U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                             Quarterly Report Under
                       the Securities Exchange Act of 1934

                      For Quarter Ended: September 30, 2006

                        Commission File Number: 000-51564

                             NORTHERN ETHANOL, INC
                             ---------------------
        (Exact name of small business issuer as specified in its charter)

                                    Delaware
                                    --------
                           State or other jurisdiction
                                of incorporation)

                                   34-2033194
                              (IRS Employer ID No.)
                              ---------------------


                              193 King Street East
                                    Suite 300
                        Toronto, Ontario, M5A 1J5, Canada
                        ---------------------------------
                    (Address of principal executive offices)

                                 (416) 366-5511
                           (Issuer's Telephone Number)
                           ---------------------------

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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      .
-----    -----

The number of shares of the  registrant's  only class of common stock issued and
outstanding as of November 20, 2006, was 104,971,500 shares.

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act)       Yes   X    No
                                -----     -----

<PAGE>


                                     PART I

ITEM 1.  FINANCIAL STATEMENTS


NORTHERN ETHANOL, INC.
(A DEVELOPMENT STAGE COMPANY)
(Formerly BEACONSFIELD I, INC.)



TABLE OF CONTENTS



                                                                     Page

UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS:

    Consolidated Balance Sheet                                       F-1
    Consolidated Statements of Operations                            F-2
    Consolidated Statement of Changes in Stockholders' Equity        F-3
    Consolidated Statements of Cash Flows                            F-4
    Notes to Unaudited Consolidated Interim Financial Statements     F-5 to F-13



                                       2

<PAGE>

<TABLE>
--------------------------------------------------------------------------------
                                                          Northern Ethanol, Inc.
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                 (Formerly BEACONSFIELD I, INC.)
                                                     Consolidated Balance Sheets

<CAPTION>
As at:                                                      September 30, 2006     December 31, 2005
                                                                   (Unaudited)
----------------------------------------------------------------------------------------------------
<S>                                                              <C>                    <C>
ASSETS

CURRENT ASSETS:
Cash and cash equivalents                                        $  1,386,322           $     13,390
Accounts receivable                                                    53,073                     --
Deposits                                                              951,602                     --
Prepaid expenses                                                      407,841                 10,250
                                                                 ------------           ------------
    Total current assets                                            2,798,838                 23,640

Property and equipment  (note 3)                                      305,966                     --
Assets under capital lease  (note 7)                               16,761,565                     --
                                                                 ------------           ------------
                                                                 $ 19,866,369           $     23,640
                                                                 ============           ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable                                                 $    103,821           $      2,000
Accrued expenses                                                       75,000                  3,098
Current portion of obligation under capital lease (note 7)             17,385                     --
                                                                 ------------           ------------
    Total current liabilities                                         196,206                  5,098

Obligation under capital lease  (note 7)                           16,744,180                     --
                                                                 ------------           ------------
                                                                   16,940,386                  5,098
                                                                 ------------           ------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.0001 par value; 100,000,000 shares
authorized; none issued and outstanding  (note 6)                          --                     --
Common stock, $.0001 par value; 250,000,000 shares
authorized;
100,700,000 and 101,500,000 shares issued and
outstanding as of September 30, 2006 and December 31
2005, respectively (note 6)                                            10,070                 10,150
Additional paid-in capital                                          5,163,429                 39,865
Deficit accumulated during the development stage                   (2,234,967)               (31,473)
Accumulated other comprehensive income (loss)                         (12,549)                    --
                                                                 ------------           ------------
                                                                    2,925,983                 18,542

                                                                 ------------           ------------
                                                                 $ 19,866,369           $     23,640
                                                                 ============           ============
</TABLE>

        See notes to unaudited consolidated interim financial statements

                                       F-1

                                       3
<PAGE>
<TABLE>

--------------------------------------------------------------------------------
                                                          Northern Ethanol, Inc.
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                 (Formerly BEACONSFIELD I, INC.)

                                           Consolidated Statements of Operations
                                                                     (Unaudited)

--------------------------------------------------------------------------------

<CAPTION>
                                                                                                             Nov 29, 2004
                                               Three Months ended                Nine Months ended          (Inception) to
                                                  September 30                     September 30              September 30
                                             2006             2005             2006            2005              2006

<S>                                     <C>              <C>              <C>              <C>              <C>
REVENUES                                $          --    $          --    $          --    $          --    $          --

COST OF GOODS SOLD                                 --               --               --               --               --
                                        -------------    -------------    -------------    -------------    -------------

GROSS MARGIN                                       --               --               --               --               --

OPERATING EXPENSES
       Salaries and benefits (note 5)         784,626               --        1,539,978               --        1,539,978
       General and administrative             427,964           14,745          589,822           20,024          621,295
       Occupancy costs                         46,779               --           60,684               --           60,684
       Depreciation                             7,723               --           13,010               --           13,010
                                        -------------    -------------    -------------    -------------    -------------
                                            1,267,092           14,745        2,203,494           20,024        2,234,967

                                        -------------    -------------    -------------    -------------    -------------

NET LOSS                                $  (1,267,092)   $     (14,745)   $  (2,203,494)   $     (20,024)   $  (2,234,967)
                                        =============    =============    =============    =============    =============

BASIC AND DILUTED LOSS PER SHARE        $       (0.01)   $       (0.00)   $       (0.02)   $       (0.00)
                                        =============    =============    =============    =============

WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING                        103,441,761      101,500,000      101,760,081      101,500,000
                                        =============    =============    =============    =============


</TABLE>


        See notes to unaudited consolidated interim financial statements

                                       F-2

                                       4
<PAGE>

<TABLE>
--------------------------------------------------------------------------------
                                                          Northern Ethanol, Inc.
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                 (Formerly BEACONSFIELD I, INC.)

                                  Consolidated Statement of Stockholders' Equity
                                                                     (Unaudited)

--------------------------------------------------------------------------------

Nine Months ended September 30, 2006 and September 30, 2005


<CAPTION>
                                                                                              Accumulated
                                        Common Stock            Additional                       Other
                                ----------------------------     Paid-in      Accumulated    Comprehensive
                                  Shares           Amount         Capital        Deficit      Gain (Loss)         Total
                                -----------    -------------    ----------    -----------    -------------    -------------
<S>                             <C>           <C>               <C>           <C>            <C>              <C>
Inception, November 29, 2004    101,500,000   $      10,150     $   39,865    $        --    $          --    $      50,015
Stock issued for cash

Net loss for the period
November 29, 2004 (inception)
to December 30, 2004                     --               --            --         (3,708)              --           (3,708)
                                -----------    -------------    ----------    -----------    -------------    -------------

Balances, December 31, 2004     101,500,000    $      10,150    $   39,865    $    (3,708)   $          --    $      46,307

Net loss for the nine months
ended September 30, 2005                 --               --            --        (20,024)              --          (20,024)
                                -----------    -------------    ----------    -----------    -------------    -------------

Balances, September 30, 2005    101,500,000   $      10,150    $   39,865     $   (23,732)   $          --    $      26,283
                                ===========    =============   ==========     ===========    =============    =============

Balances, December 31, 2005     101,500,000    $      10,150   $   39,865     $   (31,473)   $          --    $      18,542

Shares cancelled (note 6)          (800,000)             (80)          80              --               --               --
Options issued for services              --               --    1,276,984              --               --        1,276,984
Proceeds of sales under
unit subscription                        --               --    3,846,500              --               --        3,846,500
agreements, net of fees
Cumulative translation
adjustment                               --               --           --              --          (12,549)         (12,549)

Net loss for the nine months
ended September 30, 2006                 --               --           --      (2,203,494)              --       (2,203,494)
                                -----------    -------------   ----------     -----------    -------------    -------------

Balances, September 30, 2006    100,700,000   $      10,070    $4,962,798      (2,234,967)   $     (12,549)       2,925,983
                                ===========   =============    ==========     ===========    =============    =============

</TABLE>

        See notes to unaudited consolidated interim financial statements

                                       F-3

                                       5
<PAGE>

<TABLE>
--------------------------------------------------------------------------------
                                                          Northern Ethanol, Inc.
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                 (Formerly BEACONSFIELD I, INC.)
                                           Statements of Consolidated Cash Flows
                                                                     (Unaudited)
--------------------------------------------------------------------------------

<CAPTION>
                                                                                                              Nov 29, 2004
                                                   Three Months ended              Nine Months ended         (Inception) to
                                                       September 30                   September 30             September 30
                                                   2006             2005          2006             2005            2006
<S>                                           <C>             <C>             <C>             <C>             <C>
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net loss                                      $ (1,267,092)   $    (14,745)   $ (2,203,494)   $    (20,024)   $ (2,234,967)

Items not involving cash:
      Depreciation                                   7,723              --          13,010              --          13,010
      Stock-based compensation                     619,605              --       1,276,984              --       1,276,984
Changes in non-cash working capital
balances:
      Accounts receivable                          (19,414)             --         (53,073)             --         (53,073)
      Deposits                                    (201,602)             --        (951,602)             --        (951,602)
      Prepaid expenses                            (133,911)          4,500        (397,591)          9,141        (397,591)
      Accounts payable                              31,487           2,000         101,821           2,000         103,821
      Accrued liabilities                           68,302           8,245          71,902           8,151          75,000
      Other                                         (8,077)             --         (12,549)             --         (22,799)
                                              ------------    ------------    ------------    ------------    ------------
Net cash (used in) provided by
operating activities                              (902,979)             --      (2,154,592)           (732)     (2,191,217)

CASH FLOWS FROM FINANCING
ACTIVITIES:
      Proceeds from issuance of common                  --              --              --              --          50,015
      stock
      Unit subscriptions, received in            2,346,500              --       3,846,500              --       3,846,500
      advance, (net of costs)
                                              ------------    ------------    ------------    ------------    ------------

Net cash (used in) provided by                   2,346,500              --       3,846,500              --       3,896,515
financing activities

CASH FLOWS FROM INVESTING
ACTIVITIES:
      Purchase of capital assets                  (158,678)             --        (318,976)             --        (318,976)
                                              ------------    ------------    ------------    ------------    ------------

Net cash (used in) provided by
investing activities                              (158,678)             --        (318,976)             --        (318,976)
                                              ------------    ------------    ------------    ------------    ------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS                                 1,284,843              --       1,372,932            (732)      1,386,322

CASH AND CASH EQUIVALENTS:
Beginning of period                                101,479          36,783          13,390          37,315              --
                                              ------------    ------------    ------------    ------------    ------------

End of period                                 $  1,386,322    $     36,783    $  1,386,322    $     36,783    $  1,386,322
                                              ============    ============    ============    ============    ============

SUPPLEMENTAL CASH FLOW INFORMATION
      Assets acquired under capital           $ 16,761,565              --    $ 16,761,565              --    $ 16,761,565
      lease
      Cash paid for income taxes                        --              --              --              --             353
</TABLE>

        See notes to unaudited consolidated interim financial statements

                                       F-4

                                       6
<PAGE>
NORTHERN ETHANOL, INC.
(A DEVELOPMENT STAGE COMPANY)
(Formerly BEACONSFIELD I, INC.)

NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.   ORGANIZATION AND OPERATIONS

     Beaconsfield  I, Inc. (the  "Company"),  located in Toronto,  Ontario,  was
     incorporated  in Delaware on November  29, 2004 for the purpose of engaging
     in the potential  future merger or  acquisition of an  unidentified  target
     business.  Since its  inception,  the Company's  operations  have primarily
     included  raising  capital and the  performance  of certain  administrative
     functions.

     On December 15, 2004, the Company issued 150,000 shares of its common stock
     for a total of $15 in cash in accordance  with a Stock Purchase  Agreement.
     Additionally   on  that  date,   the  Company  issued   10,000,000   shares
     (pre-forward split) of its common stock, for a total of $50,000 in cash.

     On April 6, 2006, the Company incorporated  Northern Ethanol,  Inc., a 100%
     owned subsidiary under the laws of the State of Delaware.  Effective May 3,
     2006,  the  Company  merged  with this  subsidiary,  and was the  surviving
     entity.  As  permitted by Delaware  law,  the Company has adopted  Northern
     Ethanol,  Inc. as its corporate name on May 3, 2006. On April 11, 2006, the
     Company incorporated two 100% owned Canadian subsidiaries, Northern Ethanol
     (Canada) Inc. and Northern Ethanol (Barrie) Inc.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     INTERIM FINANCIAL STATEMENTS
     The  accompanying  interim  financials  statements  of  the  Company  as of
     September  30, 2006,  for the  three-month  and  nine-month  periods  ended
     September  30,  2006 and 2005 and for the period  from  November  29,  2004
     (Inception)  to September 30, 2006 have been  prepared in  accordance  with
     accounting  principles  generally accepted for interim financial  statement
     presentation and in accordance with the rules and regulations of the United
     States  Securities  and  Exchange  Commission  for  small  business  users.
     Accordingly,  they do not  include  all of the  information  and  footnotes
     required by accounting  principles  generally accepted in the United States
     of America for complete financial statement presentation. In the opinion of
     management,  all adjustments  necessary for a fair statement of the results
     of operations and financial  position for the interim period presented have
     been included.  All such adjustments are of a normal recurring nature.  The
     results  of  operations  for  the  interim   periods  are  not  necessarily
     indicative  of the results to be expected for a full year.  This  financial
     information should be read in conjunction with the financial statements and
     notes included in the Company's Form 10-KSB for the year ended December 31,
     2005.

     Basis of preparation
     These  unaudited  interim  consolidated   financial  statements  have  been
     prepared on a going  concern  basis,  which  assumes  that the Company will
     continue in operation for the foreseeable  future and  accordingly  will be
     able to realize  its assets and  discharge  its  liabilities  in the normal
     course  of  operations.  Since  the  beginning  of 2006,  the  Company  has
     concentrated  on  activities  that will enable it to acquire  facilities to
     produce  ethanol.  It has no net  earnings,  minimal  revenue and  negative
     operating cash flows, and has financed its activities  through the issuance
     of shares and capital lease arrangements. The Company's ability to continue
     as a going concern is dependent on obtaining additional  investment capital
     and the  achievement  of profitable  operations.  There can be no assurance
     that the  Company  will be  successful  in  increasing  revenue  or raising
     additional investment capital to generate sufficient cash flows to continue
     as  a  going  concern.   These  unaudited  interim  consolidated  financial
     statements  do not reflect the  adjustments  that might be necessary to the
     carrying  amount of reported  assets,  liabilities and revenue and expenses
     and the balance  sheet  classification  used if the Company  were unable to
     continue operation in accordance with this assumption.

     Certain items in the comparative  statements  have been  reclassified to be
     consistent with the presentation in the current year.

                                       F-5

                                       7
<PAGE>

NORTHERN ETHANOL, INC.
(A DEVELOPMENT STAGE COMPANY)
(Formerly BEACONSFIELD I, INC.)

NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     Cash  and  cash  equivalents  - The  Company  considers  all  highly-liquid
     investments  with an original  maturity of three  months or less to be cash
     equivalents.

     Property and  equipment - Computer and furniture and equipment are recorded
     at cost and depreciated on a straight-line basis over their useful life.

     Leasehold  improvements are capitalized at cost and amortized on a straight
     line  basis  over the  shorter  of the term of the lease and the  estimated
     useful life.

     Depreciation  and  amortization  commences  at the time when the assets are
     available for use in operations.

     Leases - The Company  follows the guidance in SFAS No. 13  "Accounting  for
     Leases",  as amended,  which  requires  the  Company to evaluate  the lease
     agreements it enters into to determine whether they represent  operating or
     capital leases at the inception of the lease.

     Assets under  capital  leases - The fair value of the land  acquired at the
     Barrie site is less than 25% of the fair value of the leased  property  and
     was therefore  considered  with the building as one lease when  determining
     that the lease should be classified as a capital lease. The assets acquired
     at the Barrie site cannot  currently  be used to carry out the  business of
     the Company without extensive  renovation and construction  activities.  As
     such,  management  considers  that the assets are not  available  for their
     intended  use.   Specifically,   management  expects  to  make  substantial
     renovations  to  portions  of the  existing  building  to provide the space
     needed to  construct  an ethanol  processing  facility.  The portion of the
     building that will eventually serve as the administrative  offices requires
     extensive  renovation  in order to bring it up to standard for  occupation.
     Management's  initial examination of the infrastructure items has indicated
     that substantial  additional  expenditures  will be required to ensure that
     rail lines are serviceable,  and in correct locations, and that the gas and
     water lines can be expanded to provide the required  capacity for the plant
     operations.  Before commencing demolition and construction activities,  the
     Company  will  use  the  findings  of an  engineering  study  that  will be
     performed,  with detailed  recommendations  on the usefulness of individual
     assets. The Company will write-off any portion of the buildings that may be
     demolished.  The Company will not capitalize  costs to assets under capital
     leases beyond what is recoverable from operations.  Depreciation of capital
     assets will  commence  once they are  determined  to be available for their
     intended  use.  The  assets  will be  depreciated  over the lesser of their
     useful life or the remaining lease term.

     Impairment  of  long-lived  assets -  Long-lived  assets are  reviewed  for
     impairment at least annually or whenever  events or changes in circumstance
     indicate  that the  carrying  amount of the  asset may not be  recoverable.
     Recoverability  is measured by a comparison  of the  carrying  amount of an
     asset to estimated  undiscounted cash flows expected to be generated by the
     long-lived  asset. If the carrying amount of an asset exceeds its estimated
     future cash flows,  an impairment  charge is recognized for the amount that
     the carrying amount exceeds the fair value of the particular assets.

     Stock-based  compensation - Effective  January 1, 2006, the Company adopted
     Financial   Accounting   Standards  Board  (FASB)  Statement  of  Financial
     Accounting  Standard  (SFAS) No.  123R,  "Share Based  Payment".  SFAS 123R
     requires a public entity to measure the cost of employee  services received
     in exchange for an award of equity instruments based on the grant-date fair
     value of the award.  That cost is recognized on a straight-line  basis over
     the employee  service  period  (usually the vesting  period).  That cost is
     measured  based on the fair  value of the equity or  liability  instruments
     issued using the Black-Scholes option pricing model.

                                       F-6

                                       8
<PAGE>

NORTHERN ETHANOL, INC.
(A DEVELOPMENT STAGE COMPANY)
(Formerly BEACONSFIELD I, INC.)

NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     Foreign  currency  translation  -  The  Company  has  determined  that  the
     functional  currency of its Canadian  subsidiaries is the Canadian  dollar.
     All  transactions  initiated in Canadian  dollars are translated  into U.S.
     dollars in accordance  with SFAS No. 52 "Foreign  Currency  Translation" as
     follows:

     (i)  Assets  and  liabilities  at the rate of  exchange  in  effect  at the
          balance sheet date; and

     (ii) Revenue and expense  items at the average rate of exchange  prevailing
          during the period

     Adjustments  arising from such  translations are deferred until realization
     and  are  included  as  a  separate   component  of  stockholders'   equity
     (deficiency)  as a component of  comprehensive  income or loss.  Therefore,
     translation  adjustments  are not included in determining net income (loss)
     but are reported as a component of other comprehensive income (loss).

     The Company  translates  foreign currency  transactions  into the Company's
     functional  currency at the exchange rate effective on the invoice date. If
     the exchange rate changes  between the time of purchase and the time actual
     payment is made, a foreign exchange  transaction gain or loss results which
     is included in determining net income for the period.

     Income taxes - Deferred  income tax assets and  liabilities  are recognized
     for  the  estimated  future  tax  consequences  attributable  to  temporary
     differences  between the financial  statement  carrying amounts of existing
     assets and  liabilities  and their  respective tax bases,  and are measured
     using  enacted  tax rates  expected  to apply in the  years in which  those
     temporary  differences are expected to be recovered or settled. A valuation
     allowance is provided when it is more likely than not that the full benefit
     of the deferred tax assets will not be realized.

     Use of estimates - The  preparation  of financial  statements in conformity
     with  accounting  principles  generally  accepted  in the United  States of
     America  requires  management to make estimates and assumptions that affect
     the reported  amounts of assets and  liabilities,  the reported  amounts of
     revenues and expenses and the disclosure of contingent liabilities.  Actual
     results may differ from these estimates.

     Earnings (loss) per common share - The Company computes net loss per common
     share using SFAS No. 128  "Earnings Per Share." Basic loss per common share
     is computed based on the weighted average number of shares  outstanding for
     the period.  Diluted loss per share is computed by dividing net loss by the
     weighted average common shares outstanding  assuming all dilutive potential
     common shares were issued.

     Fair value of financial  instruments - The carrying  value of cash and cash
     equivalents,  other current assets,  accrued  expenses and accounts payable
     approximates  fair value due to the short period of time to  maturity.  The
     carrying  value of the  obligation  under capital lease  approximates  fair
     value as the discount rate of 12% in the capital lease approximates current
     market  rates of interest  available to the Company for the same or similar
     debt instruments.


                                       F-7

                                       9
<PAGE>

 NORTHERN ETHANOL, INC.
(A DEVELOPMENT STAGE COMPANY)
(Formerly BEACONSFIELD I, INC.)

NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

3.   PROPERTY AND EQUIPMENT

     ---------------------------------------------------------------------------
                                                      Accumulated     Net book
     September 30, 2006                    Cost      depreciation      value
     ---------------------------------------------------------------------------

     Computer equipment and software   $    33,806   $     5,185    $  28,621
     Furniture and equipment               131,351         6,098      125,253
     Leasehold improvements                153,819         1,727      152,092
                                       -----------------------------------------
                                       $   318,976   $    13,010    $  305,966
     ---------------------------------------------------------------------------

                                                       Accumulated   Net book
     December 31, 2005                      Cost      depreciation     value
     ---------------------------------------------------------------------------

     Computer equipment and software   $         -   $         -    $       -
     Furniture and equipment                     -             -            -
     Leasehold improvements                      -             -            -
                                       -----------------------------------------
                                       $         -   $         -    $        -
     ---------------------------------------------------------------------------

4.   RELATED PARTY TRANSACTIONS

     During the nine months ended  September 30, 2006, the Company repaid $2,000
     to Corsair Advisors,  Inc., an entity owned by a stockholder,  for advances
     it had made on behalf of the Company prior to December 31, 2005.

     Additionally,  the Company  utilized  the office  space and  equipment of a
     stockholder at no cost,  until April 2006,  when the Company entered into a
     lease for office space, as further  discussed in note 7. During April 2006,
     the Company,  through a Canadian subsidiary,  entered into the Barrie lease
     for  property  to be used as an  ethanol  processing  facility,  as further
     discussed  in note  7.  These  leases  were  entered  into  with an  entity
     affiliated with a stockholder of the Company.




                                       F-8

                                       10
<PAGE>

NORTHERN ETHANOL, INC.
(A DEVELOPMENT STAGE COMPANY)
(Formerly BEACONSFIELD I, INC.)

NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

5.   STOCK OPTIONS

     On April 4, 2006, the Company approved the 2006 Stock Plan (the "Plan") and
     reserved 8,000,000 shares of Common Stock for issuance under the Plan.

     On April 12, 2006, pursuant to an employment agreement, the Company granted
     options to purchase  an  aggregate  of  2,000,000  shares of the  Company's
     common stock at an exercise  price equal to $1.00,  to its Chief  Executive
     Officer.  The options will vest in equal amounts each quarter over the next
     two years from the date of grant.  The options expire five years  following
     the date of grant.

     On April 21, 2006, pursuant to an employment agreement, the Company granted
     options to purchase an aggregate of 500,000 shares of the Company's  common
     stock at an exercise price equal to $1.00, to its Chief Financial  Officer.
     The options  were to vest in equal  amounts  each quarter over the next two
     years  from the date of  grant.  The  options  were to  expire  five  years
     following  the  date of  grant.  These  options  were  forfeited  with  the
     resignation of the Chief Financial Officer (note 9).

     On May 1, 2006 and on June 8, 2006, the Company granted options to purchase
     an aggregate of 224,000 shares of the Company's common stock at an exercise
     price equal to $1.00,  to certain new  employees.  The options will vest in
     equal  amounts each quarter over the next two years from the date of grant.
     The options expire five years following the date of grant.

     On July 15, 2006, pursuant to an employment agreement,  the Company granted
     options to purchase an aggregate of 300,000 shares of the Company's  common
     stock at an exercise price equal to $1.00, to its Chief Operating  Officer.
     The options  will vest in equal  amounts  each  quarter over the next three
     years from the date of grant.  The options expire five years  following the
     date of grant.

     On September 8, 2006, the Company  granted options to purchase an aggregate
     of 275,000 shares of the Company's  common stock at an exercise price equal
     to $1.00, to the non-salaried  Directors of the Company. The options vested
     immediately at the date of grant.  The options expire five years  following
     the date of grant.  Also on  September  8, 2006,  pursuant to a  consulting
     agreement,  the Company granted options to purchase an aggregate of 200,000
     shares of the Company's  common stock at an exercise  price equal to $1.00,
     to a Director.  The options  will vest at a rate of 50,000  shares in equal
     amounts  each  quarter  over the first year from the date of grant,  50,000
     shares in equal  amounts each quarter over the second year from the date of
     grant and 100,000  shares in equal amounts each quarter over the third year
     from the date of grant. The options expire five years following the date of
     grant.

     The fair value of each  option  granted  was  estimated  on the date of the
     grant  using the  Black-Scholes  option  pricing  model with the  following
     assumptions:

          ----------------------------------------------------------------
                                                                   2006
          ----------------------------------------------------------------

          Risk-free interest rate                               5.1 - 5.2%

          Volatility factor of the future expected market price    86.6%
          of the Company's common shares

          Weighted average expected life in years                   5.0

          Expected dividends                                       None
          ----------------------------------------------------------------

---------------------------------------------------------- -------------

                                       F-9

                                       11
<PAGE>

NORTHERN ETHANOL, INC.
(A DEVELOPMENT STAGE COMPANY)
(Formerly BEACONSFIELD I, INC.)

NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

5.   STOCK OPTIONS (continued)

     A total of  3,474,000  options  were  granted  during the nine month period
     ended  September 30, 2006 and are  outstanding  at September 30, 2006.  The
     fair value of the options granted as determined  above was  $2,234,879,  of
     which $1,583,738 will be expensed in fiscal 2006. Of this amount,  $619,605
     and $1,276,984  was expensed  during the three and nine month periods ended
     September  30,  2006,   respectively.   A  total  of  939,775  options  are
     exercisable at September 30, 2006.

6.   CAPITAL STOCK

     Holders of shares of common  stock are  entitled  to cast one vote for each
     share held at all  stockholders'  meetings for all purposes,  including the
     election of  directors.  The common stock does not have  cumulative  voting
     rights.

     The  preferred  stock  of the  Company  shall  be  issued  by the  Board of
     Directors  of the  Company  in one or more  classes  or one or more  series
     within any class, and such classes or series shall have such voting powers,
     full or limited or no voting powers,  and such  designations,  preferences,
     limitations  or  restrictions  as the Board of Directors of the Company may
     determine, from time-to-time.

     Holders of shares of stock of any class  shall not be  entitled as a matter
     of right to  subscribe  for or  purchase  or receive any part of any new or
     additional  issue  of  shares  of  stock  of any  class,  or of  securities
     convertible  into  shares  of stock of any  class,  whether  now  hereafter
     authorized or whether issued for money, for consideration other than money,
     or by way of dividend.

     a)   During the nine  months  ended  September  30,  2006,  the Company has
          received  gross  proceeds  of  $4,096,500  under  the  terms of a unit
          subscription agreement which provides for the purchase of one share of
          common  stock for $1.00.  Cost of  issuance  related to raising  these
          funds amounted to $250,000. As at September 30, 2006, 4,096,500 shares
          of the  Company's  common stock are  issuable  under the terms of this
          agreement. The Company is authorized to issue, to accredited investors
          only,  up to  5,000,000  shares of common stock under the terms of the
          Unit  Subscription  agreement.  Sales of units of the Company's  stock
          under these agreements will continue during the fourth quarter.

     b)   On April 1, 2006, certain founding  shareholders of the Company,  each
          owning  50,000  shares of the Common Stock of the  Company,  agreed to
          surrender  a portion  of their  stock  ownership  to the  Company  for
          cancellation.  In total, 800,000 shares were surrendered.  The Company
          transferred $80 from common stock to additional paid in capital.

     c)   Effective  July  3,  2006,  the  Company's  shareholders  approved  an
          increase  in  the  authorized   capital  stock  of  the  Company  from
          80,000,000 shares of $0.0001 par value stock to 350,000,000  shares of
          authorized  capital stock,  consisting of 250,000,000 shares of Common
          Stock having a par value of $0.0001 per share, and 100,000,000  shares
          of Preferred Stock, having a par value of $0.0001 per share

     d)   On July 5, 2006, the Company effected a 10 for one forward stock split
          of its common stock to holders of record on that date.


                                      F-10

                                       12
<PAGE>

NORTHERN ETHANOL, INC.
(A DEVELOPMENT STAGE COMPANY)
(Formerly BEACONSFIELD I, INC.)

NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

7.   LEASE AGREEMENTS

     At April 20, 2006, the Company entered into a lease  agreement  through its
     wholly  owned  subsidiary,  Northern  Ethanol  (Barrie)  Inc, for a 25 year
     lease,  with  two ten  year  optional  renewal  periods,  on an  industrial
     property located in Barrie, Ontario, Canada, (the "Barrie Lease"), on which
     it intends to construct an ethanol  processing  facility.  The Company also
     entered  into a five year lease on April 20, 2006  through its wholly owned
     subsidiary,  Northern Ethanol (Canada) Inc., for office premises located in
     Toronto,  Ontario,  Canada to be used for its head office (the "Head Office
     Lease").  The Company has  analyzed  these leases and  determined  that the
     terms of the property lease at the Barrie industrial location require it to
     be accounted for as a capital  lease.  The Company  determined the value of
     the capital lease  acquired,  by calculating the present value of the lease
     payments  over the 25 year term of the lease,  discounted at 12% per annum.
     The terms of the  office  lease at the  Toronto  location  require it to be
     accounted for as an operating lease.

     As the Barrie  location was acquired  for the purposes of  constructing  an
     ethanol  processing  facility,  and the  plant is not yet  operational,  no
     amortization or interest  expense related to this lease is reflected in the
     income statement.

     The terms of the leases require the following minimum payments:

                Fiscal Year        Barrie Lease  Head Office Lease       Total
                   2006            $   338,948      $  80,631        $   419,579
                   2007              2,033,686        161,261          2,194,947
                   2008              2,033,686        161,261          2,194,947
                   2009              2,033,686        161,261          2,194,947
                   2010              2,033,686        161,261          2,194,947
Thereafter                          48,673,826         67,192         48,741,018
                                   -----------   -----------------   -----------
Total minimum lease payments       $57,147,518      $ 792,867        $57,940,385
                                                 =================   ===========
Less amount representing
  interest of 12%                   40,385,953
                                   -----------
                                    16,761,565
Less current portion                    17,385
                                   -----------
                                   $16,744,180
                                   ===========

     The Barrie lease  payments are due on a monthly basis  starting in November
     2006. Upon  commissioning  of the ethanol  facility at the Barrie location,
     the value of the capital  lease will be amortized on a straight  line basis
     over  the  period  remaining  in the 25 year  term.  The  interest  expense
     implicit in the capital lease obligation will be recognized at the 12% rate
     implicit in the lease,  and will be  calculated  on a monthly  basis on the
     balance  outstanding  at each month end.  Since the lease  payments  are in
     Canadian dollars, the actual amortization and interest expense reflected in
     the account will vary as the exchange rate changes.

     The Barrie lease  provides  for two renewal  periods of ten years under the
     same terms and  conditions,  at the market rates for similar  properties in
     the area at the time of  renewal.  The lease  requires  total  payments  of
     $57,145,518 over 25 years, of which $40,385,953 is interest and $16,761,565
     is the repayment of the capital lease amount.  The capital lease  principal
     will be paid down by  $17,385 as a result of monthly  lease  payments  that
     will be made over the next year.


                                      F-11

                                       13
<PAGE>

NORTHERN ETHANOL, INC.
(A DEVELOPMENT STAGE COMPANY)
(Formerly BEACONSFIELD I, INC.)

NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

8.   INCOME TAXES

     The Company has incurred losses  resulting from start-up costs. A valuation
     allowance  has been  recorded to fully offset any future tax asset  because
     the future realization of the related income tax benefits is uncertain.

9.   SUBSEQUENT EVENTS

     a)   On October 12, 2006,  the Company filed a SB-2 which is in the process
          of being reviewed by the Securities Exchange Commission.

     b)   Effective  October 31, 2006,  the Company's  Chief  Financial  Officer
          resigned  and  forfeited  options to purchase an  aggregate of 500,000
          shares of the Company's common stock.  Effective November 1, 2006, the
          Company   appointed  an  interim  Chief   Financial   Officer,   on  a
          probationary basis.

     c)   On  November  2, 2006,  the  Company  granted  options to  purchase an
          aggregate  of  900,000  shares  of the  Company's  common  stock at an
          exercise price equal to $1.00 to non-employees.  The options will vest
          in equal  amounts  each  quarter over one year from the date of grant.
          The fair value of each option granted was estimated on the date of the
          grant using the Black-Scholes  option pricing model with the following
          assumptions:

     ---------------------------------------------------------------------
                                                                   2006
     ---------------------------------------------------------------------

          Risk-free interest rate                               5.1 - 5.2%

          Volatility factor of the future expected market price    86.6%
          of the Company's common shares

          Weighted average expected life in years                   5.0

          Expected dividends                                       None
     ---------------------------------------------------------------------

     The fair value of the options granted as determined above was $592,806,  of
     which $425,178 will be expensed in fiscal 2006.


                                      F-12

                                       14
<PAGE>

NORTHERN ETHANOL, INC.
(A DEVELOPMENT STAGE COMPANY)
(Formerly BEACONSFIELD I, INC.)

NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

9.   SUBSEQUENT EVENTS (continued)

     d)   Also on November  2, 2006,  the  Company  granted  options to purchase
          100,000  shares of the  Company's  common  stock at an exercise  price
          equal to $1.00, to a non-salaried Director of the Company. The options
          will vest in equal amounts annually over the next three years from the
          date of grant.  The options  expire five years  following  the date of
          grant.  Additionally  on November 2, 2006,  pursuant to an  employment
          agreement,  the Company  granted  options to purchase an  aggregate of
          75,000 shares of the Company's common stock at an exercise price equal
          to $1.00,  to a new  employee.  The options will vest in equal amounts
          annually over the next three years from the date of grant. The options
          expire five years following the date of grant.  The fair value of each
          option  granted  was  estimated  on the date of the  grant  using  the
          Black-Scholes option pricing model with the following assumptions:

          ----------------------------------------------------------------
                                                                  2006
          ----------------------------------------------------------------

          Risk-free interest rate                               5.1 - 5.2%

          Volatility factor of the future expected market price    86.6%
          of the Company's common shares

          Weighted average expected life in years                   5.0

          Expected dividends                                       None
          -------------------------------------------------------------------

     The fair value of the options granted as determined  above was $92,320,  of
     which $28,989 will be expensed in fiscal 2006.









                                      F-13

                                       15
<PAGE>

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

     The following  discussion  should be read in conjunction with our unaudited
financial  statements and notes thereto included herein. In connection with, and
because we desire to take  advantage  of, the "safe  harbor"  provisions  of the
Private  Securities  Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following  discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange  Commission.  Forward looking
statements are statements not based on historical  information  and which relate
to future  operations,  strategies,  financial  results  or other  developments.
Forward looking  statements are necessarily based upon estimates and assumptions
that are inherently  subject to significant  business,  economic and competitive
uncertainties and  contingencies,  many of which are beyond our control and many
of which,  with  respect to future  business  decisions,  are subject to change.
These  uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any  forward-looking
statements  made by, or on, our behalf.  We disclaim  any  obligation  to update
forward-looking statements.

OVERVIEW

     We were  incorporated as "Beaconsfield I, Inc." in the State of Delaware on
November 29, 2004, to pursue a business  combination.  In May 2006, we attempted
to  change  our name to  "Northern  Ethanol,  Inc." by  effecting  a merger of a
subsidiary  company  into  Beaconsfield  I,  Inc.  However,  we were  unable  to
accomplish  our  objectives  in this  regard.  Subsequently,  in July 2006,  the
holders of a majority of our then issued and  outstanding  common stock approved
an amendment to our Certificate of Incorporation  wherein we did change our name
to "Northern Ethanol,  Inc." to better reflect our current business plan that is
described  under  "Plan of  Operation"  below.  We are  currently  considered  a
"development stage" company.

RESULTS OF OPERATIONS

     Comparison  of Results  of  Operations  for the  nine-month  periods  ended
September 30, 2006 and 2005

     During the nine-month  period ended September 30, 2006, we did not generate
any revenues.  We do not expect to begin generating  revenues until such time as
the ethanol plants described below under "Plan of Operation" become operational.

     During the nine month period ended  September 30, 2006,  we incurred  costs
and expenses totaling $2,203,494, including $1,539,978 in salaries and benefits,
$650,506 in other general and  administrative  expense and  occupancy  costs and
$13,010 in depreciation  expense.  During the nine-month  period ended September
30, 2005, our total costs and expenses were $20,024.  This


                                       16

<PAGE>

significant   increase  in  operating  expenses  was  a  direct  result  of  our
commencement of our new business plan, described below.

     As a result,  we  incurred a net loss of  $2,203,494  during the nine month
period  ended  September  30,  2006,  compared  to a net loss of $20,024 for the
similar period ended September 30, 2005.

     Comparison  of Results of  Operations  for the  three-month  periods  ended
September 30, 2006 and 2005

     During the three-month period ended September 30, 2006, we did not generate
any revenues.  We do not expect to begin generating  revenues until such time as
the ethanol plants described below under "Plan of Operation" become operational.

     During the three month period ended  September 30, 2006, we incurred  costs
and expenses totaling  $1,267,092,  including $784,626 in salaries and benefits,
$474,743 in other general and  administrative  expense and  occupancy  costs and
$7,723 in depreciation  expense.  During the three-month  period ended September
30, 2005, our total costs and expenses were $14,745.  This significant  increase
in  operating  expenses  was a  direct  result  of our  commencement  of our new
business plan, described below.

     As a result,  we incurred a net loss of  $1,267,092  during the three month
period  ended  September  30,  2006,  compared  to a net loss of $14,745 for the
similar period ended  September 30, 2005.  Because we did not generate  revenues
during the nine month period ended September 30, 2006,  following is our Plan of
Operation.

PLAN OF OPERATION

     As of the date of this  report we have begun the  initial  steps to provide
entry into the business of  manufacturing  fuel ethanol for sale to oil refiners
and other users, including identifying proposed locations for the development of
ethanol  plants.  Our goal is to  produce,  market  and sell  ethanol  and other
renewable fuels in the Eastern United States and Canada.  In this regard we have
retained new management  experienced in this industry.  Further, we have secured
or are in  advanced  stages  of  securing  sites  to  build  ethanol  processing
facilities  at two  locations in Ontario,  Canada  (Barrie and Sarnia),  and one
location in upper New York State for total  planned  production  capacity of 300
million US gallons  per annum.  Each of these  locations  will be the site for a
corn-based ethanol processing  facility.  The two facilities currently envisaged
for  Ontario are  expected to be  completed  and  operational  over the next two
years.  The Upper New York State facility is expected to be operational one year
later.

     We have secured, or are in the advanced stages of securing,  sites to build
ethanol  processing  facilities at the following  locations,  in the  capacities
indicated:

                                       17
<PAGE>

     o    Barrie,  Ontario,  Canada;  100  million  gallons  - The site has been
          obtained under a 45 year lease including  renewal  options.  The lease
          allows us to utilize all existing site  infrastructure and demolish or
          modify existing  structures to optimize plant operations.  The site is
          owned by an affiliate of one of our shareholders.

     o    Sarnia,  Ontario,  Canada;  100 million  gallons - This site comprises
          approximately  40 acres. We have entered into a non-binding  letter of
          intent with the owner of this location that provides us with a 99 year
          lease with an annual rental payment of $10 (CN), plus payment by us of
          all real  estate  and  property  taxes and other  operating  expenses,
          including  utilities.  The  terms  are  subject  to  our  reaching  an
          agreement  for the owner to supply steam to our  proposed  plant for a
          minimum of 15 years.  The proposed terms also include a right of first
          refusal  for us to  acquire  this  land at a price to be agreed in the
          future and also provides for us to receive $4 million (CN) as a tenant
          inducement to enter into a definitive agreement. This site is adjacent
          to a major rail line,  has good  highway  access,  access to the Great
          Lakes for shipping purposes and is fully zoned and serviced.

     In  addition,   we  are  actively   negotiating  for  the  acquisition  and
development of a site at the following  location:  o New York State; 100 million
gallons.  This site is undergoing a  comprehensive  evaluation for a 100 million
gallon  facility and business terms of the site  acquisition are currently under
discussion.

     Each of these  locations  will be the site for a  state-of-the-art  ethanol
processing facility, using corn as the feedstock. The Barrie location represents
a conversion of an existing site from a former  brewery.  The Sarnia and Upstate
New York locations represent new construction.

     Effective  July 24, 2006, we entered into a Project  Development  Agreement
(the "Agreement") with Delta-T Corporation,  Williamsburg,  Virginia, ("Delta"),
wherein  Delta shall  provide us  professional  advice,  business and  technical
information,  design and engineering and related  services in order to assist us
in  assembling  all  of  the  information,  permits,  agreements  and  resources
necessary  for  construction  of an ethanol plant having the capacity to produce
100 million gallons per year in Barrie,  Ontario,  Canada (the "Plant"). We paid
Delta the sum of $100,000 for their services.  This amount has been  capitalized
under leasehold improvements.

     In September 2006, we entered into a similar  agreement with Delta relating
to our  proposed  Sarnia  ethanol  plant  and paid  Delta an  initial  amount of
$70,000,  with the balance of $30,000 due upon  issuance of an air permit by the
Province of Ontario.

     The  Agreement  provides  for  Delta to assist  us in the  development  and
analysis of the feasibility of the Plant,  including location,  operating costs,
Plant specifications,  compliance with environmental issues,  product marketing,
industry  economics,  technical and other assistance.  The relationship  between
Delta  and  us is  deemed  exclusive  during  the  term  of  the  Agreement  and
anticipates   that  the  parties  shall  enter  into  a   definitive,   turnkey,
engineering,  procurement

                                       18
<PAGE>

and  construction  agreement for the entire Plant. We have granted Delta a right
of first refusal in this regard. The term of the Agreement is five (5) years.

     We will  begin  construction  at each  location  as soon as we are  able to
secure all the necessary financing and permits to complete  construction of this
facility.  We expect this financing to take the form of both debt and equity. It
is our intention to use leverage to the greatest  extent  feasible as is typical
with larger energy  infrastructure  projects. To date, we have not obtained this
required  financing.  However as of the date of this report, we have completed a
private  offering  whereby we sold  3,921,500  shares of our Common  Stock to 47
"accredited  investors"  (as that term is defined in both the  Canadian and U.S.
securities  laws) at a price of $1.00  per  share  and  received  aggregate  net
proceeds of $3,846,500  therefrom.  . See "Liquidity and Capital  Resources" and
"Risk Factors."

     During  the  three  months  ended   September   30,  2006,  we  engaged  in
negotiations  to acquire an existing  ethanol  plant in the  Province of Quebec,
Canada.  However,  these negotiations did not prove successful.  We made a fully
refundable deposit to the prospective sellers in the amount of $750,000 (US) and
as a result of the  termination  of  negotiations  we have  requested  that this
deposit be  returned.  As of the date of this report we have not  received  this
deposit returned but we are confident that the same will be returned shortly.

     We are implementing a growth strategy by:

     o    Building state of the art  processing  plants on brown field and green
          field sites;

     o    Negotiating stable long term contracts with key suppliers;

     o    Securing long term sales agreements;

     o    Pursuing acquisitions of existing ethanol producers

     o    Pursuing   acquisitions   and/or  strategic   alliances  with  ethanol
          technology companies.

     We are  committed to investing in the latest  technology to ensure that the
processing  costs are as low as  possible,  and the  outputs  are of the highest
quality.  The initial  locations  have been chosen due to proximity to supply of
corn,  natural  gas, and water and are well  located for the  transportation  of
inputs and products.

     We have also  entered  into a letter of intent with a privately  held grain
merchant's  corporation  (the "Grain  Merchant"),  which owns and operates grain
elevators  and  has   extensive   domestic  and   international   experience  in
international  grain  origination  and  co-product  merchandizing.  We expect to
engage them to source all of the corn  required for the  operation of the Barrie
and Sarnia ethanol facilities at competitive  prices. We expect they will assist
us in  negotiations  with major corn suppliers to guarantee  supply and price by
committing to long-term  purchase  agreements or opportunistic  purchases on the
spot market when this can be done at favorable rates.

                                       19
<PAGE>

     We have also been in  discussion  with a privately  held  corporation  that
provides  ethanol  marketing   capability  across  North  America.  The  ethanol
marketing  company  is a fully  integrated  marketing  company  supported  by an
experienced  sales force, a knowledgeable  logistics and scheduling  department,
customer  service,  and an online computer system that we will be able to access
to   streamline   all   necessary   correspondence   for  daily   shipments  and
transportation  transactions.  We expect to engage  this  marketing  company  to
handle the sales of our ethanol  production.  We expect that the Grain  Merchant
would assist us with the sale of our dried distillers  grain by-product  through
spot sales or long-term contracts to major purchasers.

     The manner in which we intend to develop  future  sites  beyond the initial
aforementioned  locations  will depend upon the nature of the  opportunity,  the
respective  needs  of the  parties  involved,  and  ourselves.  We have set up a
separate  subsidiary to own each ethanol plant. We may purchase assets outright,
acquire an ownership  interest in  companies  controlling  key assets,  or issue
shares in the subsidiary  company that controls the site to outside  parties who
control key assets.

     It  is  likely  that  we  will  finance  our  participation  in a  business
opportunity through the issuance of common stock or other securities and through
the  issuance  of senior  debt  secured  against  the  assets of each  operating
location.

     In the case of cash  acquisition,  the transaction may be accomplished upon
the  sole   determination  of  management   without  any  vote  or  approval  by
stockholders.  In the  case of a  statutory  merger  or  consolidation  directly
involving  us, it will likely be  necessary to call a  stockholders'  meeting or
otherwise  obtain the  approval of the holders of a majority of our  outstanding
shares.  The necessity to obtain such  stockholder  approval may result in delay
and additional  expense in the consummation of any proposed  transaction and may
also give rise to certain appraisal rights to dissenting stockholders.

     We plan to  identify  and exploit new  technologies  for reduced  costs and
greater  manufacturing  yields.  For example,  we are examining new technologies
enabling the conversion of cellulose, which is generated predominantly from wood
waste,  paper waste and agricultural  waste,  into ethanol which would reduce or
eliminate  our  dependency  on corn as a primary  feedstock,  while also helping
local municipalities deal with ever increasing demands on their garbage disposal
sites.

LIQUIDITY AND CAPITAL RESOURCES

     At September 30, 2006, we had $1,386,322 in cash and cash equivalents.

     In July 2006,  we engaged in a forward split of our Common Stock whereby we
issued ten (10)  shares of our Common  Stock for every one (1) share then issued
and outstanding.

                                       20
<PAGE>

     Following  the  aforesaid  forward  stock  split,  we  commenced  a private
offering of our Common  Stock.  As of the date of this  report,  we have sold an
aggregate of 3,921,500  shares of our Common Stock to 47 "accredited  investors"
(as that term is defined in both the  Canadian  and U.S.  securities  laws) at a
price of $1.00 per share and  received  aggregate  net  proceeds  of  $3,846,500
therefrom.  We intend to utilize the  proceeds of this  offering on  preliminary
engineering  studies  relating  to our  proposed  ethanol  plants,  other  costs
associated  with the  development  of these  plants,  including  due  diligence,
preparation   of   specifications   for   construction,   and  on  general   and
administrative expenses, as well as for general working capital.

     Two of these investors are residents of the United States, with the balance
residents of Canada.  The proceeds derived from this offering are to be utilized
for the  preliminary  work relating to  development  of two ethanol plants to be
located  in  Canada  and one in Upper  New York  State,  as well as for  working
capital. We will require significant  additional funds in order to implement our
business plan described herein.

     As a result  of our  obtaining  equity  capital  in the  aforesaid  private
offering, we believe that we currently have sufficient funds available for us to
continue to implement  our  business  plan for the next 12 months.  However,  we
estimate that we will require an additional $372.5 million in additional debt or
equity  capital to fully  implement our initial  business plan in the future and
there are no assurances  that we will be able to raise this capital when needed.
However,  while there are no  definitive  agreements  in place as of the date of
this Report,  we are currently  engaged in various  discussions  with interested
parties to provide these funds or otherwise  enter into a strategic  alliance to
provide such  funding.  The inability to obtain  sufficient  funds from external
sources when needed will have a material adverse affect on our implementation of
our plan of operation, results of operations and financial condition.

INFLATION

     Although our operations are influenced by general economic  conditions,  we
do not believe that inflation had a material affect on our results of operations
during the nine-month period ended September 30, 2006.

                                  RISK FACTORS

An investment in our Common Stock is a risky investment.  Prospective  investors
should carefully consider the following risk factors before purchasing shares of
our Common Stock.

RISKS RELATED TO OUR PROPOSED OPERATIONS

We have incurred losses in the past and expect to incur greater losses until our
--------------------------------------------------------------------------------
ethanol production begins.
--------------------------

     As of  September  30, 2006 and December  31,  2005,  we had an  accumulated
deficit of  $2,234,967  and  $31,473,  respectively.  For the nine months  ended
September  30, 2006 and for

                                       21
<PAGE>

the year ended  December 31,  2005,  we incurred  net losses of  $2,203,494  and
$27,765,  respectively. We expect to incur significantly greater losses at least
until the  completion  of our  initial  ethanol  production  facility in Barrie,
Ontario.  We estimate that the earliest completion date of this facility and, as
a result, our earliest date of ethanol production will not occur until the first
quarter  of 2008.  Until  then,  we expect to rely on cash from debt and  equity
financing  to fund  all of the  cash  requirements  of our  business.  Until  we
successfully  build and begin  operating of our proposed  ethanol plants we will
experience  negative  cash flow.  Once our  ethanol  plants are built and become
operational,  there are no assurances that we will be able to attain, sustain or
increase profitability on a quarterly or annual basis.

A downturn in the demand for ethanol would  significantly  and adversely  affect
--------------------------------------------------------------------------------
our sales and profitability.
----------------------------

     Our  revenue  will be  derived  primarily  from sales of  ethanol.  Ethanol
competes with other existing products and other alternative  products could also
be developed for use as fuel  additives.  We expect to be completely  focused on
the production and marketing of ethanol and its  co-products,  dried  distillers
grains  and CO2 for the  foreseeable  future.  We may be  unable  to  shift  our
business  focus  away from the  production  and  marketing  of  ethanol to other
renewable fuels or competing products.  Accordingly, an industry shift away from
ethanol or the  emergence  of new  competing  products may reduce the demand for
ethanol.

In  order  to  complete  the  construction  of our  planned  ethanol  production
--------------------------------------------------------------------------------
facilities, we will require significant additional funding.
-----------------------------------------------------------

     We anticipate  that we will need to raise  approximately  $372.5 million in
equity  and/or debt  financing  to complete  construction  of our first  ethanol
production  facilities  in Barrie and Sarnia,  Ontario.  The proceeds we derived
from our recently  completed  private  offering are  insufficient to allow us to
commence  construction of our proposed  ethanol  plants.  As of the date of this
report we have been engaged in  discussions  with various  banks and  investment
banking  firms to  obtain  the funds we  believe  are  necessary  to allow us to
commence  construction of these ethanol plants.  However, as of the date of this
report we have no contracts  with, or binding  commitments  from, any investment
banker,  bank, lender or financial  institution for the required capital.  There
can be no assurances that we will be able to obtain any funding from one or more
investors or lenders,  or if funding is obtained,  that it will be on terms that
we have anticipated or that are otherwise  acceptable to us. If we are unable to
secure adequate  financing,  or financing on acceptable terms is unavailable for
any reason, we may be forced to abandon our construction of one or more, or even
all, of our planned ethanol production facilities.

Our  capital  structure  will  be  highly  leveraged  because  we plan to fund a
--------------------------------------------------------------------------------
substantial majority of the construction costs of our planned ethanol production
--------------------------------------------------------------------------------
facilities through the issuance of a significant amount of debt.
----------------------------------------------------------------

     Our  debt  levels  and  debt  service  requirements  could  have  important
consequences  which  could  reduce the value of your  investment,  including:

                                       22
<PAGE>

     o    limiting  our  ability  to borrow  additional  amounts  for  operating
          capital  or  other  purposes  and  causing  us to be  able  to  borrow
          additional funds only on unfavorable terms;

     o    reducing funds  available for operations and  distributions  because a
          substantial  portion of our cash flow will be used to pay interest and
          principal on our debt;

     o    making us vulnerable to increases in prevailing interest rates;

     o    placing  us  at  a   competitive   disadvantage   because  we  may  be
          substantially more leveraged than some of our competitors;

     o    subjecting  all or  substantially  all of our  assets to liens,  which
          means that  there may be no assets  left for our  stockholders  in the
          event of a liquidation; and

     o    limiting our ability to adjust to changing  market  conditions,  which
          could  increase  our  vulnerability  to a downturn in our  business or
          general economic conditions.

     If cash flow  from  operations  are  insufficient  to pay our debt  service
obligations  it is  possible  that we could be  forced to sell  assets,  seek to
obtain additional equity capital or refinance or restructure all or a portion of
our debt on substantially  less favorable terms. In the event that we are unable
to refinance  all or a portion of our debt or raise funds  through  asset sales,
sales of equity or  otherwise,  we may be forced to liquidate and you could lose
your entire investment. However, while no assurances can be provided, based upon
our discussions and negotiations with financing  entities as of the date of this
report, we do believe that our proposed business plan is viable and that we will
obtain the additional financing necessary to develop our ethanol plants.

Our success depends,  to a significant  extent,  upon the continued  services of
--------------------------------------------------------------------------------
Gord Laschinger,  who is our President and Chief Executive  Officer,  who has no
--------------------------------------------------------------------------------
prior experience in the ethanol industry.
-----------------------------------------

     While Mr.  Laschinger  has  developed key personal  relationships  with our
expected  suppliers and customers,  most of these individuals have significantly
more experience than Mr. Laschinger in the ethanol  industry.  This may place us
at a competitive disadvantage becausewe will greatly rely on these relationships
in the conduct of our  proposed  operations  and the  execution  of our business
strategies.  The loss of Mr.  Laschinger  could  also  result in the loss of our
favorable  relationships  with  one or  more  of our  suppliers  and  customers.
Although we have entered into an employment agreement with Mr. Laschinger,  that
agreement  is of limited  duration  and is subject to early  termination  by Mr.
Laschinger  under certain  circumstances.  In addition,  we do not maintain "key
person" life insurance  covering Mr. Laschinger or any other executive  officer.
The  loss of Mr.  Laschinger  could  also  significantly  delay or  prevent  the
achievement of our business objectives.

The ethanol production and marketing industry is extremely competitive.
-----------------------------------------------------------------------

                                       23
<PAGE>

     We intend to  initially  construct  ethanol  plants in Ontario,  Canada and
market our end product in those locations, as well as in the Northeastern United
States.  Many of our  significant  competitors  in the  ethanol  production  and
marketing  industry located in and around these geographic  areas,  such as ADM,
located in the midwestern  US, but which ships  throughout  North  America,  and
Conoco Oil Company, which has an ethanol plant in Sarnia, and other, all of whom
have  substantially  greater  production,  financial,  research and development,
personnel  and  marketing  resources  than we currently do. We are not currently
producing  any  ethanol.  Our  competitors,  including  but not  limited  to the
aforesaid  companies,   are  presently  producing  ethanol.  As  a  result,  our
competitors may be able to compete more  aggressively in obtaining the feedstock
necessary  to  produce   ethanol,   as  well  as  utilizing  their   established
relationships  with  prospective end users and sustain that  competition  over a
long period of time. Our lack of resources  relative to many of our  significant
competitors  may cause us to fail to  anticipate  or respond  adequately  to new
developments  and other  competitive  pressures.  This failure  could reduce our
competitiveness   and  cause  a  decline   in  our  market   share,   sales  and
profitability.

Managing the  construction  of our proposed  ethanol plants and  commencement of
--------------------------------------------------------------------------------
operations may impose a significant burden on our administrative and operational
--------------------------------------------------------------------------------
resources.
----------

     The  growth  of  our  business,  and  in  particular,   the  completion  of
construction  of  our  planned  ethanol  production  facilities,   will  require
significant investments of capital and management's close attention. Our ability
to  effectively  manage our growth will require us to  substantially  expand the
capabilities of our  administrative  and  operational  resources and to attract,
train, manage and retain qualified management,  technicians and other personnel.
We may be unable to do so. In addition,  our failure to successfully  manage our
growth could result in our sales not increasing  commensurately with our capital
investments.  If we are  unable to  successfully  manage our  growth,  we may be
unable to achieve our goals.

Our proposed business of producing and selling ethanol is subject to significant
--------------------------------------------------------------------------------
supply and demand fluctuations.
-------------------------------

     Should we become  involved in reselling  ethanol,  we  anticipate  that our
purchases  and sales of ethanol may not always match with sales and purchases of
ethanol at prevailing market prices. We may commit from time to time to the sale
of ethanol to our customers without  corresponding and commensurate  commitments
for the supply of ethanol from our  suppliers  that subject us to the risk of an
increase  in the price of  ethanol.  We may also commit from time to time to the
purchase of ethanol from our suppliers  without  corresponding  and commensurate
commitments  for the purchase of ethanol by our customers,  which subjects us to
the risk of a decline in the price of ethanol.

     We may increase  inventory  levels in anticipation of rising ethanol prices
and decrease  inventory levels in anticipation of declining ethanol prices. As a
result,  we are subject to the risk of ethanol  prices  moving in  unanticipated
directions,  which could  result in  declining  or even  negative  gross  profit
margins  for this  segment of our

                                       24
<PAGE>

business.  Accordingly,  this  segment  of our  business  would  be  subject  to
fluctuations in the price of ethanol and these  fluctuations may result in lower
or even negative gross margins and which could  materially and adversely  affect
our profitability.

     In  addition,  there  are a number of new  plants  under  construction  and
planned for  construction,  both inside and outside Ontario.  We expect existing
ethanol  plants  to  expand  by  increasing   production   capacity  and  actual
production.  Increases  in the demand for ethanol may not be  commensurate  with
increasing supplies of ethanol.  Thus,  increased production of ethanol may lead
to lower ethanol  prices.  The  increased  production of ethanol could also have
other adverse effects.  For example,  increased ethanol  production will lead to
increased  supplies of co-products from the production of ethanol,  such as DDGS
and  CO2.  Those  increased  supplies  could  lead to  lower  prices  for  those
co-products. Also, the increased production of ethanol could result in increased
demand for corn.  This could  result in higher  prices for corn and cause higher
ethanol  production costs and, in the event that we are unable to pass increases
in the price of corn to our customers,  will result in lower profits.  We cannot
predict the future price of ethanol or DDGS.  Any material  decline in the price
of ethanol, DDGS or CO2 will adversely affect our sales and profitability.

We cannot rely on long-term  ethanol  orders or commitments by our customers for
--------------------------------------------------------------------------------
protection  from the negative  financial  effects of a decline in the demand for
--------------------------------------------------------------------------------
ethanol.
--------

     The limited  certainty of ethanol  orders can make it  difficult  for us to
forecast our sales and allocate our  resources in a manner  consistent  with our
actual sales. Moreover, our expense levels are based in part on our expectations
of future sales and, if our expectations  regarding future sales are inaccurate,
we may be  unable  to  reduce  costs in a timely  manner  to  adjust  for  sales
shortfalls.  Furthermore,  because  we expect  to  depend  on a small  number of
customers for the vast majority of our sales, the magnitude of the ramifications
of these  risks is  greater  than if our sales were less  concentrated  within a
larger number of customers.  As a result of our lack of long-term ethanol orders
and   commitments,   we  may  experience  a  rapid  decline  in  our  sales  and
profitability. Ethanol markets are developing but as of the date of this report,
the market for forward contacts is not mature.

We have not conducted any significant  business  operations as yet and have been
--------------------------------------------------------------------------------
unprofitable to date.
---------------------

     Accordingly,  there is no prior operating  history by which to evaluate the
likelihood of our success or our contribution to our overall  profitability.  We
may never complete  construction of an ethanol production  facility and commence
significant  operations  or, if we do complete  the  construction  of an ethanol
production facility, it may not be successful in contributing  positively to our
profitability.

Fluctuations  in the market  price of  ethanol  may cause our  profitability  to
--------------------------------------------------------------------------------
fluctuate significantly.
------------------------

                                       25
<PAGE>

     The market  price of ethanol is dependent on many  factors,  including  the
price  of  gasoline,  which is in turn  dependent  on the  price  of  petroleum.
Petroleum  prices are highly  volatile and difficult to forecast due to frequent
changes in global politics and the world economy.  The distribution of petroleum
throughout   the  world  is  affected  by   incidents   in  unstable   political
environments,  such as Iraq, Iran, Kuwait, Saudi Arabia, the former U.S.S.R. and
other countries and regions.  The industrialized world depends critically on oil
from these areas,  and any disruption or other reduction in oil supply can cause
significant  fluctuations  in the prices of oil and gasoline.  We cannot predict
the future price of oil or gasoline and may  establish  unprofitable  prices for
the sale of  ethanol  due to  significant  fluctuations  in market  prices.  For
example,  the  price of  ethanol  declined  by  approximately  25% from its 2004
average price per gallon in only five months from January 2005 through May 2005.
In recent years, the prices of gasoline,  petroleum and ethanol have all reached
historically  unprecedented high levels. If the prices of gasoline and petroleum
decline,  we believe  that the demand for and price of ethanol may be  adversely
affected.  Ethanol has become a significant  additive to gasoline.  As a result,
its price structure generally tracks wholes unleaded gasoline.

We will be subject to extensive air, water and other  environmental  regulations
--------------------------------------------------------------------------------
in  connection  with the  construction  and  operation  of our  planned  ethanol
--------------------------------------------------------------------------------
production  facilities.  We cannot  predict  in what  manner  or to what  extent
--------------------------------------------------------------------------------
governmental  regulations  will harm our business or the ethanol  production and
--------------------------------------------------------------------------------
marketing industry in general.
------------------------------

     Our business is subject to extensive regulation by federal, state and local
governmental  agencies.  Our  business  plan  provides for the  construction  of
ethanol plants in Southeastern Canada and in upstate New York. Once these plants
have been constructed we expect to market ethanol and by products in both the US
and Canada.

     The  recent  energy  bill  signed  into law by  President  Bush  includes a
national  renewable fuels standard that requires  refiners to blend a percentage
of renewable fuels into gasoline.  Similar  regulations were recently introduced
in Ontario. If changes in government  regulations reduce the demand for ethanol,
our sales and profitability may decline.

     The  fuel  ethanol  business  benefits  significantly  from  tax  incentive
policies and  environmental  regulations  that favor the use of ethanol in motor
fuel blends in the United  States.  Currently,  a gasoline  marketer  that sells
gasoline  without ethanol must pay a federal tax of $0.18 per gallon compared to
$0.13 per gallon for gasoline that is blended with 10% ethanol.  Smaller credits
are  available  for gasoline  blended with lesser  percentages  of ethanol.  The
repeal or  substantial  modification  of the federal  excise tax  exemption  for
ethanol-blended gasoline or, to a lesser extent, other federal or state policies
and  regulations  that  encourage  the use of ethanol  could have a  detrimental
effect on the ethanol  production  and  marketing  industry and  materially  and
adversely affect our sales and profitability.

     The  production  of ethanol  involves  the  emission  of  various  airborne
pollutants,  including  particulates,  carbon  monoxide,  oxides of nitrogen and
volatile  organic  compounds.  We also may be required to obtain  various  other
water-related  permits,  such  as a water  discharge

                                       26
<PAGE>

permit and a  storm-water  discharge  permit,  a water  withdrawal  permit and a
public water supply permit. If for any reason we are unable to obtain any of the
required  permits,   construction  costs  for  our  planned  ethanol  production
facilities are likely to increase. In addition,  the facilities may not be fully
constructed at all. It is also likely that  operations at the facilities will be
governed by other regulations. Compliance with regulations may be time-consuming
and  expensive  and may delay or even prevent  sales of ethanol in Ontario or in
other jurisdictions.

     The  production and sale of ethanol is subject to regulation by agencies of
the US Federal  Government,  including,  but not limited  to, the  Environmental
Protection  Agency,  or the  EPA,  in the US as well as other  agencies  in each
jurisdiction  in which  ethanol is produced,  sold,  stored or  transported.  In
Canada,  the  production  and  sale of  ethanol  is  subject  to  regulation  by
Environment Canada, through the Canadian Environmental  Protection Act, 1999 and
by the Ontario Ministry of the Environment.  As in the United States, applicable
laws and regulations are subject to change, which could be made retroactively.

     Environmental laws and regulations that affect our operations, and that are
expected  to affect  our  planned  operations,  are  extensive  and have  become
progressively more stringent in the United State and Canada. Applicable laws and
regulations are subject to change, which could be made retroactively. Violations
of  environmental  laws and  regulations  or  permit  conditions  can  result in
substantial penalties,  injunctive orders compelling  installation of additional
controls,  civil and criminal  sanctions,  permit  revocations  and/or  facility
shutdowns.  If significant unforeseen liabilities arise for corrective action or
other compliance,  our sales and profitability could be materially and adversely
affected.

Delays in the  construction  of our planned  ethanol  production  facilities  or
--------------------------------------------------------------------------------
defects in materials and/or workmanship may occur.
--------------------------------------------------

     As of the  date of this  report,  we have  not  begun  construction  of our
proposed ethanol plants, nor do we have any commitment for the financing that is
required to commence  construction.  While we are confident that we will be able
to arrange for financing,  no assurances can be provided that we will obtain the
same,  or if we do obtain such  financing,  that we will  receive the  necessary
funds in a timely manner.

     Further,  construction  projects often involve delays in obtaining  permits
and encounter delays due to weather conditions, fire, the provision of materials
or labor or other events.  In addition,  changes in interest rates or the credit
environment or changes in political administrations at the federal,  provincial,
state or local  levels  that  result in policy  change  towards  ethanol  or our
project in particular,  could cause  construction and operation  delays.  Any of
these  events  may  adversely  affect  our  ability  to  commence  our  proposed
operations,  which may expose us to  additional  unknown risks that arise due to
such a delay.

     We may also encounter  hazardous  conditions at or near each of our planned
facility sites, including the Barrie site that may delay or prevent construction
of a particular  facility.  If we

                                       27
<PAGE>

encounter a hazardous  condition at or near a site, work may be suspended and we
may be required to correct the condition prior to continuing construction, which
will  require us to obtain  additional  financing.  The  presence of a hazardous
condition  would likely  delay  construction  of a  particular  facility and may
require  significant  expenditure of resources to correct the  condition.  If we
encounter any hazardous condition during construction,  our ability to implement
our business plan described herein may be adversely affected.

Any  significant  increase in the final  construction  cost of the facility will
--------------------------------------------------------------------------------
adversely affect our capital resources.
---------------------------------------

     We have based our estimated capital resource needs on a preliminary  design
for an ethanol production facility in Barrie Ontario.  Based on this preliminary
budget,  we estimated that the construction cost of each of our facilities to be
approximately  $160 million.  The estimated cost of these facilities is based on
preliminary  discussions and estimates,  but the final  construction cost of the
facility may be significantly higher and there can be no assurances that we will
have the ability to raise additional capital, if needed.

Our ability to implement  our proposed  business plan may be  significantly  and
--------------------------------------------------------------------------------
adversely affected by the prices and supplies of raw materials and energy.
--------------------------------------------------------------------------

     The  production of ethanol  requires a significant  amount of raw materials
and energy,  primarily corn, water,  electricity and natural gas. In particular,
we  estimate  that our Barrie  and Sarnia  ethanol  production  facilities  will
require  approximately  78 million bushels of corn each year and significant and
uninterrupted  supplies of water,  electricity  and natural  gas.  The prices of
corn, electricity and natural gas have fluctuated  significantly in the past and
may fluctuate significantly in the future. In addition,  droughts, severe winter
weather  and  other  problems  may  cause  delays or  interruptions  of  various
durations in the delivery of corn to our  facilities,  reduce corn  supplies and
increase corn prices. Local water, electricity and gas utilities may not be able
to reliably  supply the water,  electricity  and natural gas that our Barrie and
Sarnia  facilities  will need or may not be able to  supply  such  resources  on
acceptable  terms.  In addition,  if there is an  interruption  in the supply of
water or energy for any reason,  we may be required to halt ethanol  production.
We may not be able to  successfully  anticipate or mitigate  fluctuations in the
prices of raw materials  and energy  through the  implementation  of hedging and
contracting techniques. Our hedging and contracting activities may not lower our
prices of raw materials  and energy,  and in a period of declining raw materials
or energy  prices,  these hedging and  contracting  strategies may result in our
paying higher prices than our competitors. In addition, we may be unable to pass
increases in the prices of raw materials and energy to our customers. Higher raw
materials and energy prices will  generally  cause lower profit  margins and may
even result in losses.

We have not voluntarily  implemented various corporate governance  measures,  in
--------------------------------------------------------------------------------
the  absence  of  which,  stockholders  may  have  reduced  protections  against
--------------------------------------------------------------------------------
interested director transactions, conflicts of interest and other matters.
--------------------------------------------------------------------------

                                       28
<PAGE>

     We are not subject to any law, rule or regulation  requiring  that we adopt
any of the  corporate  governance  measures  that are  required  by the rules of
national securities exchanges or Nasdaq such as independent  directors and audit
committees. It is possible that if we were to adopt some or all of the corporate
governance measures, stockholders would benefit from somewhat greater assurances
that internal corporate decisions were being made by disinterested directors and
that policies had been implemented to define  responsible  conduct.  Prospective
investors should bear in mind our current lack of corporate  governance measures
in formulating their investment decisions.

We may be exposed to  potential  risks  relating to our internal  controls  over
--------------------------------------------------------------------------------
financial  reporting and our ability to have those  controls  attested to by our
--------------------------------------------------------------------------------
independent auditors.
---------------------

     As directed by Section 404 of the  Sarbanes-Oxley  Act of 2002 ("SOX 404"),
the Securities and Exchange  Commission adopted rules requiring public companies
to  include a report of  management  on the  company's  internal  controls  over
financial reporting in their annual reports, including Form 10-KSB. In addition,
the independent registered public accounting firm auditing a company's financial
statements  must also  attest to and report on  management's  assessment  of the
effectiveness  of the company's  internal  controls over financial  reporting as
well as the operating  effectiveness of the company's internal controls. We have
not yet been  subject to these  requirements.  We are  evaluating  our  internal
control  systems  in  order  to allow  our  management  to  report  on,  and our
independent auditors attest to, our internal controls, as a required part of our
annual  report on Form  10-KSB  beginning  with our  reports for the fiscal year
ended  December 31, 2007. A recent release from the SEC has indicated that newly
public  companies may be granted an additional  year,  after becoming  public to
demonstrate the  effectiveness of their internal  controls as required under SOX
404.

     While we expect to expend significant resources in developing the necessary
documentation and testing  procedures  required by SOX 404, there is a risk that
we will not comply with all of the  requirements  imposed  thereby.  At present,
there is no  precedent  available  with  which to measure  compliance  adequacy.
Accordingly,  there can be no positive assurance that we will receive a positive
attestation from our independent auditors.

     In the event we identify significant deficiencies or material weaknesses in
our internal  controls  that we cannot  remediate  in a timely  manner or we are
unable to receive a positive  attestation  from our  independent  auditors  with
respect to our internal  controls,  investors and others may lose  confidence in
the reliability of our financial  statements and our ability to obtain equity or
debt financing could suffer.

RISKS RELATED TO OUR COMMON STOCK

There is no trading market for our securities and there can be no assurance that
--------------------------------------------------------------------------------
such a market will develop in the future.
-----------------------------------------

                                       29
<PAGE>

     We have filed a registration statement on Form SB-2 with the Securities and
Exchange  Commission  pursuant  to the  Securities  Act  of  1933,  as  amended,
registering those shares that we issued in our recent private  offering.  If and
when our  registration  statement  is deemed  effective by the SEC, we intend to
undertake  efforts  to have our  common  stock  listed  for  trading  on the OTC
Electronic  Bulletin  Board  operated by the National  Association of Securities
Dealers,  Inc.  There is no assurance  that our  application  for listing on the
OTCBB will be  approved,  or if so approved  that a market  will  develop in the
future  or, if  developed,  that it will  continue.  In the  absence of a public
trading  market,  an investor may be unable to liquidate  his  investment in our
company.

We do not have significant  financial  reporting  experience,  which may lead to
--------------------------------------------------------------------------------
delays in filing  required  reports with the Securities and Exchange  Commission
--------------------------------------------------------------------------------
and suspension of quotation of our  securities on the OTCBB,  which will make it
--------------------------------------------------------------------------------
more difficult for you to sell your securities.
-----------------------------------------------

     If we are  successful in listing our common stock for trading on the OTCBB,
of which there can be no assurance, the OTCBB limits quotations to securities of
issuers that are current in their reports filed with the Securities and Exchange
Commission.  These limitations may be impediments to our quotation on the OTCBB.
Because  we do not  have  significant  financial  reporting  experience,  we may
experience  delays in filing  required  reports with the Securities and Exchange
Commission  following the  effectiveness of the registration  statement to which
this prospectus is a part.  Because  issuers whose  securities are qualified for
quotation  on the OTCBB are required to file these  reports with the  Securities
and Exchange Commission in a timely manner, the failure to do so may result in a
suspension of trading or delisting from the OTCBB.

If we are successful in listing our common stock for trading on the OTCBB, there
--------------------------------------------------------------------------------
are no automated systems for negotiating  trades on the OTCBB and it is possible
--------------------------------------------------------------------------------
for the price of a stock to go up or down  significantly  during a lapse of time
--------------------------------------------------------------------------------
between  placing a market order and its execution,  which may affect your trades
--------------------------------------------------------------------------------
in our securities.
------------------

     Because there are no automated systems for negotiating trades on the OTCBB,
they  are  conducted  via  telephone.  In  times of  heavy  market  volume,  the
limitations of this process may result in a significant  increase in the time it
takes to execute investor orders. Therefore, when investors place market orders,
an order to buy or sell a specific number of shares at the current market price,
it is possible  for the price of a stock to go up or down  significantly  during
the lapse of time between placing a market order and its execution.

If our stock  trades  below  $5.00 per share,  our stock would be  considered  a
--------------------------------------------------------------------------------
"penny stock" which can adversely affect its liquidity.
-------------------------------------------------------

     If and when trading  commences and the trading price of our Common Stock is
less than $5.00 per share, our Common Stock would be considered a "penny stock,"
and  trading in our Common  Stock would be subject to the  requirements  of Rule
15g-9 under the Securities

                                       30
<PAGE>

Exchange Act of 1934. Under this rule,  broker/dealers who recommend  low-priced
securities to persons other than established  customers and accredited investors
must satisfy special sales practice requirements. The broker/dealer must make an
individualized  written suitability  determination for the purchaser and receive
the purchaser's written consent prior to the transaction.

     SEC regulations also require  additional  disclosure in connection with any
trades  involving a "penny  stock,"  including the delivery,  prior to any penny
stock transaction,  of a disclosure  schedule  explaining the penny stock market
and its associated  risks.  These  requirements  severely limit the liquidity of
securities in the secondary  market  because few broker or dealers are likely to
undertake these compliance  activities.  In addition to the applicability of the
penny stock  rules,  other risks  associated  with trading in penny stocks could
also be price fluctuations and the lack of a liquid market.

"Penny Stock" rules may make buying or selling our securities difficult.
------------------------------------------------------------------------

     The  Securities  and  Exchange  Commission  has  adopted  regulations  that
generally define a penny stock to be any equity security that has a market price
of less than $5.00 per share, subject to certain exceptions. These rules require
that any broker-dealer who recommends our securities to persons other than prior
customers  and  accredited  investors  must,  prior to the sale,  make a special
written suitability  determination for the purchaser and receive the purchaser's
written agreement to execute the transaction.  Unless an exception is available,
the regulations require the delivery, prior to any transaction involving a penny
stock, of a disclosure  schedule explaining the penny stock market and the risks
associated with trading in the penny stock market.  In addition,  broker-dealers
must disclose  commissions  payable to both the broker-dealer and the registered
representative  and  current  quotations  for the  securities  they  offer.  The
additional  burdens  imposed  upon   broker-dealers  by  such  requirements  may
discourage  broker-dealers  from  recommending  transactions  in our securities,
which could  severely  limit the liquidity of our  securities  and  consequently
adversely affect the market price for our securities.

We do not  anticipate  payment  of  dividends,  and  investors  will  be  wholly
--------------------------------------------------------------------------------
dependent upon the market for the Common Stock to realize  economic benefit from
--------------------------------------------------------------------------------
their investment.
-----------------

     As holders of our  Securities,  you will only be entitled to receive  those
dividends that are declared by our board of directors out of surplus.  We do not
expect to have surplus available for declaration of dividends in the foreseeable
future. Indeed, there is no assurance that such surplus will ever materialize to
permit  payment of dividends to you as holders of the  Securities.  The board of
directors  will  determine  future  dividend  policy  based upon our  results of
operations,  financial condition, capital requirements,  reserve needs and other
circumstances.

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<PAGE>

Any  adverse  effect on the  market  price of our  common  stock  could  make it
--------------------------------------------------------------------------------
difficult for us to raise additional  capital through sales of equity securities
--------------------------------------------------------------------------------
at a time and at a price that we deem appropriate.
--------------------------------------------------

     If and when our registration  statement declared effective,  holders of our
shares  of  common  stock  that  are  registered  pursuant  to our  registration
statement will be permitted,  subject to few  limitations,  to freely sell these
shares of common stock.  At that time,  sales of  substantial  amounts of common
stock,  including  shares issued upon the exercise of stock options or warrants,
or in  anticipation  that such sales could occur,  may  materially and adversely
affect prevailing market prices for our common stock.

The market price of our common may fluctuate significantly in the future.
-------------------------------------------------------------------------

     If our Common  Stock is  approved  for  trading,  of which  there can be no
assurance, the market price of our common stock may fluctuate in response to one
or more of the following factors, many of which are beyond our control:

     o    the volume and timing of the receipt of orders for ethanol  from major
          customers;

     o    competitive pricing pressures;

     o    our ability to produce,  sell and deliver ethanol on a  cost-effective
          and timely basis;

     o    our inability to obtain construction,  acquisition,  capital equipment
          and/or working capital financing;

     o    the  introduction  and announcement of one or more new alternatives to
          ethanol by our competitors;

     o    changing conditions in the ethanol and fuel markets;

     o    changes in market valuations of similar companies;

     o    stock market price and volume fluctuations generally;

     o    regulatory developments;

     o    fluctuations in our quarterly or annual operating results;

     o    additions or departures of key personnel; and

     o    future sales of our common stock or other securities.

                                       32
<PAGE>

     Furthermore, adverse economic conditions in Ontario and other jurisdictions
could have a negative  impact on our results of  operations.  Demand for ethanol
could also be adversely  affected by a slow-down in overall demand for oxygenate
and  gasoline  additive  products.  The  levels of our  ethanol  production  and
purchases  for resale will be based upon  forecasted  demand.  Accordingly,  any
inaccuracy in  forecasting  anticipated  revenues and expenses  could  adversely
affect our business.  Furthermore,  we recognize  revenues from ethanol sales at
the time of delivery.  The failure to receive  anticipated orders or to complete
delivery  in  any  quarterly  period  could  adversely  affect  our  results  of
operations for that period.  Quarterly results are not necessarily indicative of
future  performance for any particular period, and we may not experience revenue
growth or profitability on a quarterly or an annual basis.

     The  price at which you  purchase  shares  of our  common  stock may not be
indicative  of the price that will  prevail in the  trading  market.  You may be
unable to sell your  shares of common  stock at or above  your  purchase  price,
which may result in substantial losses to you and which may include the complete
loss of your investment.  In the past,  securities  class action  litigation has
often  been  brought  against  a  company   following  periods  of  stock  price
volatility. We may be the target of similar litigation in the future. Securities
litigation could result in substantial costs and divert  management's  attention
and our resources away from our business. Any of the risks described above could
adversely  affect our sales and  profitability  and also the price of our common
stock.

ITEM 3.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.

     We maintain  disclosure controls and procedures that are designed to ensure
that  information  required to be disclosed in our reports filed pursuant to the
Securities  Exchange Act of 1934, as amended (the "Exchange  Act"), is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Securities and Exchange  Commission's rules,  regulations and related forms, and
that such  information  is  accumulated  and  communicated  to the our principal
executive  officer and principal  financial  officer,  as appropriate,  to allow
timely decisions regarding required disclosure.

     As of  September  30,  2006,  we  carried  out  an  evaluation,  under  the
supervision  and  with  the  participation  of  our  management,  including  our
principal   executive   officer  and  principal   financial   officer,   of  the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures.  Based on this  evaluation,  our  principal  executive  officer  and
principal   financial  officer  concluded  that  our  disclosure   controls  and
procedures were effective.

CHANGES IN INTERNAL CONTROLS.

     There have been no changes in our  internal  controls  or in other  factors
that could significantly affect these controls and procedures during the quarter
ended September 30, 2006.

                                       33
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS - None

ITEM 2.  CHANGES IN SECURITIES.

     During  the  three  month  period  ended  September  30,  2006,  we sold an
aggregate of 3,921,500  shares of our Common Stock to 47 "accredited  investors"
(as that term is defined in both the  Canadian  and U.S.  securities  laws) at a
price of $1.00 per share and  received  aggregate  net  proceeds  of  $3,846,500
therefrom.

     We relied upon the exemption from registration provided by Regulation S and
Regulation D promulgated under the Securities Act of 1933, as amended,  to issue
these securities.

     In September 2006, two of our former officers and/or directors  voluntarily
surrendered  150,000 and 50,000 shares,  respectively,  of our Common Stock that
had  been  previously  issued  to  them  back  to us for  cancellation.  Also in
September 2006, one of these  individuals also agreed to surrender an additional
150,000  shares  that had been  previously  issued to him,  although  he has not
formally executed the documentation to effectuate such surrender but did execute
the  consent  of the  board  of  directors  authorizing  the  acceptance  of the
surrender and cancellation of such shares.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None

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

     None

ITEM 5.  OTHER INFORMATION - None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K -

     (a)    Exhibits

     31.1   Certification of Chief Executive Officer Pursuant to Section 302 of
            the Sarbanes-Oxley Act of 2002.

     31.2   Certification of Chief Financial Officer Pursuant to Section 302 of
            the Sarbanes-Oxley Act of 2002.

                                       34
<PAGE>

     32.1   Certification of Chief Executive Officer Pursuant to Section 906 of
            the Sarbanes-Oxley Act of 2002.

     32.2   Certification of Chief Financial Officer Pursuant to Section 906 of
            the Sarbanes-Oxley Act of 2002.

     (b) Reports on Form 8-K.

     On July 21, 2006,  as amended  August 3 2006, we filed a report on Form 8-K
advising that  effective  July 19, 2006, the firm of Raich Ende Malter & Co. LLP
("REM"),  our  independent  accountant  during the period from November 29, 2004
(inception)  through July 18, 2006,  was  dismissed.  Effective July 19, 2006 we
retained the firm of KPMG as our independent accountant, to review our unaudited
financial  statements for the interim periods ended June 30, 2006, September 30,
2006, and to audit our financial  statement for our fiscal year ending  December
31, 2006,  and include  such report as part of our annual  report on Form 10-KSB
for our fiscal year ending December 31, 2006.

     On August 7, 2006,  we filed a report on Form 8-K advising  that  effective
July 24, 2006, we entered into a Project Development Agreement (the "Agreement")
with Delta-T Corporation, Williamsburg, Virginia, ("Delta"), wherein Delta shall
provide us professional advice,  business and technical information,  design and
engineering and related  services in order to assist us in assembling all of the
information,  permits, agreements and resources necessary for construction of an
ethanol  plant  having the  capacity to produce 100 million  gallons per year in
Barrie, Ontario, Canada.

     This report also advised that we had  retained  Steven  Reader as our Chief
Operating Officer.

     On September 12, 2006, we filed a report on Form 8-K,  advising of the sale
of unregistered  shares of our common stock relevant to the private  offering of
our common stock  described  above under  "Liquidity and Capital  Resources," as
well as under Part II, Item 2, "Changes in Securities," above. In addition, this
report  disclosed of certain changes in our management  wherein we increased the
number of our Board of  Directors  from three to six members,  Mr.  Joseph Galda
resigned as a director of our Company  and Messrs.  Andrew  Telsey,  Paul Durst,
Robert Richards and Frank F. Klees were appointed as directors,  with Mr. Telsey
also assuming the position of our Corporate Secretary.

Subsequent Events

     On October 31, 2006,  we filed a report on Form 8-K advising  that our Chef
Financial Officer, Ciaran Griffin, had resigned.

                                       35
<PAGE>

     On November  14,  2006,  we filed a report on Form 8-K,  advising  that Mr.
Richard Smith had been appointed to the position of Chief Financial Officer on a
probationary basis, replacing Mr. Griffin. In addition, this report also advised
that (i) we had  elected to extend this  offering  and (ii) the number of shares
and proceeds  received by us was  incorrectly  stated in our  previous  Form 8-K
report.  This  offering  has been closed and the  information  contained in this
report relating to our private offering is current and correct.




                                       36
<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements  of Section 12 of the Securities and Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                   NORTHERN ETHANOL, INC.
                                   (Registrant)

Dated:  November 30, 2006


                                   By:s/Gordon Laschinger
                                      ------------------------------------------
                                      Gordon Laschinger, Chief Executive Officer


                                       37