SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

|X|   Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of 1934 for the fiscal year ended June 30, 2007

|_|   Transition Report under Section 13 of 15(d) of the Securities Exchange Act
      of 1934

For the transition period from ___________ to __________

                       Commission file number: 333-116890

                                ABC Funding, Inc.
                 (Name of small business issuer in its charter)

            Nevada                                     56-2458730
 (State or other jurisdiction of          (I.R.S. Employer Identification No.)
 incorporation or organization)

                           c/o Eaton & Van Winkle LLP,
                                 3 Park Avenue,
                            New York, New York 10016
                    (Address of principal executive offices)

         Issuer's telephone number, including area code: (212) 561-3626

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

         Securities registered under Section 12(g) of the Exchange Act:
                     Common Stock par value $.001 per share

      Check whether the issuer is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. |_|

      Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 |_|

      Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will 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-KSB
or any amendment to this form 10-KSB. |X| (Not applicable)

      Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). YES |X| NO |_|

      The issuer's revenues for its most recent fiscal year were $0.

<PAGE>

      As of September 25, 2007, the aggregate market value of the issuer's
common equity held by non-affiliates was $2,121,033, based on the closing price
of $0.38 per share for its common stock on the OTC Bulletin Board on September
25, 2007. As of September 25, 2007, 22,265,000 shares of the issuer's common
stock were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

Transitional Small Business Disclosure Format (check one): Yes |_| No |X|

<PAGE>

                                     PART I

Cautionary Notice Regarding Forward Looking Statements

      ABC Funding, Inc. (referred to herein as "we" or the "Company") desires to
take advantage of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. This report contains a number of forward-looking
statements that reflect management's current views and expectations with respect
to our business, strategies, future results and events and financial
performance. All statements made in this annual report other than statements of
historical fact, including statements that address operating performance, events
or developments that management expects or anticipates will or may occur in the
future, including statements related to future reserves, cash flows, revenues,
profitability, adequacy of funds from operations, statements expressing general
optimism about future operating results and non-historical information, are
forward-looking statements. In particular, the words "believe," "expect,"
"intend," " anticipate," "estimate," "may," "will," variations of such words and
similar expressions identify forward-looking statements, but are not the
exclusive means of identifying such statements and their absence does not mean
that the statement is not forward-looking. These forward-looking statements are
subject to certain risks and uncertainties, including those discussed below. Our
actual results, performance or achievements could differ materially from
historical results as well as those expressed in, anticipated or implied by
these forward-looking statements. We do not undertake any obligation to revise
these forward-looking statements to reflect any future events or circumstances.

      Readers should not place undue reliance on these forward-looking
statements, which are based on management's current expectations and projections
about future events, are not guarantees of future performance, are subject to
risks, uncertainties and assumptions (including those described below) and apply
only as of the date of this report. Our actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in "--Risk
Factors" below as well as those discussed elsewhere in this report, and the
risks discussed in our press releases and other communications to shareholders
issued by us from time to time, which attempt to advise interested parties of
the risks and factors that may affect our business. We undertake no obligation
to publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.

Item 1. Description of Business.

      We were incorporated as a Nevada corporation in May 2004 to be a mortgage
brokerage firm. Prior to the change of control following the Stock Transaction
(as hereinafter defined), our operations as a mortgage broker consisted of
originating or locating possible mortgage loans, including, conventional loans,
jumbo loans, home equity and second mortgages, non-conforming loans, sub-prime
loans and construction loans, that we would refer to lending sources to fund.
However, we never funded any loans. We now intend to engage in the oil and
natural gas industry either by making acquisitions of oil and gas properties or
by participating in strategic joint ventures.

      We are a "shell company" as that term is defined in Rule 405 promulgated
under the Securities Act of 1933 (the "Securities Act") and Rule 12b-2
promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), and
as such, are subject to rules of the Securities Exchange Commission (SEC)
applicable to shell companies. To date, we have only conducted nominal
operations and have only nominal assets.


                                       1
<PAGE>

Development of Business.

      On April 28, 2006, Energy Venture, Inc., a privately-held Delaware
corporation ("Energy Venture") consummated its acquisition of shares of the
capital stock of the Company in accordance with the terms of that certain Stock
Purchase Agreement, dated as of April 3, 2006, as amended by that Amendment,
dated as of April 28, 2006, among Energy Venture and those certain selling
stockholders of the Company named therein (as amended, the "Purchase
Agreement"). Under the Purchase Agreement Energy Venture acquired a total of
8,200,000 shares of the Company's common stock, par value $.001 per share (the
"Common Stock") for an aggregate purchase price of $433,037 (the "Stock
Transaction"). Included among the selling stockholders in the Stock Transaction
was the then Chief Executive Officer, Chief Financial Officer and Chairman of
the Company, Harold Barson.

      Prior to the completion of the Stock Transaction, Harold Barson and
Jeffrey Brown, another former officer and director of the Company, held
9,160,000 and 100,000 shares of the Common Stock, respectively, representing
collectively 92.6% of the Company's 10,000,000 shares of Common Stock then
issued and outstanding. After giving effect to the Stock Transaction, Energy
Venture held an aggregate of 8,200,000 shares constituting, in the aggregate,
82% of the issued and outstanding shares of Common Stock.

      After giving effect to the Stock Transaction, each of Alan Gaines and
Steven Barrenechea, our current directors were indirect owners of all 8,200,000
shares of the Common Stock acquired by Energy Venture as a result of their
control of Energy Venture, which Messrs. Gaines and Barrenechea served as
directors and of which Mr. Gaines owned a majority of the issued and outstanding
shares of capital stock. Such securities ownership represented 82% of the issued
and outstanding shares of the Common Stock of the Company and a controlling
interest. In connection with the Stock Transaction, Messrs. Gaines and
Barrenechea became directors and officers of the Company.

      On May 26, 2006 (the "Effective Date"), the Company, and our wholly-owned
subsidiary, EVI Acquisition Corp., a Nevada corporation ("EVI Acquisition"),
entered into, and consummated, the Agreement and Plan of Merger (the "Merger
Agreement") with Energy Venture. Pursuant to the Merger Agreement, on the
Effective Date, Energy Venture merged with and into EVI Acquisition (the
"Merger") and, in return: (i) each share of common stock of Energy Venture, par
value $.0001 per share, then issued and outstanding was exchanged for one share
of our Common Stock; (ii) each outstanding option to purchase shares of common
stock of Energy Venture was exchanged for an option to purchase, at the same
exercise price, an equal number of shares of our Common Stock; and (iii) all of
the obligations and liabilities of Energy Venture, including those certain 10%
Convertible Promissory Notes of Energy Venture in the aggregate principal amount
of $1,500,000 (the "Notes"), were assumed by the Company. As part of the Merger,
EVI Acquisition amended its Articles of Incorporation to change its name to
"Energy Venture, Inc." Immediately prior to the issuance of shares of our Common
Stock pursuant to the Merger Agreement, there were 10,000,000 shares of our
common stock outstanding, of which 8,200,000 were held by Energy Venture and
cancelled, on the Effective Date, pursuant to the Merger Agreement.

      The Notes assumed by the Company in the Merger are for an aggregate
principal amount of $1,500,000 and accrue interest thereon at a rate of 10% per
annum. Subject to the rights of the holders thereof to convert the Notes at any
time, the principal amount and all accrued interest is payable on August 31,
2007 (the "Maturity Date"). By the terms of the Notes, holders thereof may elect
to receive interest in either cash or in shares of our common stock. Each Note
is convertible into that number of shares of our common stock equal to the
principal amount of the Note, together with interest accrued thereon, owing and
unpaid as of the date of the notice of conversion divided by $0.50.

      As a result of the Merger, the former stockholders of Energy Venture
became the controlling stockholders of our Company. Additionally, since we had
no substantial assets immediately prior to the Merger, the transaction was
treated for accounting purposes as a reverse acquisition and has been accounted
for as a recapitalization of Energy Venture rather than a business combination.
Consequently, the historical financial statements of Energy Venture are now the
historical financial statements of the Company.


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<PAGE>

Employees

      At the current time, we do not have any employees other than our officers.
Prior to the closing of the Stock Transaction, we had two fulltime employees,
Harold Barson, our then President and a processor. We also had two part time
loan originators. None of the employees were covered by a collective employment
agreement.

Risk Factors

      The reader should carefully consider each of the risks described below. If
any of the following risks develop into actual events, our business, financial
condition or results of operations could be materially adversely affected and
the trading price of our common stock could decline significantly.

Risk Factors of the Company

We are a company with limited operating history and very limited resources.

      We have commenced business of a limited basis, and to date have been
engaged principally in organization, capital-raising activities and early
business development planning matters related primarily to making acquisitions
or participating in strategic joint ventures in the oil and natural gas
industry. To date no acquisitions have been made nor have any joint ventures
been entered into by the Company; in addition, we have had no revenues and
anticipate significant expenses relating to the development of our
infrastructure and business. Our prospects must be considered in light of the
risks, expenses, delays, problems and difficulties frequently encountered in the
establishment of a new business in the energy industry, given the volatile
nature of the energy markets. There can be assurance that the Company will
achieve its objective and business plan, or that it will be able to succeed in
achieving its objective and business plan. Given factors that are described
below, there exists a possibility that an investor could suffer a substantial
loss as a result of an investment in the Company.

Substantial doubt exists as to whether our Company can continue as a going
concern.

      We have only generated nominal revenues since our inception and have no
current source of revenues. Our lack of revenues increases the likelihood that
the Company may be unable to continue as a going concern, particularly in the
event that it is unable to obtain additional financing and/or attain profitable
operations. The financial statements presented in this annual report do not
include any adjustments that might result from the outcome of this uncertainty
and if our Company cannot continue as a going concern, our shares could become
devalued or even worthless.

      Our common stock is listed on the OTC Bulletin Board. Our common stock is
not quoted on the NASDAQ National Market System or listed on a national
securities exchange. The NASDAQ National Market System and national securities
exchanges require companies to fulfill certain requirements in order for their
shares to be listed and to continue to be listed. The securities of a company
may be ineligible for listing or, if listed, may be considered for delisting if
the company fails to meet certain financial thresholds, including if the company
has sustained losses from continuing operations and/or net losses in recent
fiscal years. There can be no assurance that we will not report additional
losses in the future or that we will be able to list or have our common stock
quoted on the NASDAQ National Market or a national securities exchange. An
inability to list our common stock could adversely affect our ability to raise
capital in the future by issuing common stock or securities convertible into or
exercisable for our common stock.

      Continuing losses may mean that additional funding may not be available on
acceptable terms, if at all. If adequate funds are unavailable from our
operations or additional sources of financing, we might be forced to reduce or
delay acquisitions or capital expenditures, sell assets, reduce operating
expenses, refinance all or a portion of our debt, or delay or reduce important
drilling or enhanced production initiatives.


                                       3
<PAGE>

      In addition, in that instance, we may seek to raise any necessary
additional funds through equity or debt financings, convertible debt financing,
joint ventures with corporate partners or other sources, which may be dilutive
to our existing shareholders and may cause the price of our common stock to
decline.

We have future capital needs and without adequate capital we may go out of
business.

      Our growth and continued operations could be impaired by limitations on
our access to the capital markets or traditional secured sources of credit.
There is no assurance that capital will be available to us, or if available,
would be adequate for the long-range growth of our Company. If financing is
available, it may involve issuing securities senior to our shares or equity
financings which are dilutive to holders of our shares. In addition, in the
event we do not raise additional capital from conventional sources, such as our
existing investors or commercial banks, there is every likelihood that our
growth will be restricted and we may need to scale back or curtail implementing
our business plan. Even if we are successful in raising capital, we will likely
need to raise additional capital to continue and/or expand our operations. If we
do not raise the additional capital, the value of our shares may become
substantially devalued.

Management's decision to change the business focus of the Company from the
mortgage industry to the oil and natural gas industry could ultimately prove to
be unsuccessful, harming our business operations and prospects.

      Management has changed the Company's business focus from the mortgage
industry to the oil and natural gas industry. Accordingly, a substantial portion
of our management's time will be directed toward the pursuit of identifying and
acquiring business opportunities in the oil and natural gas industry. There can
be no assurance that new management will be able to properly manage the
direction of the Company or that any ultimate change in the Company's business
focus will be successful. If new management fails to properly manage and direct
the Company, the Company may be forced to scale back or abandon its existing
operations, which will cause the value of our shares to decline.

Our Chairman possesses significant control over our operations based, in part,
upon being our controlling stockholder, and because of this he could choose a
plan of action which could devalue our outstanding securities.

      Our Chairman, Alan Gaines controls 51.2% of our outstanding shares of
capital stock as of the date hereof. Accordingly, our Chairman could
significantly influence the Company on matters submitted to the stockholders for
approval. These matters include the election of directors, mergers,
consolidations, the sale of all or substantially all of our assets, and also the
power to prevent or cause a change in control. This amount of control gives Mr.
Gaines virtually limitless ability to determine the future of our Company, and
as such, he could unilaterally elect to close the business, change the business
plan or make any number of other major business decisions without the approval
of other stockholders. This control may eventually make the value of our shares
worthless.

Conflicts of interest for our Chairman may exist with regards to his obligations
to the Company and his obligations to businesses in which he continues to own
interests and manage.

      Our Chairman, Alan Gaines, also serves as an executive officer and
director of each of Dune Energy, Inc. and Baseline Oil & Gas Corp., public
companies also engaged in the oil and gas industry. Mr. Gaines is required to
devote his time (and in the case of Dune Energy, Inc., substantially all of his
business time as provided in his employment agreement) to the business and
affairs of each of these entities, and his responsibilities to these other
entities may have the effect of diverting his time and attention that he might
have otherwise had available to devote solely to the business and operations of
our Company. There can be no guarantee that Mr. Gaines will be able to devote
adequate time to the affairs of the Company given his fiduciary and contractual
obligations to Dune Energy, Inc. and Baseline Oil & Gas Corp.


                                       4
<PAGE>

      In addition, our officers and directors are be subject to the certain
duties imposed on them under the Nevada law, including a general requirement
that opportunities which come to their attention may be considered opportunities
that should be made available to our Company as well as the companies that they
may be affiliated with on an equal basis. A breach of this requirement will be a
breach of the fiduciary duties of the officer and director. If our Company or
any of the other companies with which any of our officers or directors is
affiliated both desire to take advantage of an opportunity, then those officers
and directors would abstain from negotiating and voting upon the business
opportunity. Even in the event these procedures are followed, we cannot assure
you that conflicts of interests among us, our officers and directors, and such
other companies will not develop.

We have not and do not anticipate paying any cash dividends on our common stock,
because of this our securities could face devaluation in the market

      We have paid no cash dividends on our common stock to date and it is not
anticipated that any cash dividends will be paid to holders of our common stock
in the foreseeable future. While our dividend policy will be based on the
operating results and capital needs of the business, it is anticipated that any
earnings will be retained to finance our future expansion. As an investor, you
should take note of the fact that a lack of a dividend can further affect the
market value of our stock, and could significantly affect the value of any
investment in our Company.

Notwithstanding our financial position, we will continue to incur significant
increased costs as a result of operating as a public company, and our management
will be required to devote substantial time to new compliance requirements.

      In January 2006, we registered our common stock under the Securities
Exchange Act of 1934, as amended, and thereby became subject to the reporting
requirements promulgated by the Securities and Exchange Commission thereunder.
As a public company, we incur significant legal, accounting and other expenses
under the Sarbanes-Oxley Act of 2002, together with rules implemented by the
Securities and Exchange Commission and applicable market regulators. These rules
impose various requirements on public companies, including requiring certain
corporate governance practices. Our management and other personnel will need to
devote a substantial amount of time to these new compliance requirements.
Moreover, these rules and regulations will increase our legal and financial
compliance costs and will make some activities more time-consuming and costly.

      In addition, the Sarbanes-Oxley Act requires, among other things, that we
maintain effective internal controls for financial reporting and disclosure
controls and procedures. In particular, for fiscal years ending on or after
December 15, 2007, we must perform system and process evaluation and testing of
our internal controls over financial reporting to allow management to report on
the effectiveness of our internal controls over financial reporting, as required
by Section 404 of the Sarbanes-Oxley Act. For fiscal years ending on or after
December 15, 2008, we must perform system and process evaluation and testing of
our internal controls over financial reporting to allow management and our
independent registered public accounting firm to report on the effectiveness of
our internal controls over financial reporting, as required by Section 404 of
the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our
independent registered public accounting firm, may reveal deficiencies in our
internal controls over financial reporting that are deemed to be material
weaknesses. Compliance with Section 404 may require that we incur substantial
accounting expense and expend significant management efforts. If we are not able
to comply with the requirements of Section 404 in a timely manner or if our


                                       5
<PAGE>

independent registered public accounting firm later identifies deficiencies in
our internal controls over financial reporting that are deemed to be material
weaknesses, the market price of our stock could decline and we could be subject
to sanctions or investigations by the SEC or other applicable regulatory
authorities.

Our articles of incorporation provide for indemnification of officers and
directors at our expense and limit their liability.

      Our articles of incorporation and applicable Nevada law provide for the
indemnification of our directors, officers, employees, and agents, under certain
circumstances, against attorney's fees and other expenses incurred by them in
any litigation to which they become a party arising from their association with
or activities on behalf of the Company. We will also bear the expenses of such
litigation for any of our directors, officers, employees, or agents, upon such
person's promise to repay us therefor if it is ultimately determined that any
such person shall not have been entitled to indemnification. This
indemnification policy could result in substantial expenditures by us which we
will be unable to recoup.

      We have been advised that in the opinion of the SEC, this type of
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against these types of liabilities, other than the payment by us
of expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding, is asserted by a director,
officer or controlling person in connection with the securities being
registered, we will (unless in the opinion of our counsel, the matter has been
settled by controlling precedent) submit to a court of appropriate jurisdiction,
the question whether indemnification by us is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such
issue.

Our board of directors has the authority, without stockholder approval, to issue
preferred stock with terms that may not be beneficial to common stock holders
and with the ability to adversely affect stockholder voting power and perpetuate
the board's control over the Company.

      Our certificate of incorporation authorizes the issuance of up to
1,000,000 shares of preferred stock, par value $ .001 per share.

      The specific terms of the preferred stock have not been determined,
including: designations; preferences; conversions rights; cumulative, relative;
participating; and optional or other rights, including: voting rights;
qualifications; limitations; or restrictions of the preferred stock.

      The board of directors is entitled to authorize the issuance of up to
1,000,000 shares of preferred stock in one or more series with such limitations
and restrictions as may be determined in its sole discretion, with no further
authorization by security holders required for the issuance thereof.

      The issuance of preferred stock could adversely affect the voting power
and other rights of the holders of common stock. Preferred stock may be issued
quickly with terms calculated to discourage, make more difficult, delay or
prevent a change in control of our Company or make removal of management more
difficult. As a result, the board of directors' ability to issue preferred stock
may discourage the potential hostile acquirer, possibly resulting in beneficial
negotiations. Negotiating with an unfriendly acquirer may result in, among other
things, terms more favorable to us and our stockholders. Conversely, the
issuance of preferred stock may adversely affect any market price of, and the
voting and other rights of the holders of the common stock. We presently have no
plans to issue any preferred stock.

      Oil and Natural Gas Prices are Volatile.


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<PAGE>

      If any of the projects we participate in are successful, the prices we
receive for future oil and natural gas production will heavily influence our
revenue, profitability, access to capital and rate of growth. Oil and natural
gas are commodities and their prices are subject to wide fluctuations in
response to relatively minor changes in supply and demand or global
macroeconomic disruptions. Historically, the markets for oil and natural gas
have been volatile. These markets will likely continue to be volatile in the
future. The prices we may receive for any future production, and the levels of
this production, depend on numerous factors beyond our control. These factors
include the following:

      o     changes in global supply and demand for oil and natural gas;
      o     the actions of the Organization of Petroleum Exporting Countries, or
            OPEC;
      o     the price and quantity of imports of foreign oil and natural gas in
            the U.S.;
      o     political conditions, including embargoes, which affect other
            oil-producing activities;
      o     the level of global oil and natural gas exploration and production
            activity;
      o     the level of global oil and natural gas inventories;
      o     weather conditions affecting energy consumption;
      o     technological advances affecting energy consumption; and
      o     the price and availability of alternative fuels.

      Lower oil and natural gas prices may not only decrease our revenues on a
per unit basis but also may reduce the amount of oil and natural gas that we can
produce economically. Lower prices will also negatively impact the value of our
proved reserves. A substantial or extended decline in oil or natural gas prices
may materially and adversely affect our future business, financial condition,
results of operations, liquidity or ability to finance planned capital
expenditures.

      Competition in the oil and natural gas industry is intense.

      We intend to operate in a highly competitive environment for developing
properties, marketing of oil and natural gas and securing trained personnel.
Many of our competitors possess and employ financial, technical and personnel
resources substantially greater than ours, which can be particularly important
in the areas in which we operate. Those companies may be able to pay more for
productive oil and natural gas properties and prospects and to evaluate, bid for
and purchase a greater number of properties and prospects than our financial or
personnel resources permit. Our ability to acquire additional prospects and to
find and develop reserves in the future will depend on our ability to evaluate
and select suitable properties and to consummate transactions in a highly
competitive environment. In addition, there is substantial competition for
capital available for investment in the oil and natural gas industry. We may not
be able to compete successfully in the future in acquiring prospective reserves,
developing reserves, marketing oil and natural gas, attracting and retaining
quality personnel and raising additional capital.

Drilling for and producing oil and natural gas are high risk activities with
many uncertainties that could adversely affect our business, financial condition
or results of operations.

      Our future success will depend on the success of our exploitation,
exploration, development and production activities. Our oil and natural gas
exploration and production activities will be subject to numerous risks beyond
our control, including the risk that drilling will not result in commercially
viable oil or natural gas production. Our decisions to purchase, explore,
develop or otherwise exploit prospects or properties will depend in part on the
evaluation of data obtained through geophysical and geological analyses,
production data and engineering studies, the results of which are often
inconclusive or subject to varying interpretations. Please read "- Reserve
estimates depend on many assumptions that may turn out to be inaccurate" (below)
for a discussion of the uncertainties involved in these processes. Our costs of


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<PAGE>

drilling, completing and operating wells is often uncertain before drilling
commences. Overruns in budgeted expenditures are common risks that can make a
particular project uneconomical. Further, many factors may curtail, delay or
cancel drilling, including the following:

      o     delays imposed by or resulting from compliance with regulatory
            requirements;
      o     pressure or irregularities in geological formations;
      o     shortages of or delays in obtaining equipment and qualified
            personnel;
      o     equipment failures or accidents;
      o     adverse weather conditions;
      o     reductions in oil and natural gas prices;
      o     oil and natural gas property title problems; and
      o     market limitations for oil and natural gas.

Prospects that we decide to drill may not yield oil or natural gas in
commercially viable quantities.

      There is no way to predict in advance of drilling and testing whether any
particular prospect will yield oil or natural gas in sufficient quantities to
recover drilling or completion costs or to be economically viable. The use of
seismic data and other technologies and the study of producing fields in the
same area will not enable us to know conclusively prior to drilling whether oil
or natural gas will be present or, if present, whether oil or natural gas will
be present in commercial quantities. We cannot assure you that the analogies we
draw from available data from other wells, more fully explored prospects or
producing fields will be applicable to our drilling prospects.

We may incur substantial losses and be subject to substantial liability claims
as a result of our oil and natural gas operations.

      We are not insured against all risks. Losses and liabilities arising from
uninsured and underinsured events could materially and adversely affect our
business, financial condition or results of operations. Our oil and natural gas
exploration and production activities will be subject to all of the operating
risks associated with drilling for and producing oil and natural gas, including
the possibility of:

      o     environmental hazards, such as uncontrollable flows of oil, natural
            gas, brine, well fluids, toxic gas or other pollution into the
            environment, including groundwater and shoreline contamination;
      o     abnormally pressured formations;
      o     mechanical difficulties, such as stuck oil field drilling and
            service tools and casing collapses;
      o     fires and explosions;
      o     personal injuries and death; and
      o     natural disasters.

      Any of these risks could adversely affect our ability to conduct
operations or result in substantial losses to the Company. We may elect not to
obtain insurance if we believe that the cost of available insurance is excessive
relative to the risks presented. In addition, pollution and environmental risks
generally are not fully insurable. If a significant accident or other event
occurs and is not fully covered by insurance, then that accident or other event
could adversely affect our results of operations, financial condition and cash
flows.

We may not have enough insurance to cover all of the risks that we face.


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<PAGE>

      In accordance with customary industry practices, we will maintain
insurance coverage against some, but not all, potential losses in order to
protect against the risks we face. We do not carry business interruption
insurance. We may elect not to carry insurance if our management believes that
the cost of available insurance is excessive relative to the risks presented. In
addition, we cannot insure fully against pollution and environmental risks. The
occurrence of an event not fully covered by insurance could have a material
adverse effect on our financial condition and results of operations.

Our operations may cause us to incur substantial liabilities for failure to
comply with environmental laws and regulations.

      Our oil and natural gas operations will be subject to stringent federal,
state and local laws and regulations relating to the release or disposal of
materials into the environment or otherwise relating to environmental
protection. These laws and regulations may require the acquisition of a permit
before drilling commences, restrict the types, quantities and concentration of
substances that can be released into the environment in connection with drilling
and production activities, limit or prohibit drilling activities on certain
lands lying within wilderness, wetlands and other protected areas, and impose
substantial liabilities for pollution resulting from our operations. Failure to
comply with these laws and regulations may result in the assessment of
administrative, civil and criminal penalties, incurrence of investigatory or
remedial obligations or the imposition of injunctive relief. Changes in
environmental laws and regulations occur frequently, and any changes that result
in more stringent or costly waste handling, storage, transport, disposal or
cleanup requirements could require us to make significant expenditures to
maintain compliance, and may otherwise have a material adverse effect on our
results of operations, competitive position or financial condition as well as
the industry in general. Under these environmental laws and regulations, we
could be held strictly liable for the removal or remediation of previously
released materials or property contamination regardless of whether we were
responsible for the release or if our operations were standard in the industry
at the time they were performed.

If our access to markets is restricted, it could negatively impact our
production, our income and ultimately our ability to retain our leases.

      Market conditions or the unavailability of satisfactory oil and natural
gas transportation arrangements may hinder our access to oil and natural gas
markets or delay our production. The availability of a ready market for our oil
and natural gas production depends on a number of factors, including the demand
for and supply of oil and natural gas and the proximity of reserves to pipelines
and terminal facilities. Our ability to market our production depends in
substantial part on the availability and capacity of gathering systems,
pipelines and processing facilities owned and operated by third parties. Our
failure to obtain such services on acceptable terms could materially harm our
business.

      Our productive properties may be located in areas with limited or no
access to pipelines, thereby necessitating delivery by other means, such as
trucking, or requiring compression facilities. Such restrictions on our ability
to sell our oil or natural gas could have several adverse affects, including
higher transportation costs, fewer potential purchasers (thereby potentially
resulting in a lower selling price) or, in the event we were unable to market
and sustain production from a particular lease for an extended time, possibly
causing us to lose a lease due to lack of production.

Item 2. Description of Property.

      Presently, our corporate office is located at 3 Park Avenue, 16th Floor,
New York, New York 10016. Prior to the closing of the Stock Transaction, we
operated out of office space located at 9160 South 300 West, Sandy, Utah 84070.
The lease covering such space was month-to-month and called for minimum monthly
rental payments of $312 plus telephone line costs which average approximately
$300 per month. We paid approximately 50% of the cost of the lease with Harold
Barson, our then President, paying the balance.


                                       9
<PAGE>

Item 3. Legal Proceedings.

      The Company is not currently subject to any litigation.

Item 4. Submission of Matters to a Vote of Security Holders.

      None.

                                     PART II

Item 5. Market for Common Equity, Related Stockholder Matters and Small Business
        Issuer Purchases of Equity Securities.

      Our common stock is quoted on the OTC Bulletin Board under the trading
symbol "AFDG". The prices set forth below reflect the quarterly high and low
sale information for shares of our common stock during the period since the
common stock began trading. These quotations reflect inter-dealer prices,
without retail markup, markdown or commission, and may not represent actual
transactions. There were no trades of our securities on the OTC Bulletin Board
prior to April 13, 2006.

2006-2007 Quarter Ended               High Price               Low Price
-----------------------               ----------               ---------
06/30/2007                            $.51                     $.28
03/31/2007                            $.55                     $.35
12/31/2006                            $.60                     $.21
09/30/2006                            $.65                     $.25

2005-2006 Quarter Ended               High Price               Low Price
-----------------------               ----------               ---------
6/30/2006                             $1.25                    $0.05
3/31/2006                               N/A                      N/A
12/31/2005                              N/A                      N/A
9/30/2005                               N/A                      N/A

      As of September 25, 2007, there were approximately 126 holders of record
of our common stock.

      Our common stock is covered by an SEC rule that imposes additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors, which are generally
institutions with assets in excess of $5,000,000, or individuals with net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. For transactions covered by the rule, the broker-dealer must
make a special suitability determination for the purchaser and transaction prior
to the sale. Consequently, the rule may affect the ability of broker-dealers to
sell our securities, and also may affect the ability of purchasers of our common
stock to sell their shares in the secondary market. It may also cause fewer
broker-dealers to be willing to make a market in our common stock, and it may
affect the level of news coverage we receive.

      We have not declared or paid any cash dividends on our common stock since
our inception, and our Board of Directors currently intends to retain all
earnings for use in the business for the foreseeable future. Any future payment
of dividends will depend upon our results of operations, financial condition,
cash requirements and other factors deemed relevant by our Board of Directors.


                                       10
<PAGE>

      We have outstanding as of September 25, 2007, stock options to purchase
3,650,000 shares of Common Stock and the Notes convertible into 2,620,171 shares
of common stock.

Item 6. Management's Discussion and Analysis or Plan of Operation.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

      Information set forth herein contains "forward-looking statements" which
can be identified by the use of forward-looking terminology such as "believes,"
"expects," "intends," "may," "should" or "anticipates" or the negative thereof
or other variations thereon or comparable terminology, or by discussions of
strategy. No assurance can be given that the future results covered by the
forward-looking statements will be achieved. We caution readers that important
factors may affect our Company's actual results and could cause such results to
differ materially from forward-looking statements made by or on behalf of the
Company. These include our Company's lack of historically profitable operations,
dependence on key personnel, ability to implement business plan, ability to
market our services, and other factors identified in our filings with the
Securities and Exchange Commission, press releases and other public
communications.

      Plan of Operation. The Company has not had any revenues from operations
since we commenced business in February 2006. See Item 7 "Financial Statements."
Accordingly, the information provided in this Item 6 is a plan of operation
pursuant to Regulation S-B Item 303(a) promulgated by the SEC.

      The merger transaction with Energy Venture in May 2006 resulted in the
Energy Venture stockholders controlling approximately 92% of our issued and
outstanding shares of Common Stock immediately following its completion.
Consequently, the transaction was accounted for as a reverse merger with Energy
Venture being deemed the acquiring entity for financial accounting purposes.
Since the transaction involved the merger of a private company (Energy Venture)
into a public shell company, it was considered to be a capital transaction
rather than a business combination for financial accounting purposes. Thus, for
financial accounting and reporting purposes, the historical financial statements
of the Company prior to the effective date of the Energy Venture merger have
been restated to be those of Energy Venture.

      Since the merger with Energy Venture, the Company has primarily been
involved in conducting business planning and capital-raising activities. The
Company intends to engage in the oil and natural gas industry either by making
acquisitions or by participating in strategic joint ventures. To date no
acquisitions have been made nor has the Company entered into any joint ventures.

      Capital Resources. During 2006, we raised funds by issuances of our debt
and equity securities to pay current expenses and funds for our proposed
operations. See Item 1. "Description of Business" and Item 7. "Financial
Statements".

      From March through July 2006, the Company conducted a private placement
offering, pursuant to a Private Placement Memorandum, of the Notes (the "Private
Placement"). As a result of the Merger we were provided with needed working
capital in the form of a capital infusion of approximately $1,500,000 from the
Private Placement.

      The Company repaid, on the Maturity Date, six (6) of the holders of the
Notes in the aggregate $424,636.99, with an additional $44,623.29 of interest to
be repaid as shares of common stock of the Company, which is in the aggregate
89,248 shares of the Company's common stock. The remaining holders of the Notes
have entered into an agreement with the Company whereby the Notes were amended.
The Maturity Date of the Notes was extended to February 28, 2008 and, from


                                       11
<PAGE>

September 1, 2007 until the Notes are paid in full, the interest rate accruing
on the principal was increased from 10% per annum to 12% per annum. In addition,
the Company agreed to issue to the remaining holders of the Notes in the
aggregate 218,000 shares of the Company's common stock.

      Despite the Merger, if we are unable to raise additional capital from
conventional sources, including lines of credit and additional sales of
additional stock in the future, we may be forced nevertheless to curtail or
cease our business operations. Even if we are able to continue our operations,
the failure to obtain sufficient financing could have a substantial adverse
effect on our business and financial results.

      In the future, we may be required to seek additional capital by selling
debt or equity securities, curtailing operations, selling assets, or otherwise
be required to bring cash flows in balance when we approach a condition of cash
insufficiency. The sale of additional equity securities, if accomplished, may
result in dilution to our shareholders. We cannot assure you, however, that
financing will be available in amounts or on terms acceptable to us, or at all.
Our inability to obtain sufficient financing will adversely affect our operating
results and prospects.

      Our forecasted operating needs and funding requirements, as well as our
projected ability to obtain adequate financial resources, involve risks and
uncertainties, and actual results could vary as a result of a number of factors,
including the "Risk Factors" set forth above. The risks described therein are
not the only ones facing us and additional risks that we do not yet know of or
that we currently think are not material may also have an adverse effect on our
business operations. If any of the risks actually occur, our business could be
adversely affected as well as the value of our shares.

Recent Accounting and Reporting Pronouncements

      In June 2003, the Securities and Exchange Commission ("SEC") adopted final
rules under Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404").
Commencing with our annual report for the year ended June 30, 2008, we will be
required to include a report of management on our internal control over
financial reporting. The internal control report must include a statement

      o     of management's responsibility for establishing and maintaining
            adequate internal control over our financial reporting;

      o     of management's assessment of the effectiveness of our internal
            control over financial reporting as of year end;

      o     of the framework used by management to evaluate the effectiveness of
            our internal control over financial reporting; and

      o     beginning with the year ended June 30, 2009, a statement that our
            independent registered public accounting firm has issued an
            attestation report on management's assessment of our internal
            control over financial reporting, which report is also required to
            be filed.

      In May 2005, the Financial Accounting Standards Board ("FASB") issued SFAS
Statement No. 154 ("SFAS 154"), Accounting Changes and Error Corrections. SFAS
154 requires that, when a company changes its accounting policies, the change
must be applied retrospectively to all prior periods presented instead of a
cumulative effect adjustment in the period of the change. SFAS 154 may also
apply when the FASB issues new rules requiring changes in accounting. If the new
rule allows cumulative effect treatment, it will take precedence over SFAS 154.
This statement is effective for fiscal years beginning after December 15, 2005.
The adoption of SFAS 154 is not expected to have a significant impact on the
Company's financial position or its results of operations.


                                       12
<PAGE>

      In June 2006, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 48, Accounting for Uncertainty in Income taxes ("FIN
48"). FIN 48, which is an interpretation of SFAS No. 109, "Accounting for Income
Taxes," provides guidance on the manner in which tax positions taken or to be
taken on tax returns should be reflected in an entity's financial statements
prior to their resolution with taxing authorities. The Company is required to
adopt FIN 48 during the first quarter of fiscal 2008. The Company is currently
evaluating the requirements of FIN 48 and has not yet determined the impact, if
any; this interpretation may have on its consolidated financial statements.

Critical Accounting Policies

      The preparation of financial statements and related notes requires us to
make judgments, estimates, and assumptions that affect the reported amounts of
assets, liabilities, revenue and expenses, and related disclosure of contingent
assets and liabilities. An accounting policy is considered to be critical if it
requires an accounting estimate to be made based on assumptions about matters
that are highly uncertain at the time the estimate is made, and if different
estimates that reasonably could have been used, or changes in the accounting
estimates that are reasonably likely to occur periodically, could materially
impact the financial statements.

      Because of our limited level of operations, we have not had to make
material assumptions or estimates other than our assumption that we are a going
concern. If our business increases, our principal estimates will involve whether
engagements in process will be profitable.

Item 7. Financial Statements.

      The financial information required by this item is set forth beginning on
page F-1.

Item 8. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure.

      (a) On September 12, 2006, the Company appointed the firm of Malone &
Bailey, PC ("New Auditor") as the Company's independent auditor and, as of such
date, dismissed the firm of Mantyla McReynolds LLC ("Former Auditor"), which had
been serving as the Company's independent auditor up to such date.

      (b) The reports of the Former Auditor on the Company's financial
statements for the fiscal years ended June 30, 2005 and June 30, 2004 did not
contain an adverse opinion, a disclaimer of opinion or any qualifications or
modifications related to uncertainty, limitation of audit scope or application
of accounting principles, except that such reports of the Former Auditor
expressed "substantial doubt about the Company's ability to continue as a going
concern" and state that "The financial statements do not include any adjustments
that might result from the outcome of this uncertainty". During the fiscal years
ending June 30, 2005 and June 30, 2004 and the period from June 30, 2005 to
September 12, 2006, the Company did not have any disagreements (within the
meaning of Instruction 4 of Item 304 of Regulation S-K) with the Former Auditor
as to any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure and there have been no reportable
events (as defined in Item 304 of Regulation S-K).


                                       13
<PAGE>

      (c) The Company has not consulted with the New Auditor regarding the
application of accounting principles to a specified transaction or the type of
audit opinion that might be rendered on the Company's financial statements
during the two most recent fiscal years through the present.

      (e) The dismissal of the Former Auditor and appointment of the New Auditor
as the Company's independent auditor was approved by the Board of Directors of
the Company on September 12, 2006.

Item 8A. Controls and Procedures.

      We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in its Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure based closely on the definition of "disclosure controls and
procedures" in Rule 13a-15(e). In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.

      At the end of the period covered by this Annual Report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based upon the foregoing, our Chief Executive Officer and Chief
Financial Officer concluded that, as of June 30, 2007, the disclosure controls
and procedures of the Company were effective to ensure that the information
required to be disclosed in the Company's Exchange Act reports was recorded,
processed, summarized and reported on a timely basis.

      There were no changes in internal controls over financial reporting that
occurred during the fiscal year ended June 30, 2007, that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

Item 8B. Other Information.

      None.

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.

      The following table sets forth information with respect to the current
directors and executive officers of the Company.


                                       14
<PAGE>

Name of Individual       Age             Position with the Company
------------------       ---             ------------------------------------

Alan Gaines               51             Chairman and Director
Richard Cohen             55             Chief Financial Officer
Steven Barrenechea        47             Chief Executive Officer and Director

The business experience of each director and executive officer of the Company is
set forth below.

      Mr. Alan Gaines: Mr. Gaines served as Chief Executive Officer from April
2006 to September 2007, and as Chairman and a director of the Company since
April 2006. He is currently the Chairman and CEO of Dune Energy, Inc., an
independent E&P company engaged in the development, exploration and acquisition
of oil and gas properties, with operations presently concentrated onshore the
Louisiana/Texas Gulf Coast as well as the Fort Worth Basin Barnett Shale, as
well as Vice-Chairman and a director of Baseline Oil & Gas Corp., a public
company engaged in the development, exploration and acquisition of oil and gas
proprties. Mr. Gaines has 25 years of experience as an energy investment and
merchant banker. In 1983, he co-founded Gaines, Berland Inc., an investment bank
and brokerage firm, specializing in global energy markets, with particular
emphasis given to small to medium capitalization companies involved in
exploration and production, pipelines, refining and marketing, and oilfield
services. Prior to selling his interest in Gaines, Berland, the Firm managed or
co-managed, and participated in $4 billion of equity and debt financings during
a three year period. He has acted as an advisor to financier Carl Icahn during
such corporate takeovers as USX Corporation (Marathon Oil) and Texaco. Mr.
Gaines has provided funding and/or advisory services to Parker & Parsley (now -
NYSE listed Pioneer Natural Resources), Lomak Petroleum (now NYSE - listed Range
Resources), Devon Energy (now NYSE - listed), and Comstock Resources (now NYSE -
listed). Mr. Gaines holds a BBA in Finance from Baruch College, and an MBA in
Finance (with distinction) from Zarb School, Hofstra University School of
Graduate Management.

      Steven Barrenechea: Mr. Barrenechea has served as a Director of the
Company since April 2006 and as Chief Executive Officer since September 2007.
Mr. Barrenechea is the Chief Operating Officer of Coast to Coast Catering
Company, an upscale catering service. Since May 2001, Mr. Barrenechea has served
as a Director for Dune Energy, Inc., a public company, and from April 2005 to
January 2006, Mr. Barrenechea also served as a Director of Baseline Oil & Gas
Corp., another public company. Mr. Barrenechea is a member of the Board of
Directors of the Creative Coalition, The Milford (Connecticut) Red Cross, and
The Child Guidance Center of Fairfield County. Mr. Barrenechea holds a BBA from
New York University.

      Mr. Richard Cohen: Mr. Cohen has served as Chief Financial Officer of the
Company since April 2006. Since May 2007 Mr. Cohen has served as a director of
Universal Travel Group, a public company engaged in the travel service business
in south China. From December 2005 until August 2007, Mr. Cohen served as Chief
Financial officer of Baseline Oil & Gas Corp., an OTCBB company with
non-operating interests in the New Albany Shale. Since 2003, Mr. Cohen has
served as a director of Dune Energy, Inc., for which he served as Chief
Financial Officer from November 2003 to April 2005. Since 1996, he has been the
President of Richard M. Cohen Consultants, a financial services consulting
company that accepts engagements from public and private companies to assist
with their corporate governance and corporate finance needs. During 1999, Mr.
Cohen served as the President of National Auto Credit, a publicly traded
sub-prime auto finance company. From 1992 to 1995, Mr. Cohen was the President
of General Media, then a $150 million international diversified publishing and
communications company. Mr. Cohen is a Certified Public Accountant (New York
State). He received a BS from The University of Pennsylvania (Wharton) and an
MBA from Stanford University.


                                       15
<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

      We file with the SEC reports and certain other information under the
Exchange Act pursuant to the rules under Section 15(d) of the Exchange. Our
directors and officers and holders of 10% or more of our common stock are not
currently required to file statements of beneficial ownership with regards to
their ownership of our equity securities under Sections 13 or 16 of the Exchange
Act. At such time as our shares are registered under Section 12 of the Exchange
Act, our officers, directors and 10% or more stockholders will be required to
file such statements of beneficial ownership.

Code of Ethics

      We have not adopted a Code of Ethics with respect to our officers because
we have not been an operating company. We intend to adopt a Code of Ethics upon
the completion of an acquisition of an operating company.

Audit Committee

      Presently we do not have an Audit Committee. We intend to establish an
Audit Committee and such other committees as may be required upon the completion
of an acquisition of an operating company.

Item 10. Executive Compensation.

      The only officer or director who received compensation in fiscal years
ended June 30, 2006, 2005 and 2004 was the then president, Harold Barson, who
received compensation of $11,775, $32,846 and $19,160 in 2006, 2005 and 2004,
respectively; all of which relates to origination fees for loans originated by
him.

      Our Chief Financial Officer, Richard Cohen, received compensation of
$72,000 and $18,000, in the fiscal years ended June 30, 2007 and 2006,
respectively.

      No director, officer or employee has a contract or commitment to receive
annual compensation in excess of $100,000.

      The following sets forth the annual and long-term compensation for
services in all capacities to the Company for the fiscal years ended June 30,
2007, 2006 and 2005 paid to the Company's Chief Executive Officer ("CEO") and
the Company's four most highly compensated executive officers, if any, other
than the CEO whose total compensation during fiscal year 2007 exceeded $100,000
and who were serving as executive officers at the end of the 2007 fiscal year
(collectively, the "Named Executive Officers").


                                       16
<PAGE>

                           Summary Compensation Table

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
       Name           Year       Salary    Bonus    Stock      Option      Non-Equity         Change in        All Other     Total
       and                        ($)      ($)      Awards     Awards    Incentive Plan     Pension Value    Compensation     ($)
    Principal                                        ($)        ($)       Compensation           and             ($)
     Position                                                                 ($)           Nonqualified
                                                                                              Deferred
                                                                                            Compensation
                                                                                              Earnings
                                                                                                 ($)
       (a)             (b)        (c)      (d)       (e)        (f)           (g)                (h)             (i)          (j)
------------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>       <C>        <C>       <C>        <C>           <C>                <C>             <C>        <C>
 Harold Barson (1)    2007      N/A        N/A       N/A        N/A           N/A                N/A             N/A        N/A
                      2006      $11,775                                                                                     $11,775
                      2005      $32,846                                                                                     $32,846
------------------------------------------------------------------------------------------------------------------------------------
Steven Barrenechea,   2007      $0         N/A       N/A        N/A           N/A                N/A             N/A        $0
 Chief Executive      2006      $0                                                                                          $0
 Officer (2)          2005      N/A                                                                                         $N/A
------------------------------------------------------------------------------------------------------------------------------------
Alan Gaines           2007      $0         N/A       N/A        N/A           N/A                N/A             N/A        $0
 Chairman (3)         2006      $0                                                                                          $0
                      2005      N/A                                                                                         N/A
------------------------------------------------------------------------------------------------------------------------------------
Richard Cohen,        2007      $72,000    N/A       N/A        $294,623      N/A                N/A             N/A        $366,623
 Chief Financial      2006      $18,000                         N/A                                                         $18,000
 Officer              2005      None                            N/A                                                         None
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

      (1)   Mr. Barson, our former Chairman, Chief Executive Officer and
            President, resigned from all offices he held in, and as a Director
            of, the Company pursuant to the Stock Transaction.
      (2)   Mr. Barrenechea was elected Chief Executive Officer in September
            2007.
      (3)   Mr. Gaines resigned as Chief Executive Officer in September 2007.

      The following table indicates the total number and value of exercisable
stock options held by the Named Executive Officers during the 2007 fiscal year.

               Outstanding Equity Awards at Fiscal Year-End Table

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                            Option Awards                                           Stock Awards
------------------------------------------------------------------------------------------------------------------------------------
 Name           Number of        Number of         Equity      Option      Option      Number     Market     Equity        Equity
                Securities      Securities        incentive   Exercise    Expiration     of        Value    Incentive     Incentive
                Underlying      Underlying          Plan        Price       Date       Shares       of         Plan          Plan
               Unexercised      Unexercised        Awards:       ($)                  or Units    Shares     Awards:       Awards:
                 Options          Options         Number of                              of         or        Number        Market
                   (#)              (#)          Securities                             Stock      Units        of         or Payout
               Exercisable     Unexercisable     Underlying                             That        of       Unearned      Value of
                                                 Unexercised                            Have       Stock      Shares,      Unearned
                                                  Unearned                               Not       That      Units or       Shares,
                                                   Options                             Vested      Have       Other        Units or
                                                     (#)                                 (#)        Not       Rights         Other
                                                                                                  Vested       That         Rights
                                                                                                    ($)      Have Not        That
                                                                                                              Vested       Have Not
                                                                                                                (#)         Vested
                                                                                                                              ($)
    (a)            (b)              (c)              (d)         (e)         (f)         (g)        (h)         (i)           (j)
------------------------------------------------------------------------------------------------------------------------------------
<S>                <C>              <C>              <C>        <C>      <C>             <C>       <C>         <C>           <C>
Steven             None             None             None       None     None            None      None        None          None
Barrenechea
CEO
------------------------------------------------------------------------------------------------------------------------------------
Richard Cohen
CFO                150,000          None             None       $0.30    May 22, 2012    None      None        None          None
------------------------------------------------------------------------------------------------------------------------------------
Alan Gaines,       None             None             None       None     None            None      None        None          None
former CEO
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       17
<PAGE>

      The Company currently has no formal written salary arrangement with its
president and, while no specific annual salary or length of employment has been
determined, the Company anticipates providing an annual salary not to exceed
$100,000 commencing with the hopeful successful expansion of business. The
salary will be paid out of revenues, if any, or accrued if sufficient cash is
not available to make payments. They will receive no other compensation from ABC
until it is operating profitably. There are no written arrangements or any
compensation paid to officers or directors other than as set forth above.

Stock Option Plan

      Pursuant to the May 14, 2004 board of directors' approval and subsequent
stockholder approval, the Company adopted our 2004 Non-Statutory Stock Option
Plan (the "Plan") whereby we reserved for issuance up to 1,500,000 shares of our
common stock. Non-Statutory Stock Options do not meet certain requirements of
the Internal Revenue Service as compared to Incentive Stock Options which meet
the requirements of Section 422 of the Internal Revenue Code. Nonqualified
options have two disadvantages compared to incentive stock options. One is that
recipients have to report taxable income at the time that they exercise the
option to buy stock, and the other is that the income is treated as
compensation, which is taxed at higher rates than long-term capital gains. We
may file a Registration Statement on Form S-8 so as to register those 1,500,000
shares of common stock underlying the options in the Plan.

      As of June 30, 2007, no options have been issued under the Plan.

      As previously indicated, the board of directors, on May 14, 2004, adopted
the Plan so as to provide a long-term incentive for employees, non-employee
directors, consultants, attorneys and advisors of the Company and our
subsidiaries, if any. The board of directors believes that our policy of
granting stock options to such persons will provide us with a potential critical
advantage in attracting and retaining qualified candidates. In addition, the
Plan is intended to provide us with maximum flexibility to compensate plan
participants. We believe that such flexibility will be an integral part of our
policy to encourage employees, non-employee directors, consultants, attorneys
and advisors to focus on the long-term growth of stockholder value. The board of
directors believes that important advantages to ABC are gained by an option
program such as the Plan which includes incentives for motivating our employees,
while at the same time promoting a closer identity of interest between
employees, non-employee directors, consultants, attorneys and advisors on the
one hand, and the stockholders on the other.

      The principal terms of the Plan are summarized below; however, it is not
intended to be a complete description thereof and such summary is qualified in
its entirety by the actual text of the Plan, a copy of which has been filed as
an exhibit to our registration statement of which this prospectus is a part.

Summary Description of the ABC Funding Inc, Inc. 2004 Non-Statutory Stock Option
Plan

      The purpose of the Plan is to provide directors, officers and employees
of, as well as consultants, attorneys and advisors to, the Company and our
subsidiaries, if any, with additional incentives by increasing their ownership
interest in the Company. Directors, officers and other employees of the Company
and our subsidiaries are eligible to participate in the Plan. Options in the
form of Non-Statutory Stock Options ("NSO") may also be granted to directors who
are not employed by us and consultants, attorneys and advisors to us providing
valuable services to us and our subsidiaries. In addition, individuals who have
agreed to become an employee of, director of or an attorney, consultant or
advisor to us and/or our subsidiaries are eligible for option grants,
conditional in each case on actual employment, directorship or attorney, advisor
and/or consultant status. The Plan provides for the issuance of NSO's only,
which are not intended to qualify as "incentive stock options" within the


                                       18
<PAGE>

meaning of Section 422 of the Internal Revenue Code, as amended. Further, NSO's
have two disadvantages compared to ISO's in that recipients of NSO's must report
taxable income at the time of NSO option exercise and income from NSO's is
treated as compensation which is taxed at higher rates than long-term capital
gains.

      Our board of directors or a compensation committee (once established) will
administer the Plan with the discretion generally to determine the terms of any
option grant, including the number of option shares, exercise price, term,
vesting schedule and the post-termination exercise period. Notwithstanding this
discretion (i) the term of any option may not exceed 10 years and (ii) an option
will terminate as follows: (a) if such termination is on account of termination
of employment for any reason other than death, without cause, such options shall
terminate one year thereafter; (b) if such termination is on account of death,
such options shall terminate 15 months thereafter; and (c) if such termination
is for cause (as determined by the board of directors and/or compensation
committee), such options shall terminate immediately. Unless otherwise
determined by the board of directors or compensation committee, the exercise
price per share of common stock subject to an option shall be equal to no less
than 10% of the fair market value of the common stock on the date such option is
granted. No NSO shall be assignable or otherwise transferable except by will or
the laws of descent and distribution or except as permitted in accordance with
SEC Release No.33-7646 as effective April 7, 1999.

      The Plan may be amended, altered, suspended, discontinued or terminated by
the board of directors without further stockholder approval, unless such
approval is required by law or regulation or under the rules of the stock
exchange or automated quotation system on which the common stock is then listed
or quoted. Thus, stockholder approval will not necessarily be required for
amendments which might increase the cost of the Plan or broaden eligibility
except that no amendment or alteration to the Plan shall be made without the
approval of stockholders which would:

      o     decrease the NSO price (except as provided in paragraph 9 of the
            Plan) or change the classes of persons eligible to participate in
            the Plan, or

      o     extend the NSO period, or

      o     materially increase the benefits accruing to Plan participants, or

      o     materially modify Plan participation eligibility requirements, or

      o     extend the expiration date of the Plan.

      Unless otherwise indicated the Plan will remain in effect for a period of
ten years from the date adopted unless terminated earlier by the board of
directors except as to NSOs then outstanding, which shall remain in effect until
they have expired or been exercised.


                                       19
<PAGE>

Equity Compensation Plan Information

<TABLE>
<CAPTION>
                                                                                Number of securities
                                                                                remaining available for
                                                                                future issuance under
                             Number of securities to   Weighted-average         equity compensation
                             be issued upon exercise   exercise price of        plans (excluding
                             of outstanding options,   outstanding options,     securities reflected in
                             warrants and rights       warrants and rights      column (a))

Plan category                       (a)                      (b)                        (c)
-------------------------------------------------------------------------------------------------------
<S>                               <C>                        <C>                      <C>
Equity compensation plans
approved by security
holders                                  --                     --                    1,500,000
-------------------------------------------------------------------------------------------------------
Equity compensation plans
not approved by security
holders                           3,650,000                  $0.32                           --
-------------------------------------------------------------------------------------------------------
Total                             3,650,000                  $0.32                    1,500,000
-------------------------------------------------------------------------------------------------------
</TABLE>

      On March 1, 2006, Energy Venture granted options to three (3)
non-employees (the "Optionees") exercisable for a period of five (5) years to
purchase in the aggregate up to 1,100,000 shares of its common stock, pursuant
to a stock option agreement between Energy Venture and each of the Optionees.
One Optionee was granted an option to purchase up to 350,000 shares of common
stock at a price of $0.05 per share, and the other two (2) Optionees were
granted options to purchase up to 250,000 and 500,000 shares of common stock
respectively at a price of $0.60 per share. As a result of the Merger, and on
the Effective Date, each outstanding option to purchase shares of common stock
of Energy Venture was exchanged for an option to purchase, at the same exercise
price, an equal number of shares of our Common Stock.

      On December 28, 2006, the Company granted two (2) non-employees options to
purchase up to an aggregate of 1,500,000 shares of common stock of the Company
at an exercise price of $0.25 per share for services rendered. The options
vested immediately and terminate on December 28, 2011.

      On May 22, 2007, the Company granted three (3) non-employees (including
its Chief Financial Officer) options to purchase up to an aggregate of 1,050,000
shares of common stock of the Company at an exercise price of $0.30 per share
for services rendered. The options vested immediately and terminate on May 22,
2012.

Director Compensation

      Directors of the Company are not compensated in cash for their services
but are reimbursed for out-of-pocket expenses incurred in furtherance of our
business.

Item 11. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters.

      We have 22,265,000 shares of common stock outstanding as of September 25,
2007. The following table sets forth certain information regarding the
beneficial ownership of our common stock as of September 25, 2007 by (i) each
person who, to our knowledge, beneficially owns more than 5% of our common
stock; (ii) each of our current directors and executive officers; and (iii) all
of our current directors and executive officers as a group. Unless otherwise
noted below, we believe that all persons named in the table have sole voting and
investment power with respect to all shares of Common Stock beneficially owned
by them. For purposes hereof, a person is deemed to be the beneficial owner of
securities that can be acquired by such person within 60 days from the date
hereof upon the exercise of warrants or options or the conversion of convertible
securities. Each beneficial owner's percentage ownership is determined by
assuming that any warrants, options or convertible securities that are held by
such person (but not those held by any other person) and which are exercisable
within 60 days from the date hereof, have been exercised.


                                       20
<PAGE>

Name of                                                    Percent
Beneficial Owner                        Number of Shares   of Outstanding Shares
----------------                        ----------------   ---------------------
Alan Gaines (Chairman & Director)       11,390,000         51.2%
Steven Barrenechea (CEO & Director)     250,000            1.1%
Richard Cohen (CFO)                     458,001   (1)      2.0%
All Officers & Directors as a Group
(3 persons)                             12,098,001         53.9%

----------
      (1)   Includes 6,667 shares of Common Stock issuable upon conversion of
            Convertible Promissory Note and 150,000 shares of Common Stock upon
            exercise of stock options.

      The address of each of our current officers and directors is c/o Eaton &
Van Winkle LLP, 3 Park Avenue, 16th Floor, New York, New York 10016.

Item 12. Certain Relationships and Related Transactions.

      Pursuant to the Stock Transaction, Energy Venture acquired 8,200,000 of
the issued and outstanding shares of the Company's Common Stock. After giving
effect to the Stock Transaction, each of Mr. Gaines and Mr. Barrenechea were
indirect owners of all 8,200,000 shares of the Common Stock acquired (or
otherwise previously owned) by Energy Venture as a result of their control of
Energy Venture, in which Messrs. Gaines and Barrenechea served as directors and
Mr. Gaines owned a majority of the issued and outstanding shares of its capital
stock. Such securities ownership represented 82% of the issued and outstanding
shares of the Common Stock of the Company and a controlling interest. By reason
of the Stock Transaction, Messrs. Gaines and Barrenechea became directors and
officers of the Company.

      Prior to completion of the Stock Transaction, Harold Barson, as the
Company's Chief Executive Officer and a director, and Jeffrey Brown, as the
Company's Secretary/Treasurer and a director, held 9,160,000 and 100,000 shares,
respectively, of the common stock of the Company, which stock having been
previously issued to them upon incorporation of the Company in May 2004. Such
stock was all valued at $.001 per share and all in exchange for the business of
ABC Funding, an unincorporated entity founded by Mr. Barson in May 2002.

      Harold Barson received origination and other fees aggregating $11,775 in
2006, $32,846 in 2005 and $19,160 in 2004, respectively.


                                       21
<PAGE>

Item 13. Exhibits.

      (A)   Documents Filed as Part of this Report:

            (I)   Financial Statements:

                                                                           Pages
I         ABC Funding, Inc. Audited Financial Statements and Notes
     A.   Report of Independent Registered Public Accounting Firm           F-1
     B.   Balance Sheet                                                     F-2
     C.   Statements of Expenses                                            F-3
     D.   Statements of Cash Flows                                          F-4
     E.   Statements of Changes in Stockholders' Deficit                    F-5
     F.   Notes to Financial Statements                                    F-6-8


                                       22
<PAGE>

            (II)  Exhibits

Exhibit Nos.      Description of Exhibit
------------      ----------------------
2.1               Agreement and Plan of Merger, dated as of May 26, 2006, among
                  the Company, Energy Venture and EVI Acquisition (incorporated
                  herein by reference to Exhibit 2.1 of the Company's Form 8-K
                  report, filed June 2, 2006).
3.1               Articles of Incorporation of the Company (incorporated herein
                  by reference to Exhibit 3.1 to the Company's Registration
                  Statement on Form SB-2, filed December 8, 2004).
3.2               By-Laws of the Company (incorporated herein by reference to
                  Exhibit 3.2 of Company's Registration Statement on Form SB-2,
                  filed December 8, 2004).
4.1               Form of 10% Convertible Promissory Note, issued by Energy
                  Venture (and assumed by the Company ) in March 2005
                  (incorporated herein by reference to Exhibit 4.1 of the
                  Company's Form 8-K report, filed June 2, 2006).
10.1              2004 Non-Statutory Stock Option Plan of the Company
                  (incorporated herein by reference to Exhibit 10.1 to the
                  Company's Registration Statement on Form SB-2, filed December
                  8, 2004).
10.2              Stock Purchase Agreement dated as of April 3, 2006 among
                  Energy Venture, as buyer, and the named selling stockholders
                  of the Company (incorporated herein by reference to Exhibit
                  10.1 of the Company's Form 8-K report, filed April 28, 2006).
10.3              Amendment to Stock Purchase Agreement dated April 28, 2006
                  among Energy Venture and each of the named selling
                  stockholders of the Company (incorporated herein by reference
                  to Exhibit 10.2 of the Company's Form 8-K report, filed April
                  28, 2006).
10.4              Form of Stock Option Agreement issued by Energy Venture (and
                  assumed by the Company) to the Optionees (incorporated herein
                  by reference to Exhibit 10.4 of the Company's Annual Report on
                  Form 10-KSB, filed September 28, 2006).
10.5*             Form of Agreement between the Company and the holders of the
                  Company's 10% Convertible Promissory Note.
31.1*             Certification of Chief Executive Officer required by Rule
                  13a-14(a) under the Exchange Act.
31.2*             Certification of Chief Financial Officer required by Rule
                  13a-14(a) under the Exchange Act.
32.1*             Certification of Chief Executive Officer and Chief Financial
                  Officer pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

Numbers with (*) indicate exhibits that are filed herewith.


                                       23
<PAGE>

Item 14. Principal Accountant Fees and Services.

      On September 12, 2006, ABC Funding, Inc. ("we" or the "Company") appointed
the firm of Malone & Bailey, PC ("New Auditor") as the Company's independent
auditor and, as of such date, dismissed the firm of Mantyla McReynolds LLC
("Former Auditor"), which had been serving as the Company's independent auditor
up to such date.

      For fiscal year 2007 and fiscal year 2006, the aggregate fees billed by
Mantyla McReynolds LLC our principal independent accounting firm, for
professional services were as follows:

                                                    Fiscal Year Ended
                                          June 30, 2007         June 30, 2006
Audit Fees                                     N/A                 $6,907
Audit-Related Fees                             N/A                 $    0
Tax Fees                                       N/A                   N/A
All Other Fees                                 N/A                   N/A

      For fiscal year 2007 and fiscal year 2006, the aggregate fees billed by
Malone & Bailey, PC, our principal independent accounting firm, for professional
services were as follows:

                                                    Fiscal Year Ended
                                          June 30, 2007         June 30, 2006
Audit Fees                                   $15,308               $20,360
Audit-Related Fees                             N/A                   N/A
Tax Fees                                     $ 4,700                 N/A
All Other Fees                                 N/A                   N/A

      As of June 30, 2007, we did not have a formal documented pre-approval
policy for the fees of our principal accounting firm.


                                       24
<PAGE>

                                   SIGNATURES

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

                                                     ABC FUNDING, INC.


Date: September 27, 2007                             By: /s/ Steven Barrenechea
                                                         -----------------------
                                                         Steven Barrenechea
                                                         Chief Executive Officer

      In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Signature                                                  Date
---------                                                  ----


/s/  Steven Barrenechea                                    September 27, 2007
--------------------------------------------
Steven Barrenechea
Chief Executive Officer


/s/  Richard Cohen                                         September 27, 2007
--------------------------------------------
Richard Cohen
Chief Financial Officer
(Principal Financial and Accounting Officer)


/s/  Alan Gaines                                           September 27, 2007
--------------------------------------------
Alan Gaines
Director


/s/  Steven Barrenechea                                    September 27, 2007
--------------------------------------------
Steven Barrenechea
Director


                                       25

<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
ABC Funding, Inc.
(a Development Stage Company)
New York, New York

We have audited the accompanying balance sheet of ABC Funding, Inc. ("the
Company") (a Development Stage Company) as of June 30, 2007 and the related
statements of expenses, cash flows and changes in stockholders' deficit for the
year ended June 30, 2007 and for the period from February 21, 2006 (inception)
through June 30, 2007 and 2006, respectively. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with 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 audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of June 30,
2007, and the results of its operations and its cash flows for the periods
described in conformity with accounting principles generally accepted in the
United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered losses from operations and has a
working capital deficiency, which raises substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty


/s/ Malone & Bailey, PC
-----------------------
Malone & Bailey, PC
www.malone-bailey.com
Houston, Texas

September 24, 2007


                                      F-1
<PAGE>

                                ABC Funding, Inc.
                          (A Development Stage Company)
                                  Balance Sheet
                                  June 30, 2007

ASSETS
Cash and cash equivalents                                    $   550,394
Prepaid and other current assets                                  30,428
                                                             -----------
Total current assets                                             580,822
                                                             -----------

Total assets                                                 $   580,822
                                                             ===========

LIABILITIES & STOCKHOLDERS' DEFICIT
Accounts payable                                             $     7,180
Accrued liabilities                                              188,996
Convertible debt, net of unamortized discount of
$36,973                                                        1,463,027
                                                             -----------
Total current liabilities                                      1,659,203

Commitments and contingencies                                         --

STOCKHOLDERS' DEFICIT

Preferred stock, $.001 par value,
1,000,000 shares authorized
none outstanding                                                      --

Common stock, $.001 par value
30,000,000 shares authorized
22,065,000 issued and outstanding                                 22,065

Additional paid-in-capital                                     1,244,765

Deficit accumulated in the development stage                  (2,345,211)
                                                             -----------

Total stockholders' deficit                                   (1,078,381)
                                                             -----------

Total liabilities & stockholders' deficit                    $   580,822
                                                             ===========

                 See accompanying summary of accounting policies
                       and notes to financial statements.


                                      F-2
<PAGE>

                                ABC Funding, Inc.
                          (A Development Stage Company)
                             Statements of Expenses
   Year Ended June 30, 2007 and the Periods From February 21, 2006 (Inception)
                         Through June 30, 2006 and 2007

                                                 February 21,       February 21,
                                                     2006               2006
                                                 (Inception)         (Inception)
                                  Year Ended       Through             Through
                                   June 30,        June 30,           June 30,
                                     2007            2006               2007
                                ------------------------------------------------
Selling, general and
administrative expense          $    943,826     $  1,035,711      $  1,979,537
                                ------------     ------------      ------------

Operating loss                       943,826        1,035,711         1,979,537

Other (income) expense:
Interest income                      (31,163)          (5,186)          (36,349)
Interest expense                     332,329           69,695           402,023
                                ------------     ------------      ------------

Total other (income) expense         301,166           64,509           365,674


Total expenses                     1,244,992        1,100,219         2,345,211
                                ------------     ------------      ------------

Net loss                        $ (1,244,992)    $ (1,100,219)     $ (2,345,211)
                                ============     ============      ============

Basic and diluted net loss
per common share                $      (0.06)    $      (0.05)              N/A

Weighted average common
shares outstanding - basic
and diluted                       22,065,000       20,576,628               N/A

                 See accompanying summary of accounting policies
                       and notes to financial statements.


                                      F-3
<PAGE>

                                ABC Funding, Inc.
                          (A Development Stage Company)
                            Statements of Cash Flows
   Year Ended June 30, 2007 and the Periods From February21, 2006 (Inception)
                         Through June 30, 2006 and 2007

<TABLE>
<CAPTION>
                                                                    February 21,       February 21,
                                                                        2006               2006
                                                                    (Inception)        (Inception)
                                                   Year Ended         Through            Through
                                                    June 30,          June 30,           June 30,
                                                      2007              2006               2007
                                                  -------------------------------------------------
<S>                                               <C>               <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                          $(1,244,992)      $(1,100,219)       $(2,345,211)
Adjustments to reconcile net loss to cash
used in operating activities:
Share based compensation                              589,345           425,518          1,014,863
Amortization of debt discount                         182,482            30,545            213,027

Changes in:
Prepaid and other current assets                       36,033           (66,461)           (30,428)

Accounts payables and accrued liabilities              78,010           118,166            196,176
                                                  -----------       -----------        -----------

NET CASH USED IN OPERATING ACTIVITIES                (359,122)         (592,451)          (951,573)
                                                  -----------       -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from sale of common stock                         --           251,967            251,967

Proceeds from convertible notes                        15,000         1,235,000          1,250,000
                                                  -----------       -----------        -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES              15,000         1,486,967          1,501,967
                                                  -----------       -----------        -----------

NET CHANGE IN CASH                                   (344,122)          894,516            550,394
Cash and cash equivalents balance,
beginning of period                                   894,516                --                 --
                                                  -----------       -----------        -----------
Cash and cash equivalents balance, end of
period                                            $   550,394       $   894,516        $   550,394
                                                  ===========       ===========        ===========

SUPPLEMENTAL DISCLOSURES:
Cash paid for interest                            $        --       $        --        $        --

Cash paid for income taxes                                 --                --                 --
</TABLE>

                 See accompanying summary of accounting policies
                       and notes to financial statements.


                                      F-4
<PAGE>

                                ABC Funding, Inc.
                          (A Development Stage Company)
                  Statement of Changes in Stockholders' Deficit
   Year Ended June 30, 2007 and the Periods From February21, 2006 (Inception)
                         Through June 30, 2006 and 2007

<TABLE>
<CAPTION>
                                                                                                Deficit
                                                                                              Accumulated
                                                                                                During
                                     Common                                 Paid In           Development
                                     Shares               Stock             Capital              Stage               Totals
                                   -----------         -----------        -----------         -----------         -----------
<S>                                <C>                 <C>                <C>                 <C>                 <C>
Balances at February 21, 2006               --         $        --        $        --         $        --         $        --

Proceeds from issuance
  of common stock                   19,665,000              19,665            (17,698)                 --               1,967

Proceeds from issuance
  of stock to noteholders              600,000                 600            249,400                  --             250,000

Shares issued in reverse merger      1,800,000               1,800             (1,800)                 --                  --

Stock based compensation                    --                  --            425,518                  --             425,518

Net loss                                    --                  --                 --          (1,100,219)         (1,100,219)
                                   -----------         -----------        -----------         -----------         -----------

Balances at June 30, 2006           22,065,000              22,065            655,420          (1,100,219)           (422,734)

Stock based compensation                    --                  --            589,345                  --             589,345

Net loss                                    --                  --                 --          (1,244,992)         (1,244,992)
                                   -----------         -----------        -----------         -----------         -----------

Balances at June 30, 2007          $22,065,000         $    22,065        $ 1,244,765         $(2,345,211)        $(1,078,381)
                                   ===========         ===========        ===========         ===========         ===========
</TABLE>

                 See accompanying summary of accounting policies
                       and notes to financial statements.


                                      F-5
<PAGE>

                                ABC Funding, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business. ABC Funding, Inc. ("ABC" or "Company") was incorporated in
Nevada on May 13, 2004. On May 26, 2006, ABC acquired Energy Venture, Inc.
("EVI') for 20,265 000 shares of ABC common stock. EVI was merged with and into
a wholly-owned ABC subsidiary with ABC continuing as the surviving entity.

The share issuance resulted in the EVI shareholders controlling approximately
92% of ABC's issued and outstanding shares of common stock. Consequently, the
transaction has been accounted for as a reverse merger with EVI being deemed the
accounting acquirer. Since the transaction involved the merger of a private
company (EVI) into a public shell company (ABC), it is considered to be a
capital transaction rather than a purchase business combination. As accounting
acquirer, EVI issued one share of its common stock for each share of ABC's
common stock issued and outstanding as of the effective date resulting in a
total of 1,800,000 shares of EVI shares being issued. For financial accounting
and reporting purposes, the historical financial statements of ABC prior to the
effective date have been restated to be those of EVI.

Use of Estimates. In preparing financial statements, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities in
the balance sheet and revenue and expenses in the statement of expenses. Actual
results could differ from those estimates.

Cash and Cash Equivalents. For purposes of the statement of cash flows, ABC
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.

Revenue Recognition. Revenue is recognized when persuasive evidence of an
arrangement exists, services have been rendered, the sales price is fixed or
determinable, and collectibility is reasonably assured. There were no revenues
through June 30, 2007.

Income Taxes. ABC recognizes deferred tax assets and liabilities based on
differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that are expected to be in
effect when the differences are expected to be recovered. ABC provides a
valuation allowance for deferred tax assets for which it does not consider
realization of such assets to be more likely than not.

Basic and Diluted Net Loss Per Share. The basic net loss per common share is
computed by dividing the net loss by the weighted average number of common
shares outstanding. Diluted net loss per common share is computed by dividing
the net loss adjusted on an "as if converted" basis, by the weighted average
number of common shares outstanding plus potential dilutive securities. For the
period ended June 30, 2007, there were no potential dilutive securities.

Stock Based Compensation. In December 2004, the FASB issued SFAS No. 123R,
"Share-Based Payments" ("FAS 123R"). ABC adopted the disclosure requirements of
FAS 123R as of January 1, 2006 using the modified prospective transition method
approach as allowed under FAS 123R. FAS 123R establishes standards for the
accounting for transactions in which an entity exchanges its equity instruments
for goods or services. FAS 123R focuses primarily on accounting for transactions
in which an entity obtains employee services in share-based payment
transactions. FAS 123R requires that the fair value of such equity instruments
be recognized as expense in the historical financial statements as services are
performed.


                                      F-6
<PAGE>

Recently Issued Accounting Pronouncements. In June 2006, the Financial
Accounting Standards Board ("FASB") issued FASB Interpretation No. 48,
"Accounting for Uncertainty in Income taxes" ("FIN 48"). FIN 48, which is an
interpretation of SFAS No. 109, "Accounting for Income Taxes," provides guidance
on the manner in which tax positions taken or to be taken on tax returns should
be reflected in an entity's financial statements prior to their resolution with
taxing authorities. The Company is required to adopt FIN 48 during the first
quarter of fiscal 2008. The Company is currently evaluating the requirements of
FIN 48 and has not yet determined the impact, if any; this interpretation may
have on its financial statements.

NOTE 2 GOING CONCERN

ABC has been in the development stage since its formation in February 2006 and
has not yet realized any revenues from its planned operations. The ability of
ABC to emerge from the development stage with respect to its principal business
activity is dependent upon its successful efforts to raise additional equity or
debt financing, to acquire or participate in oil and natural gas operations and
to generate significant revenue and operating cash flow. As of June 30, 2007,
ABC has a working capital deficit of $1,078,381 and since inception, has
incurred losses of $2,345,211. As discussed below in Note 5, the Company has
extended the maturity date of $1,090,000 of the Notes through February 28, 2008;
however, without significant new sources of liquidity, the factors discussed
above raise substantial doubt regarding ABC's ability to continue as a going
concern. The financial statements do not include any adjustments that might be
necessary if ABC is unable to continue as a going concern.

NOTE 3 INCOME TAXES

ABC uses the liability method, where deferred tax assets and liabilities are
determined based on the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial
and income tax reporting purposes. During fiscal years 2007,and 2006, ABC
incurred net losses and, therefore, has no tax liability. The net deferred tax
asset generated by the loss carry-forward has been fully reserved. The
cumulative net operating loss carry-forward is approximately $1,330,000 at June
30, 2007.

At June 30, 2007, deferred tax assets consisted of the following:

Deferred tax assets
  Net operating losses                                 $ 465,622
  Less: valuation allowance                             (465,622)
Net deferred tax assets                                $      --
                                                       =========

The net operating loss will expire beginning in 2026. The valuation allowance
increased by $229,476 during the year ended June 30, 2007.

NOTE 4 ISSUANCE OF COMMON STOCK

At inception, EVI issued 19,665,000 shares of stock for $.0001 per share, or
$1,967.


                                      F-7
<PAGE>

NOTE 5 PROCEEDS FROM CONVERTIBLE NOTE SUBSCRIPTION

Between February 21, 2006 and April 30, 2006, ABC circulated a Private Placement
Memorandum ("PPM") offering convertible notes on the following terms: each note
matures August 31, 2007, a 10% interest rate payable in either cash or shares
and a conversion rate of $0.50 per share exercisable at the option of the
investor, and each investor would be issued upon subscription, as an inducement
to participate in the offering, a number of shares of Common Stock equal to 40%
of his or her investment. The original PPM offered up to $1,500,000 in notes.
Actual subscriptions received and accepted were for $1,500,000, $15,000 of which
was received in the nine month period ended March 31, 2007. If all $1,500,000 of
notes are converted at maturity, then, including interest and the additional
shares issued upon subscription, 4,009,139 shares will be issued.

Such additional shares of common stock issued to the investors upon their
subscription for convertible notes amounted to 600,000 shares. The relative fair
value of these shares is $250,000 and was recorded as a debt discount and as
additional paid in capital. The debt discount is being amortized over the term
of the notes payable using the effective interest method. The original issue
discount rate was 23.44%. During the period from February 21, 2006 (inception)
to June 30, 2007, a total of $213,027 was amortized and recorded as interest
expense.

ABC evaluated the application of Statement of Financial Accounting Standard No.
133, "Accounting for Derivative Instruments and Hedging Activities" and Emerging
Issues Task Force 00-19, "Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company's Own Stock" for the 10%
convertible promissory notes. Based on the guidance of SFAS No. 133 and EITF
00-19, ABC concluded that these instruments were not required to be accounted
for as derivatives.

NOTE 6 STOCK OPTION GRANTS

On May 22, 2007, ABC granted three non-employees options to purchase up to an
aggregate of 1,050,000 shares of ABC common stock at an exercise price of $0.30
per share for services rendered. The options vested immediately and terminate on
May 22, 2012.

The fair value of the options was determined utilizing the Black-Scholes stock
option valuation model. The significant assumptions used in the valuation were:
the exercise price as noted above; the market value of ABC's common stock on May
22, 2007, $0.30; expected volatility of 160%; risk free interest rate of 4.76%;
and a term of five years. The fair value of the options was $294,623 at May 22,
2007 and was recorded as share based compensation.

On December 28, 2006, ABC granted two non-employees options to purchase up to an
aggregate of 1,500,000 shares of ABC common stock at an exercise price of $0.25
per share for services rendered. The options vested immediately and terminate on
December 28, 2011.

The fair value of the options was determined utilizing the Black-Scholes stock
option valuation model. The significant assumptions used in the valuation were:
the exercise price as noted above; the market value of ABC's common stock on
December 28, 2006, $0.25; expected volatility of 105%; risk free interest rate
of 4.69%; and a term of five years. The fair value of the options was $294,722
at December 28, 2006 and was recorded as share based compensation.

NOTE 7 SUBSEQUENT EVENTS

The Company repaid in cash, on the Maturity Date, six (6) of the holders of the
Notes an aggregate amount of $424,637. An additional $44,623 of accrued interest


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was repaid through the issuance of 89,248 shares of common stock of the Company.
The remaining holders of the Notes have entered into an agreement with the
Company whereby the Maturity Date of the Notes was extended to February 28, 2008
and, beginning September 1, 2007 until the Notes are paid in full, the interest
rate on the outstanding principal increased to 12% per annum. In addition, the
Company agreed to issue to the remaining holders of the Notes 218,000 shares of
the Company's common stock with a value of $82,840 as consideration for
extending the Note's maturity date.

On August 21, 2007, the Company issued 100,000 shares of common stock with a
value of $45,000 to a non-employee as compensation for services rendered.

On September 17, 2007, the Company issued 100,000 shares of common stock with a
value of $45,000 to a non-employee as compensation for services rendered.

On September 19, 2007, the Board of Directors of the Company approved the
issuance of 150,000 shares of common stock with a value of $ 55,500 to a member
of the Board of Directors as compensation for assuming the role of Chief
Executive Officer of the Company.


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