graphical scales included in the photographs. The coal samples were placed in sealed boxes to maintain the integrity of the samples. Each sample was clearly identified, noting the depth of the top and bottom of the samples, along with the sample number. The samples were placed in core boxes, in stratigraphic order, with the boxes clearly marked on the outside to identify the intervals that were contained in the boxes.

All drill holes were geophysically logged by a reputable logging company, Century Wireline Services, familiar with logging coal, utilizing a standard coal suite of logs (i.e., natural gamma, gamma–gamma density, resistivity and caliper). This suite of logs permitted the determination of the depth and thickness of coal seams present in each drill hole. The geophysical logs from the rotary pilot holes were used to determine the intervals to be cored. Geophysical logs are invaluable for accurately determining the depth of the coal seam, coal seam thickness and presence of parting material within the coal seams. Also, the coal seam thickness from the geophysical log can be compared to the measured coal seam from the core holes to determine if core was lost. Copies of the logs were received in paper and digital format.

The commercial laboratory recommended and selected to analyze the samples was Standard Laboratories, Inc. of Casper, Wyoming, which is familiar with the analysis of coal seams in accordance with ASTM standards. A full proximate analysis and sample weight was performed on the coal seam as a raw sample. Partings that were encountered within the coal seam were included with the seam sample. A float/sink analysis has also been performed on the coal seam at a 1.70 specific gravity, according to ASTM standards.

Other Property

In addition to the coal and mineral rights described above, we maintain our corporate offices at 16 Market Square Center, 1400 16th Street Suite 400, Denver, CO 80202. The Company pays a monthly fee of $299 for the use of a virtual office at this address.

ITEM 3.LEGAL PROCEEDINGS.

We ~~may~~are ~~become~~not ~~involved~~a inparty ~~various~~to ~~routine~~any pending legal proceedings ~~incidental~~and no such proceedings are known to ~~our~~be ~~business~~contemplated. ~~However~~No director, toofficer, ~~our~~or ~~knowledge~~affiliate as of the ~~date~~issuer and no owner of ~~this~~record ~~report,~~or ~~there~~beneficially ~~are~~of nomore ~~material~~than ~~pending~~5% ~~legal~~of ~~proceedings~~our toCommon ~~which~~Stock, weor ~~are~~any security holder is a party oradverse to ~~which~~the ~~any~~Company ofor ~~our~~has ~~property~~a ismaterial ~~subject~~interest adverse to the Company.

ITEM 4.~~(REMOVED~~MINE ~~AND~~SAFETY ~~RESERVED)~~DISCLOSURES

13Not applicable.

PART II

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

Market Information

Our Common Stock is quoted on the OTC Bulletin Board under the symbol “AMPW.” Prior to that, it was quoted under the symbol “TGMP.”

Our common stock has traded infrequently on the OTC Bulletin Board, which limits our ability to locate accurate high and low bid prices for each quarter within the last two fiscal years. Therefore, the following table lists the quotations for the high and low bid prices as reported by a Quarterly Trade and Quote Summary Report of the OTC Bulletin Board since American Power Corporation changed their name and symbol from Teen Glow Makeup, Inc. The quotations reflect inter-dealer prices without retail mark-up, markdown, or commissions and may not represent actual transactions.

Period	Low	High	~~High~~
Quarter ended September 30, 2011	$0.245		$0.56
Quarter ended September 30, 2012	$0.053	$0.15
Quarter ended June 30, 2011	$0.36		$0.86
Quarter ended June 30, 2012	$0.081	$0.1449
Quarter ended March 31, 2011	$0.77		$2.14
Quarter ended March 31, 2012	$0.14	$0.20
Quarter ended December 31, 2010	$0.75		$1.45
Quarter ended December 31, 2011	$0.125	$0.37
Quarter ended September 30, 2010	$0.85		$1.25
Quarter ended September 30, 2011	$0.245	$0.56
The last reported sale price of our common stock on the OTC Bulletin Board was $0.14 per share on December 28, 2011.

The last reported sale price of our common stock on the OTC Bulletin Board was $0.064 per share on December 27, 2012.

Holders of Common Stock

As of December 2927, ~~2011~~2012, there were ~~seven~~nine holders of record of our common stock.

Dividends

We have never paid or declared any cash dividends on our common stock. We currently intend to retain any future earnings to finance the growth and development of our business and we do not expect to pay any cash dividends on our common stock in the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in current or future financing instruments, including the consent of debt holders, if applicable at such time, and other factors our board of directors deems relevant.

Securities Authorized for Issuance under Equity Compensation Plans

None.

Recent Sales of Unregistered Securities

All transactions have previously been disclosed.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the fiscal years ended September 30, ~~2011~~2012 or ~~2010~~2011.

Transfer Agent

Our transfer agent is Signature Stock Transfer, Inc. located at 2632 Coachlight Court, Plano, TX 75093.

ITEM 6.SELECTED FINANCIAL DATA.

Not applicable.

1421

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes to our financial statements included elsewhere in this report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under ITEM 1A. Risk Factors are elsewhere in this report.

~~Overview of the Company’s Business~~General

The Company was incorporated in the State of Nevada as a for-–profit company on August 7, 2007. Our primary business focus is to acquire, explore and develop coal, oil, and gas properties in the United States, with a particular focus on the Rocky Mountains region. We have acquired certain coal and ~~minerals~~mineral rights located in the Judith Basin County, Montana, collectively described as the “PACE Coal Project.” Our plan of operation is to explore the PACE Coal Project and acquire and explore new properties which we believe are prospective for coal and/or hydrocarbons.

OnPlan August 3, 2010, the Company retained Weir International, Inc. (“Weir”) to prepare an exploration drilling program for the PACE Coal Project and to supervise its execution. Weir is an internationally recognized consulting firm that has provided mining, geology, and energy consulting services to the US and international mining and energy industries for over 75 years. On September 9, 2010, the Company approved an exploration drilling program consisting of 61 drilling locations and a total of 52,740 feet in three phases. On July 29, 2011, the Coal and Uranium Program of the Montana Department of Environmental Quality (“Montana DEQ”) approved the Prospecting Permit Application No. X2011335 which authorizes the Company to carry out the first phase of its planned exploration drilling program. On August 16, 2011, the Company started drilling operations for Phase I of the exploration drilling program. As of December 29, 2011, the Company had completed a total of 14,076 feet of drilling for all three phases of its exploration drilling program. All drill locations corresponding to Phases I and II had been fully completed while one drill location corresponding to Phase III has been completed during 2011.Operation

~~Due~~On toAugust ~~adverse~~3, ~~weather conditions in Central Montana~~2010, ~~the~~we ~~Company~~retained ~~decided~~Weir to ~~halt~~prepare an exploration drilling ~~operations~~program infor ~~December~~the ~~2011.~~PACE ~~The~~Coal ~~decision~~Project ~~took~~and ~~into~~to ~~consideration~~supervise ~~the~~its ~~decreasing~~execution. ~~returns~~Weir inis ~~productivity~~an ~~and~~internationally ~~increasing~~recognized ~~operating~~consulting ~~costs~~firm that ~~prevail~~has ~~when~~provided ~~drilling~~mining, ~~activities~~geology ~~occur~~and ~~with~~energy ~~cold~~consulting ~~weather~~services to the US and ~~snow~~international onmining ~~the~~and ~~ground.~~energy ~~The~~industries ~~Company~~for ~~plans~~over to75 ~~resume~~years. ~~drilling~~In ~~activities~~September ~~for~~9, ~~Phase~~2010, ~~III~~we ofapproved ~~the~~an exploration drilling program inconsisting ~~the~~of ~~spring~~61 drilling locations and a total of ~~2012~~52,740 feet in three phases.

~~RESULTS~~In OF2011, ~~OPERATIONS~~the ~~FOR~~Company ~~THE~~received ~~YEARS~~the ~~ENDED~~Prospecting ~~SEPTEMBER~~Permit 30No. X2011335 which allowed it to carry out exploration activities on the project from July 29, 2011 to July 29, 2012. We applied for two amendments to the original exploration permit to obtain permits for Phase II and ~~2010~~Phase III drill holes. The permits were obtained on September 12, 2011 and October 25, 2011. The current Prospecting Permit ID: X2011335 (and the Notice of Intent Permit ID: N2011007), which was issued, and renewed, by the Montana DEQ per a letter dated April 24, 2012, affects only privately owned surface and private minerals. Because both the mineral and surface ownership are privately owned, the only governmental permit that is required for our current exploration activities is by the Montana DEQ, and no additional permits are required by the Bureau of Land Management (BLM) or U.S. Forest Service.

~~Revenues~~On August 16, 2011, we started drilling operations for Phase I of the exploration drilling program. As of December 29, 2011, we had completed a total of 14,076 feet of drilling and 18 drilling locations involving all three phases of our exploration drilling program. All drill locations corresponding to Phases I and II have been fully completed, while one drill location corresponding to Phase III has been completed. Due to adverse weather conditions in Central Montana, we decided to halt drilling operations in December 2011. The decision took into consideration the decreasing returns in productivity and increasing operating costs that prevail when drilling activities occur with cold weather and snow on the ground. We plan to resume drilling activities for Phase III of the exploration drilling program in the spring of 2013 after finding capable drilling contractors and securing adequate financing.

~~The~~We commissioned the preparation of a preliminary Mine Feasibility Study for the PACE Coal Project with the project data obtained during the 2011 drilling season and data from previous exploration work carried out by Mobil Oil Co. This preliminary study was completed by our engineering consultant Weir International, Inc. (“Weir”) in September 2012. Controlled property in the PACE Coal Project is comprised of acreage where the Company ~~has~~owns ~~yet~~the coal and mineral rights but not the surface rights. Uncontrolled property in the PACE Coal Project is comprised of acreage where the Company owns neither the coal and mineral rights nor the surface rights; thus, the uncontrolled property will have to ~~generate~~be ~~any~~successfully ~~revenues~~acquired by purchase or lease to develop the mine plan. The Mine Feasibility Study includes information on the geology and mineralization of the PACE Coal Project, a mine plan suitable to geology and production requirements and projections for production capacity, productivity, staffing levels, equipment and facilities, capital expenditures, operating costs and coal sales. According to the preliminary Mine Feasibility Study, 191.3 million tons of coal are expected to be produced over a 15-year mine life. At full production, the mine plan projects annual production of thermal coal at 7.9 million saleable tons (14.9 million ROM tons) per year, utilizing three continuous miner units and one longwall mining unit. Capital expenditures are estimated at approximately $402 million for future initial mine development and $730 million for sustaining capital over the 15-year mine plan. In addition, we estimate the cost of leasing uncontrolled coal properties to be $5.5 million plus royalties calculated as a percentage of actual production. The PACE Coal Project clean coal quality, based on the exploration data, is projected to be 11,750 Btu/lb and 2.28 percent sulfur (3.88 Lbs SO2/MBtu). The calorific value (Btu/lb) is among the highest in the major coal producing regions in the western United States. Upon completion of Phase III of our planned exploration drilling program, we expect to obtain a final reserve study setting forth the quantity and classification of proven and probable coal reserves and a valuation thereof and final mine feasibility study by the summer of 2013. These final studies will incorporate the drilling results of all three phases of the exploration program.

~~Year ended September 30, 2011 compared to the year ended September 30, 2010~~22

We RESULTS ~~had~~OF aOPERATIONS ~~net~~FOR ~~loss~~THE ofYEARS ~~$1,952,064~~ENDED ~~for~~SEPTEMBER ~~the year ended September~~ 30, ~~2011,~~2012 ~~which~~AND was $1,174,843 greater than the net loss of $777,221 for the year ended September 30, 2010. This change in our results over the two periods is primarily the result of an increase in office and general expenses, consulting management fees, exploration expenses and interest expenses to implement our business plan.2011

Results

The Company had no revenue in the fiscal years ended September 30, 2012 and 2011.

Expenses, including office and general, management fees, professional fees and exploration costs, were $1,142,642 in fiscal 2012, compared to $1,623,717 during the previous fiscal year. This decrease of $481,075 (30%) was primarily attributable to decrease in management fees of $565,667 (primarily attributable to the stock-based compensation of our officers), which was partially offset by an increase exploration costs of $7,716 (primarily attributable to the implementation of the PACE Coal Project), an increase in office and general expenses of $22,650, and an increase in professional fees of $54,226.

Other expenses, including interest expense and loss on settlement of debt, were $593,214 in fiscal 2012, compared to $328,347 during the previous fiscal year. The increase of $264,867 (81%) was primarily attributed to an increase in interest expense of $31,805 (primarily attributed to interest accretion of the debt discount on promissory notes) and a loss on the settlement of debt of $233,062 (primarily attributed deemed extinguishment of debt and the issuance of new debt due under the amended promissory notes entered into by the Company on March 26, 2012).

We experienced a net loss of $1,735,586 during fiscal 2012 as compared to a net loss of $1,952,064 during the previous fiscal year, a $216,208 (11%) decrease.

Liquidity and Capital Resources

Our ~~balance~~net ~~sheet~~loss asfor ofthe fiscal year ended September 30, ~~2011~~2012 was $1,735,586. During ~~reflects~~fiscal ~~current~~2012, ~~assets~~we experienced a decrease in cash of $~~647~~630,~~610~~280, which resulted a bank overdraft of $423 at September 30, 2012. At AsSeptember 30, 2012, we had ~~cash~~a inworking ~~the~~capital ~~amount~~deficit of $~~629~~1,~~857~~840,360, ~~and~~compared ato working capital deficit ~~in the amount~~ of $25,277 asat of September 30, 2011. The We$1,815,083 doincreased ~~not~~deficit ~~have~~in ~~sufficient~~ working capital tois ~~enable~~attributable usprimarily to ~~carry~~the ~~out~~$630,280 ~~our~~decrease ~~stated~~in ~~plan~~cash ofand ~~operation~~a ~~for~~$1,168,750 ~~the~~increase ~~next~~in ~~twelve~~current ~~months~~portion of promissory notes.

Working Capital

	At September 30, 2011			At September 30, 2010
	At September 30, 2012			At September 30, 2011
Current assets	$	~~647~~9,~~610~~020		$	~~545~~647,~~592~~610
Current liabilities		~~672~~1,~~887~~849,380			~~618~~672,~~728~~887
Working capital	$	(251,~~277~~840,360	)	$	(7325,~~136~~277	)

Operating Activities

Net cash flows used in operating activities were $~~690~~898,~~365~~048 and $~~197~~690,~~937~~365 for the years ended September 30, ~~2011~~2012 and ~~2010~~2011, respectively. Negative cash flows in both periods are primarily attributable to a net loss of $1,~~952~~738,~~064~~586 ($~~777~~1,~~221~~952,064: ~~2010~~2011) furthermore changed by depreciation and amortization of $1110,~~016~~976 ($311,~~371~~016: ~~2010~~2011), $~~692~~251,~~500~~336 ($~~160~~692,~~000~~500: ~~2010~~2011) in stock based compensation, $~~328~~326,~~287~~382 ($~~197~~328,~~374~~287: ~~2010~~2011) in accretion of debt discount, and $0233,602 ($~~237,807~~0: ~~2010~~2011) in loss recognized in extinguishment of debt. Net loss was further adjusted for ~~the $0~~ (~~$8,000: 2010~~increase) ~~gain~~decrease ~~on debt forgiveness, increase~~ in prepaid expense of $118,~~429~~733 ($6(11,~~324~~429): ~~2010~~2011), decrease in advances of $~~18,416~~0 (~~increase of~~ $18,416: ~~2010~~2011), and increase in accounts payable of $~~222~~7,~~909~~320 ($13222,~~472~~909:~~2010~~2011).

Investing Activities

Net cash flows used in investing activities were $~~100~~32,~~630~~232 and $~~386~~100,~~148~~630 for the years ended September 30, ~~2011~~2012 and ~~2010~~2011, respectively. Negative cash flows for the year ended September 30, ~~2011~~2012 was due to ~~the purchase of our website in the amount of $7,754 and~~ a reclamation bond in the amount of $9232,~~876~~232.

Financing Activities

Net cash flows provided by financing activities were $~~900~~300,~~000~~423 and $1900,~~104,790~~000 for the years ended September 30, ~~2011~~2012 and ~~2010~~2011, respectively. Positive cash flows for the year ended September 30, ~~2011~~2012 were due to proceeds from the sale of common stock in the amount of $1300,~~500,~~000 ~~and repayment on promissory note in the amount of $600,000~~. Positive cash flows for the year ended September 30, ~~2010~~2011 were due to proceeds from the sale of common stock in the amount of $~~900~~1,~~000~~500,000 ~~proceeds~~partially ~~from~~offset aby ~~loan in~~ the ~~amount~~repayment of ~~$200,000~~promissory ~~and~~notes ~~loans from related parties~~ in the amount of $4600,~~790~~000.

	Year Ended September 30,
	2011			2010
	2012			2011
Net Cash Used in Operating Activities	$	(~~690~~898,~~365~~048	)	$	(~~197~~690,~~937~~365	)
Net Cash Used in Investing Activities		(~~100~~32,~~630~~232	)		(~~386~~100,~~148~~630	)
Net Cash Provided by Financing Activities		~~900~~300,~~000~~423			1900,~~104,790~~000
Net Increase in Cash	$	~~109~~(629,~~005~~857	)	$	~~520~~109,~~705~~005

We have a Stock Issuance Agreement dated September 10, 2010 with Black Sands Holdings, Ltd., a Marshall Islands corporation (“Black Sands”), pursuant to which Black Sands has provided the Company with financing of in excess of $2.4 million in the past two years.

While we expect to use issuances of Common Stock pursuant to the SEDA once it is available and engage in further financings with Black Sands to obtain additional working capital, we will require additional funding to execute our business plan, including the continuation of the PACE Coal Project. Our plan is to obtain such additional resources by obtaining capital from management and significant shareholders sufficient to meet our minimal operating expenses and to seek additional equity and/or debt financing. However, we cannot provide assurances that we will be successful in accomplishing any of these plans. Our failure to secure additional funding to implement our business plan will significantly affect our ability to continue operations. We do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months.

Liquidity Outlook

We have substantial capital commitments over the next several years related to our interests in the PACE Coal property. Pursuant to the Coal Amendment and the related Amended JBM Note, we are obligated to make payments to JBM Energy of (A) $100,000 upon the earlier of (i) sixty (60) days following the effective date of the registration statement on Form S-1 to be filed under the Amended SEDA and (ii) March 9, 2013 and (B) monthly payments of $100,000 plus accrued interest commencing on April 9, 2013. Pursuant to the Mineral Amendment and the Amended Pace Note, we are obligated to make payments to Pace of (A) $100,000 upon the earlier of (i) sixty (60) days following the effective date of the registration statement filed under the Amended SEDA and (ii) March 9, 2013, (B) $200,000 upon the earlier of (i) ninety (90) days following the effective date of the registration statement and (ii) March 9, 2013 and (C) monthly payments of $100,000 plus accrued interest commencing on April 9, 2013. Interest began to accrue under both the JBM Note and the Pace Note on April 9, 2012, and interest payments began on July 9, 2012.

Payment under the Amended JBM Note and the Amended Pace Note are expected to equal approximately $2.2 million in 2013. Further, we expect to use cash of $900,000 for office and general expenses, management fees, professional fees and exploration costs in 2013. We plan to meet these obligations by utilizing proceeds from issuances under the SEDA and other financing sources, as available. However, there is no assurance that additional financing with be available at all or on terms acceptable to us.

Our failure to secure additional funding to implement our business plan will significantly affect our PACE Coal Project and our ability to continue operations. We do not have sufficient working capital to meet our day to day obligations or to enable us to carry out our stated plan of operation for the next twelve months. If we fail to make the required payments under the Amended JBM Note or the Amended Pace Note, we may forfeit our rights with respect to the PACE Coal Property. Further, if we cannot obtain additional funding in the near term, we may be forced to cease operations and liquidate.

Off-Balance Sheet Arrangements

At September 30, ~~2011~~2012, we had no existing off-balance sheet arrangements, as defined under SEC rules that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Our financial statements and notes thereto, and other information required by this Item 8 are included in this report beginning on page F-1.

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

None.

ITEM 9A.CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time periods. Our Chief Executive Officer and our Chief Financial Officer (collectively, the “Certifying Officers”) are responsible for maintaining our disclosure controls and procedures. The controls and procedures established by us are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

1624

To evaluate the effectiveness of our internal controls over financial reporting, we have adopted the framework prescribed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). We believe that this framework will assist in the provision of reasonable assurance of the effectiveness and efficiency of operations, the reliability of financial reporting, and compliance with applicable laws and regulations. In adopting the COSO framework, we maintain a control environment, perform risk assessments, carry out control activities, emphasize quality information and effective communication, and perform monitoring. In the maintenance of a control environment, we are committed to integrity and ethical values as well as to competence. We strive to assign authority and responsibility in a manner that supports our internal controls, and we also maintain human resources policies and procedures designed to support our internal controls. Our risk assessments are designed to ensure the achievement of company-wide and process-level objectives as well as to identify and analyze risks while managing change. We believe that all of these components together form a foundation for sound internal control through directed leadership, shared values and a culture that emphasizes accountability for control.

As of the end of the period covered by this report, the Certifying Officers evaluated the effectiveness of our disclosure controls and procedures. Based on the evaluation, the Certifying Officers concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure. The Certifying Officers have also concluded, based on our evaluation of our controls and procedures that as of September 30, ~~2011~~2012, our internal controls over financial reporting are effective and provide a reasonable assurance of achieving their objective.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements under all potential conditions. Therefore, effective internal control over financial reporting provides only reasonable, and not absolute, assurance that a restatement of our financial statements would be prevented or detected.

ITEM 9B.OTHER INFORMATION.

None.

PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following table sets forth certain information regarding our current directors and executive officers. Our directors and executive officers serve one-year terms.

Name	Age		Position	Date Appointed
Johannes Petersen		3940	CFO, Secretary, and Director	November 20, 2009~~, Realigned August 1, 2010~~
Alvaro Valencia		3839	President, CEO, and Director	August 1, 2010

Biographies

Alvaro Valencia

Mr. Valencia has been an officer and director of the Company since August 1, 2010. Mr. Valencia holds a BSc in Economics from Universidad del Pacifico (Peru) and an MA degree in Economics from Syracuse University in New York. He brings to the Company his experience in investment banking and corporate finance, with an emphasis in the mining and infrastructure sectors. Mr. Valencia has held positions of increasing seniority in New York, Washington D.C., and Latin America. He has worked on major corporate and government mining-–related projects, including working in association with Credit Suisse on the privatization of two international mining units in the mid ~~1990’s~~1990s.

Mr. Valencia formerly worked for the investment banking division of Macroconsult S.A. (from May 2007- to December 2010) and Europa Partners Latin America (formerly known as StandSure Corporate Advisors S.A.C.) in Lima, Peru (from September 2006- to April 2007). He formerly worked in the United States for the following: CNY Works, Inc. (2004-–2006), Inter-–American Development Bank (2002), BBVA Securities Inc. (2000-–2001) and Credit Lyonnais Securities Asia (1999).

In determining Mr. Valencia’s qualifications to serve on our board of directors, the board considered, among other things, his experience and expertise in the mining and finance industries.

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Johannes Petersen

Mr. Petersen has been an officer in the Company since November 20, 2009. Mr. Petersen holds a BSc in Economics from Universidad del Pacifico (Peru) and an MBA degree from the London Business School (UK). He brings to the Company experience gained from multiple managerial and directorship positions within diverse private and public companies. Since completing his business school studies, Mr. Petersen gained business development and business planning experience with an emphasis in the resources industry. He has worked in business planning and development for natural resource projects and has also covered several functions within the financial services industry, ranging from fixed income to currency trading.

Mr. Petersen ~~currently~~formerly ~~sits~~served as CEO and sat on the board of directors of Gold American Mining Corp. from Feb 2010 to Oct 2012 a U.S. public company, currently quoted on the OTC Bulletin Board. Mr. Petersen formerly ~~worked~~served as CEO for Dragon Gold Resources Inc. (from July 2004- to May 2007) and as CFO for Century Petroleum Corp. (from May 2006- to December 2009), U.S. companies previously listed on the OTC Bulletin Board. He also ~~worked~~served as CFO for American Sierra Gold Corp (from October 2009- to September 2010), a U.S. company listed on the OTC Bulletin Board. He also sat on the board of Reflection Oil & Gas Partners Ltd (2005-–2010), and Hainan Mining Corporation (2005-–2011), private UK companies of which he was a founder. He formerly worked in Lima, Peru for the following: Peru Scan Trading SAC, Credibolsa SAB, Banco de Credito del Peru and CONASEV (Peruvian securities regulation agency equivalent to the SEC).

In determining Mr. Petersen’s qualifications to serve on our board of directors, the board considered, among other things, his experience in the mining industry and extensive managerial background.

Legal Proceedings

The Company is not aware of any legal proceedings in which any Director, nominee, officer or affiliate of the Company, any owner of record or beneficially of more than five percent of any class of voting securities of the Company, or any associate of any such Director, nominee, officer, affiliate of the Company, or security holder is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

Audit Committee

The Company does not have a separately designated standing audit committee. Pursuant to Section 3(a)(58)(B) of the Exchange Act, the entire Board of Directors acts as an audit committee for the purpose of overseeing the accounting and financial reporting processes, and audits of the financial statements of the Company. The Commission recently adopted new regulations relating to audit committee composition and functions, including disclosure requirements relating to the presence of an “audit committee financial expert” serving on its audit committee. In connection with these new requirements, the Company’s Board of Directors examined the Commission’s definition of “audit committee financial expert” and concluded that the Company does not currently have a person that qualifies as such an expert. The Company has had minimal operations for the past two (2) years. Presently, there are only two directors serving on the Company’s Board, and the Company is not in a position at this time to attract, retain, and compensate additional directors in order to acquire a director who qualifies as an “audit committee financial expert.” While our current directors do not meet the qualifications of an “audit committee financial expert”, the Company’s directors, by virtue of his past employment experience, has considerable knowledge of financial statements, finance, and accounting, and has significant employment experience involving financial oversight responsibilities. Accordingly, the Company believes that its current directors capably fulfill the duties and responsibilities of an audit committee in the absence of such an expert.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors, and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based upon a review of the copies of such forms furnished to us and written representations from our executive officers and directors, we believe that as of the date of this report they were all current in their 16(a) reports.

Board of Directors

Our board of directors currently consists of two members, Mr. Alvaro Valencia and Mr. Johannes Petersen. Our directors serve one-year terms.

Committees of the Board of Directors

None.

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Code of Ethics

We have not adopted a Code of Business Conduct and Ethics at this time. Presently, there are only two officers of the Company, each of whom is a director. We do not believe it necessary or in the Company’s best interests to adopt a code of ethics to govern the actions of two officers who also serve on the Company’s board of directors.

Limitation of Liability of Directors

Pursuant to the Nevada Revised Statutes, our Articles of Incorporation exclude personal liability for our directors for monetary damages based upon any violation of their fiduciary duties as directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or any transaction from which a director receives an improper personal benefit. This exclusion of liability does not limit any right which a director may have to be indemnified and does not affect any director’s liability under federal or applicable state securities laws. We have agreed to indemnify our directors against expenses, judgments and amounts paid in settlement in connection with any claim against a director if he acted in good faith and in a manner he believed to be in our best interests.

Insofar as indemnification by us for liabilities arising under the Securities Act may be permitted to our directors, officers, or persons controlling the company pursuant to provisions of our Articles of Incorporation and Bylaws, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification by such director, officer, or controlling person of us in the successful defense of any action, suit, or proceeding is asserted by such director, officer, or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

ITEM 11.EXECUTIVE COMPENSATION.

The following table sets forth summary compensation information for the fiscal years ended September 30, ~~2011~~2012 and ~~2010~~2011 for our officers and directors. We did not have any other executive officers or directors as of the end of fiscal ~~2011~~2012.

SUMMARY COMPENSATION TABLE
Name and principal position	Year	~~Salary ($)~~	~~Bonus~~Salary ($)	~~Stock Awards ($)(1)~~	~~Option Awards ($)~~	~~Non-Equity Incentive Plan Compensation ($)~~	~~Nonqualified~~Bonus ~~Deferred Compensation Earnings~~ ($)	~~All Other Compensation ($)~~	~~Total ($)~~	Stock Awards ($)(1)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Johannes Petersen Officer	~~2010~~2011	~~$30,000(2)~~	0$	060,000	0(2)	0	0	0	~~$30,000(2)~~		0		0		0		0		0	$	60,000	(2)
	2011	$60,000(2)	0	0	0	0	0	0	$60,000(2)
	2012		$	43,000	(2)		$	5,000			0		0		0		0		0	$	48,000	(2)
Alvaro Valencia Officer	~~2010~~2011	~~$8,333~~	0$	~~$160~~50,000	0	0	0	0	~~$168,333~~	$	692,500		0		0		0		0	$	742,500
	2011	$50,000	0	$692,500	0	0	0	0	$742,500
	2012		$	50,000			$	5,000		$	133,833		0		0		0		0	$	188,333

_______________________

(1)	Calculated in accordance with FASB ASC Topic 718.

(2) Mr. Petersen ~~earns~~earned $5,000 per month based on a consulting arrangement with the Company for providing services as a financial officer of the Company from October 1, 2010 to May 31, 2012. Mr. Petersen earned $3,000 for the period from July 1, 2012 to September 30, 2012.

The Company and Alvaro Valencia entered into an Independent Consulting Agreement effective (“Consulting Agreement”) on August 1, 2010. According to the terms of the Consulting Agreement, Mr. Valencia will serve as President, Chief Executive Officer, and Director of the Company for a period of four (4) years beginning August 1, 2010. The Consulting Agreement is renewable upon the mutual consent of the parties on or before thirty (30) days prior to the end date of the Consulting Agreement. Any such renewal shall be for a period of twelve (12) months. The Company shall pay Mr. Valencia $50,000 per year, in equal monthly installments of $4,166,67. Mr. Valencia will also receive up to an aggregate of four million (4,000,000) restricted shares of the Company. Two hundred and fifty thousand (250,000) shares shall be ~~released~~issued at the end of each three-–month period immediately following August 1, 2010.

WeShares ~~have~~issued ~~entered into a consulting arrangement with Johannes Petersen, our Chief Financial Officer, pursuant~~ to ~~which, we pay~~ Mr. ~~Petersen~~Valencia ~~$5,000~~since ~~per~~the ~~month~~execution ~~for~~of ~~providing~~the ~~consulting~~Consulting ~~services~~Agreement inuntil ~~his~~September ~~capacity~~30, as2012, ~~Chief~~total ~~Financial Officer~~2, ~~however~~000,000 ~~such~~shares ~~consulting~~and ~~arrangement~~were isissued ~~not~~as ~~pursuant to any written agreement.~~follows:

# Certificate	# Shares	Dated
Shares	Dated
1067	250,000	11/01/2010
1068	250,000	02/01/2011
1092	250,000	05/01/2011
1093	250,000	08/01/2011
1094	250,000	11/01/2011
1097	100,000	02/21/2012
1098	100,000	02/21/2012
1099	50,000	02/21/2012
1105	250,000	05/01/2012
1106	250,000	08/01/2012

We have entered into a consulting arrangement with Johannes Petersen, our Chief Financial Officer and Secretary, pursuant to which, we pay Mr. Petersen $5,000 per month for providing consulting services in his capacity as Chief Financial Officer and Secretary. However, such consulting arrangement has not been memorialized in a written agreement. For the period from July 1, 2012 to September 30, 2012, the Company and Mr. Petersen agreed that we would pay $3,000 for his consulting services.

Potential Payments Upon Termination or Change in Control

In the event of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of ~~the~~our ~~Company’s~~Common ~~common~~Stock ~~stock~~ are exchanged for securities, cash or other property of any other corporation, firm, partnership, joint venture, association, or business entity, the Company is otherwise acquired or there is a change of control of the Company (receipt of more than 50% of the outstanding shares of the Company, the Company otherwise being acquired, or a change in control of the Company are collectively referred to as an “Acquisition”), or in the event of liquidation of the Company, so much of the 4,000,000 ~~Shares~~shares that have not been issued to ~~Company~~Alvaro Valencia shall immediately and fully vest and shall also be transferable by Alvaro Valencia immediately prior to such Acquisition or liquidation. The ~~numbers~~number of ~~Shares~~shares ~~are~~is subject to adjustment from time to time as set forth in Section 3(b) of the Consulting Agreement with Alvaro Valencia.

Outstanding Equity Awards at ~~2011~~2012 Fiscal Year-End

None.

Compensation Committee Interlocks and Insider Participation

All members of our board of directors acted in lieu of a compensation committee during fiscal 2012. We had no compensation committee interlocks with any entity in fiscal ~~2011~~2012.

Compensation Committee Report

We, constituting all members of the Board of Directors, in lieu of a compensation committee, have reviewed and discussed the Compensation Discussion and Analysis (set forth above) with the management of the company, and, based on such review and discussion, have recommended to the Board of Directors the inclusion of the Compensation Discussion and Analysis in ~~this~~the ~~Annual~~registration ~~Report~~statement onof ~~Form 10-K~~which ~~for~~this ~~the~~prospectus ~~year~~forms ~~ended~~a ~~September 30, 2011~~part.

Johannes Petersen

Alvaro Valencia

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

The following table presents information, to the best of American Power’s knowledge, about the ownership of American Power’s common stock on December 27, 2012 relating to those persons known to beneficially own more than 5% of American Power’s capital stock and by American Power’s named executive officers, directors and directors and executive officers as a group. The percentage of beneficial ownership for the following table is based on

~~The following table presents information~~102, ~~to the best of American Power’s knowledge~~512,909 about the ownership of American Power’s common stock on December 29, 2011 relating to those persons known to beneficially own more than 5% of American Power’s capital stock and by American Power’s named executive officers, directors and directors and executive officers as a group. The percentage of beneficial ownership for the following table is based on 96,429,358 shares of common stock outstanding.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes shares of common stock that the stockholder has a right to acquire within 60 days after December 29, ~~2011~~2012 pursuant to options, warrants, conversion privileges or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of American Power’s common stock.

OFFICERS, DIRECTORS AND BENEFICIAL OWNERS, AS OF DECEMBER 2927, ~~2011~~2012

OFFICERS AND DIRECTORS

Title of Class	Name and Address of Shareholder	Office, If Any	Amount & Nature of Beneficial Ownership (1)	Percent of Class (2)
Common Stock	Johannes Petersen c/o American Power Corp 1600 14th Street, Ste 400 Denver CO 80202	CFO, Secretary and Director	47,600,000 ~~Direct~~	4946.4%
Common Stock	Alvaro Valencia(3) c/o American Power Corp 1600 14th Street, Ste 400 Denver CO 80202	President, CEO, Director	12,~~250~~000,000	12.30%
All Officers and Directors as a group			4849,~~850~~700,000	5048.76%

(1)	Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.

(2) A total of 96102,~~429~~512,~~358~~909 shares of our common stock outstanding are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1) as of December 2927, ~~2011~~2012.

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Changes in Control

There are no arrangements known to us, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of the Company.

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

We were not a party to any transactions or series of similar transactions that have occurred during this fiscal year in which the amounts involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years.

ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES.

De Joya Griffith & Company, LLC served as our principal independent public accountants for fiscal ~~2010~~2011 and ~~2011~~2012. Aggregate fees billed to us for the fiscal years ended September 30, ~~2011~~2012 and ~~2010~~2011 by De Joya Griffith & Company, LLC were as follows:

	For the Fiscal Years Ended September 30,
	2011			2010
	2012			2011
(1) Audit Fees(1)		$	2231,~~250~~350		$	922,~~500~~250
(2) Audit-Related Fees(2)			-0-			-0-
(3) Tax Fees(3)			-0-			-0-
(4) All Other Fees			-0-			-0-
Total fees paid or accrued to our independent public accountants		$	2231,~~250~~350		$	922,~~500~~250

_______________________

(1)

Audit Fees include fees billed and expected to be billed for services performed to comply with Generally Accepted Auditing Standards (GAAS), including the recurring audit of the Company’s financial statements for such period included in this Annual Report on Form 10-K and for the reviews of the quarterly financial statements included in the Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. This category also includes fees for audits provided in connection with statutory filings or procedures related to audit of income tax provisions and related reserves, consents and assistance with and review of documents filed with the SEC.

(2)

Audit-Related Fees include fees for services associated with assurance and reasonably related to the performance of the audit or review of the Company’s financial statements. This category includes fees related to assistance in financial due diligence related to mergers and acquisitions, consultations regarding Generally Accepted Accounting Principles, reviews and evaluations of the impact of new regulatory pronouncements, general assistance with implementation of Sarbanes-Oxley Act of 2002 requirements and audit services not required by statute or regulation.

(3)	Tax fees consist of fees related to the preparation and review of the Company’s federal and state income tax returns.

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PART IV

ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) Financial Statements

See “Index to Financial Statements” on page F-3.

(b) and (c)Exhibits

Exhibit No.
2.1		Agreement and Plan of Merger, dated as of July 9, 2010, between American Power Merger Corporation. and American Power Corporation (filed as Exhibit 10.1 to the Company’s Form 8-K filed July 13, 2010 and incorporated by reference herein)
3.1		Articles of Incorporation (filed as Exhibit 3(i) to the Company’s Registration Statement on Form S-1 filed June 6, 2008 and incorporated by reference herein)
3.2		Bylaws (filed as Exhibit 3(ii) to the Company’s Registration Statement on Form S-1 filed June 6, 2008 and incorporated by reference herein)
10.1		Coal Buy and Sell Agreement, dated February 4, 2010, by and between JBM Energy Company, LLC and Future Gas Holdings, Ltd. (filed as Exhibit 10.1 to the Company’s Form 8-K filed April 5, 2010 and incorporated by reference herein)
10.2		Consulting Agreement, dated as of February 4, 2010, by and between Russell B. Pace, Jr. and the Company (filed as Exhibit 10.3 to the Company’s Form 8-K filed April 5, 2010 and incorporated by reference herein)
10.3		Stock Agreement, dated as of February 4, 2010, by and between Russell B. Pace, Jr. and Future Gas Holdings, Ltd. (filed as Exhibit 10.4 to the Company’s Form 8-K filed April 5, 2010 and incorporated by reference herein)
10.4		Mineral Buy and Sell Agreement, dated as of February 4, 2010, by and between Russell B. Pace, Jr. and Future Gas Holdings, Ltd. (filed as Exhibit 10.6 to the Company’s Form 8-K filed April 5, 2010 and incorporated by reference herein)
10.5		Assignment and Assumption of Coal Agreement, dated as of March 31, 2010, by and between JBM Energy Company, LLC, Future Gas Holdings, Ltd. and the Company (filed as Exhibit 10.2 to the Company’s Form 8-K filed April 5, 2010 and incorporated by reference herein)
10.6		Assignment and Assumption of Stock and Consulting Agreements, dated as of March 31, 2010, by and between Russell B. Pace, Jr., Future Gas Holdings, Ltd. and the Company (filed as Exhibit 10.5 to the Company’s Form 8-K filed April 5, 2010 and incorporated by reference herein)
10.7*		Assignment and Assumption of Mineral Buy and Sell Agreement, dated as of March 31, 2010, by and between Russell B. Pace, Jr., Future Gas Holdings, Ltd. and the Company
10.8*		10% Unsecured Loan Agreement, dated as of April 6, 2010, by and between the Company and Black Sands Holdings Inc.
10.9		Escrow Agreement, dated as of April 9, 2010, by and between JBM Energy Company, LLC, Russell B. Pace, Jr., the Company and Realty Title Company, Inc. (filed as Exhibit 10.1 to the Company’s Form 8-K filed April 14, 2010 and incorporated by reference herein)
10.10		Quit Claim Mineral Deed, dated as of April 9, 2010, by Russell B. Pace, Jr. in favor of the Company (filed as Exhibit 10.2 to the Company’s Form 8-K filed April 14, 2010 and incorporated by reference herein)
10.11		Promissory Note, dated as of April 9, 2010, by the Company in favor of Russell B. Pace, Jr. (filed as Exhibit 10.4 to the Company’s Form 8-K filed April 14, 2010 and incorporated by reference herein)
10.12		Promissory Note, dated as of April 9, 2010, by the Company in favor of JBM Energy Company, LLC (filed as Exhibit 10.5 to the Company’s Form 8-K filed April 14, 2010 and incorporated by reference herein)
10.13		Private Placement Subscription For Non U.S. Subscribers, dated as of June 30, 2010, by and between the Company and Black Sands Holdings Inc. (filed as Exhibit 10.1 to the Company’s Form 8-K filed June 30, 2010 and incorporated by reference herein)
10.14		Independent Consulting Agreement, dated as of August 1, 2010, by and between the Company and Alvaro (filed as Exhibit 10.1 to the Company’s Form 8-K filed August 4, 2010 and incorporated by reference herein)
10.15		Stock Issuance Agreement, dated as of September 10, 2010, by and between the Company and Black Sands Holdings Inc. (filed as Exhibit 10.1 to the Company’s Form 8-K filed September 13, 2010 and incorporated by reference herein)

EXHIBIT INDEX



3(i)	Incorporating Documents of the Company, including: Articles of Incorporation, dated August 7, 2007, (incorporated by reference to Exhibit 3.(I). of the Company’s Form S-1 filed on June 9, 2008); Amendment to Articles of Incorporation ( incorporated by reference to Exhibit 3.2 to the Company’s Form S-1 filed on June 25, 2012)

3(ii)	Bylaws of the Company, including: Bylaws, dated August 13, 2007, (incorporated by reference to Exhibit 3.(II). of the Company’s Form S-1 filed on June 9, 2008)


10.1	Coal Buy and Sell Agreement, dated February 4, 2010, (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on April 5, 2010)

10.2	Assignment and Assumption of Coal, dated March 31, 2010, (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on April 5, 2010)

10.3	Consulting Agreement, dated February 4, 2010, (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed on April 5, 2010)

10.4	Stock Agreement, dated February 4, 2010 (incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K filed on April 5, 2010)

10.5	Assignment and Assumption of Stock and Consulting Agreements, dated March 31, 2010, (incorporated by reference to Exhibit 10.5 of the Company’s Form 8-K filed on April 5, 2010)

10.6	Mineral Buy and Sell Agreement, dated February 4, 2010, (incorporated by reference to Exhibit 10.6 of the Company’s Form 8-K filed on April 5, 2010)

10.16		Settlement Agreement, dated as of October 9, 2010, by and between the Company and Black Sands Holdings Inc. (filed as Exhibit 10.12 to the Company’s Form 8-K filed September 13, 2010 and incorporated by reference herein)
10.7	Mineral Buy and Sell Agreement, dated February 4, 2010, (incorporated by reference to Exhibit 10.7 of the Company’s Form 8-K filed on April 5, 2010)
10.17		Private Placement Subscription For Non U.S. Subscribers, dated as of October 10, 2010, by and between the Company and Black Sands Holdings Inc. (filed as Exhibit 10.1 to the Company’s Form 8-K filed October 8, 2010 and incorporated by reference herein)
10.8	Escrow Agreement, dated April 9, 2010, (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on April 14, 2010)
10.18		Private Placement Subscription For Non U.S. Subscribers, dated as of January 4, 2011, by and between the Company and Black Sands Holdings Inc. (filed as Exhibit 10.1 to the Company’s Form 8-K filed February 2, 2011 and incorporated by reference herein)
10.9	Quit Claim Mineral Deed, dated April 9, 2010 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on April 14, 2010)
10.19		Letter Agreement, dated as of January 28, 2011, by and between Gryphon Partners Canada Inc. (filed as Exhibit 10.1 to the Company’s Form 8-K filed February 2, 2011 and incorporated by reference herein)
10.10	Quit Claim Mineral Deed, dated April 9, 2010, (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed on April 14, 2010)
10.20		Private Placement Subscription For Non U.S. Subscribers, dated as of February 23, 2011, by and between the Company and Black Sands Holdings Inc. (filed as Exhibit 10.1 to the Company’s Form 8-K filed February 28, 2011 and incorporated by reference herein)
10.11	Promissory Note, dated April 9, 2010, (incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K filed on April 14, 2010)
10.21		Private Placement Subscription For Non U.S. Subscribers, dated as of August 9, 2011, by and between the Company and Black Sands Holdings Inc. (filed as Exhibit 10.1 to the Company’s Form 8-K filed August 11, 2011 and incorporated by reference herein)
10.12	Promissory Note, dated April 9, 2010, (incorporated by reference to Exhibit 10.5 of the Company’s Form 8-K filed on April 14, 2010)
23.1*		Consent of De Joya Griffith & Company, LLC
10.13	Independent Consultant Agreement, dated August 1, 2010, (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on August 4, 2010)
31.1*		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
10.14	Stock Issuance Agreement, dated September 10, 2010, (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on September 13, 2010)
31.2*		Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
10.15	Settlement Agreement (incorporated by reference to Exhibit 10.12 of the Company’s Form 8-K filed on September 13, 2010)
32.1*		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
10.16	Subscription Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on October 8, 2010)
32.2*		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
10.17	Subscription Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on February 1, 2011)
10.18	Gryphon Partners Letter, dated January 28, 2011, (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on February 1, 2011)
10.19	Subscription Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on February 28, 2011)
10.20	Subscription Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on August 11, 2011)
10.21	Standby Equity Distribution Agreement, dated February 17, 2012, (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on February 24, 2012)
10.22	Note Purchase Agreement, dated February 17, 2012, (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on February 24, 2012)
10.23	Secured Convertible Note (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed on February 24, 2012)
10.24	Subscription Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on February 27, 2012)
10.25	Amended and Restated Coal Buy and Sell Agreement, dated March 26, 2012, (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on March 30, 2012)
10.26	Amended and Restated Promissory Note, dated March 26, 2012, (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on March 30, 2012)
10.27	Amended and Restated Mineral Buy and Sell Agreement, dated March 26, 2012, (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed on March 30, 2012)
10.28	Amended and Restated Promissory Note, dated March 26, 2012, (incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K filed on March 30, 2012)
10.29	Amended and Restated Escrow Agreement, dated March 26, 2012, (incorporated by reference to Exhibit 10.5 of the Company’s Form 8-K filed on March 30, 2012)
10.30	Termination Agreement, dated June 13, 2012, (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on June 15, 2012)
10.31	Amended and Restated Standby Equity Distribution Agreement, dated June 13, 2012 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on June 15, 2012)
10.32	Subscription Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on September 25, 2012)
10.33	Subscription Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on October 5, 2012)
10.34	Second Amended and Restated Promissory Note, dated December 11, 2012, (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on December 20, 2012)
10.35	Second Amended and Restated Promissory Note, dated December 11, 2012, (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on December 20, 2012)
10.36	Second Amended and Restated Escrow Agreement, dated December 11, 2012, (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed on December 20, 2012)
31.1	Certification of Principal Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
101	The following financial statements, formatted in XBRL: (i) Consolidated Balance Sheets as of September 30, 2011 and September 30, 2010; (ii) Consolidated Statements of Operations for the twelve months ended September 30, 2011 and September 30, 2010; (iii) Consolidated Statements of Cash Flows for the twelve months ended September 30, 2011 and September 30, 2010; and (iv) Notes to the Audited Consolidated Financial Statements, tagged as blocks of text. The information in Exhibit 101 is “furnished” and not “filed,” as provided in Rule 402 of Regulation S-T.

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

______________

*Filed herewith

SIGNATURES

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

AMERICAN POWER CORPORATION

By: /s/ Alvaro Valencia

Director, Chief Executive Officer and President

By: /s/ Johannes Petersen

Director, Chief Financial Officer and Secretary

Date: ~~January~~December 531, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/ Alvaro Valencia

Director, Chief Executive Officer and President

By: /s/ Johannes Petersen

Director, Chief Financial Officer and Secretary

Date: ~~January~~December 531, 2012

2431

~~AMERICAN~~REPORT ~~POWER~~OF ~~CORP.~~INDEPENDENT ~~(An~~REGISTERED ~~Exploration~~PUBLIC ~~Stage~~ACCOUNTING ~~Company) FINANCIAL STATEMENTS September 30, 2011 and 2010 (Audited)~~FIRM

AMERICAN POWER CORP.
(An Exploration Stage Company)
BALANCE SHEETS
(Audited)
	September 30, 2011			September 30, 2010
ASSETS
CURRENT ASSETS
Cash	$	629,857		$	520,852
Prepaids and deposit		17,753			6,324
Advances to related party		-			18,416
TOTAL CURRENT ASSETS		647,610			545,592
LONG TERM ASSETS
Mineral property (Note 5)		2,670,500			2,670,500
Reclamation bond		92,876			-
Equipment - net		3,218			4,480
Website - net		26,297			28,297
TOTAL LONG TERM		2,792,891			2,703,277
TOTAL ASSETS	$	3,440,501		$	3,248,869
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	241,637		$	18,728
Promissory notes, current portion		431,250			600,000
TOTAL CURRENT LIABILITIES		672,887			618,728
LONG TERM LIABILITIES
Promissory notes, net of current portion, net of debt discount of $777,442 ($1,105,729 – September 30, 2010)		1,691,308			1,794,271
TOTAL LONG TERM LIABILITIES		1,691,308			1,794,271
TOTAL LIABILITIES		2,364,195			2,412,999
STOCKHOLDERS’ EQUITY
Capital stock
Authorized
500,000,000 shares of common stock, $0.001 par value,
Issued and outstanding
92,952,085 shares of common stock (90,480,000 September 30, 2010)		92,951			90,480
Additional paid in capital		2,957,037			528,098
Stock payable		867,500			1,106,410
Accumulated deficit during the exploration stage		(2,841,182	)		(889,118	)
TOTAL STOCKHOLDERS’ EQUITY		1,076,306			835,870
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,440,501		$	3,248,869
The accompanying notes are an integral part of these financial statements.

To the Board of Directors and Stockholders

AMERICAN POWER CORP.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
(Audited)
							Cumulative results
							from inception
	Year ended			Year ended			(August 7, 2007) to
	September 30, 2011			September 30, 2010			September 30, 2011
REVENUE
Revenues	$	-		$	-		$	-
Total revenues		-			-			-
EXPENSES
Office and general		261,032			91,427			358,384
Management fees		802,500			-			1,001,164
Professional fees		119,291			258,613			210,142
Gain on debt forgiveness		-			(8,000	)		(8,000	)
Exploration costs		440,894			-			440,894
Total expenses		(1,623,717	)		(342,040	)		(2,002,584	)
OTHER EXPENSE
Interest expense		(328,347	)		(197,374	)		(525,721	)
Loss on debt settlement		-			(237,807	)		(237,807	)
Total other expenses		(328,347	)		(435,181	)		(763,528	)
NET LOSS	$	(1,952,064	)	$	(777,221	)	$	(2,766,112	)
BASIC LOSS PER COMMON SHARE	$	(0.02	)	$	(0.01	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- BASIC		92,125,873			88,689,041

American Power Corp.

We have audited the balance sheets of American Power Corp. (An Exploration Stage Company) (the “Company”) as of September 30, 2012 and 2011 and the related statements of operations, stockholders’ equity (deficit) and cash flows for each of the years in the two-year period ended September 30, 2012 and 2011, and for the period from inception (August 7, 2007) through September 30, 2012. American Power Corp.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Power Corp. (An Exploration Stage Company) as of September 30, 2012 and 2011 and the results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2012 and for the period from inception (August 7, 2007) through September 30, 2012 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ De Joya Griffith, LLC

Henderson, Nevada

December 19, 2012

________________________________________________________________________________________________________________________________________________________________________________

De Joya Griffith, LLC ● 2580 Anthem Village Dr. ● Henderson, NV ● 89052

Telephone (702) 563-1600 ● Facsimile (702) 920-8049

www.dejoyagriffith.com

AMERICAN POWER CORP.

(An Exploration Stage Company)

FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Audited)

AMERICAN POWER CORP.
(An Exploration Stage Company)
BALANCE SHEETS
(Audited)

	September 30, 2012			September 30, 2011

ASSETS
CURRENT ASSETS
Cash	$	-		$	629,857
Prepaids and deposit		9,020			17,753
TOTAL CURRENT ASSETS		9,020			647,610

LONG TERM ASSETS
Mineral property (Note 4)		2,670,500			2,670,500
Reclamation bond		125,108			92,876
Equipment - net		1,978			3,218
Website - net		16,562			26,297
TOTAL LONG TERM ASSETS		2,814,148			2,792,891
TOTAL ASSETS	$	2,823,168		$	3,440,501

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES
Bank overdraft	$	423		$	-
Accounts payable and accrued liabilities		248,957			241,637
Promissory notes, current portion		1,600,000			431,250
TOTAL CURRENT LIABILITIES		1,849,380			672,887

LONG TERM LIABILITIES
Promissory notes, net of current portion, net of debt discount of $217,998 ($777,442 – September 30, 2011)		1,082,002			1,691,308
TOTAL LONG TERM LIABILITIES		1,082,002			1,691,308
TOTAL LIABILITIES		2,931,382			2,364,195

STOCKHOLDERS’ EQUITY (DEFICIT)
Capital stock
Authorized
500,000,000 shares of common stock, $0.001 par value,
Issued and outstanding
101,247,086 shares of common stock (92,952,085 September 30, 2011)		101,247			92,951
Additional paid-in capital		4,349,244			2,957,037
Stock payable		18,333			867,500
Accumulated deficit during the exploration stage		(4,577,038	)		(2,841,182	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(108,214	)		1,076,306
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	2,823,168		$	3,440,501

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

AMERICAN POWER CORP.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
(Audited)

							Cumulative results
							from inception
	Year ended			Year ended			(August 7, 2007) to
	September 30, 2012			September 30, 2011			September 30, 2012
REVENUE

Revenues	$	-		$	-		$	-
Total revenues		-			-			-

EXPENSES

Office and general		283,682			261,032			642,066
Management fees		236,833			802,500			1,237,997
Professional fees		173,517			119,291			383,659
Gain on debt forgiveness		-			-			(8,000	)
Exploration costs		448,610			440,894			889,504
Total expenses		(1,142,642	)		(1,623,717	)		(3,145,226	)

OTHER EXPENSE
Interest expense		(360,152	)		(328,347	)		(885,873	)
Loss on debt settlement		(233,062	)		-			(470,869	)
Total other expenses		(593,214	)		(328,347	)		(1,356,742	)

NET LOSS	$	(1,735,856	)	$	(1,952,064	)	$	(4,501,968	)

BASIC LOSS PER COMMON SHARE
BASIC LOSS PER COMMON SHARE	$	(0.02	)	$	(0.02	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- BASIC

		97,510,321			92,125,873

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

AMERICAN POWER CORP.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
From inception (August 7, 2007) to September 30, 2011
From Inception (August 7, 2007) to September 30, 2012
(Audited)
	Common Stock
	Number of shares		Amount		Additional Paid-in Capital		Share Subscription Receivable			Stock Payable			Accumulated deficit during the exploration stage			Total
Balance, August 7, 2007 (Inception)		-	$	-	$	-	$	-		$	-		$	-		$	-
Common stock issued for cash at $0.001per share on August 13, 2007		44,200,000		44,200		-		(8,500	)		-			(35,700	)		-
Common stock issued for cash at $0.001 per share on August 13, 2007		44,200,000		44,200		-		(8,500	)		-			(35,700	)		-
Net loss		-		-		-		-			-			(2,525	)		(2,525	)
Balance, September 30, 2007		44,200,000		44,200		-		(8,500	)		-			(38,225	)		(2,525	)
Subscription Receivable		-		-		-		8,500			-			-			8,500
Common stock issued for cash at $0.03per share July and August 2008		43,180,000		43,180		-		-			-			(39,370	)		3,810
Net loss														(12,964	)		(12,964	)
Balance, September 30, 2008		87,380,000		87,380		-		-			-			(90,559	)		(3,179	)
Net loss		-		-		-		-			-			(21,338	)		(21,338	)
Balance, September 30, 2009		87,380,000		87,380		-		-			-			(111,897	)		(24,517	)
Forgiveness of debt by former director		-		-		16,198		-			-			-			16,198
Common Stock, issued for mineral property at $0.05 per share April 9, 2010		2,300,000		2,300		112,700		-			-			-			115,000
Common stock issued for cash at $0.50per share June 25, 2010		800,000		800		399,200		-			-			-			400,000
Common stock issued for cash at $0.50 per share June 25, 2010		800,000		800		399,200		-			-			-			400,000
Common stock to be issued on debt totaling $208,603 (including interest of $8,603) conversion at $0.50 per share September 10, 2010		-		-		-		-			446,410			-			446,410
Common stock to be issued for services at $0.96 per share at September 30, 2010		-		-		-		-			160,000			-			160,000
Private placement received in advance		-		-		-		-			500,000			-			500,000
Net loss		-		-		-		-			-			(777,221	)		(777,221	)
Balance, September 30, 2010		90,480,000		90,480		528,098		-			1,106,410			(889,118	)		835,870
Common stock issued for 595,238 units at $0.84 per unit on October 5, 2010		595,238		595		499,405		-			(500,000	)		-			-
Common stock issued for 449,438 units at $0.89 per unit on January 25, 2011		449,438		449		399,551		-			-			-			400,000
Common stock issued for 510,204 units at $0.98 per unit on February 23, 2011		510,204		510		499,490		-			-			-			500,000
Common stock issued for stock payable on April 5, 2011		417,205		417		445,993		-			(446,410	)		-			-
Common stock issued for services on April 5, 2011 , 250,000 shares vested on October 31, 2010 and 250,000 shares vested on January 31, 2011		500,000		500		584,500		-			(160,000	)		-			425,000
Common stock issued for services on April 5, 2011, 250,000 shares vested on October 31, 2010 and 250,000 shares vested on January 31, 2011		500,000		500		584,500		-			(160,000	)		-			425,000
Common stock to be issued for 2,727,273 units at $0.22 per unit on August 9, 2011		-		-		-		-			600,000			-			600,000
Common stock to be issued for services at September 30, 2011		-		-		-		-			267,500			-			267,500
Net loss		-		-		-		-			-			(1,952,064	)		(1,952,064	)
Balance, September 30, 2011		92,952,085	$	92,951	$	2,957,037	$	-		$	867,500		$	(2,841,182	)	$	1,076,306
Common stock issued for stock payable on December 12, 2011		2,727,273		2,727		597,273		-			(600,000	)		-			-
Common stock issued for services on December 12, 2011 , 250,000 shares vested on April 30, 2011, 250,000 shares vested on July 31, 2011 and 250,000 shares vested on October 31, 2011		750,000		750		289,250		-			(267,500	)		-			22,500
Common stock issued for services on February 1, 2012 , 250,000 shares vested on January 31, 2012		250,000		250		42,250		-			-			-			42,500
Common stock issued for 734,394 units at $0.16 per unit on February 17, 2012		734,394		734		116,769		-			-			-			117,503
Common stock issued for 1,666,667 units at $0.12 per unit on February 21, 2012		1,666,667		1,668		198,332		-			-			-			200,000
Common stock issued for services on May 1, 2012 , 250,000 shares vested on April 30, 2012		250,000		250		33,000		-			-			-			33,250
Common stock issued for services on August 1, 2012 , 250,000 shares vested on July 31, 2012		250,000		250		17,000		-			-			-			17,250
Common stock issued for 1,666,667 units at $0.06 per unit on September 30, 2012		1,666,667		1,667		98,333		-			-			-			100,000
Common stock to be issued for services at September 30, 2012		-		-		-		-			18,333			-			18,333
Net loss		-		-		-		-			-			(1,735,856	)		(1,735,856	)
Balance, September 30, 2012		101,247,086	$	101,247	$	4,349,244	$	-		$	18,333		$	(4,577,038	)	$	(108,214	)
The accompanying notes are an integral part of these financial statements.

AMERICAN POWER CORP.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Audited)
							Cumulative results
	Year ended			Year ended			from inception (August 7, 2007)
	September 30, 2011			September 30, 2010			to September 30, 2011
	September 30, 2012			September 30, 2011			to September 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,~~952~~735,~~064~~856	)	$	(~~777~~1,~~221~~952,064	)	$	(24,~~766~~501,~~112~~968	)
Adjustment to reconcile net loss to net cash
used in operating activities
Depreciation and amortization		1110,~~016~~976			311,~~371~~016			1425,~~387~~363
Stock-based compensation		~~692~~251,~~500~~336			~~160~~692,~~000~~500			~~852~~1,~~500~~103,836
Accretion of debt discount		~~328~~326,~~287~~382			~~197~~328,~~374~~287			~~525~~852,~~661~~043
Gain on extinguishment of debt		-			~~(8,000~~-	)		(8,000	)
Loss on extinguishment of debt		-233,062			~~237,807~~-			~~237~~470,~~807~~869
(Increase) in prepaid expenses		(11,429	)		(6,324	)		(17,753	)
(Increase) decrease in prepaid expenses		8,733			(11,429	)		(9,020	)
(Increase) decrease in advances to related party		18,416			(18,416	)		-
Decrease in advances to related party		-			18,416			-
Increase in accounts payable and accrued liabilities		~~222~~7,~~909~~319			13222,~~472~~909			~~249~~256,~~637~~956
NET CASH USED IN OPERATING ACTIVITIES		(~~690~~898,~~365~~048	)		(~~197~~690,~~937~~365	)		(~~911~~1,~~873~~809,921	)
CASH FLOWS FROM INVESTING ACTIVITIES
Website		~~(7,754~~-	)		(317,~~191~~754	)		(38,945	)
Equipment		-			~~(4,957~~-	)		(4,957	)
Mineral property		-			~~(350,000~~-	)		(350,000	)
Reclamation bond		(9232,~~876~~232	)		-(92,876	)		(92125,~~876~~108	)
NET CASH USED IN INVESTING ACTIVITIES		(~~100~~32,~~630~~232	)		(~~386~~100,~~148~~630	)		(~~486~~519,~~778~~010	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock		1,500,000			900,000			2,412,310
Proceeds from bank overdraft		423			-			423
Loans from related party		-			4,790			16,198
Proceeds from sale of common stock		300,000			1,500,000			2,712,310
Proceeds from notes payable		-			200,000			200,000
Loans from related party		-			-			16,198
Payment on promissory note		(600,000	)		-			(600,000	)
Proceeds from notes payable		-			-			200,000
NET CASH PROVIDED BY FINANCING ACTIVITIES		900,000			1,104,790			2,028,508
Payment on promissory note		-			(600,000	)		(600,000	)
INCREASE IN CASH		109,005			520,705			629,857
NET CASH PROVIDED BY FINANCING ACTIVITIES		300,423			900,000			2,328,931
CASH, BEGINNING OF PERIOD		520,852			147			-
(DECREASE) INCREASE IN CASH		(629,857	)		109,005			-
CASH, END OF PERIOD	$	629,857		$	520,852		$	629,857
CASH, BEGINNING OF PERIOD		629,857			520,852			-
Supplemental cash flow information and non-cash financing activities:
CASH, END OF PERIOD	$	-		$	629,857		$	-
Common stock payable for property acquisition	$	-		$	115,000		$	115,000
Interest paid with cash	$	31,250		$	-		$	31,250
Promissory notes issued for property	$	-		$	2,405,500		$	2,405,500
Taxes paid with cash	$	-		$	-		$	-
Forgiveness of debt by former director	$	-		$	16,198		$	16,198
Supplemental cash flow information and non-cash investing and financing activities:
Common stock issued to satisfy common stock payable	$	1,106,410		$	-		$	1,106,410
Common stock payable for property	$	-		$	-		$	115,000
Conversion of debt totaling $208,603, (including interest of $8,603) for common stock	$	-		$	446,410		$	446,410
Promissory notes issued for property	$	-		$	-		$	2,405,500
Forgiveness of debt by former director	$	-		$	-		$	16,198
Common stock issued to satisfy common stock payable	$	867,500		$	1,106,410		$	1,973,910
Conversion of debt totaling $208,603, (including interest of $8,603) for common stock	$	-		$	-		$	464,610
The accompanying notes are an integral part of these financial statements

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, ~~2011~~2012 and ~~2010~~2011

(Audited)

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

American Power Corp. (the “Company”) was originally organized as Teen Glow Makeup, Inc. under the laws of the State of Nevada on August 7, 2007. On April 30, 2010 the Company changed its name to American Power Corp. The Company is in the exploration stage and has incurred losses since inception of $24,~~841~~501,~~182~~968. The Company is An Exploration Stage Enterprise, as defined in FASB ASC 915-10 “Development Stage Entities”. During the year ended September 30, 2010, the Company decided to redirect its business focus toward coal, oil and natural gas exploration and development.

The accompanying audited financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-K.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements present the balance sheets, statements of operations, stockholders’ equity (deficit) and cash flows of the Company. These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States.

Going Concern

The Company’s financial statements as of September 30, ~~2011~~2012 have been prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. For the years ended September 30, ~~2011~~2012 and ~~2010~~2011 the Company had a net loss of $1,~~952~~735,~~064~~856 and $~~777~~1,~~221~~952,064, respectively.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Stock based compensation

The Company recognizes stock-based compensation in accordance with ASC Topic 718 “Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values.

For non-employee stock-based compensation, the Company has adopted ASC Topic 505 “Equity-Based Payments to Non-Employees”, which requires stock-based compensation related to non-employees to be accounted for based on the fair value of the related stock or options or the fair value of the services on the grant date, whichever is more readily determinable in accordance with ASC Topic 505.

Cash and cash equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, ~~2011~~2012 and ~~2010~~2011

(Audited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (~~CONTINUED~~continued)

Financial Instruments

ASC 825, Financial Instruments requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 825 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data of the fair value of the assets or liabilities.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, and promissory notes.

Pursuant to ASC 825, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of cash, accounts payable and accrued liabilities, and other payables approximate their current fair values because of their nature and respective relatively short maturity dates or durations. Notes payable and loans payable approximate current fair value because interest is payable at market rates.

Use of Estimates and Assumptions

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Net Loss per Share

Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company. Because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share.

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, ~~2011~~2012 and ~~2010~~2011

(Audited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (~~CONTINUED~~continued)

Fixed Assets

Fixed assets are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income.

The Company’s fixed assets consist of computer equipment, which is valued at cost and depreciated using the straight-line method over a period of four years.

Website Development Costs

Costs incurred in developing and maintaining a website are charged to expense when incurred for the planning, content population, and administration or maintenance of the website. All development costs for the application, infrastructure, and graphics development are capitalized and subsequently reported at the lower of unamortized cost or net realizable value. Capitalized costs are amortized using the straight-line method over a four year estimated economic life. For the years ended September 30, ~~2011~~2012 and September 30, ~~2010~~2011, the company recorded Website amortization of $9,~~754~~736 and $29,~~894~~754, respectively, and net Website asset of $2616,~~297~~562 and $2826,297, respectively.

Revenue Recognition

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

Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. As of September 30, ~~2011~~2012, the Company had net operating loss ~~carryforwards~~carry forwards; however, due to the uncertainty of realization, the Company has provided a full valuation allowance for the deferred tax assets resulting from these loss carryforwards.

Mineral Property Costs

The Company has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining and coal properties. Mineral property exploration costs are charged to operations as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property, are capitalized. Such costs will be depleted using the units-of-production method over the estimated life of the probable reserve.

Although the Company has taken steps to verify title to mineral and coal properties in which it has an interest, according to the usual industry standards for the stage of exploration of such properties, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

Recent Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements that impacted the fourth quarter of fiscal ~~2011~~2012, or which are expected to impact future periods, which were not already adopted and disclosed in prior periods.

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, ~~2011~~2012 and ~~2010~~2011

(Audited)

NOTE 3 – FIXED ASSETS

The Company’s fixed assets consist of computer equipment which is valued at cost and depreciated using the straight-line method over four years as follows:

Sept. 30,

Accumulated

~~2011~~2012

~~2010~~2011

Cost

Amortization

Net

Computer equipment

4,~~956~~957

12,~~738~~979

31,~~218~~978

43,~~480~~218

Depreciation of $1,~~262~~240 and $~~477~~1,262 is included in general and administrative expenses in the statement of operations for the years ended September 30, ~~2011~~2012 and ~~2010~~2011, respectively.

NOTE 4 – ~~LOANS~~COAL AND OTHER MINERAL PROPERTIES

OnThe ~~April 6, 2010, the~~ Company ~~obtained~~entered into a ~~loan~~series ~~in the amount~~ of ~~$200,000,~~agreements ~~bearing~~to ~~interest~~acquire ofall ~~10%~~the ~~per annum from Black Sands Holdings~~mineral, ~~Ltd. On~~oil ~~September~~and ~~10,~~gas ~~2010~~rights ~~the~~of ~~Company agreed to enter into~~ a ~~debt~~mineral toproperty ~~equity~~located ~~conversion~~in asJudith aBasin ~~means of settling the outstanding loan amount of $208~~County,~~603~~ byMontana ~~issuing~~for ~~417,205~~a ~~shares.~~total ~~The~~consideration ~~fair value~~ of ~~the shares was~~ $~~446~~2,~~410~~670, ~~of which $237,807 was recognized as a loss on debt settlement~~500.

~~NOTE~~Coal 5Agreement –and ~~COAL AND OTHER MINERAL PROPERTIES~~Amendment

On March 31, 2010, the Company, Future Gas Holdings, Ltd. (“Future Gas”) and JBM Energy Company, LLC (“JBM”) entered into aan ~~series~~Assignment of ~~agreements~~Coal Agreement (“Assignment”) to ~~acquire~~transfer and assign all the rights and obligations of Future Gas to the Company to purchase all coal mineral rights owned by JBM under a Coal Buy and Sell Agreement (“Coal Agreement”) dated February 4, ~~oil~~2010. Pursuant to the Assignment and ~~gas~~Coal ~~rights~~Agreement, ofthe Company paid in cash $150,000 to JBM and signed a ~~mineral~~5% ~~property~~promissory ~~located~~note with a face value of $1,750,000 (“Coal Promissory Note”) to JBM. During the first 2 years, the note carried no interest. On July 9, 2010 and January 9, 2011 cash payments of $200,000 and $200,000, respectively, were paid towards Coal Promissory Note. An additional amount of $100,000 was to be paid 90 days following the completion of the Reserve Study and Mining Plan, to be no later than April 9, 2012. Interest only payments on the $1,250,000 balance were to be made quarterly during the third and fourth years, starting July 9, 2012. Starting July 9, 2014, the principal balance of $1,250,000 was to be paid in ~~Judith~~8 ~~Basin~~equal ~~County~~quarterly installments, ~~Montana~~plus ~~for~~accrued ainterest ~~total~~on ~~consideration~~the unpaid principal balance to date of each principal payment. The Company has made one interest payment of $215,~~670~~625 as of September 30,~~500~~ 2012, and one interest payment of $15,625 subsequently.

On March 3126, ~~2010~~2012, the Company, ~~Future Gas Holdings, Ltd. (“Future Gas”) and JBM Energy Company, LLC (“JBM”)~~ entered into an ~~Assignment~~Amended ~~of Coal Agreement (“Assignment”) to transfer~~ and ~~assign~~Restated ~~all the rights and obligations of Future Gas to the Company to purchase all coal mineral rights owned by JBM under a~~ Coal Buy ~~and~~ Sell Agreement (~~“Agreement”) dated February 4, 2010. Pursuant to~~ the ~~Assignment and Agreement, the Company paid in cash $150,000 to JBM and signed a 5% promissory note with a face value of $1,750,000 (~~“~~Promissory~~Coal ~~Note 1~~Amendment”) ~~to JBM. During the first 2 years~~, ~~the~~by ~~note carries no interest. On July 9, 2010~~ and ~~January~~between ~~9, 2011 additional cash payments of $200,000 and $200,000, respectively, was paid towards Promissory Note 1. An additional amount of $100,000 is to be paid 90 days following~~ the ~~completion~~Company ~~of the Reserve Study~~ and ~~Mining Plan~~JBM, toamending ~~be no later than April 9, 2012. Interest only payments on the $1,250,000 balance shall be made quarterly during the third~~ and ~~fourth~~restating ~~years, starting July 9, 2012. Starting July 9, 2014,~~ the ~~principal~~terms ~~balance~~ of ~~$1,250,000 shall be paid in 8 equal quarterly installments, plus accrued interest on~~ the ~~unpaid~~Coal principal balance to date of each principal payment. The promissory note to facilitate the agreements is contracted at an interest rate substantially below market rates for similar types of coal properties. AccordinglyAgreement, ~~the~~dated ~~Company~~as ~~imputed a discount~~ of ~~$613,812~~February ~~at a market interest rate of 16% in accordance FASB ASC 835~~4,~~”Interest”. Should~~ ~~the Company make all necessary payments as indicated~~2010, upby ~~until April 9, 2012~~ and ~~completes~~between ~~the~~JBM ~~Reserve Study~~ and ~~Mining~~Future ~~Plan as anticipated in the agreement~~Gas, ~~but~~which ~~defaults~~Coal onAgreement ~~the~~was ~~$1,250,000~~subsequently ~~balance,~~assigned ~~the~~by ~~coal~~Future ~~property~~Gas ~~will be returned~~ to ~~JBM and~~ the Company ~~will~~pursuant ~~receive~~to athat ~~40%~~certain ~~equity interest in JBM and the $1~~Assignment,~~250,000~~ ~~balance~~dated ~~will~~as be cancelled. Otherwise, if the Company defaults on Promissory Note 1, JBM at its option may terminate the agreement and or initiate action for any other remedy under the law. At September 30, 2011, Promissory Note 1 is presented net of ~~unamortized~~March ~~debt discount of $381~~31,~~808~~ (2010 ~~- $528~~,~~906).~~ ~~Under~~by ~~the~~and ~~Coal~~among ~~Buy~~JBM, ~~Sell~~Future ~~Agreement~~Gas, ~~JBM will be paid a royalty of $0.25 per ton on all coal when~~ and ~~as mined from~~ the ~~coal property~~Company.

The Coal Amendment extended the date upon which the Company must complete a reserve study and mine feasibility study from April 9, 2012 to April 9, 2013. However, the Company represents that it will make every effort in good faith to complete its drilling plan in 2012 and have Weir International, Inc. finalize and prepare a preliminary reserve study and mine feasibility study and mining plan as soon as possible thereafter. The Coal Amendment also provides that the Company’s payment of $100,000 to JBM that was previously due 90 days following the completion of the mining and reserve study and to be no later than April 9, 2012 is now due on the earlier of (i) sixty (60) days following the effective date of the registration statement (the "Registration Statement") with respect to the Amended and Restated Standby Equity Distribution Agreement (the “SEDA”), dated as of June 13, 2012, by and between the Company and YA Global Master SPV Ltd. or (ii) December 9, 2012, and delayed the first interest payment due under the Coal Agreement until July 9, 2012. Finally, the Company’s payment obligations under the Coal Amendment are evidenced by an amended and restated promissory note of the Company in favor of JBM, dated as of March 26, 2012, with a current principal balance of $1,350,000, an interest rate of 5% per annum and monthly payments of $100,000 plus accrued interest commencing on April 9, 2013 (the “Amended Coal Promissory Note”). The Amended Coal Promissory Note replaces the Coal Promissory Note, dated as of April 9, 2010, by the Company in favor of JBM.

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, ~~2011~~2012 and ~~2010~~2011

(Audited)

NOTE 54 – COAL AND OTHER MINERAL PROPERTIES (continued)

OnThe ~~March~~Amended ~~31,~~Coal ~~2010,~~Promissory ~~the~~Note ~~Company,~~to ~~Future~~facilitate ~~Gas~~the ~~Holdings,~~agreements ~~Ltd.~~is ~~(“Future~~contracted ~~Gas”)~~at ~~and Russell B. Pace, Jr. (“Pace”) entered into~~ an ~~Assignment~~interest ~~and~~rate ~~Assumption~~substantially ofbelow ~~Mineral~~market ~~Agreement~~rates tofor ~~transfer~~similar ~~and~~types ~~assign all the rights and obligations~~ of ~~Future Gas to the Company to purchase all mineral rights (except~~ coal), ~~oil and gas rights owned by Pace under a Mineral Buy and Sell Agreement dated February 4, 2010~~properties. ~~Pursuant~~ ~~to the Mineral Buy and Sell Agreement~~Accordingly, the Company ~~issued~~imputed ~~1,000,000~~a ~~shares~~discount of ~~its common stock valued at~~ $50186,~~000~~392 ~~($0.05~~at ~~per share), signed~~ a 5%market ~~promissory~~interest ~~note~~rate ~~with~~of aapproximately ~~face~~16% ~~value~~in ofaccordance ~~$1,950,000~~FASB ~~(“Promissory~~ASC ~~Note 2~~835,”)Interest”. OnShould ~~October~~the 9,Company ~~2010~~make ~~and~~all ~~April~~necessary ~~9, 2011 additional cash~~ payments ofas ~~$200~~indicated,~~000~~ ~~and~~up ~~$200,000,~~until ~~respectively,~~December ~~was paid towards Promissory Note 2. Additional amounts of $100~~9,~~000~~ ~~and~~2012 ~~$200,000 are to be paid 90 days~~ and ~~180~~completes ~~days, respectively, following~~ the ~~completion of the~~ Reserve Study and Mining Plan, toas beanticipated noin ~~later~~the ~~than April 9~~agreement, ~~2012.~~but ~~Interest~~defaults ~~only payments~~ on the $1,250,000 balance ~~shall be made quarterly during the third and fourth years~~, ~~starting July 9, 2012. Starting, July 9, 2014,~~ the ~~principal~~coal ~~balance~~property ofwill ~~$1,250,000 shall~~ be ~~paid~~returned ~~in 8 equal quarterly installments, plus accrued interest on the unpaid principal balance~~ to ~~date~~JBM ofand ~~each principal payment. The promissory note to facilitate~~ the ~~agreements~~Company iswill ~~contracted~~receive ata an40% equity interest ~~rate~~in ~~substantially~~JBM ~~below market rates for similar types of mineral, oil~~ and ~~gas properties. Accordingly,~~ the ~~Company imputed a discount of~~ $~~680~~1,~~688~~250,000 atbalance awill ~~market~~be ~~interest rate of 16% in accordance FASB ASC 835, “Interest”~~cancelled. IfOtherwise, if the Company defaults on Amended Coal Promissory Note 2, ~~Pace~~JBM at ~~his~~its option may terminate the agreement and or initiate action for any other remedy under the law. At September 30, ~~2011~~2012, Amended Coal Promissory Note 2 is presented net of unamortized debt discount of $~~395~~108,~~634~~223 (~~2010~~2011 - $~~576~~381,~~823~~808). Under the Mineral Buy Sell Agreement, Pace is due a royalty equal to 20% of all royalties and other payments received by the Company as a result of any lease of the of the mineral property conveyed and 20% of all net cash proceeds and/or other consideration received by the Company from the sale or disposal of the mineral, oil and gas property.

~~Furthermore,~~Under the ~~Company~~Coal ~~issued 1~~Amendment,~~000,000~~ ~~shares~~JBM ofwill ~~its~~be ~~common~~paid ~~stock~~a ~~valued~~royalty atof $~~50,000 ($~~0.0525 per ~~share)~~ton toon ~~Future~~all ~~Gas~~coal ~~for~~when ~~the~~and ~~assignment~~as ofmined ~~such~~from ~~agreements~~the coal property.

Mineral Agreement and Amendment

On April 9, 2010, the Company, Future Gas and Russell B. Pace, Jr. (“Pace”) entered into an Assignment and Assumption of Mineral Agreement (“Mineral Agreement”) to transfer and assign all the rights and obligations of Future Gas to the Company to purchase all mineral rights (except coal), oil and gas rights owned by Pace under a Mineral Buy and Sell Agreement dated February 4, 2010. Pursuant to the Mineral Buy and Sell Agreement, the Company issued 1,000,000 shares of its common stock valued at $50,000 ($0.05 per share), signed a 5% promissory note with a face value of $1,950,000 (“Mineral Promissory Note”). On October 9, 2010 and April 9, 2011 cash payments of $200,000 and $200,000, respectively, was paid towards Mineral Promissory Note. Additional amounts of $100,000 and $200,000 were to be paid 90 days and 180 days, respectively, following the completion of the Reserve Study and Mining Plan, to be no later than April 9, 2012. An interest only payment on the $1,250,000 balance was to be paid quarterly during the third and fourth years, starting July 9, 2012. Starting, July 9, 2014, the principal balance of $1,250,000 were to be paid in 8 equal quarterly installments, plus accrued interest on the unpaid principal balance to date of each principal payment.

On April 9, 2010, the Company agreed to issue 300,000 common shares of common stock valued at $15,000 ($0.05 per share), to the parties involved in the Assignment of Coal Agreement and Assignment and Assumption of Mineral Agreement as introduction and assignment compensation. The shares were issued on August 27, 2010.

Furthermore, the Company issued 1,000,000 shares of its common stock valued at $50,000 ($0.05 per share) to Future Gas for the assignment of such agreements

On March 26, 2012, the Company entered into an Amended and Restated Mineral Buy Sell Agreement (the “Mineral Amendment”), by and between the Company and Pace, amending and restating the terms the Mineral Agreement, dated as of February 4, 2010, by and between Pace and Future Gas, which Mineral Agreement was subsequently assigned by Future Gas to the Company pursuant to that certain Mineral Agreement, dated as of April 9, 2010, by and among Pace, Future Gas, and the Company.

The Mineral Amendment delays the Company’s payment of $100,000 to Pace until the earlier of (i) sixty (60) days following the effective date of the Registration Statement or (ii) December 9, 2012, and delays the first interest payment due under the Mineral Agreement until July 9, 2012. An additional $200,000 will be payable to Pace upon the earlier of (i) ninety (90) days following the effective date of the Registration Statement or (ii) December 9, 2012. The $100,000 and $200,000 amounts were to be previously paid 90 days and 180 days, respectively, following the completion of the Reserve Study and Mining Plan, to be no later than April 9, 2012. Finally, the Company’s payment obligations under the Mineral Agreement are evidenced by an amended and restated promissory note of the Company in favor of Pace, dated as of March 26, 2012, with a current principal balance of $1,550,000, an interest rate of 5% per annum and monthly payments of $100,000 plus accrued interest commencing on April 9, 2013 (the “Amended Mineral Promissory Note”). The Amended Mineral Promissory Note replaces the Mineral Promissory Note, dated as of April 9, 2010, by the Company in favor of Pace.

The Amended Mineral Promissory Note to facilitate the agreements is contracted at an interest rate substantially below market rates for similar types of mineral, oil and gas properties. Accordingly, the Company imputed a discount of $200,363 at a market interest rate of approximately 16% in accordance FASB ASC 835, “Interest”. If the Company defaults on Amended Mineral Promissory Note, Pace at his option may terminate the agreement and or initiate action for any other remedy under the law. At September 30, 2012, Amended Mineral Promissory Note is presented net of unamortized debt discount of $109,775 (2011 - $395,634).

Under the Mineral Buy Sell Agreement, Pace is due a royalty equal to 20% of all royalties and other payments received by the Company as a result of any lease of the mineral property conveyed and 20% of all net cash proceeds and/or other consideration received by the Company from the sale or disposal of the mineral, oil and gas property.

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Audited)

NOTE 4 – COAL AND OTHER MINERAL PROPERTIES (continued)

Loss on Extinguishment of Debt

In accordance with ASC Topic No. 470, “Debt – Modifications and Extinguishments” (Topic 470), the transactions noted above were determined to be an extinguishment of the existing debt and an issuance of new debt. As a result, we recorded a loss on the extinguishment of debt in the amount of $233,062 in the line item “Loss on extinguishment of debt” in the Statements of Operations.

Consulting Agreement

Pursuant to a Consulting Agreement dated as of February 4, 2010 between Pace and Future Gas assigned to the Company on March 31, 2010, Pace agreed to provide consulting services to Future Gas concerning the coal property conveyed to Future Gas by JBM in the Coal Buy and Sell Agreement, and other minerals conveyed to Future Gas by Pace in the Mineral Buy and Sell Agreement. Future Gas agreed to pay Pace $5,000 on the first day of the month following the closing date of the Coal Buy and Sell Agreement and on the first day of each following month during for a period of one year subject to the option of Pace to extend this Consulting Agreement for two successive one year terms. Pace's rights to further compensation under this Consulting agreement will terminate upon termination of the Coal Buy and Sell Agreement by either party as authorized under said Coal Buy and Sell Agreement. Pace agreed to make himself available to perform consulting services for Future Gas for 5 days during each paid month. Future Gas had the option to require Pace to perform consulting services for an additional 5 days during each paid month for an additional $1,000 per each additional day. If Future Gas required more than 10 days per paid month, Pace had the option to decline or if accepted, Future Gas agreed to pay Pace $500 per each additional day. The Consulting Agreement is for services received by the Company after the purchase of the mineral property and is accounted for as an expense in the statements of operations.

NOTE 65 -– ~~CAPITAL~~SHAREHOLDERS’ ~~STOCK~~EQUITY (DEFICIT)

Share Capital

The Company’s capitalization is 500,000,000 shares of common stock with a par value of $0.001 per share. No preferred shares have been authorized or issued.

On August 13, 2007, a former director purchased 44,200,000 shares of the common stock in the Company for $8,500, recognizing a loss of $35,700. ~~During July and August 2008, the Company sold 43,180,000 shares for $3,810, recognizing a loss of $39,370.~~

During July and August 2008, the Company sold 43,180,000 shares for $3,810, recognizing a loss of $39,370.

On January 25, 2010, a former director forgave a loan in the amount of $16,198 which was owed to the director by the Company.

On January 25, 2010, the Company announced a change in control of the Company. Johannes Petersen, a director of the Company acquired 98.63% of the issued and outstanding shares of stock of the Company from Pamela Hutchinson and Andrea Mizuhima pursuant to the terms and conditions of two Agreements for the Purchase of Common Stock, dated November 20, 2009.

On April 9, 2010, as a result of the execution of the Mineral Buy and Sell Agreement, the Company was obligated to issue 1,000,000 shares of its common stock valued at $50,000 ($0.05 per share) to Russell B. Pace, Jr. The shares were issued on August 27, 2010.

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2011 and 2010

(Audited)

NOTE 6 - CAPITAL STOCK – (continued)

On April 9, 2010, the Company agreed to issue 300,000 common shares valued at $15,000 ($0.05 per share) to the parties involved in the Assignment of Coal Agreement and Assignment and Assumption of Mineral Agreement as introduction and assignment compensation. The shares were issued on August 27, 2010.

On April 9, 2010, the Company agreed to issue 1,000,000 shares of common stock valued at $50,000 ($0.05 per share) to JBM Energy Company, LLC in lieu of a $50,000 cash payment due under a Coal Buy and Sell Agreement. The shares were issued on August 27, 2010.

Effective April 30, 2010, the President and Chairman of the Board entered into an agreement with the Company whereby 2,845,800,000 shares of the outstanding common stock of the Company were canceled and returned to the pool of the Company’s authorized and unissued shares of common stock. Since the shares under this agreement have been cancelled without the exchange of consideration to reduce number of shares outstanding, the Company considered the change in capital structure from the cancellation agreement in substance a reverse stock split. In accordance with SAB Topic 4-C, the Company recorded the cancellation retroactively as a reduction to the par value of common stock with a corresponding increase to additional paid-in capital.

Effective April 30, 2010, the Board of Directors authorized a 340 for 1 forward stock split on the issued shares of common stock. The authorized number of shares of common stock was increased from 75,000,000 to 500,000,000 shares with a par value of $0.001. All references in the accompanying financial statements to the number of common shares have been restated to reflect the forward stock split.

On June 30, 2010, the Company closed a private placement consisting of 800,000 shares of common stock at a purchase price of $0.50 per share, for gross proceeds of $400,000.

On August 1, 2010, the Company entered into an independent consultant agreement with CEO and Director Alvaro Valencia in which Mr. Valencia is entitled to receive over a period of 4 years, up to an aggregate amount of 4,000,000 of restricted shares of the Company’s common stock. The shares are to vest and be issued at the end of each three month period. As of September 30, 2011, Mr. Valencia had earned a total of 1,166,667 shares valued at $852,500, of which 166,667 shares valued at $160,000 had been recognized as compensation expense as of September 30, 2010 and 1,000,000 shares valued at $692,500 had been recognized as compensation expense as of September 30, 2011. A total of 500,000 shares were issued to Mr. Valencia on April 5, 2011 and the additional 666,667 were issued subsequent to September 30, 2011.

On September 10, 2010, the Company agreed to enter into a debt to equity conversion as a means of settling the outstanding loan and interest amount of $208,603 by issuing 417,205 shares. The fair value of the shares was $446,410, of which $237,807 was recognized as a loss on debt settlement in the statements of operations.

As of September 30, 2010, the Company recorded $160,000 for stock-based compensation payable related to 166,667 shares of common stock due to Mr. Alvaro Valencia, CEO and director of the Company, valued at the closing price of $0.96 per share of common stock as of September 30, 2010.

On October 5, 2010, the Company entered into a Private Placement Subscription for Non U.S. Subscribers with Black Sands Holdings, Inc., to subscribe to and purchase 595,238 units valued at $0.84 per unit for an aggregate purchase price of $500,000. Each unit comprises one share of common stock and one warrant of the Company. Each warrant entitles the holder to purchase one additional share of common stock of the Company at an exercise price of $1.26 per share for a period of three years.

On January 25, 2011, the Company entered into a Private Placement Subscription for Non U.S. Subscribers with Black Sands Holdings, Inc., to subscribe to and purchase 449,438 units valued at $0.89 per unit for an aggregate purchase price of $400,000. Each unit comprises one share of common stock and one warrant of the Company. Each warrant entitles the holder to purchase one additional share of common stock of the Company at an exercise price of $1.34 per share for a period of three years.

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, ~~2011~~2012 and ~~2010~~2011

(Audited)

NOTE 65 -– ~~CAPITAL~~SHAREHOLDERS’ ~~STOCK~~EQUITY –(DEFICIT) (continued)

Share Capital (continued)

On June 30, 2010, the Company closed a private placement consisting of 800,000 shares of common stock at a purchase price of $0.50 per share, for gross proceeds of $400,000.

On August 1, 2010, the Company entered into an independent consultant agreement with CEO and Director, Alvaro Valencia, in which Mr. Valencia is entitled to receive over a period of 4 years, up to an aggregate amount of 4,000,000 of restricted shares of the Company’s common stock. The shares are to vest and be issued at the end of each three month period. For the years ended September 30, 2012, 2011 and 2010, Mr. Valencia has earned a total 1,000,000, 1,000,000 and 167,667 shares valued at $133,833, $692,500 and $133,833, respectively, The shares were valued based on the closing price of our common stock on the date the stock grant vested.

On February 23, 2011, the Company entered into a Private Placement Subscription for Non U.S. Subscribers with Black Sands Holdings, Inc., to subscribe to and purchase 510,204 units valued at $0.98 per unit for an aggregate purchase price of $500,000. Each unit comprises one share of common stock and one warrant of the Company. Each warrant entitles the holder to purchase one additional share of common stock of the Company at an exercise price of $1.47 per share for a period of three years.

On April 5, 2011, the Company issued 417,205 shares to settle the debt to equity conversion agreement entered into ~~during~~September ~~the~~10, ~~prior year~~2010, as a means of settling an outstanding loan and interest amount of $208,603. On April 6, 2010, the Company obtained the loan settled in the amount of $200,000, bearing interest of 10% per annum from Black Sands Holdings, Ltd. The fair value of the shares was $446,410, of which $237,807 was recognized as a loss on debt settlement in the statement of operations infor the ~~prior~~ year ended September 30, 2010. These shares were previously recorded as stock payable at September 30, 2010.

On April 5, 2011, the Company issued a total of 500,000 shares to Mr. Alvaro Valencia, CEO and Director of the Company, asin ~~per~~accordance with his Independent Consulting Agreement. These shares were previously recorded as a stock payable.

On August 9, 2011, the Company entered into a Private Placement Subscription for Non U.S. Subscribers with Black Sands Holdings, Inc., to subscribe to and purchase 2,727,273 units valued at $0.22 per unit for an aggregate purchase price of $600,000. Each unit comprises one share of common stock and one warrant of the Company. Each warrant entitles the holder to purchase one additional share of common stock of the Company at an exercise price of $0.33 per share for a period of three years. The shares for this Private Placement were not issued by September 30, 2011 and, as such, the $600,000 proceeds were recorded as stock payable on the balance sheet.

On December 12, 2011, the Company issued a total of 2,727,273 shares, valued at $600,000, to Black Sands Holding Inc. These shares were previously recorded as stock payable on September 30, 2011.

On December 12, 2011, the Company issued a total of 750,000 shares to Mr. Alvaro Valencia, CEO and Director of the Company in accordance with his Independent Consulting Agreement. These shares were previously recorded as a stock payable.

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Audited)

NOTE 5 – SHAREHOLDERS’ EQUITY (DEFICIT) (continued)

Share Capital (continued)

On February 17, 2012, the Company issued a total of 734,394 shares common stock to YA Global Master SPV Ltd. as a commitment fee for the following contemplated transitions:

(1)

On February 17, 2012, the Company entered into a Standby Equity Distribution Agreement (“SEDA”) with YA Global Master SPV Ltd. (“YA Global”) pursuant to which the Company may, at its sole and exclusive option, periodically sell to YA Global, and YA Global agrees to purchase shares of its common stock, $0.001 par value per share for a total purchase price of up to four million dollars ($4,000,000). Each sale of Common Stock, pursuant to an advance notice under the SEDA (each an “advance notice”), shall be limited to the greater of (1) $250,000 and (2) the average of the daily value traded for each of the 10 trading days prior to the applicable advance notice. For each share of Common Stock purchased pursuant to the SEDA, YA Global will pay to the Company ninety-five (95%) of the market price, defined as the average of the two lowest daily volume weighted average price of the Common Stock during the five (5) consecutive trading days following delivery by the Company of an advance notice, which price shall not be less than 90% of the volume weighted average price on the trading day prior to the advance notice date. Under the SEDA, the Company cannot sell shares of Common Stock until such time as it files with the Securities and Exchange Commission (“SEC”) a registration statement (the “Registration Statement”) registering the resale of the shares of Common Stock to be sold to YA Global, and such registration statement is declared effective by the SEC. The Company is not obligated to sell any shares of Common Stock under the SEDA and there are no minimum commitments or minimum use penalties. The SEDA, unless terminated by the Company, shall terminate on the earlier of (i) March 1, 2014, or (ii) the date on which YA Global

(2)

On February 17, 2012, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with YA Global pursuant to which the Company may issue and sell to YA Global, and YA Global shall purchase, secured convertible notes (the “Notes”) in an aggregate principal amount of up to $200,000, which Notes are convertible into Common Stock. The Company may notify YA Global in writing of its intent to sell a Note to YA Global at any time and from time to time after the Company’s initial filing of the Registration Statement and prior to the earlier of the date on which such Registration Statement is declared effective by the SEC and August 13, 2012, subject to the satisfaction (or waiver) of certain terms and conditions. Notes are issuable with principal amounts not to exceed $50,000 and, other than with respect to the first Note purchased by YA Global, there must be at least 30 days between Note Purchases.

Each Note issued pursuant to the Note Purchase Agreement shall mature on August 13, 2012 and shall bear interest at a rate equal to 8% per annum, payable upon the maturity of such Note. In addition, YA Global shall have the right to convert any portion of any outstanding Note, including any accrued interest, into shares of Common Stock, at a conversion rate equal to the daily volume weighted average price of the Common Stock for the three trading days prior to such Note’s issuance (the “Conversion Price”). The Company may also redeem all or any portion of any outstanding Notes, including any accrued interest, upon advanced written notice to YA Global, provided that the daily volume weighted average price of the Common Stock on the date of redemption is greater than the Conversion Price.

The commitment fee’s estimated value of $117,503 is based on the closing price of our common stock at February 17, 2012 and is included in the line item “Office and general” in Statements of Operations.

On June 13, 2012, the Company entered into a Termination Agreement with YA Global terminating the Note Purchase Agreement dated as of February 17, 2012, by and between the Company and YA Global.

Concurrently with the termination of the Note Purchase Agreement, on June 13, 2012, the Company entered into an Amended and Restated Standby Equity Distribution Agreement with YA Global (“Amended SEDA”) to clarify the obligations of the parties pursuant to the Standby Equity Distribution Agreement, dated as of February 17, 2012, by and between the Company and YA Global.

On February 21, 2012, the Company entered into a Private Placement Subscription for Non U.S. Subscribers with Black Sands Holdings, Inc., to subscribe to and purchase 1,666,667 units valued at $0.12 per unit for an aggregate purchase price of $200,000. Each unit consists of one share of the Company’s common stock and one warrant. Each warrant entitles the holder to purchase one additional share of the Company’s common stock at an exercise price of $0.18 for a period of three years.

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Audited)

NOTE 5 – SHAREHOLDERS’ EQUITY (DEFICIT) (continued)

Share Capital (continued)

On September 20, 2012, the Company entered into a Private Placement Subscription for Non U.S. Subscribers with Black Sands Holdings, Inc., to subscribe to and purchase 1,666,667 units valued at $0.06 per unit for an aggregate purchase price of $100,000. Each unit consists of one share of the Company’s common stock and one warrant. Each warrant entitles the holder to purchase one additional share of the Company’s common stock at an exercise price of $0.09 for a period of three years.

Stock Payable

At September 30, 2012, under the Independent Consultant Agreement between the Company and the CEO, 166,667 shares of common stock were recorded in stock payable on the balance sheet at an estimated value of $18,333 based on the closing price of our shares of common stock at September 30, 2012.

Warrants

The following is a summary of the common stock warrants granted, forfeited or expired and exercised.

		Warrants		Weighted Average Exercise Price Per Shares
		Weighted Average Exercise
Outstanding – October 1, 2010			0	$	0.00
	Warrants	Price Per Shares
Granted			4,282,153	$	0.70
Outstanding – October 1, 2010	0	$0.00
Forfeited or expired			0	$	0.00
Granted	4,282,153	$0.70
Exercised			0	$	0.00
Forfeited or expired	0	$0.00
Outstanding – September 30, 2011			4,282,153	$	0.70
Exercised	0	$0.00
Outstanding – September 30, 2011	4,282,153	$0.70
Granted	3,333,334	$0.14
Forfeited or expired	0	$0.00
Exercised	0	$0.00
Outstanding – September 30, 2012	7,615,487	$0.45

As of September 30, ~~2011~~2012, the Company has the following warrants to purchase common stock outstanding:

Number of Warrants Issued			Warrant Exercise Price Per Share		Warrant Expiration Date
Number of	Warrant Exercise	Warrant
	595,238		$	1.26	October 5, 2013
Warrants Issued	Price Per Share	Expiration Date
	449,438		$	1.34	January 25, 2014
595,238	$1.26	October 5, 2013
	510,204		$	1.47	February 23, 2014
449,438	$1.34	January 25, 2014
	2,727,273		$	0.33	August 9, 2014
510,204	$1.47	February 23, 2014
	4,282,153
2,727,273	$0.33	August 9, 2014
1,666,667	$0.18	February 21, 2015
1,666,667	$0.09	September 20, 2015
7,615,487

AMERICAN POWER CORP.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, ~~2011~~2012 and ~~2010~~2011

(Audited)

NOTE 76 – INCOME TAXES

As of September 30, ~~2011~~2012, the Company had net operating loss carry forwards of $12,~~158~~083,~~146~~223 that may be available to reduce future years’ taxable income through 2029 to ~~2031~~2032. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carryforwards.

Components of net deferred tax assets, including a valuation allowance, are as follows at September 30, ~~2011~~2012 and ~~2010~~2011:

Deferred tax assets:	~~2011~~2012			~~2010~~2011
Net operating loss carryforward	$	1,158,146		$	226,869
Net operating loss carry forward	$	2,083,223		$	1,158,146
Total deferred tax assets	$	~~405~~729,~~351~~128		$	79405,~~404~~351
Less: Valuation allowance		(~~405~~729,~~351~~128	)		(79405,~~404~~351	)
Net deferred tax assets	$	-		$	-

The valuation allowance for deferred tax assets as of September 30, ~~2011~~2012 was $~~405~~729,~~351~~128. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of September 30, ~~2011~~2012.

Reconciliation between the statutory rate and the effective tax rate is as follows at September 30, ~~2011~~2012 and ~~2010~~2011:

	2011			2010
	2012			2011
Federal statutory tax rate		(35.0	)%		(35.0	)%
Stock-based compensation		125.0	%		712.0	%
Interest accretion		67.0	%		96.0	%
Loss on extinguishment		5.0	%		~~10.~~0	%
Valuation allowance		1718.0	%		917.0	%
		-	%		-	%

NOTE 87 - SUBSEQUENT EVENTS

On ~~December~~October 123, ~~2011~~2012, the Company ~~issued~~entered ~~2,727,273~~into ~~shares~~a ofPrivate ~~common~~Placement ~~stock~~Subscription tofor Non U.S. Subscribers with Black Sands Holdings, Inc., to ~~settle~~subscribe ato ~~Private~~and ~~Placement~~purchase ~~Subscription~~1,265,823 ~~Agreement~~units ~~entered~~valued onat ~~August~~$0.079 9per unit for an aggregate purchase price of $100,000. Each ~~2011~~unit consists of one share of the Company’s common stock and one warrant. ~~These~~ Each ~~shares~~warrant ~~were~~entitles ~~recorded~~the asholder to purchase one additional share of the Company’s common stock ~~payable~~at onan ~~September~~exercise ~~30,~~price ~~2011~~of $0.119 for a period of three years.

~~Additionally,~~On on December 1211, ~~2011~~2012, the Company ~~issued~~entered ~~750,000~~into ~~shares~~a ofSecond ~~common~~Amended ~~stock~~and toRestated ~~Mr.~~Promissory ~~Alvaro~~Note J.(the ~~Valencia,~~“Amended ~~CEO~~JBM Note”) in connection with that certain Amended and ~~Director~~Restated Coal Buy and Sell Agreement (the “Coal Agreement”) dated as of March 26, 2012, by and between the Company and JBM Energy Company, inLLC ~~accordance~~(“JBM”). ~~with~~The ~~his~~Amended ~~Independent~~JBM ~~Consultant~~Note ~~Agreement. Of~~replaces ~~these~~the ~~shares~~Amended and Restated Promissory Note with JBM Energy dated March 26, ~~500~~2012 to provide that the next payment of $100,000 ~~were~~due ~~recorded~~to asJBM ~~stock~~will ~~payable~~now be due upon the earlier of (i) sixty (60) days following the effective date of the registration statement on ~~September~~Form ~~30,~~S-1 ~~2011~~which the Company is filing with respect to that certain Amended and ~~250~~Restated Standby Equity Distribution Agreement dated as of June 13,~~000~~ ~~were~~2012 ~~fully~~by ~~vested~~and onbetween ~~October~~the 31Company and YA Global Master SPV Ltd. (the “Amended SEDA”) or (ii) March 9, ~~2011~~2013, instead of December 9, 2012 as previously provided.

Also on December 11, 2012, the Company entered into a Second Amended and Restated Promissory Note (the “Amended Pace Note”) in connection with that certain Amended and Restated Mineral Buy and Sell Agreement (the “Mineral Agreement”) dated as of March 26, 2012, by and between the Company and Russell B. Pace, Jr. (“Pace”). The Amended Pace Note replaces the Amended and Restated Promissory Note with Pace dated March 26, 2012 to provide that the next payment of $100,000 due to Pace will now be due upon the earlier of (i) sixty (60) days following the effective date of the registration statement on Form S-1 which the Company is filing with respect to the Amended SEDA or (ii) March 9, 2013, instead of December 9, 2012 as previously provided. The Amended Pace Note also provides that the next payment of $200,000 due to Pace will now be due upon the earlier of (i) ninety (90) days following the effective date of the registration statement or (ii) March 9, 2013, instead of December 9, 2012 as previously provided.

Filing Compare · AMERICAN POWER CORP.