10-K 1 g7041a.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: May 31, 2013 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number: 000-52410 SKY HARVEST ENERGY CORP. (Exact name of registrant as specified in its charter) Nevada N/A (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1200 West 73rd Street, 11th Floor, Vancouver, BC, Canada V6P 6G5 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (604) 267-3041 Securities registered pursuant to Section 12(b) of the Act Title of Each Class Name of each Exchange on which registered ------------------- ----------------------------------------- Nil N/A Securities registered pursuant to Section 12(g) of the Act Common Stock, par value $0.001 per share (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, 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. [ ] 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 [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] The aggregate market value of common stock held by non-affiliates of the registrant, based upon the last closing price of $0.02 for the registrant's common stock on November 30, 2012, the last business day of the registrant's most recently completed second fiscal quarter, as reported for such date by OTC Markets was approximately $209,956. Common stock held by each executive officer and director of the registrant and by each person who owns 5% or more of the outstanding common stock have been excluded from this computation because such persons may be deemed affiliates of the registrant. This determination of affiliate status for this purpose does not reflect a determination that any persons are affiliates for any other purposes. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 33,203,016 shares of common stock are issued and outstanding as of October 7, 2013 (including 15,680,016 shares of common stock reserved for issuance in exchange for certain outstanding exchangeable securities of the registrant). DOCUMENTS INCORPORATED BY REFERENCE Not Applicable SKY HARVEST ENERGY CORP. FORM 10-K FOR THE YEAR ENDED MAY 31, 2013 TABLE OF CONTENTS PART I ITEM 1 BUSINESS 4 ITEM 1A RISK FACTORS 11 ITEM 1B UNRESOLVED STAFF COMMENTS 11 ITEM 2 PROPERTIES 12 ITEM 3 LEGAL PROCEEDINGS 12 ITEM 4 MINE SAFETY DISCLOSURES 12 PART II ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 13 ITEM 6 SELECTED FINANCIAL DATA 14 ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 14 ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 17 ITEM 8 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 18 ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 37 ITEM 9A CONTROLS AND PROCEDURES 37 ITEM 9B OTHER INFORMATION 38 PART III ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 39 ITEM 11 EXECUTIVE COMPENSATION 42 ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 44 ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 46 ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES 46 PART IV ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES 48 SIGNATURES 51 2 FORWARD-LOOKING STATEMENTS This report contains forward-looking statements. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in Item 1A "Risk Factors" commencing on page 11 of this report, which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. In this report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common shares" refer to the common shares in our capital stock. As used in this annual report, the terms "we", "us", "our", the "Company" and "Sky Harvest" mean Sky Harvest Energy Corp. FOREIGN CURRENCY AND EXCHANGE RATES All amounts in this annual report are stated in United States Dollars unless otherwise indicated. 3 PART I ITEM 1. BUSINESS CORPORATE OVERVIEW We are a development stage company in the business of electrical power generation through the use of wind energy. We currently own leasehold interests in certain lands located in southwest Saskatchewan, Canada that comprise over 15,000 acres. Our agreements with land owners provide that we are permitted to erect wind power facilities on these properties for the purpose of generating and selling electricity. We also hold the right to explore certain additional lands in southwest Saskatchewan for the purpose of determining whether they possess wind resources that justify the erection of electrical power generation facilities on them. We have not generated any revenue from operations since our incorporation. We do not anticipate earning any revenue until we have secured a power purchase agreement to sell electricity that we generate, erected wind turbines on our properties, connected our wind turbines to the electrical supply grid, and commenced the production of electricity. There is no assurance that we will be able to accomplish any or all of these objectives. We were incorporated as Keewatin Windpower Corp. in the State of Nevada on February 25, 2005. We changed our name to Sky Harvest Windpower Corp. on September 1, 2009, and subsequently to Sky Harvest Energy Corp. on September 7, 2012. Our resident agent is Empire Stock Transfer Inc., 1859 Whitney Mesa Drive, Henderson, NV, 89014. We are a United States and British Columbia reporting public company, and our shares are quoted on the OTCQB under the symbol "SKYH". Our head office is located in Vancouver, Canada. OUR BUSINESS The business of Sky Harvest Energy Corp. consists of two segments. The first involves identifying potential wind power project sites in Canada in the range of 100 to 200 megawatt capacity, collecting wind data on the sites, evaluating the wind resource, and conducting initial environmental screening studies and community relations activities. The second segment involves the design, manufacture, and sale of vertical axis wind turbines. Subsequent to the fiscal year ended May 31, 2013, we acquired the intellectual property rights relating to a specific vertical axis wind turbine design, and leasehold interests in both manufacturing facilities and equipment from a private Canadian company. TECHNICAL BACKGROUND Electricity is generated by wind power using a turbine. Wind passing over the blades of the turbine causes them to rotate, driving a generator which produces electrical current. A turbine is capable of generating a specified number of megawatts, referred to as its "nameplate capacity". The total capacity of the project is calculated as the sum of the nameplate capacities of the turbines installed on the site. The number of turbines that can economically occupy a specified area of land depends upon a number of factors including the predominant wind direction, the topography of the property, the dimensions of the property, the size of the turbines and their relative positions on the property. The most important criteria for the assessment of a wind power project are the speed of the wind on a property, measured in meters per second, and the number of hours that the wind moves at various speeds. This calculation is referred to as the "capacity" of the wind resource. 4 In order for a wind power project to be profitable, the area in which it is located should have a wind resource that yields a net capacity factor of over 30%. The capacity factor (sometimes referred to as the load factor) of a wind project is the energy produced during a given period divided by the energy that would have been produced had the project been running continually and at maximum output, i.e.: Capacity Factor(CF)= electricity produced during the period (MW x h) ----------------------------------------------------------- installed capacity (MW) x number of hours in the period (h) As wind energy output is a cube function of wind speed, the fewer hours at higher wind speeds are significantly more valuable than more hours at lower wind speeds. A significant factor in assessing the viability of a power project is the proximity of the project to established electrical transmission lines. The project developer must pay to connect any wind turbines to this transmission line. These connection costs are typically justified if the property is within 15 miles of the transmission line. COMPETITIVE BUSINESS CONDITIONS The alternative energy business is currently experiencing a strong growth phase in North America. Several developers with existing generating facilities and new developers with land holdings are engaged in the wind power business in the province of Saskatchewan. We will be competing with other independent power producers for transmission and supply contracts. In addition, traditional fossil fuel producers in the region may be able to generate and supply electricity to customers at prices below historical levels, depending on market conditions for oil, coal, and natural gas. PRINCIPAL SUPPLIERS Wind, the "fuel" that drives a wind power generating plant is, by definition, free and inexhaustible. The major cost categories for a wind power project are the turbines, balance of station costs, which include all necessary infrastructures, and the cost of connection to the transmission grid. Once in operation, there are ongoing costs for monitoring, maintenance, repairs and replacement. The wind power business is global with the majority of turbines being manufactured in Europe and the United States. Existing wind power projects in Canada have generally selected turbines supplied by Vestas Wind Systems Inc. or General Electric Energy. Both of these companies have corporate offices in Canada. DISTRIBUTION METHODS OF THE PRODUCTS OR SERVICES Any electricity that a project produces will be sold to a public utility located in the province of Saskatchewan, or in the neighboring Canadian provinces of Alberta or Manitoba, or in the state of North Dakota. If a public utility other the Saskatchewan Power Corporation (SaskPower) purchases the electricity, the Company will be required to make application to SaskPower under the Open Access Transmission Tariff agreement (OATT) for permission to use its electricity distribution grid. We have not made application to SaskPower under the OATT. If we make such an application, there is no assurance that SaskPower will grant us access to the distribution grid, or that we would achieve access on acceptable terms. 5 POWER PURCHASE AGREEMENT AND DEPENDENCE ON MAJOR CUSTOMERS We intend to enter into an agreement, known as a power purchase agreement (PPA) to sell the electricity generated from our proposed wind power projects. PPAs typically include clauses regarding the price to be paid for the electricity in cents per kilowatt-hour, the term of the agreement (usually 10 to 20 years), terms of interconnection costs, and termination provisions. Due to our limited operations, it is unlikely that we will pursue a PPA independently. Instead, for each project, we will likely seek one or more potential joint venture partners that have wind power development experience and significant financial resources. To date, we have not entered into any joint venture agreements with any third parties relating to our projects. If we are able to execute a PPA with a third party, then we intend to undertake the construction of a wind power project on the properties in which we have a leasehold interest. Banks and other lenders will typically finance up to 75% of wind power construction costs subject to review of the wind assessment data and the PPA. The lender will ensure the project has sound fiscal parameters necessary to be profitable, namely the price to be received per megawatt hour and the number of megawatts of rated capacity. We have not had any specific communications with any representative of a debt financing institution regarding any proposed wind power project. Typical PPAs that power utilities in Canada execute provide for the supply of a specified number of megawatt-hours for a period of between ten and twenty years at a pre-determined fixed price. We expect that a future PPA will encompass all of the electricity that a particular project generates. For this reason, once we have entered into a PPA, we expect to be dependent upon that customer to a significant extent. We intend to enter into a PPA with a public utility in the province of Saskatchewan. As the public utilities in Saskatchewan are government entities, counterparty risk is expected to be significantly lower than it would be if the customer were a for-profit entity. If we are unable to enter into a PPA with a Saskatchewan provincial utility, we will consider executing a PPA with a similar utility in Manitoba, Canada, or with a for-profit utility in Alberta, Canada, or in the United States. If we enter into a PPA with a for-profit entity, counterparty risk will be increased. As of the date of this report, we have not commenced substantive negotiations with any prospective purchaser, and there is no assurance that we will be able to successfully conclude a PPA on acceptable terms. CURRENT PROJECTS We initially decided to focus on the acquisition and development of potential wind power projects in the Canadian province of Saskatchewan for several reasons, including the high quality wind resource, the paucity of existing wind power installations, aging fossil fuel generating infrastructure, growing public and political support for green energy in the province, and the participation of that province in the OATT. The OATT is an agreement which allows independent power producers to transmit electricity via the province's electrical grid to public utilities in Saskatchewan and to neighboring jurisdictions in Canada and the United States. KEEWATIN PROJECT In June 2005, we identified a potential wind resource location, and in August 2005, we entered into an agreement with a land owner allowing the Company to erect a meteorological tower on land located in southwestern Saskatchewan. We 6 erected a tower on the property in early October 2005 and commenced gathering wind data. As of the date of this report, we have assessed wind speed data from the Keewatin site and have determined that the property has a wind resource that warrants the further collection and evaluation of wind data, and the commencement of initial engineering studies, environmental screening, and community relations activities. Based on the wind data collected, we have identified the area in which we desire to acquire the rights to erect wind turbines. We believe that this area is ideally situated as it is removed from population centers, and is less than five miles from the nearest provincial electricity transmission line. We have commenced initial negotiations with additional land owners in the region to acquire the rights to erect wind turbines at identified locations. However, no land lease agreements have been concluded and there is no assurance that we will be able to acquire the necessary rights on acceptable terms. As of the date of this report, we have not applied for any government permits or approvals for this project. Prior to generating any revenue from the Keewatin project, we must accomplish the following business objectives: * Identify the lands over which we wish to acquire lease rights, and enter into lease agreements with the owners of those lands, * Complete initial engineering and environmental screening studies on the leased lands; * Identify a joint venture partner with the financial and operational resources necessary to construct and operate the project, and conclude a joint venture and development agreement with the joint venture partner on terms acceptable to both parties; * In concert with the joint venture partner, complete the necessary engineering and environmental studies, and obtain all necessary permits; * In concert with the joint venture partner, negotiate a PPA with a public utility; * In concert with the joint venture partner, arrange the equity and debt financing to fund the construction of the project; * Complete the construction of the project; * Arrange for the connection of the project to the provincial electricity transmission grid; and * Commence the generation of electricity. SKY HARVEST PROJECT In October 2005, Sky Harvest - Saskatchewan, which subsequently became our subsidiary, identified a potential wind power project site in southwestern Saskatchewan and commenced the collection of wind data. Analysis of the data collected indicates that the potential wind resource on the property exceeds the minimum capacity factor necessary to justify the planning and construction of a 150 megawatt wind power project on the site. We acquired Sky Harvest - Saskatchewan in July as we believe that in addition to being located in an excellent wind resource area, the project is ideally situated as it is removed from population centers, and is less than five miles from the nearest provincial electricity transmission line. At the time of our acquisition of Sky Harvest - Saskatchewan, its principal shareholders were two of our current directors, William Iny and Greg Yanke, as well as a former director of the Company. Sky Harvest - Saskatchewan has concluded land lease agreements with landowners allowing us to erect wind turbines on approximately 15,000 acres. We have also completed initial engineering and environment screening studies on the site. At the initiation of the project, Sky Harvest - Saskatchewan committed to involve 7 the local community in the development process and has fully briefed local council members on the details of the proposed development. The local municipal authority responded positively to the proposed project and voted unanimously to amend a by-law allowing wind power development in the rural municipality. As of the date of this report, we have not applied for any government permits or approvals for the project. Prior to generating any revenue from the Sky Harvest project, we must accomplish the following business objectives: * Identify a joint venture partner with the financial and operational resources necessary to construct and operate the project, and conclude a joint venture and development agreement with the joint venture partner on terms acceptable to both parties; * In concert with the joint venture partner, complete the necessary engineering and environmental studies, and obtain all necessary permits; * In concert with the joint venture partner, negotiate a PPA with a public utility; * In concert with the joint venture partner, arrange the equity and debt financing to fund the construction of the project; * Complete the construction of the project; * Arrange for the connection of the project to the provincial electricity transmission grid; and * Commence the generation of electricity. MATADOR PROJECT In 2007, we identified an additional potential wind power generation location near Beechy, Saskatchewan known as the Matador Pasture and entered into an agreement under permit with the Government of Saskatchewan allowing us to erect a meteorological on certain land located in southwestern Saskatchewan. We erected this tower in autumn of 2007 and commenced gathering wind data. We have determined that the Matador project hosts a wind resource that warrants the additional collection and evaluation of wind data, as well as the commencement of initial engineering studies, environmental screening, and community relations activities. The project is removed from population centers and is traversed by a 230 kilovolt provincial electricity transmission line. The agreement with the Government of Saskatchewan respecting the lands that comprise the Matador project states that the government has no intention of permitting the study or development of wind power by another entity We have not entered into any land lease agreements relating to the Matador project. VERTICAL AXIS WIND TURBINE BUSINESS On July 19, 2013, we announced our acquisition of a vertical axis wind turbine manufacturing and sales business from a private Canadian company in consideration of the issuance of 650,000 shares of our common stock, cash payments totaling $65,000, and the grant of an option to the vendor to acquire up to 550,000 shares of our common stock at a price of $0.10 for a period of five years. This grant is pursuant to the Company's previously announced 2011 Stock Option Plan. In addition, we agreed to pay the vendor a royalty of $200 for every vertical axis wind turbine that we sell for a period of ten years. The vendor will also receive 500,000 voting shares of Sky Vertical Technologies Inc., our wholly-owned subsidiary that we incorporated for the purpose of holding the turbine assets, if that company's shares trade publicly on a recognized stock exchange or quotation system. As part of the agreement, we have 8 acquired the intellectual property rights relating to the turbine design, and leasehold interests in both manufacturing facilities and equipment. To date, we have received written expressions of interest for the purchase of over 13,000 vertical axis turbines from parties in four different countries. The sale of such number of turbines would generate revenue of approximately $250 million. Sky Harvest has also entered into discussions with additional parties with compatible technology regarding the potential joint venture development of additional wind turbine products. However, there is no guarantee that such sales will be completed or that we will enter into any agreement regarding the joint venture development of additional wind turbine technologies. Unlike traditional turbines, a vertical axis wind turbine has blades that spin around a vertical mast. They are primarily used in remote areas to provide electricity to communication towers, mines, and communities that typically rely on diesel or propane for power generation, which results in reduced costs to the user, as well as a smaller environmental impact through the reduced use of fossil fuels and no risk of on-site diesel spills. These turbines are also suitable for rural areas of developing countries where grid infrastructure is minimal or non-existent. They can also be mounted near the upper portion of commercial smoke stacks and are powered by the updraft. The principal advantages of a vertical axis wind turbine include low noise levels, minimal vibrations due to low RPM, the ability to utilize wind from any direction, ease of installation and maintenance, durability, and very low impact to wildlife. In addition, the Sky Harvest turbine is self-starting and begins to move at wind speeds as low as two meters per second and commence generating power at wind speeds of three meters per second. The additional advantages of the Sky Harvest turbine when compared to its competitors are its ability to withstand temperatures well below freezing and to operate without a driveshaft or gearbox. In addition to planned manufacturing and sales activities, we will also focus on further turbine research and development in order to introduce new products for commercial use. The company expects that this may include grant or joint venture opportunities with government entities, universities, and private corporations, though no such arrangements have been made and there is no guarantee that such joint ventures will materialize. The Board of Directors of Sky Vertical Technologies Inc., our wholly-owned subsidiary that holds the assets and will undertake operations, consists of Kyle Loney and Harry Bauskin. Mr. Loney acts as the subsidiary's President and Chief Executive Officer while Patricia J. Shorr will act as the Chief Financial Officer. Mr. Loney has acted as our project acquisition consultant since 2011. Mr. Bauskin and Ms. Shorr both act as directors of Sky Harvest since 2011. GOVERNMENT APPROVALS AND ENVIRONMENTAL LAWS In order to erect turbines on a property, the Company may need to apply for, and obtain, municipal permits relating to zoning and building. Until the Company determines the exact locations of the sites within the property upon which it intends to erect turbines, it will not be able to determine the specific permitting requirements for its project. However, the potential turbine sites for the Company's wind power project are located in areas well removed from significant population centers. The creation of a wind power project will also involve the excavation of portions of the land and the construction of concrete platforms below the land surface. Any development project of this nature is subject to the provisions of the Saskatchewan Environmental Assessment Act. Before excavation and construction can be commenced, the Company will need to obtain environmental approval from the Saskatchewan provincial government Ministry of the Environment. The Company must apply for approval by completing an environmental 9 impact assessment and statement, as well as by providing public notice of the proposed development. After the public review, usually a 30 day period which may involve public meetings, the Ministry of the Environment will make a final decision regarding the project. An approval may include a number of conditions to mitigate any identified environmental impacts. As of the date of this report, the Company is not aware of any archaeologically significant or ecologically sensitive areas within the locations on which the Company is contemplating the erection of turbines. However, the Company is unable to predict if the requisite permits will be granted; or, if they are granted, what, if any, conditions may be imposed by the provincial government, and the costs associated with compliance therewith. If such permits are granted subject to certain conditions, there is no assurance that it will be economically or practically feasible for the Company to comply with those conditions. As of the date of this report, the Company has not applied for any government permits or approvals for either location. RESEARCH AND DEVELOPMENT, PATENTS AND TRADEMARKS The Company has filed provisional patent applications relating to its vertical axis wind turbine design.. DIRECTORS, OFFICERS AND EMPLOYEES The Company has four directors, one of whom also serves as Chief Executive Officer and Chief Financial Officer. As of the date of this report, the Company has one employee who acts as the manager of our vertical axis wind turbine manufacturing business. The Company also engages consultants and professional service firms to perform all the work necessary to advance the Company's projects. Additional employees will be engaged as and when the Company's activities warrant this. PLAN OF OPERATIONS - YEAR ENDING MAY 31, 2013 During the fiscal year ending May 31, 2013, the Company intends to achieve the following business objectives: CORPORATE ACTIVITIES * Raise additional financing to fund the continued operations of the Company. KEEWATIN PROJECT * Commence a Wind Resource Report and Site Engineering Assessment, * Commence assessment of potential environmental impacts of the proposed project, * Commence a community relations program, * Commence negotiation of land lease agreements with landowners. SKY HARVEST PROJECT * Continue to monitor wind data and update the Wind Resource Report and Site engineering Assessment accordingly, * Continue discussions with a potential joint venture and development partner and reach a joint venture agreement in a form acceptable to both parties, 10 * Continue the Community Development program to provide residents in the area with information on the project, and to allow for comments and mitigation, * Consult with First Nations groups that may be impacted by project development. VERTICAL AXIS WIND TURBINE BUSINESS * Raise necessary financing for the manufacture of approximately ten test turbines * Solicit and fulfill orders for vertical axis wind turbines based on the successful operation of the test turbines The Company will also consider the potential acquisition of additional alternative energy projects. As of the date of this report, there is no assurance that the Saskatchewan utility will issue another RFQ, an RFP or a power call. If a RFP or power call is issued, there is no assurance that the Company will be successful in negotiating a PPA for the full capacity of either of its potential projects. At present, only the Sky Harvest project is at a stage of development that would justify participation in an RFQ, RFP or a power call. In addition, there is no guarantee that the vertical axis wind turbines will perform as expected and that we will be able to generate sufficient sales to realize profitable operations. During the fiscal year, our management decided that we will not be proceeding with the Levant natural gas storage project in order that we may focus Company efforts on our vertical axis wind turbine business. The Company will require additional funding in order to complete the plan of operations as set out above. While the Company does not have any commitments for future funding, it anticipates that additional cash requirements will be met by debt or equity financings. There is no assurance, however, that additional funding can be obtained, or if obtained, on terms that are acceptable to the Company. REPORTS TO SECURITY HOLDERS We file reports and other information with the SEC. Historical information about our company and other information can be inspected and copied at the Public Reference Room of the SEC located at Room 1580, 100 F Street, N.E., Washington D.C. 20549. Copies of such materials, including copies of any portion of the registration statement, can be obtained from the Public Reference Room of the SEC at prescribed rates. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. Such materials may also be accessed electronically by means of the SEC's home page on the Internet (http://www.sec.gov). ITEM 1A. RISK FACTORS Not applicable. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable 11 ITEM 2. PROPERTIES Our executive and head office is located at 1200 West 73rd Avenue, 11th Floor, Vancouver, BC, Canada. We also hold leasehold interests in approximately 15,000 acres in southwestern Saskatchewan and agreements with a land owner and the Government of Saskatchewan, which provide the right to erect a meteorological tower on certain additional land located in southwestern Saskatchewan. In addition, we hold leasehold interests in one manufacturing facility and one test facility, located in the Canadian provinces of Saskatchewan and Manitoba, for our vertical axis wind turbine. We do not have an interest in any other real property. ITEM 3. LEGAL PROCEEDINGS During the fiscal year ended May 31, 2012, a shareholder commenced a legal action against us, and two of our directors, alleging that the directors had earned short swing trading profits as a result of trading in our shares and were required to disgorge those profits and pay them to us. The lawsuit was amended to dismiss the claims against the directors, who provided the shareholder with evidence that profits were disgorged. The shareholder's legal counsel continues to seek compensation in the amount of $29,750 for the benefit that we received from the disgorgement, which the Company disputes. The Company has not had any contact from the shareholder's legal counsel in 2013. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 12 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 OTCQB under the symbol "SKYH". However, due to sporadic trading, there is no established public trading market for our shares of common stock. The following table shows the quarterly range of high and low closing prices for our common stock over the fiscal quarters for the last two fiscal years as quoted on the OTCQB. Investors should not rely on historical prices of our common stock as an indication of its future price performance. The last sale price of our common stock occurred on October 4, 2013 at a price of $0.25. The high and low trading prices for our common stock through the facilities of the OTCQB for the past eight quarters were: Quarter Ended High Low ------------- ---- --- August 31, 2011 $0.55 $0.30 November 30, 2011 $0.43 $0.05 February 29, 2012 $0.45 $0.06 May 31, 2012 $0.38 $0.07 August 31, 2012 $0.10 $0.09 November 30, 2012 $0.02 $0.015 February 28, 2013 $0.048 $0.025 May 31, 2013 $0.2477 $0.025 TRANSFER AGENT The transfer agent and registrar for our common stock is: Empire Stock Transfer Inc. 1859 Whitney Mesa Drive Henderson, NV 89014 Phone: 702.818.5898 Fax: 702.974.1444 Website: www.empirestock.com. HOLDERS OF COMMON STOCK As of May 31, 2013, our 38 shareholders of record held 33,203,016 shares of our common stock. DIVIDENDS We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future. 13 RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIES Other than as previously disclosed in our periodic filings pursuant to the Exchange Act during the fiscal year ended May 31, 2013, we did not sell any equity securities that were not registered under the Securities Act of 1933. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS None. ITEM 6. SELECTED FINANCIAL DATA Not applicable ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following discussion and analysis should be read together with our Consolidated Financial Statements and the Notes to those statements included elsewhere in this Annual Report on Form 10-K and the Consolidated Financial Statements and the Notes to those statements included in our Form 10-K for the year ended May 31, 2013. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this prospectus and registration statement. Our audited consolidated annual financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. RESULTS OF OPERATIONS The following summary of our results of operations should be read in conjunction with our audited consolidated annual financial statements for the year ended May 31, 2013 which are included herein.

Year Ended May 31, Increase/(Decrease) 2013 2012 ~~2011~~ $ % ---------- ---------- ---------- ---------- Revenue $ -- $ -- -- N/A Expenses 193,890 552,507 ~~965,699~~ (~~413~~358,~~192~~617) (4365%) Foreign exchange loss (gain) 5,729 65,501 (4859,~~837~~772) (~~114,338~~91%) ~~N/A~~ Impairment ~~Loss~~loss (income) 66,831 -- 266,~~551,440~~831 ~~(2,551,440)~~N/A ~~(100%)~~ Interest and Dividend (Income) -- (249) ~~(24)~~-- (~~100%~~9) N/A Settlement of Debt (gain) -- (3,999) 153,~~986~~999 ~~19,985~~(100%) ~~N/A~~ ---------- ---------- ---------- ---------- Net Loss $ 266,441 614,009 ~~$3,484,264~~ (2347,~~870,255~~568) (8257%) ========== ========== ========== ==========

14 REVENUE We recorded a net operating loss of $266,441 for the twelve months ended May 31, 2013 and have an accumulated deficit of $7,024,075 since inception. We have had no operating revenues since our inception on February 25, 2005 through to the period ended May 31, 2013. We do not anticipate that we will generate any revenues during the period in which we are a development stage company. EXPENSES Our expenses for the years ended May 31, 2013 and 2012 are outlined below:

Year Ended May 31, Increase/(Decrease) 2013 2012 ~~2011~~ $ % ---------- ---------- ---------- ---------- Consulting fees $ -- 84,487 ~~$ 54~~(84,~~476~~487) ~~30,011 55~~(100%) Engineering and development 59,307 140,592 92(81,~~917~~285) ~~47,675 51~~(58%) Management fees 59,761 134,367 94(74,~~144~~606) ~~40,223 43~~(56%) Professional fees 41,938 158,011 54116,~~757~~073 ~~103,254 189~~(73%) General and administrative 32,884 35,050 ~~669,405~~ (~~634~~2,~~355~~166) (956%) ---------- ---------- ---------- ---------- Total Operating Expenses $ 193,890 552,507 ~~$ 965,699~~ (~~413~~358,~~192~~617) (4365%) ========== ========== ========== ==========

Consulting fees decreased by $84,487 from $84,487 in the year ended May 31, 2012 to NIL in the year ended May 31, 2013. Consulting fees in fiscal 2012 related to the recorded value of stock options that we granted to members of our advisory board. Engineering and development expenses decreased by $81,285 from $140,592 in the year ended May 31, 2012 to $59,307 in the year ended May 31, 2013. This decrease is a result of a drop in engineering costs relating to our leased Saskatchewan properties. Management fees decreased by $74,606 from $134,367 for the year ended May 31, 2012 to $59,761 for the year ended May 31, 2013. This decrease is a result of a management bonus that we paid during fiscal 2012. Professional fees decreased by $116,073 from $158,011 in the year ended May 31, 2013 to $41,938 in the year ended May 31, 2013 due to higher legal fees in fiscal 2012. General and administrative expenses decreased by $2,166 from $35,050 in the year ended May 31, 2012 to $32,884 in the year ended May 31, 2013. LIQUIDITY AND CAPITAL RESOURCES Our financial condition for the year ended May 31, 2013 and 2012 and the changes between those periods for the respective items are summarized as follows: 15 WORKING CAPITAL

Year Ended May 31, Increase/(Decrease) 2013 2012 ~~2011~~ $ % ---------- ---------- ---------- ---------- Current Assets $ 110,319 157,125 ~~$ 87~~(46,~~440~~806) ~~69,685 80~~(30%) Current Liabilities 389,213 295,323 ~~513~~93,~~079~~890 ~~(217,756) (42~~32%) ---------- ---------- ---------- ---------- Working Capital $ (~~138~~278,~~198~~894) $ (~~425~~138,~~639~~198) (~~287~~140,~~441~~696) N/A ========== ========== ========== ==========

The $140,696 increase in our working capital deficit from ($138,198) as of May 31, 2012, to ($278,894) as of May 31, 2013 was primarily due to a $69,378 increase in amounts due to related parties that were incurred in the course of our normal business operations and a $24,415 increase in our accounts payable. In addition, our cash position fell from $144,686 at May 31, 2012 to $103,439 at May 31, 2013. CASH FLOWS

Year Ended May 31, Increase/(Decrease) 2013 2012 ~~2011~~ $ % ---------- ---------- ---------- ---------- Cash Flows (used in) Operating Activities $ (~~558~~99,~~274~~054) $ (~~208~~558,~~008~~274) ~~(350~~459,~~266)~~220 N/A Cash Flows provided by (used in) Investing Activities (1,660) -- ~~22,840~~ (221,~~840~~660) ~~(100%)~~N/A Cash Flows provided by Financing Activities 49,500 611,540 ~~267~~(562,~~714~~040) ~~343,826 128~~(92%) Effect of exchange rate changes on cash 9,968 67,955 (5957,~~315~~987) ~~127,270~~(85%) ~~N/A~~ ---------- ---------- ---------- ---------- Net increase (decrease) in cash during year $ (41,247) 121,221 ~~$ 23~~(162,~~231~~468) ~~97,990~~N/A ~~422%~~ ========== ========== ========== ==========

CASH USED IN OPERATING ACTIVITIES During the year ended May 31, 2012 we used net cash in operating activities in the amount of 99,054 (year ended May 31, 2012 - $558,274). The cash was used to fund our corporate activities and operations on our wind power projects. CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES During the year ended May 31, 2013 we purchased computer equipment for $1,660. CASH FROM FINANCING ACTIVITIES In the year ended May 31, 2013, we raised $49,500 through a private placement sale of our common stock. In the year ended May 31, 2012, we raised $647,500 through private placement sales of our common stock. We also received $118,900 in proceeds from two of our directors relating to their payment of short-swing trading profits to us. As well, we repaid $154,860 in loans that we received from various parties. 16 FUTURE FINANCINGS As of the date of this report, we do not have any arrangements in place for additional debt financing or for the sale of our securities, and there is no assurance that we will be able to raise funds through either means. We have not had any specific communications with any representative of a debt financing institution regarding our proposed wind power project. We will only be able to secure debt financing for wind turbines if we are able to prove that an economic wind resource exists on a property that is acquired and that we have negotiated a power purchase agreement with a credit worthy counter-party. We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. As of the date of this report, there is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our development activities. OFF BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable 17 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Sky Harvest Energy Corp. Formerly Sky Harvest Windpower Corp. (A Development Stage Company) May 31, 2013 Report of Independent Registered Public Accounting Firm .................... 19 Consolidated Balance Sheets as of May 31, 2013 and May 31, 2012............. 20 Consolidated Statements of Operations for the years ended May 31, 2013 and May 31, 2012, and for the period since inception........................ 21 Consolidated Statement of Stockholders' Equity for period ended May 31, 2013, and the period since inception................................ 22 Consolidated Statements of Cash Flows for the years ended May 31, 2013 and May 31, 2012, and for the period since inception........................ 26 Notes to the Consolidated Financial Statements.............................. 27 18 PLS CPA, A Professional Corp. * 4725 MERCURY STREET SUITE 210 * SAN DIEGO * CALIFORNIA 92111 * * TELEPHONE (858) 722-5953 * FAX (858) 761-0341 * FAX (858) 764-5480 * E-MAIL changgpark@gmail.com * -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders Sky Harvest Energy Corp. (formerly Sky Harvest Windpower Corp.) (A Development Stage Company) We have audited the accompanying consolidated balance sheets of Sky Harvest Energy Corp. (formerly Sky Harvest Windpower Corp.) (A Development Stage "Company") as of May 31, 2013 and 2012 and the related consolidated statements of operation, changes in shareholders' equity and cash flows for the years then ended and for the period February 25, 2005 (inception) to May 31, 2013. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial positions of Sky Harvest Energy corp. as of May 31, 2013 and 2012, and the consolidated results of its operation and its cash flows for the years then ended and for the period February 25, 2005 (inception) to May 31, 2013 in conformity with U.S. generally accepted accounting principles. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company's losses from operations raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ PLS CPA ------------------------------------ PLS CPA, A Professional Corp. October 15, 2013 San Diego, CA 92111 Registered with the Public Company Accounting Oversight Board 19 Sky Harvest Energy Corp. Formerly Sky Harvest Windpower Corp. (A Development Stage Company) Consolidated Balance Sheets (Expressed in US Dollars)

May 31, 2013 May 31, 2012 ~~2011~~ ------------ ------------ $ $ ASSETS ~~CURRENT~~Current ~~ASSETS~~Assets Cash and cash equivalents 103,439 144,686 ~~23,465~~ Other receivables 5,742 11,557 ~~10,855~~ Prepaid expenses ~~882 53~~1,~~120~~138 882 ------------ ------------ ~~TOTAL~~Total ~~CURRENT~~Current ~~ASSETS~~Assets 110,319 157,125 ~~87,440~~ Property and equipment, net (Note 4) 1,400 66,826 ~~71,945~~ ------------ ------------ ~~TOTAL~~Total ~~ASSETS~~Assets 111,719 223,951 ~~159,385~~ ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT ~~LIABILITIES~~Liabilities Accounts payable 183,485 159,070 ~~166,576~~ Accrued liabilities 347 250 ~~3,156~~ Due to related parties (Note 7) 155,381 86,003 ~~283,023~~ Note payable (Note 5) 50,000 6050,~~324~~000 ------------ ------------ ~~TOTAL~~Total ~~LIABILITIES~~Liabilities 389,213 295,323 ~~513,079~~ ------------ ------------ ~~STOCKHOLDERS~~Stockholders' ~~EQUITY~~Deficit ~~(DEFICIT)~~ Preferred Stock: Authorized: 10,000,000 shares, $0.001 par value Issued and outstanding: 1 share (May 31, ~~2011~~2012 - 1 share) -- -- Common Stock: Authorized: 100,000,000 shares, $0.001 par value Issued and outstanding: 32,553,016 shares (May 31, ~~2011~~2012 - 2932,~~732~~553,016 shares) 32,553 2932,~~732~~553 Additional paid-in capital 6,707,278 56,~~829~~707,~~796~~278 Common stock subscribed (Note 11) 6,750 6,750 Stock subscriptions receivable ~~(Note~~-- 8(~~b)) (~~49,500) -- Accumulated other comprehensive loss (166,~~917~~098) (8216,~~445~~917) Deficit accumulated during the development stage (67,~~751~~017,~~536~~977) (6,~~137~~751,~~527~~536) ------------ ------------ ~~TOTAL~~Total ~~STOCKHOLDERS~~Stockholders' ~~DEFICIT~~Deficit (71277,~~372~~494) (~~353~~71,~~694~~372) ------------ ------------ ~~TOTAL~~Total ~~LIABILITIES~~Liabilities ~~AND~~and ~~STOCKHOLDERS~~Stockholders' ~~EQUITY~~Deficit ~~(DEFICIT)~~111,719 223,951 ~~159,385~~ ============ ========== ~~Continuing operations (Note 1) Commitments and contingencies (Note 11)~~==

Continuing operations (Note 1) Commitments and contingencies (Note 11) (The accompanying notes are an integral part of these consolidated financial statements) 20 Sky Harvest Energy Corp. Formerly Sky Harvest Windpower Corp. (A Development Stage Company) Consolidated Statements of Operations (Expressed in US Dollars, except number of shares)

Accumulated from February 25, 2005 For the For the (Date of Inception) to Year Ended Year Ended May 31, 2013 May 31, 2013 May 31, 2012 ~~2012 2011~~ ------------ ------------ ------------ $ $ $ ~~EXPENSES~~Expenses Consulting fees 450,934 -- 84,487 ~~54,476~~ Engineering and development ~~552~~612,~~923~~230 59,307 140,592 ~~92,917~~ Management fees (Note 7) ~~734~~794,~~947~~708 59,761 134,367 ~~94,144~~ Professional fees ~~511~~553,~~776~~714 41,938 158,011 ~~54,757~~ General and administrative 1,~~802~~835,~~562~~446 32,884 35,050 ~~669,405~~ Acquired development costs 242,501 -- -- ------------ ------------ ------------ ~~OPERATING~~Operating ~~LOSS~~loss (4,~~295~~489,~~643~~533) (~~552~~193,~~507~~890) (~~965~~552,~~699~~507) ~~OTHER~~Other ~~INCOME~~Income (~~LOSS~~Loss) Impairment loss (2,~~551~~618,~~440~~271) -- (266,~~551,440~~831) -- Interest income 89,~~382~~391 9 -- 24 Foreign exchange gain (loss) 1812,~~152~~423 (5,729) (65,501) ~~48,837~~ Settlement of debt (11,987) -- 3,999 ~~(15,986)~~ ------------ ------------ ------------ ~~NET~~Net ~~LOSS~~loss (67,~~751~~017,~~536~~977) (~~614~~266,~~009~~441) (3614,~~484,264~~009) Other Comprehensive Income (Loss) Foreign currency translation adjustments (166,~~917~~098) 10,819 65,528 ~~(54,188)~~ ------------ ------------ ------------ Comprehensive loss (67,~~768~~024,~~453~~075) (~~548~~255,~~481~~622) (3548,~~538,452~~481) ============ ============ ============ ~~NET~~Net ~~LOSS~~loss ~~PER~~per ~~COMMON~~common ~~SHARE~~share - ~~BASIC~~basic ~~AND~~and ~~DILUTED~~diluted (0.0201) (0.1202) ------------ ------------ ~~WEIGHTED~~Weighted ~~AVERAGE~~average ~~NUMBER~~number OFof ~~COMMON~~common ~~STOCK~~stock ~~OUTSTANDING~~outstanding 3132,~~594~~553,000 2931,~~732~~594,000 ------------ ------------

(The accompanying notes are an integral part of these consolidated financial statements) 21 Sky Harvest Energy Corp. Formerly Sky Harvset Windpower Corp. (A Development Stage Company) Consolidated Statement of Stockholders' Equity (Expressed in US Dollars, except number of shares)

(The accompanying notes are an integral part of these consolidated financial statements) 22 Sky Harvest Energy Corp. Formerly Sky Harvest Windpower Corp. (A Development Stage Company) Consolidated Statement of Stockholders' Equity (Expressed in US Dollars, except number of shares)

Deficit Accumulated Additional Common During the Preferred Common Paid-in Stock Development Stock Amount Shares Amount Capital Subscribed Stage Total ~~# $ # $ $ $ $ $~~ ------ ------ ---------- -------- --------- ------- ---------- --------- # $ # $ $ $ $ $ Balance - May, 31, 2005 brought forward -- -- 10,530,000 10,530 43,970 -- (12,321) 42,179 Net loss for the year -- -- -- -- -- -- (57,544) (57,544) ------ ------ ---------- -------- --------- ------- ---------- --------- Balance - May 31, 2006 -- -- 10,530,000 10,530 43,970 -- (69,865) (15,365) Common stock subscribed -- -- -- -- -- 500,500 -- 500,500 Stock-based compensation -- -- -- -- 365,508 -- -- 365,508 Net loss for the year -- -- -- -- -- -- (435,426) (435,426) ------ ------ ---------- -------- --------- ------- ---------- --------- Balance - May 31, 2007 carried forward -- -- 10,530,000 10,530 409,478 500,500 (505,291) 415,217 ------ ------ ---------- -------- --------- ------- ---------- --------- Common stock issued on July 11, 2007 for cash at $0.70 per share -- -- 715,000 715 499,785 (500,500) -- -- Common stock issued on July 11, 2007 for finders' fees -- -- 71,500 71 49,979 -- -- 50,050 Common stock issued on July 27, 2007 for cash at $1.20 per share -- -- 1,075,000 1,075 1,288,925 -- -- 1,290,000 One million share purchase warrants issued for finders' fee -- -- -- -- 321,279 -- -- 321,279 Finders' fees -- -- -- -- (498,080) -- -- (498,080) Net loss for the year -- -- -- -- -- -- (256,830) (256,830) ------ ------ ---------- -------- --------- ------- ---------- --------- Balance - May 31, 2008 -- -- 12,391,500 12,391 2,071,366 -- (762,121) 1,321,636 Common stock subscribed -- -- -- -- -- 6,750 -- 6,750 Net loss for the year -- -- -- -- -- -- (341,733) (341,733) ------ ------ ---------- -------- --------- ------- ---------- --------- Balance - May 31, 2009 carried forward -- -- 12,391,500 12,391 2,071,366 6,750 (1,103,854) 986,653 ------ ------ ---------- -------- --------- ------- ---------- ---------

(The accompanying notes are an integral part of these consolidated financial statements) 23 Sky Harvest Energy Corp. Formerly Sky Harvest Windpower Corp. (A Development Stage Company) Consolidated Statement of Stockholders' Equity (Deficit) (Expressed in US Dollars, except number of shares)

Deficit Accumulated Accumulated Additional Common Stock ~~Accumulated~~Other During the Preferred Common Paid-in Stock Subscriptions ~~Other~~Comprehensive Development Stock Amount Shares Amount Capital Subscribed Receivable ~~Comprehensive~~Loss Stage Total ~~# $ # $ $ $ $ Loss $ $~~ ---- ------ ---------- -------- --------- ------- ------ ---------- ---------- ---------- # $ # $ $ $ $ $ $ $ Balance - May 31, 2009 carried forward -- -- 12,391,500 12,391 2,071,366 6,750 -- -- (1,103,854) 986,653 Common stock issued pursuant to business acquisition -- -- 17,340,516 17,341 2,583,736 -- -- -- -- 2,601,077 Preferred stock issued pursuant to business acquisition 1 -- -- -- -- -- -- -- -- -- Stock-based compensation -- -- -- -- 589,514 -- -- -- -- 589,514 Accumulated other comprehensive loss -- -- -- -- -- -- -- (28,257) -- (28,257) Net loss for year -- -- -- -- -- -- -- -- (1,549,409) (1,549,409) ---- ------ ---------- -------- --------- ------- ------ ---------- ---------- ---------- Balance - May 31, 2010 1 -- 29,732,016 29,732 5,244,616 6,750 -- (28,257) (2,653,263) 2,599,578 Stock-based compensation -- -- -- -- 585,180 -- -- -- -- 585,180 Accumulated other comprehensive loss -- -- -- -- -- -- -- (54,188) -- (54,213) Net loss for the year -- -- -- -- -- -- -- -- (3,484,264) (917,550) ---- ------ ---------- -------- --------- ------- ------- ---------- ---------- ---------- Balance - May 31, 2011 1 -- 29,732,016 29,732 5,829,796 6,750 -- (82,445) (6,137,527) (353,694) Stock-based compensation -- -- -- -- 64,403 -- -- -- -- 64,403 Accumulated other comprehensive loss -- -- -- -- -- -- -- 65,528 -- 65,528 Common stock issued on June 21, 2011 for cash at $0.25 per share -- -- 1,970,000 1,970 490,530 -- -- -- -- 492,500 Common stock issued on May 29, 2012 for cash at $0.25 per share -- -- 818,000 818 203,682 -- (49,500) -- -- 155,000 Common stock issued on May 29, 2012 for finders fees at $0.25 per share -- -- 33,000 33 (33) -- -- -- -- -- Disgorgement of swing trading profits -- -- -- -- 118,900 -- -- -- -- 118,900 Net loss for the year -- -- -- -- -- -- -- -- (614,009) (614,009) ---- ------ ---------- -------- --------- ------- ------- ---------- ---------- ---------- Balance - May 31, 2012 1 -- 32,553,016 32,553 6,707,278 6,750 (49,500) (16,917) (6,751,536) (71,372) ==== ====== ========== ======== ========= ======= ======= ========== ========== ==========

(The accompanying notes are an integral part of these consolidated financial statements) 24 Sky Harvest Energy Corp. Formerly Sky Harvest Windpower Corp. (A Development Stage Company) Consolidated Statement of Stockholders' Equity (Deficit) (Expressed in US Dollars, except number of shares)

Deficit Accumulated ~~from~~Accumulated ~~February~~Additional ~~25,~~Common ~~2005~~Stock ~~For~~Other ~~the~~During ~~For~~ the ~~(Date~~Preferred ofCommon ~~Inception)~~Paid-in toStock ~~Year~~Subscriptions ~~Ended~~Comprehensive ~~Year~~Development ~~Ended~~Stock ~~May~~Amount ~~31,~~Shares ~~May~~Amount ~~31,~~Capital ~~May~~Subscribed ~~31,~~Receivable ~~2012~~Loss ~~2012~~Stage ~~2011~~Total ---- ------ ---------- -------- --------- $------- $------ $---------- ~~OPERATING~~---------- ~~ACTIVITIES~~---------- ~~Net~~# ~~loss~~$ ~~for~~# ~~the~~$ ~~period~~$ ~~(6,751,536)~~$ ~~(614,009)~~$ ~~(3,484,264)~~$ ~~Adjustments~~$ to$ ~~reconcile~~Common ~~net~~stock ~~loss~~issued toon ~~net~~June ~~cash~~21, ~~used~~2011 infor ~~operating~~cash ~~activities:~~at ~~Depreciation~~$0.25 ~~23,708~~per ~~697~~share ~~4,144~~-- ~~Stock~~-~~based~~- ~~compensation~~ 1,~~609~~970,~~565~~000 641,~~403~~970 ~~585~~490,~~180~~530 ~~Impairment~~-- ~~loss~~-- ~~2,551,440~~-- -- 2492,~~551,440~~500 ~~Loss~~Common ~~(gain)~~stock issued on ~~settlement~~May ~~of debt 11~~29,~~987~~ ~~(3,999)~~2012 ~~15,986~~for ~~Acquired~~cash ~~development~~at ~~costs~~$0.25 ~~242,501~~per share -- -- ~~Changes~~818,000 in818 ~~operating assets and liabilities: Prepaid expenses 11~~203,~~252~~682 ~~52,238~~-- (3149,~~535~~500) ~~Accrued~~-- ~~interest 244~~ -- 31155,000 ~~Accounts~~Common ~~payable~~stock ~~and~~issued ~~accrued~~on ~~liabilities~~May ~~141~~29,~~654~~ ~~(6,413)~~2012 ~~98,606~~for ~~Account~~finders ~~receivable~~fees ~~(29,914)~~at ~~(701)~~$0.25 ~~(23,229)~~per ~~Note~~share ~~receivable (280,000)~~ -- -- ~~Due to related parties 23~~33,~~958~~000 33 (~~50,490~~33) ~~75,633~~ -- -- -- -- -- Disgorgement of swing trading profits -- -- -- -- 118,900 -- -- -- --~~----~~ ~~NET~~118,900 ~~CASH~~Net ~~FLOWS~~loss ~~USED~~for INthe ~~OPERATING~~year ~~ACTIVITIES (2,445,141) (558,274) (208,008)~~ -- -- -- -- -- -- --~~------~~ --~~--------~~ ~~INVESTING~~(614,009) ~~ACTIVITIES Purchase of equipment~~ (23614,~~504~~009) -- -- ~~Purchase of short~~-~~term investments (2,472,839)~~ -- -- ~~Redemption of short~~-~~term~~ ~~investments 2,493,484~~ -- ~~22,840 Cash acquired from acquisition 21,016~~ -- -- ---- ------ -- --------- ------- --- ~~NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES 18,157~~ ---- ~~22,840~~ ---------- ---------- ---------- ~~FINANCING~~Balance ~~ACTIVITIES~~- ~~Proceeds~~May ~~from~~31, ~~common~~2012 ~~stock~~1 ~~issuances~~-- 232,~~365~~553,~~749~~016 ~~647~~32,~~500~~553 ~~-- Proceeds from (repayment of) related party loans 62~~6,~~854 (144~~707,~~536)~~278 ~~207~~6,~~390~~750 ~~Proceeds from~~ (~~repayment of~~49,500) ~~note payable 50,000~~ (1016,~~324~~917) 60(6,~~324 Proceeds from swing sale disgorgement 118~~751,~~900~~536) ~~118~~(71,~~900~~372) -- -- -------- ---------- ---------- ~~NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 2,597,503 611,540 267,714~~ ---------- -------~~---~~ -------~~---~~ ~~Effect of exchange rate changes on cash (25,833) 67,955 (59,315)~~ ---------- ---------- ---------- ~~Increase~~Balance in- ~~cash~~May ~~and~~31, ~~cash~~2012 ~~equivalents~~1 ~~144~~-- 32,~~686~~553,016 ~~121~~32,~~221~~553 236,~~231~~707,278 ~~Cash~~6,750 ~~and~~(49,500) ~~cash~~(16,917) ~~equivalents~~(6,751,536) -(71,372) ~~beginning~~Stock ofsubscriptions ~~period~~received -- ~~23,465 234~~ -- -- -- -- -- 49,500 -- -- 49,500 Accumulated other comprehensive loss -- -- -- -- -- -- ---- ~~CASH~~10,819 ~~AND CASH EQUIVALENTS~~ -- ~~END OF PERIOD 144~~10,~~686~~819 ~~144,686~~Net ~~23,465~~loss ~~==========~~for ~~==========~~the ~~==========~~year ~~SUPPLEMENTARY~~-- ~~DISCLOSURES:~~-- ~~Interest paid~~ -- -- -- ~~Income taxes paid~~ -- -- -- (266,441) (266,441) ---- ------ ---------- -------- -- ~~SIGNIFICANT NON~~-~~CASH INVESTING AND FINANCING ACTIVITIES: Stock issuance for acquisition 2,601,077~~ -- -- ~~Increase intangible asset due to acquisition 2,551,400~~ -- -- ~~Accounts payable increased due to acquisition 30,986~~ -- --- ~~Stock issuance for finders fee 8,250 8,250~~ ------- ---------- ---------- ---------- Balance - May 31, 2013 1 -- 32,553,016 32,553 6,707,278 6,750 -- (6,098) (7,017,977) (277,494) ==== ====== ========== ======== ========= ======= ======= ========== ========== ==========

(The accompanying notes are an integral part of these consolidated financial statements) 25 Sky Harvest Energy Corp. Formerly Sky Harvest Windpower Corp. (A Development Stage Company) Consolidated Statements of Cash Flows

~~Non~~Accumulated from February 25, 2005 For the For the (Date of Inception) to Year Ended Year Ended May 31, 2013 May 31, 2013 May 31, 2012 -~~Equity~~----------- ~~Nonqualified~~------------ ~~Name~~------------ ~~and~~$ ~~Incentive~~$ ~~Deferred~~$ ~~Principal~~Operating activities Net loss for the period (7,017,977) (266,441) (614,009) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 24,705 997 697 Stock-based ~~Option~~compensation ~~Plan~~1,609,565 ~~Compensation~~-- ~~All~~64,403 ~~Other~~Impairment ~~Position~~loss ~~Year~~2,618,271 ~~Salary~~66,831 -- Loss ($gain) ~~Bonus~~on settlement of debt 11,987 -- ($3,999) ~~Awards~~Acquired development costs 242,501 -- -- Changes in operating assets and liabilities: Prepaid expenses 10,996 ($256) ~~Awards~~52,238 Accrued interest 244 -- -- Accounts payable and accrued liabilities 166,165 24,511 ($6,413) ~~Compensation~~Account receivable ($24,099) ~~Earnings~~5,815 ($701) ~~Compensation~~Note receivable ($280,000) ~~Totals~~-- -- Due to related parties 93,446 69,488 ($50,490) -------- ---- ------------ ------------ Net cash flows used in operating activities (2,544,196) (99,054) (558,274) ------------ ------------ ------------ Investing activities Purchase of equipment (25,164) (1,660) -- Purchase of short-term investments (2,472,839) -- -- Redemption of short-term investments 2,493,484 -- -- Cash acquired from acquisition 21,016 -- -- ------------ ------------ ------------ ~~William~~Net ~~2012~~cash ~~Nil~~flows ~~Nil~~provided ~~Nil~~by ~~Nil~~(used ~~Nil~~in) ~~Nil~~investing ~~134~~activities 16,~~367~~497 (1,660) ~~134~~-- ------------ ------------ ------------ Financing activities Proceeds from common stock issuances 2,~~367~~415,249 ~~Iny~~49,500 ~~2011~~647,500 ~~Nil~~Proceeds ~~Nil~~from ~~Nil~~(repayment ~~152~~of) related party loans 62,854 -- (144,536) Proceeds from (repayment of) note payable 50,000 -- (10,324) Proceeds from swing sale disgorgement 118,900 -- 118,900 ------------ ------------ ------------ Net cash flows provided by financing activities 2,647,003 49,500 ~~Nil~~611,540 ~~Nil~~------------ 63------------ ------------ Effect of exchange rate changes on cash (15,~~241~~865) 9,968 67,955 ------------ ------------ ------------ Increase (1Decrease) ~~215~~in cash and cash equivalents 103,~~741~~439 ~~President~~(41,247) ~~CEO~~121,221 ~~CFO~~Cash and cash equivalents - beginning of period -- 144,686 ~~Secretary~~23,465 &------------ ~~Treasurer~~------------ ~~Chris~~------------ ~~2011~~Cash 30and cash equivalents - end of period 103,~~903~~439 ~~Nil~~103,439 ~~Nil~~144,686 ~~Nil~~============ ~~Nil~~============ ~~Nil~~============ ~~Nil~~Supplementary 30disclosures: Interest paid -- -- -- Income taxes paid -- -- -- ------------ ------------ ------------ Significant non-cash investing and financing activities: Stock issuance for acquisition 2,~~903~~601,077 ~~Craddock~~-- ~~Former~~-- ~~President~~Increase intangible asset due to acquisition 2,551,400 ~~CEO~~-- -- Accounts payable increased due to acquisition 30,986 ~~CFO~~-- -- Stock issuance for finders fee 8,250 ~~Secretary~~-- &8,250 ~~Treasurer~~------------ ------------ ------------

(The accompanying notes are an integral part of these consolidated financial statements) 26 Sky Harvest Energy Corp. Formerley Sky Harvest Windpower Corp. (A Development Stage Company) Notes to the Consolidated Financial Statements May 31, 2013 (Expressed in US Dollars) 1. Organization and Description of Business Sky Harvest Windpower Corp. (the "Company") was incorporated in the State of Nevada on February 25, 2005. The Company is a Development Stage Company, as defined by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 915, DEVELOPMENT STAGE ENTITIES. Its activities to date have been limited to capital formation, organization, and development of its business plan for the exploration and development of wind power projects in Canada. On August 13, 2013, the Company changed its name from "Sky Harvest Windpower Corp." to "Sky Harvest Energy Corp." Effective July 13, 2009, the Company acquired all the outstanding common stock of Sky Harvest Windpower (Saskatchewan) Corp. ("Sky Harvest - Saskatchewan"), a private company incorporated under the laws of Canada. On September 1, 2009, the Company completed a merger with its wholly-owned inactive subsidiary, Sky Harvest Windpower Corp., a Nevada corporation, which was incorporated solely to effect a change in the Company's name. As a result, the Company changed its name from Keewatin Windpower Corp. to Sky Harvest Windpower Corp. These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, the successful exploitation of economically recoverable electricity in its wind power projects, and the attainment of profitable operations. As at May 31, 2013, the Company has accumulated losses of $7,017,977 since inception. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management plans to raise additional funds through debt and equity offerings. Management has yet to decide what type of offering the Company will use or how much capital the Company will attempt to raise and on what terms. There is however no assurance that the Company will be able to raise any additional capital through any type of offering on terms acceptable to the Company. 2. Significant Accounting Polices a. Basis of Accounting The Company's consolidated financial statements are prepared using the accrual method of accounting. These consolidated statements include the accounts of the Company and its wholly-owned subsidiaries Keewatin Windpower Inc. and Sky Harvest - Saskatchewan. All significant intercompany transactions and balances have been eliminated. The Company has elected a May 31 year-end. b. Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. c. Fair Value Measurements ASC 820, FAIR VALUE MEASUREMENTS AND DISCLOSURES, defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. 27 Sky Harvest Energy Corp. Formerley Sky Harvest Windpower Corp. (A Development Stage Company) Notes to the Consolidated Financial Statements May 31, 2013 (Expressed in US Dollars) 2. Significant Accounting Polices (continued) c. Fair Value Measurements (continued) FAIR VALUE HIERARCHY ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring 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 820 establishes three levels of inputs that may be used to measure fair value: LEVEL 1 Level 1 applies to assets and liabilities for which there are quoted prices in active markets for identical assets or liabilities. Valuations are based on quoted prices that are readily and regularly available in an active market and do not entail a significant degree of judgment. LEVEL 2 Level 2 applies to assets and liabilities for which there are other than Level 1 observable inputs 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. Level 2 instruments require more management judgment and subjectivity as compared to Level 1 instruments. For instance: * Determining which instruments are most similar to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer, credit rating and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced; and * Determining whether a market is considered active requires management judgment. LEVEL 3 Level 3 applies to assets and 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 determination of fair value for Level 3 instruments requires the most management judgment and subjectivity. The Company believes the fair value of its financial instruments consisting of cash, other receivables, accounts payable, amounts due to related parties and notes payable approximate their carrying values due to the relatively short maturity of these instruments. d. Equipment (i) Amortization Methods and Rates Equipment is carried at cost. Depreciation is computed using a straight-line method over the estimated useful lives of the depreciable property, which range from 3 to 5 years. Management evaluates useful lives regularly in order to determine recoverability taking into consideration current technological conditions. Maintenance and repairs are charged to expenses as incurred; additions and betterments are capitalized. Upon retirement or disposal of any item of equipment, the cost and related accumulated depreciation of the disposed assets is removed, and any resulting gain or loss is credited or charged to operations. Costs included in wind equipment are under construction and will be amortized over their useful life on a straight-line basis once they are put into use. 28 Sky Harvest Energy Corp. Formerley Sky Harvest Windpower Corp. (A Development Stage Company) Notes to the Consolidated Financial Statements May 31, 2013 (Expressed in US Dollars) 2. Significant Accounting Polices (continued) d. Equipment (continued) (ii) Asset Impairment The Company performs impairment tests on its property and equipment when events or changes in circumstances occur that indicate the carrying value of an asset may not be recoverable. Estimated future cash flows are calculated using estimated future prices and operating and capital costs on an undiscounted basis. When the carrying value of the property and equipment exceeds estimated future cash flows, the asset is impaired. An impairment loss is recorded to the extent the carrying value exceeds the discounted value of the estimated future cash flows. (iii) Repairs and Maintenance Repairs and maintenance costs are charged to expense as incurred, except when these repairs significantly extend the life of an asset or result in an operating improvement. In these instances, the portion of these repairs relating to the betterment is capitalized as part of property and equipment. e. Long Lived Assets INTANGIBLE ASSETS In accordance with ASC 350, INTANGIBLES - GOODWILL AND OTHER, goodwill is required to be tested for impairment on an annual basis, or more frequently if certain indicators arise, using the guidance specifically provided, and purchased intangible assets other than goodwill are required to be amortized over their useful lives unless there lives are determined to be indefinite. Management reviews intangible assets at least annually, and on an interim basis when conditions require, evaluates events or changes in circumstances that may indicate impairment in the carrying amount of such assets. An impairment loss is recognized in the statement of operations in the period that the related asset is deemed to be impaired. In accordance with ASC 360, PROPERTY, PLANT AND EQUIPMENT, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. f. Income Taxes Income taxes are provided in accordance with ASC 740, INCOME TAXES. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 29 Sky Harvest Energy Corp. Formerley Sky Harvest Windpower Corp. (A Development Stage Company) Notes to the Consolidated Financial Statements May 31, 2013 (Expressed in US Dollars) 2. Significant Accounting Polices (continued) g. Foreign Currency Translation The functional currency of the Company's Canadian subsidiaries is the applicable local currency. The functional currency is translated into U.S. dollars for balance sheet accounts using current exchange rates in effect as of the balance sheet date and for revenue and expense accounts and cash flow items using a weighted-average exchange rate during the reporting period. Adjustments resulting from translation are included in accumulated comprehensive income (loss), a separate component of shareholders' equity (deficit). Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations. h. Basic Earnings (Loss) per Share The Company computes net income (loss) per share in accordance with ASC 260, EARNINGS PER SHARE. ASC 260 specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. Basic net earnings (loss) per share amounts are computed by dividing the net earnings (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company. i. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the periods presented. Actual results could differ from those estimates. Significant estimates made by management are, among others, realizability of long-lived assets, deferred taxes and stock option valuation. Management reviews its estimates on a quarterly basis and, where necessary, makes adjustments prospectively. j. Stock-Based Compensation The Company records stock-based compensation in accordance with ASC 718, COMPENSATION - STOCK BASED COMPENSATION, and ASC 505-50, EQUITY BASED PAYMENTS TO NON-EMPLOYEES, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. k. Comprehensive Income ASC 220, COMPREHENSIVE INCOME, establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial statements. As at May 31, 2013 and May 31, 2012, the Company`s only component of comprehensive income (loss) was foreign currency translation adjustments. 30 Sky Harvest Energy Corp. Formerley Sky Harvest Windpower Corp. (A Development Stage Company) Notes to the Consolidated Financial Statements May 31, 2013 (Expressed in US Dollars) 3. Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. 4. Property and equipment May 31, 2013 May 31, 2012 Accumulated Net Carrying Net Carrying Cost Depreciation Value Value ------- ------- ------- ------- $ $ $ $ Computer equipment 7,428 (6,223) 1,205 310 Asset under construction -- -- -- 66,060 Wind tower equipment 22,116 (21,921) 195 456 ------- ------- ------- ------- 29,544 (28,144) 1,400 66,826 ======= ======= ======= ======= During the year ended May 31, 2013, the Company recorded an impairment loss of $66,831 on its Assets under construction. 5. Note Payable During the year ended May 31, 2011, the Company received advances from third parties in the amount of $60,324. During the year ended May 31, 2012, the Company repaid $10,324. At May 31, 2013, advances of $50,000 remain outstanding. The amount is unsecured, non-interest bearing and due on demand. 6. Preferred Stock On July 11, 2009, the Company entered into a voting and exchange trust agreement among its subsidiary, Keewatin Wind Power Corp., and Valiant Trust Company (Valiant Trust) whereby the Company issued and deposited with Valiant Trust one special preferred voting share of the Company in order to enable Valiant Trust to execute certain voting and exchange rights as trustee from time to time for and on behalf of the registered holders of the preferred shares of Keewatin Wind Power Corp. Each preferred share of Keewatin Wind Power Corp. is exchangeable into one share of common stock of the Company at the election of the shareholder, or, in certain circumstances, of the Company. As of May 31, 2013, the Company had issued 885,000 shares of common stock to holders of 885,000 shares of exchangeable preferred shares of its subsidiary Keewatin Wind Power Corp., pursuant to them exercising their exchange rights. As of May 31, 2013, there were 15,680,016 outstanding exchangeable shares (May 31, 2012 - 15,680,016 shares). As the exchangeable shares have already been recognized in connection with the acquisition of Sky Harvest - Saskatchewan, the value ascribed to these shares on exchange is $Nil. 31 Sky Harvest Energy Corp. Formerley Sky Harvest Windpower Corp. (A Development Stage Company) Notes to the Consolidated Financial Statements May 31, 2013 (Expressed in US Dollars) 7. Related Party Transactions a) During the year ended May 31, 2013, the Company incurred $59,761 (2012 - $60,507) to a company controlled by the President and principal shareholder of the Company for management services. During the year ended May 31, 2013, the Company paid a bonus of $nil (2012 - $73,860 (Cdn$75,000)) to the President and principal shareholder of the Company for management services. As at May 31, 2013, the Company is indebted to that company and the Company's President for $86,520 (May 31, 2012 - $21,080), which is non-interest bearing, unsecured and due on demand. b) On June 18, 2010, the Company entered into a loan agreement with a director for $27,000 which is payable within three months a written demand is received from the note holder. The amount is unsecured and bears interest at 15% per annum. As at May 31, 2013, accrued interest of $11,961 was recorded. During the year ended May 31, 2011, the Company received an advance of $68,480 (CDN$71,000) from the same director. During the year ended May 31, 2012, the Company repaid $38,580 (CDN$40,000). At May 31, 2013, $29,900 (CDN$31,000) is unsecured, non-interest bearing and has no terms of repayment. c) During the year ended May 31, 2013, the Company incurred $nil (2012 - $104,538) to a company controlled by a director of the Company for legal services. d) On August 31, 2011, the Company received a disgorgement of swing trading profits of $59,450 from the President of the Company. This amount has been credited to additional paid-in capital. e) On January 7, 2012, the Company received a disgorgement of swing trading profits of $59,450 from a director of the Company. This amount has been credited to additional paid-in capital. These related party transactions are recorded at the exchange amount, being the amount established and agreed to by the related parties. 8. Common Stock a) During the year ended May 31, 2013, the Company received stock subscriptions of $49,500 for 198,000 shares of common stock issued on May 29, 2012. b) On June 21, 2011, the Company closed a private placement consisting of 1,970,000 shares of common stock at a price of $0.25 per share for gross proceeds of $492,500. c) On May 29, 2012, the Company closed a private placement consisting of 818,000 shares of common stock at a price of $0.25 per share for gross proceeds of $204,500, of which $49,500 is recorded in stock subscriptions receivable at May 31, 2012. In connection with the private placement, the Company issued 33,000 shares of common stock as finders fees. The Company received the remaining proceeds of $49,500 during the fiscal year ended May 31, 2013. 9. Stock Based Compensation On September 11, 2009, the Company's board of directors adopted the 2009 Stock Option Plan ("2009 Plan") which provides for the granting of stock options to acquire up to 2,900,000 common shares of the Company to eligible employees, officers, directors and consultants of the Company. At May 31, 2013, the Company had 1,650,000 shares of common stock available to be issued under the Plan. On March 10, 2011, the Company's board of directors adopted the 2011 Stock Option Plan ("2011 Plan") which provides for the granting of stock options to acquire up to 5,000,000 common shares of the Company to eligible employees, officers, directors and consultants of the Company. At May 31, 2013, the Company had 1,410,000 shares of common stock available to be issued under the Plan. On March 19, 2012, pursuant to the 2011 Plan, the Company granted 990,000 options with immediate vesting to consultants to acquire 990,000 common shares at an exercise price of $0.10 per share exercisable for 5 years and recorded stock-based compensation for the vested options of $69,300, as general and administrative expense. 32 Sky Harvest Energy Corp. Formerley Sky Harvest Windpower Corp. (A Development Stage Company) Notes to the Consolidated Financial Statements May 31, 2013 (Expressed in US Dollars) 9. Stock Based Compensation (continued) The fair value for stock options vested during the years ended May 31, 2013 and May 31, 2012 were estimated at the vesting and granting date using the Black-Scholes option-pricing model. The weighted average assumptions used are as follows: Year Ended Year Ended May 31, 2013 May 31, 2012 ------------ ------------ Expected dividend yield -- 0% Risk-free interest rate -- 1.16% Expected volatility -- 702% Expected option life (in years) -- 4.89 The following table summarizes the continuity of the Company's stock options: Weighted-Average Weighted Remaining Average Contractual Aggregate Number of Exercise Term Intrinsic Options Price (years) Value ------- ----- ------- ----- $ $ Outstanding: May 31, 2011 3,183,334 0.23 Granted 990,000 0.10 ---------- ---- Outstanding: May 31, 2012 and May 31, 2013 4,173,334 0.20 2.84 251,500 ========== ==== ==== ======= Exercisable: May 31, 2013 4,173,334 0.20 2.84 251,500 ========== ==== ==== ======= At May 31, 2013, there was $nil of unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the 2009 Plan and 2011 Plan. 10. Joint Venture On February 3, 2012, the Company and its joint venture partner incorporated a British Columbia corporation under the name Levant Energy Inc. ("Levant") for the purposes of developing underground natural gas storage plants in the Republic of Turkey. The Company will initially hold a 65% interest in Levant by investing $500,000. The investment is subject to certain conditions, including completion of further equity or debt funding in order to finance acquisition. The Company's joint venture partner will hold the remaining 35% interest in Levant. At May 31, 2013, the Company and its joint venture partner have not made any contribution to Levant and operations have not yet begun. 33 Sky Harvest Energy Corp. Formerley Sky Harvest Windpower Corp. (A Development Stage Company) Notes to the Consolidated Financial Statements May 31, 2013 (Expressed in US Dollars) 11. Commitments and Contingencies a) On April 5, 2006, the Company's wholly-owned subsidiary, Sky Harvest - Saskatchewan, entered into a Saskatchewan Wind Energy Lease agreement, whereby the lessor granted to Sky Harvest - Saskatchewan the right to use certain lands for development and operation of a wind powered electrical generating facility for the conversion of wind energy into electrical energy. The Company agreed to pay the lessors $2,500 per turbine installed on the land and a 1% royalty on all revenue generated from wind energy on the leased lands. Pursuant to the agreement, the term of the lease shall commence on that date (the "Commencement Date") upon which the Company commences generating and selling electricity through the operation of turbines on the leased lands, and shall end on the 25th anniversary of the Commence Date. The agreement was amended on November 1, 2011. Pursuant to the amendment, in the event that the Commencement Date has not occurred by September 30, 2008, then the Company shall either abandon the lease or pay the sum of Cdn$5,000 per month as a delay rental to keep the lease in good standing up to and including the month in which the Commencement date occurs. The Cdn$5,000 monthly delay rental is only payable when the Company commences generating and selling electricity and will not be accrued until the Commencement Date. . All payments due and owing as of November 1, 2011 shall accrue and be paid in full within 30 days of the Commencement Date. If the Commencement Date has not occurred by December 31, 2016, then the lessors have the right to terminate the agreement upon notice in writing to the Company. At May 31, 2013, the Company has accrued $110,085 of lease payments. b) On April 15, 2009, the Company's wholly-owned subsidiary, Sky Harvest - Saskatchewan, entered into a Saskatchewan Wind Energy Lease agreement, whereby the lessor granted to Sky Harvest - Saskatchewan the right to use certain lands for development and operation of a wind powered electrical generating facility for the conversion of wind energy into electrical energy. The Company agreed to pay the lessors a 1% royalty on all revenue generated from wind energy on the leased lands. Pursuant to the agreement, the term of the lease shall commence on that date (the "Commencement Date") upon which the Company commences generating and selling electricity through the operation of turbines on the leased lands, and shall end on the 25th anniversary of the Commence Date. The agreement was amended on November 1, 2011. In the event that the Commencement Date has not occurred by September 30, 2010, the Company shall either abandon the lease or pay the sum of Cdn$5,000 per month as a delay rental to keep the lease in good standing up to the and including the month in which the Commencement Date occurs. The Cdn$5,000 monthly delay rental is only payable when the Company commences generating and selling electricity and will not be accrued until the Commencement Date. All payments due and owing as of November 1, 2011 shall accrue and be paid in full within 30 days of the Commencement Date. If the Commencement Date has not occurred by December 31, 2016, then the lessors have the right to terminate the agreement upon notice in writing to the Company. At May 31, 2013, the Company has accrued $40,000 of lease payments. c) On February 23, 2009, the Company entered into a consulting agreement with a consultant (the "Consultant"). Pursuant to the agreement, the Consultant provided investor relations services for the Company from February 24, 2009 to July 5, 2009. In consideration for the investor relations services, the Company agreed to pay the Consultant $5,000 per month and to issue 15,000 shares of the Company's common stock. At May 31, 2013, the fair value of the 15,000 shares issuable was $6,750 and is included in common stock subscribed. d) On February 3, 2012, the Company entered into a consulting agreement with a consultant. Pursuant to the agreement, the consultant will introduce the Company potential acquisition and investment opportunities in the energy sector, as well as any related sectors. If the Company completes an acquisition of any interest in any company or assets as a result of the consultant's introduction to investment opportunity, the Company shall pay the consultant a success fee equal to 10% of the value of the transaction in shares of the Company's common stock. The Company may also pay such success fees in cash, or a combination of shares and cash. If the Company completes transactions as a result of the consultant's introductions with an aggregate value of at least $3,000,000, including any concurrent financings, the consultant shall have the option to cause the Company to enter into an employment agreement with him, join the Company's Board of Directors, and be appointed as the Company's President and Chief Executive Officer. The term of the agreement is three years. 34 Sky Harvest Energy Corp. Formerley Sky Harvest Windpower Corp. (A Development Stage Company) Notes to the Consolidated Financial Statements May 31, 2013 (Expressed in US Dollars) 12. Income Taxes The Company has net operating losses carried forward of $2,793,300 (2012 - $2,594,600) available to offset taxable income in future years which expire beginning in fiscal 2021. The Company is subject to United States federal and state income taxes at an approximate rate of 35%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company's income tax expense as reported is as follows: May 31, 2013 May 31, 2012 ------------ ------------ $ $ Net loss before income taxes per financial statements (266,441) (614,009) Income tax rate 35% 35% Income tax recovery (93,254) (214,903) Permanent differences -- 21,141 Temporary differences 23,740 244 Change in valuation allowance 69,514 193,518 --------- --------- Provision for income taxes -- -- ========= ========= The significant components of deferred income tax assets and liabilities at May 31, 2013 and 2012 are as follows: May 31, 2013 May 31, 2012 ------------ ------------ $ $ Net operating loss carry-forward 977,641 908,127 Valuation allowance (977,641) (908,127) --------- --------- Net deferred income tax asset -- -- ========= ========= 13. Subsequent Events In accordance with ASC 855, Subsequent Events, the Company has evaluated subsequent events through the date of issuance of the unaudited interim consolidated financial statements. Subsequent to the fiscal period ended May 31, 2013, the Company did not have any material recognizable subsequent events except the following: a) On July 5, 2013, the Company entered into an asset purchase agreement with Kelso Energy Ltd. and Barry Ireland (the "Vendors") whereby the Company acquired all the property, assets and undertaking of the vertical axis wind turbine manufacturing and sales business as a going concern, including all intellectual property rights, leasehold interests in two manufacturing facilities and related equipment, client and contact lists, and unfulfilled purchase orders. In connection with the acquisition, the Company has incorporated a wholly-owned subsidiary under the name "Sky Vertical Technologies Inc." ("Sky Vertical") which holds the assets and will undertake operations. In consideration of the transfer of these assets, the Company agreed to pay a total of $65,000, issue 650,000 shares of common stock of the Company, and grant incentive stock options to acquire up to 550,000 shares of common stock of the Company at a price of $0.10 per share for a period of five years. In addition, the Vendors will receive 500,000 voting shares of Sky Vertical by the date that Sky Harvest files a prospectus or registration statement in any jurisdiction with a view to having its shares trade publicly on a recognized stock exchange or quotation system. As well, the Vendors are entitled to a royalty from the Company of $200 for every vertical axis wind turbine that the Company sells for a period of ten years. 35 Sky Harvest Energy Corp. Formerley Sky Harvest Windpower Corp. (A Development Stage Company) Notes to the Consolidated Financial Statements May 31, 2013 (Expressed in US Dollars) 13. Subsequent Events (continued) b) On July 5, 2013, the Company's wholly-owned subsidiary, Sky Vertical, entered into an employment agreement with its manager of operations whereby Sky Vertical agreed to pay a monthly salary of Cdn$10,000. The base salary will increase effective on each anniversary of the effective date of this agreement by at least 2% of the base salary in effect at the time. The manager of operations shall be entitled to participate in Sky Vertical's incentive stock option plan when adopted and be entitled to be granted 20% of the total stock options available. c) On July 9, 2013, the Company granted stock options to two consultants of the Company to acquire up to 500,000 shares of its common stock at a price of $0.10 per share for a period of five years. This grant is pursuant to the Company's 2011 Stock Option Plan. d) On August 13, 2013, the Company changed its name from "Sky Harvest Windpower Corp." to "Sky Harvest Energy Corp." 36 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL MATTERS None ITEM 9A. CONTROLS AND PROCEDURES A. DISCLOSURE CONTROLS AND PROCEDURES As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934, the Company's principal executive officer and principal financial officer evaluated the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) for the period covered by this Annual Report on Form 10-K as of our fiscal year end, May 31, 2013. Based on this evaluation, this officer concluded that as of the end of the period covered by this Annual Report on Form 10-K, these disclosure controls and procedures were adequate to ensure that the information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and include controls and procedures designed to ensure that such information is accumulated and communicated to the Company's management, including the Company's principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. B. MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management is responsible for establishing and maintaining adequate internal control over our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our internal controls over financial reporting were not effective as of May 31, 2013 and were subject to material weaknesses. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. We have identified the following material weaknesses in our internal control over financial reporting using the criteria established in the COSO: 1. Failing to have an audit committee or other independent committee that is independent of management to assess internal control over financial reporting; and 37 2. Failing to have a director that qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate. This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Our internal control over financial reporting was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this Annual Report. C. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING. During the fiscal year ended May 31, 2013, there were no changes in internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. 38 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS As of the date of this report, our directors and executive officers, their ages, positions held, and date of election or appointment, are as follows: Date First Elected or Name Position Held with our Company Age Appointed ---- ------------------------------ --- --------- William Iny President, CEO, CFO, Secretary 63 September 1, 2010 and Treasurer Director May 23, 2006 Harry Bauskin Director 62 April 14, 2011 Patricia J. Shorr Director 54 April 28, 2011 Greg Yanke Director 43 June 14, 2011 FAMILY RELATIONSHIPS There are no family relationships with any of our other directors and officers. BUSINESS EXPERIENCE The following is a brief account of the education and business experience of our directors and executive officer during at least the past five years, indicating their business experience, principal occupations during the period, and the names and principal businesses of the organizations by which they were employed. WILLIAM INY has acted as our director since May 23, 2006 and as our president, CEO, CFO, secretary and treasurer since September 1, 2010. Since 1981, Mr. Iny has acted as the Principal of Abra Management Corporation, a private company involved in real estate development, franchising and in providing consulting and financing services to private and public companies. He was also a co-founder and director of Empire Stock Transfer Inc., a Las Vegas, Nevada based registrar and transfer agent registered with the United States Securities & Exchange Commission. HARRY BAUSKIN has acted as our director since April 14, 2011. Mr. Bauskin previously held various positions with Bank Hapoalim, Israel's largest bank, over a 30 year period. These positions included acting as head of the bank's Toronto and Canadian divisions and head of the Investment Advice Division in Jerusalem. Mr. Bauskin has also acted as Deputy Managing Director for Israel Halutz Ltd., a portfolio management company based in Israel, and as Senior Portfolio Manager/Analyst for Afikim Investments Limited. He holds a Bachelor of Commerce degree from Durban University in South Africa where he specialized in economics and accountancy. PATRICIA J. SHORR has acted as our director since April 28, 2011. Since 1999, Ms. Shorr has acted as a principal of Spectrum Capital Corporation, a company that consults to wind and solar energy developers and is involved in the commercial mortgage brokerage sector. In this role, she has been involved in all aspects of permitting wind energy farms and solar projects including 39 coordinating all legal documentation for land leases and permitting, securing state sponsored financing and economic incentives, liaising and negotiating with transmission conglomerates and regional utilities, participating in turbine acquisition and balance of plant procurement, and securing transmission and utility participation. Ms. Shorr's previous employment positions include acting as an Assistant Vice-President of First City Bank in Columbus, Ohio; as a Financial Analyst for W.R. Grace & Co. in New York; and as Staff Auditor for Touche Ross & Co. in Washington, DC. She holds a Bachelor's of Business Administration degree specializing in marketing and a Master of Accounting degree both from The George Washington University. GREG YANKE has acted as our director since June 14, 2011. Since 2000, Mr. Yanke has been a self-employed corporate and securities lawyer and the principal of Gregory S. Yanke Law Corporation. Mr. Yanke is a graduate of the University of British Columbia, receiving Bachelor degrees in Political Science (1991) and Law (1994), as well as Arizona State University, where he obtained an MBA, specializing in Financial Management and Markets (2009). He is a member in good standing with the Law Society of British Columbia. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS Our director, executive officer and control persons have not been involved in any of the following events during the past five years: 1. any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; 2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); 3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; 4. being the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity; 5. being found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; or 6. being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive 40 officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that all filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with. CODE OF ETHICS We adopted a Code of Ethics applicable to all of our directors, officers, employees and consultants, which is a "code of ethics" as defined by applicable rules of the SEC. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our chief executive officer, chief financial officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a Current Report on Form 8-K filed with the SEC. CORPORATE GOVERNANCE NOMINATING AND COMPENSATION COMMITTEES We do not have standing nominating or compensation committees, or committees performing similar functions. Our board of directors believes that it is not necessary to have a standing compensation committee at this time because the functions of such committee are adequately performed by our board of directors. Our board of directors also is of the view that it is appropriate for us not to have a standing nominating committee because our board of directors has performed and will perform adequately the functions of a nominating committee. Our board of directors has not adopted a charter for the nomination committee. There has not been any defined policy or procedure requirements for stockholders to submit recommendations or nomination for directors. Our board of directors does not believe that a defined policy with regard to the consideration of candidates recommended by stockholders is necessary at this time because we believe that, given the early stages of our development, a specific nominating policy would be premature and of little assistance until our business operations are at a more advanced level. There are no specific, minimum qualifications that our board of directors believes must be met by a candidate recommended by our board of directors. The process of identifying and evaluating nominees for director typically begins with our board of directors soliciting professional firms with whom we have an existing business relationship, such as law firms, accounting firms or financial advisory firms, for suitable candidates to serve as directors. It is followed by our board of directors' review of the candidates' resumes and interview of candidates. Based on the information gathered, our board of directors then makes a decision on whether to recommend the candidates as nominees for director. We do not pay any fee to any third party or parties to identify or evaluate or assist in identifying or evaluating potential nominee. AUDIT COMMITTEE We do not have a standing audit committee at the present time. Our board of directors has determined that we do not have a board member that qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K. We believe that our board of directors is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The board of directors of our company does not believe that 41 it is necessary to have an audit committee because we believe that the functions of an audit committee can be adequately performed by the board of directors. In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any revenues from operations to date. OTHER COMMITTEES All proceedings of our board of directors for the year ended May 31, 2013 were conducted by telephone conference or by resolutions consented to in writing by our directors and filed with the minutes of the proceedings of the board of directors. Our company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our board of directors believes that it is not necessary to have such committees, at this time, because they can adequately perform the functions of such committees. Our company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. Our director believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. Our board of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment. A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our President, at the address appearing on the first page of this annual report. ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION The particulars of compensation paid over the past two fiscal years to the following persons: * All individuals serving as our principal executive officer; * All individuals serving as our principal financial officer; * our three most highly compensated executive officers who were serving as executive officers at the end of the year ended May 31, 2013 whose total annual compensation exceeded $100,000; and * up to two additional individuals for whom disclosure would have been provided above but for the fact that the individual was not serving as our executive officer at the end of the most recently completed financial year, whom we refer to collectively as the "named executive officers", for the year ended May 31, 2013, are set out in the following summary compensation table: 42

~~Change in Pension Value and Fees~~ Non-Equity Nonqualified ~~Earned~~Name and Incentive Deferred ~~Paid~~Principal in Stock Option Plan Compensation All Other ~~Name~~Position ~~Cash~~Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) ~~Total~~Totals($) -------- ---- --------- -------- --------- --------- --------------- ----------- --------------- --------- William ~~Iny~~2013 Nil Nil Nil Nil Nil ~~134~~Nil 59,~~367~~761 (1) ~~Nil~~59,761 ~~Harry~~Iny ~~Bauskin~~2012 Nil Nil Nil Nil Nil Nil ~~Nil~~134,367 ~~Patricia~~(1) J.134,367 ~~Shorr~~President, ~~Nil~~2011 Nil Nil Nil ~~Nil~~152,500 Nil Nil ~~Greg~~63,241 ~~Yanke~~(1) ~~Nil~~215,741 ~~Nil~~CEO, ~~Nil Nil Nil 104~~CFO,~~538~~ ~~(1)~~Secretary ~~Nil~~& Treasurer

---------- 1. Management fees and bonus paid to a company controlled by Mr. Iny. DIRECTOR COMPENSATION POLICY Our board of directors does not receive compensation for acting in such capacity. On occasion, our directors will receive compensation for services that they provide to us. The following table provides information regarding compensation that we have provided to our directors during the fiscal year ended May 31, 2011:

~~Option~~Change ~~Awards~~in ~~Stock~~Pension ~~Awards~~Value ~~-----------------------------------------------------------------~~and ~~-----------------------------------------------~~Fees Non-Equity ~~Incentive~~Nonqualified ~~Equity~~Earned ~~Plan~~ Incentive ~~Awards:~~Deferred ~~Plan~~Paid ~~Market~~in orStock ~~Awards:~~Option ~~Payout Equity Number of Value of Incentive Number Unearned Unearned~~ Plan ~~Awards;~~Compensation ofAll ~~Market Shares, Shares, Number of Number of Number of Shares Value of Units or Units or Securities Securities Securities or Units Shares or~~ Other Other Underlying Underlying Underlying of Stock Units of Rights Rights Unexercised Unexercised Unexercised Option Option That Stock That That That Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not Name ~~Exercisable~~Cash(#$) ~~Unexercisable~~Awards(#$) ~~Options~~Awards(#$) ~~Price~~Compensation($) ~~Date Vested~~Earnings(#$) ~~Vested~~Compensation($) ~~Vested~~Total(#$) ~~Vested(#)~~ ---- ------- ------- -- ---------~~-----~~ ---------- ----- ---- --------- --------- ------~~---~~ --------- William ~~333,334~~Iny Nil Nil ~~$0.51~~Nil ~~2014~~Nil Nil 59,761 (1) Nil Harry Bauskin Nil Nil ~~Iny~~Nil ~~900,000~~Nil Nil Nil $0Nil Patricia J.10 ~~2016~~Shorr Nil Nil Nil Nil ~~Chris~~ Nil Nil Nil Greg Yanke Nil Nil Nil Nil Nil Nil ~~Craddock~~Nil

---------- 1. Management fees and bonus paid to a company controlled by Mr. Iny. 43 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END Below is a summary of unexercised options; stock that has not vested; and equity incentive plan awards for each named executive officer outstanding as of the end of our last completed fiscal year.

~~Filed~~Option ~~with~~Awards ~~Description~~Stock ~~Exhibit~~Awards ~~No. Form Filing date this Form 10~~-K ----------- ----------- ---- ----------- -------------- ~~ARTICLES OF INCORPORATION AND BYLAWS Articles of Incorporation 3.1 SB~~-~~2 July 14, 2005 Bylaws 3.2 SB~~-~~2 July 14, 2005 Certificate of designation 3.3 8~~-~~K July 13, 2009 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS Form of Warrant Certificate for July 13, 2007 Private Placement 4.1 10~~-~~QSB January 14, 2008 MATERIAL CONTRACTS~~--~~MANAGEMENT CONTRACTS AND COMPENSATORY PLANS Management Agreement between Keewatin Windpower Corp. 10.1 SB~~-~~2 July 14, 2005 and Christopher Craddock, dated March 1, 2005 MATERIAL CONTRACTS~~--~~FINANCING AGREEMENTS Form of Subscription Agreement for July 13, 2007 Private Placement for US Subscribers 10.2 10~~-~~QSB January 14, 2008 Form of Subscription Agreement for July 13, 2007 Private Placement for Non~~-~~US Subscribers 10.3 10~~-~~QSB~~- ~~January 14, 2008 MATERIAL CONTRACTS~~--~~OTHER~~--------------------------------------------- ~~Consent~~Equity toIncentive ~~Entry/Right~~Equity ofPlan ~~Access~~Incentive ~~Agreement~~Awards: ~~between~~Plan ~~Keewatin~~Market ~~Windpower~~or ~~Corp.~~Awards: ~~and~~Payout ~~Edward~~Equity ~~and~~Number ~~Charlotte~~of ~~Bothner,~~Value ~~dated~~of ~~August~~Incentive ~~23,~~Number ~~2005~~Unearned ~~10.4~~Unearned ~~SB-2~~Plan ~~September~~Awards; ~~29, 2005 48 Letter~~ of ~~Intent~~Market ~~between~~Shares, ~~Keewatin Windpower Corp. and Sky Harvest Windpower Corp. dated March 27~~Shares, ~~2007~~Number ~~10.5~~of ~~10-QSB~~Number ~~January~~of ~~14,~~Number ~~2008~~of ~~Loan~~Shares ~~Agreement~~Value ~~between~~of ~~Sky~~Units ~~Harvest~~or ~~Windpower~~Units ~~Corp.~~or ~~and~~Securities ~~Keewatin~~Securities ~~Windpower~~Securities ~~Corp.~~or ~~dated~~Units ~~September~~Shares ~~23,~~or ~~2008~~Other ~~10.6~~Other ~~10-QSB~~Underlying ~~January~~Underlying ~~14,~~Underlying ~~2009~~of ~~Promissory~~Stock ~~Note~~Units of ~~Sky~~Rights ~~Harvest~~Rights ~~Windpower~~Unexercised ~~Corp.~~Unexercised ~~dated~~Unexercised ~~September~~Option ~~23,~~Option ~~2008~~That ~~10.7~~Stock ~~10-QSB~~That ~~January~~That ~~14,~~That ~~2009~~Options ~~Financial~~Options ~~Communications~~Unearned ~~and~~Exercise ~~Strategic~~Expiration ~~Consulting~~Have ~~Agreement~~Not ~~with~~Have ~~Aspire~~Not ~~Clean~~Have ~~Tech~~Not ~~Communications,~~Have ~~Inc.~~Not ~~dated~~Name ~~February~~Exercisable(#) ~~23,~~Unexercisable(#) ~~2009~~Options(#) ~~10.8~~Price($) ~~8-K~~Date ~~March~~Vested(#) 3,Vested($) ~~2009~~Vested(#) ~~Promissory~~Vested(#) ~~Note~~---- of-------------- ~~Sky~~---------------- ~~Harvest~~---------- ~~Windpower~~----- ~~Corp.~~---- ~~dated~~--------- ~~September~~--------- ~~23, 2008 10.9 10~~-Q-------- ~~February 28, 2009 Loan Agreement between Sky Harvest Windpower Corp. and Keewatin Windpower Corp. dated January 28, 2009 10.10 10~~-Q-------- ~~February~~William 28333,334 ~~2009~~Nil ~~Share~~Nil ~~exchange agreement between Keewatin Windpower Corp~~$0.51 ~~and~~2014 ~~Sky~~Nil ~~Harvest~~Nil ~~Windpower~~Nil ~~Corp.~~Nil ~~dated~~Iny ~~May 11~~900,000 ~~2009~~Nil ~~10.11~~Nil ~~8-K July 10, 2009 Exchangeable share support agreement between Keewatin Windpower Corp~~$0. ~~and Keewatin Windpower Inc. dated May 11, 2009~~ 10~~.12~~ ~~8-K~~2016 ~~July~~Nil ~~10,~~Nil ~~2009~~Nil ~~Voting~~Nil ~~and~~OPTION ~~exchange~~EXERCISES ~~trust~~AND ~~agreement~~STOCK ~~between~~VESTED ~~Keewatin~~TABLE ~~Windpower~~OPTION ~~Corp.,~~AWARDS ~~Keewatin~~STOCK ~~Windpower~~AWARDS ~~Inc. and Valiant Trust Company dated May 11, 2009 10.13 8~~-~~K July 10, 2009 2010 Share Option plan 10.14 8~~-~~K September 23, 2009 CODE OF ETHICS Code of Ethics 14.1 10~~-K--------------------------- ~~August 31, 2009 CERTIFICATES Certification Statement of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes~~-~~Oxley~~--------------------------- ~~Act~~Number of ~~2002~~Number ~~31.1 ` * Certification Statement~~ of ~~the~~Shares ~~Chief~~Value ~~Executive~~Shares ~~Officer~~Value ~~and~~Acquired ~~Chief~~On ~~Financial~~Realized ~~Officer~~On ~~pursuant~~Acquired toOn 18Realized ~~U.S.C.~~On ~~Section~~Name ~~1350,~~Exercise(#) asExercise($) ~~adopted~~Vesting(#) ~~pursuant~~Vesting($) to---- ~~Section~~----------- ~~906~~----------- of---------- ~~the Sarbanes~~-~~Oxley~~--------- ~~Act~~William OfIny ~~2002~~Nil ~~32.1~~Nil *Nil Interactive Data Files pursuant to Rule 405 of Regulation S-T. 101 *Nil

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table reflects, as of September 2, 2013, the beneficial common stock ownership of: (a) each of our directors, (b) each executive officer, (c) each person known by us to be a beneficial holder of five percent (5%) or more of our common stock, and (d) all of our executive officers and directors as a group: 44 Beneficial ownership is determined in accordance with the rules of the SEC. Shares of common stock subject to options currently exercisable or exercisable within 60 days of September 2, 2013, are deemed outstanding for computing the percentage ownership of the stockholder holding the options or warrants, but are not deemed outstanding for computing the percentage ownership of any other stockholder. Unless otherwise indicated in the footnotes to this table, we believe stockholders named in the table have sole voting and sole investment power with respect to the shares set forth opposite such stockholder's name. Percentage of ownership is based on 33,203,016 shares of common stock outstanding as of September 2, 2013. Amount and Nature of Beneficial Percent of Name and Address of Beneficial Shareholder Ownership (1) Class (2) ------------------------------------------ ------------- --------- William Iny 10,347,447 (3) 31.8% 1200 West 73rd Street, 11th Floor Vancouver, British Columbia Greg Yanke 9,882,128 (4) 30.4% 1200 West 73rd Street, 11th Floor Vancouver, British Columbia Harry Bauskin 4,759,000 (5) 14.6% 1200 West 73rd Street, 11th Floor Vancouver, British Columbia Patricia J. Shorr 350,000 (6) 1.1% 1200 West 73rd Street, 11th Floor Vancouver, British Columbia Directors and officers as a group (4 persons) 25,338,575 77.8% ---------- 1. Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. 2. The percentage of class is based on 33,203,016 shares of common stock issued and outstanding as of September 2, 2013. This total includes 15,680,016 shares of common stock that are reserved for issuance in exchange for certain exchangeable securities of the Company's subsidiary Keewatin Windpower Inc. 3. Total consists of: 9,114,113 shares of the Company's common stock beneficially owned by Mr. Iny and incentive stock options to purchase up to 1,233,334 shares of the Company's common stock. 4. Total consists of: 9,357,128 shares of the Company's common stock beneficially owned by Mr. Yanke and incentive stock options to purchase up to 525,000 shares of the Company's common stock. 5. Total consists of: 1,334,000 shares of the Company's common stock beneficially owned by Mr. Bauskin, 2,900,000 shares of the Company's common stock owned by Plein Sprung Energy Partnership, of which Mr. Bauskin is a limited partnership, and incentive stock options to purchase up to 525,000 shares of the Company's common stock. 6. Total consists of incentive stock options to purchase up to 350,000 shares of the Company's common stock. 45 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS Other than as listed below, we have not entered into or participated in any transactions or a series of similar transactions, wherein the amount involved exceeded $120,000 or one percent of our total assets at year end for the last three completed fiscal years, in which any of our officers, directors, persons nominated for these positions, beneficial owners of 5% or more of our common stock, family members of these persons or any related person of our company had a direct or indirect material interest. 1. During the year ended May 31, 2013, the Company paid or accrued $59,761 (year ended May 31, 2012 - $60,507) in management fees to a company owned by William Iny, our president. 2. During the year ended May 31, 2010, one of our directors, Greg Yanke, loaned the Company $27,000. The amount is unsecured and accrues interest at an annual rate of 15%. As at May 31, 2013, accrued interst of $11,961 on the loan has been recorded. DIRECTOR INDEPENDENCE Our common stock is quoted on the FINRA bulletin board interdealer quotation system, which does not have director independence requirements. Under NASDAQ rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. Three of our four directors are considered independent. EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS We have not entered into an employment agreement or consulting agreement with our board of directors and executive officers. PENSION, RETIREMENT OR SIMILAR BENEFIT PLANS There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof. We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. AUDIT FEES For the years ended May 31, 2013 and 2012, the aggregate fees billed by PLS CPA, our independent accountant, for professional services rendered for the audit of our annual consolidated financial statements included in our annual report on Form 10-K were: 2013 $24,000 2012 $24,000 46 AUDIT RELATED FEES For the years ended May 31, 2013 and 2012, the aggregate fees billed for assurance and related services by PLS CPA relating to the performance of the audit of our financial statements which are not reported under the caption "Audit Fees" above, was: 2013 Nil 2012 Nil TAX FEES For the years ended May 31, 2013 and 2012, the aggregate fees billed by PLS CPA for other non-audit professional services, other than those services listed above, totalled: 2013 Nil 2012 Nil We do not use PLS CPA for financial information system design and implementation. These services, which include designing or implementing a system that aggregates source data underlying the financial statements or generates information that is significant to our financial statements, are provided internally or by other service providers. We do not engage PLS CPA to provide compliance outsourcing services. Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before PLS CPA is engaged by us to render any auditing or permitted non-audit related service, the engagement be: * approved by our board of directors who are capable of analyzing and evaluating financial information; or * entered into pursuant to pre-approval policies and procedures established by the board of directors, provided the policies and procedures are detailed as to the particular service, the board of directors is informed of each service, and such policies and procedures do not include delegation of the board of directors' responsibilities to management. The board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered. 47 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES The following consolidated financial statements of Sky Harvest Energy Corp. and its subsidiary are filed as part of this Form 10-K: Statements Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of May 31, 2013 and 2012 Consolidated Statements of Operations for the years ended May 31, 2013 and 2012 and for the period since inception Consolidated Statements of Cash Flows for the years ended May 31, 2013 and 2012 and for the period since inception Consolidated Statement of Stockholders' Equity for the years ended May 31, 2013 and 2012 and for the period since inception Notes to the Consolidated Annual Financial Statements All schedules are omitted because they are not applicable or the required information is shown in the Financial Statements or notes thereto. 48 EXHIBITS

50 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. SKY HARVEST ENERGY CORP. /s/ William Iny -------------------------------------------- William Iny Chief Executive Officer and Chief Financial Officer Principal Executive Officer, Principal Accounting Officer and Principal Financial Officer Date: October 16, 2013 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: /s/ William Iny -------------------------------------------- William Iny President, Chief Executive Officer, Chief Financial Officer , President, Treasurer, Secretary, and Director, Principal Executive Officer, Principal Accounting Officer and Principal Financial Officer Date: October 16, 2013 51

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