UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC  20549





FORM
10-KSB




(Mark
One)






x
            Annual Report
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for
      theFiscal
      Year Ended December 31, 2007





or






o
            Transition Report Pursuant to
      Section 13 or 15(d) of the Securities Exchange Act of 1934 for theTransition
      period from ______ to ______




Commission
File Number:  000-26017





INTERNATIONAL
STAR, INC.


(Exact
Name of Small Business Issuer as Specified in Its Charter)





Nevada
            86-0876846(State
      or other jurisdiction of
            (I.R.S.
      Employerincorporation
      or organization)
            Identification
      No.)1818 Marshall Street,
      Shreveport, LA
            71101(Address
      of principal executive offices)
            (Zip
      Code)





(318)
464-8687


(Registrant’s
telephone number, including area code)




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





Securities
registered pursuant to Section 12(g) of the Act:





Common
Stock, par value $0.001 per share





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




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 preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.    Yes  x   No 
o




Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  o




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


Yes  o   No 
x




The
issuer’s revenues for the year ended December 31, 2007, were $0.




Based on
the closing sale price of $0.010 on March 17, 2008, the aggregate market value
of the voting stock held by non-affiliates of the registrant was
$2,733,623.




As of
March 17, 2008, there were 273,362,274 shares of the registrant’s Common Stock
issued and outstanding.




Transitional
Small Business Disclosure Format (check one):    Yes 
oNo  x











INTERNATIONAL
STAR, INC.


Form
10-KSB


For
the Fiscal Year Ended December 31, 2007





TABLE
OF CONTENTS





PART
      I
            1ITEM 1. BUSINESS
            2ITEM 2. DESCRIPTION OF
      PROPERTY
            5ITEM 3. LEGAL
      PROCEEDINGS
            7ITEM 4. SUBMISSION OF
      MATTERS TO A VOTE OF SECURITY HOLDERS
            7PART
      II
            8ITEM 5.           
      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            8ITEM
      6.           
      MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            10ITEM
      7.            FINANCIAL
      STATEMENTS
            14ITEM
      8.          
       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE
            14ITEM
      8A.         CONTROLS AND
      PROCEDURES
            14ITEM
      8B.         OTHER
      INFORMATION
            15PART
      III
            15ITEM 9. DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
      COMPLIANCE
              WITH SECTION
      16(a) OF THE EXCHANGE ACT
            15ITEM
      10.          EXECUTIVE
      COMPENSATION
            18ITEM
      11.          SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
            20ITEM
      12.          CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
            21ITEM
      13.          EXHIBITS
            23ITEM
      14.          PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
            26





PART
I





FORWARD LOOKING STATEMENTS





This Form
10-KSB, the other reports, statements, and information that we have previously
filed or that we may subsequently file with the Securities and Exchange
Commission (“SEC”) and public announcements that we have previously made or may
subsequently make include, may include, incorporate by reference or may
incorporate by reference certain statements that may be deemed to be
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995.  These forward-looking statements
relate to such matters as, among other things, our anticipated financial
performance, business prospects, technological developments, new products,
future distribution or license rights, international expansion, possible
strategic alternatives, new business concepts, capital expenditures, consumer
trends and similar matters.





Forward
looking statements necessarily involve known and unknown risks, uncertainties
and other factors that may cause our actual results, levels of activity,
performance, or achievements to be materially different from any future results,
levels of activity, performance, or achievement expressed or implied by such
forward-looking statements.  In some cases, you can identify
forward-looking statements by terminology such as “may,” “will,” “should,”
“could,” “intend,” “expect,” “anticipate,” “assume,” “hope,” “plan,” “believe,”
“seek,” “estimate,” “predict,” “approximate,” “potential,” “continue,” or the
negative of such terms.  Statements including these words and
variations of such words, and other similar expressions, are forward-looking
statements.  Although we believe that the expectations reflected in
the forward-looking statements are reasonable based upon our knowledge of our
business, we cannot absolutely predict or guarantee our future results, levels
of activity, performance, or achievements.  Moreover, neither we nor
any other person assumes responsibility for the accuracy and completeness of
such statements.





We note
that a variety of factors could cause our actual results and experience to
differ materially from the anticipated results or other expectations expressed
in our forward-looking statements.  The risks and uncertainties that
may affect the operations, performance, development and results of our business
include, but are not limited to, factors described elsewhere in this Annual
Report on Form 10-KSB and the following:  changes in consumer spending
patterns; changes in consumer preferences and overall economic conditions; the
impact of competition and pricing; the financial condition of the suppliers and
manufacturers from whom we source our merchandise; economic and political
instability in foreign countries or restrictive actions by the governments of
foreign countries in which suppliers and manufacturers from whom we source
products are located or in which we may actually conduct or intend to expand our
business; changes in tax laws; general economic, business and social conditions
in the United States and in countries from which we may source products,
supplies or customers; the costs of complying with changes in applicable labor
laws or requirements, including without limitation with respect to health care;
the costs of complying with changes in applicable environmental or land use laws
or regulations; changes in the costs of interest rates, insurance, shipping and
postage, energy, fuel and other business utilities; the reliability, longevity
and performance of our licensors and others from whom we derive intellectual
property or distribution rights in our business; the risk of non-payment by,
and/or insolvency or bankruptcy of, customers and others owing indebtedness to
us; threats or acts of terrorism or war; and strikes, work stoppages or slow
downs by unions affecting businesses which have an impact on our ability to
conduct our own business operations.





Forward-looking
statements that we make, or that are made by others on our behalf with our
knowledge and express permission, are based on a knowledge of our business and
the environment in which we operate, but because of the factors listed above,
actual results may differ from those in the forward-looking
statements.  Consequently, these cautionary statements qualify all of
the forward-looking statements we make herein.  We cannot assure the
reader that the results or developments anticipated by us will be realized or,
even if substantially realized, that those results or developments will result
in the expected consequences for us or affect us, our business or our operations
in the way we expect.  We caution readers not to place undue reliance
on these forward-looking statements, which speak only as of their dates, or on
any subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf which are expressly qualified in their entirety by
these cautionary statements.  We do not undertake any obligation to
release publicly any revisions to such forward-looking statements to reflect
events or circumstances after the date hereof or thereof or to reflect the
occurrence of unanticipated events.





1




ITEM
1.                      BUSINESS





Our
Background and Business Development





International
Star, Inc. (“us,” “we,” “our” or the “Company”) was organized under the laws of
the State of Nevada on October 28, 1993, as Mattress Showrooms,
Inc.  In 1997, we changed our corporate name to International Star,
Inc. and became engaged in the business of construction, sale and operation of
state of the art waste management systems, specializing in turnkey systems for
management of hospital, industrial, petroleum, chemical and municipal solid
waste collection systems.  Despite our efforts, we were unable to
develop this business beyond the start-up stage.  Following our
unsuccessful venture in waste management, we refocused our business efforts on
mineral exploration in 1998.  Currently, we are primarily engaged in
the acquisition and exploration of precious metals mineral
properties.  Since 1998, we have examined various mineral properties
prospective for precious metals and minerals and have acquired interests in
those we believe may contain precious metals and minerals.  Our
properties are located in Arizona.  We have not established that any
of our properties contain reserves.  A reserve is that part of a
mineral deposit which could be economically and legally extracted or produced at
the time of the reserve determination.  Further exploration will be
needed before a final determination can be made whether any property is
economically and legally feasible.  Therefore, at present we have no
reserves and no income from mineral production.





On March
2, 1998, we entered into a mining property lease agreement with James R. Ardoin
pursuant to which Mr. Ardoin leased to our Company eight mineral claims located
in the Detrital Wash area around mile marker 22 on Highway 93, Mohave County,
Arizona, for the purpose of exploring for minerals, and if minerals are found on
the lands leased to us pursuant to this lease, for the extraction, treatment,
and sale of such minerals.  We agreed to pay Mr. Ardoin a production
royalty equal to two percent (2%) of net smelter returns (“NSR”) (as defined in
the lease).  The term of this lease is for 20 years, with an option to
renew for a successive 20-year term.  In July 2004, we acquired
additional claims totaling approximately 20,000 acres adjacent to our original
claims pursuant to an exploration rights agreement with the holders of the
claims.  The agreement granted us exploration rights on the claims,
and first right of refusal to enter into a mineral lease agreement in exchange
for a 0.25% NSR payable to the claimholders should the Company bring the
property into production.  These claims provide the Company an
aggregate of approximately 21,000 acres in the Detrital Wash area upon which we
are conducting mineral exploration (collectively, the “Detrital Wash
Property”).





On March
26, 2001, we purchased from Gold Standard Mines, Inc. 51 lode mining claims
located in the Wikieup mining district, Mohave County, Arizona (collectively,
the “Wikieup Property”) and the exclusive rights to an extraction process for
the recovery of precious metals from the Wikieup Property that was developed by
the claim owner.  A lode mining claim is a claim asserting the right
to extract minerals from a parcel of federal land where deposits of minerals
encased in or surrounded by hard rock, such as veins, fissures, lodes and
disseminated ore bodies, have been discovered.  We have not had the
extraction process for the Wikieup Property verified by an independent
source.  As consideration for the claims, we issued 1,000,000 shares
of our restricted common stock having an aggregate value of $400,000 as of the
date of the acquisition.  In exchange, we received a notarized
quitclaim deed granting us all rights, interest and title to 51 lode mining
claims.  The deed was subsequently recorded at the United States
Bureau of Land Management office in Phoenix, Arizona, and at Mohave County in
Kingman, Arizona.





On
October 15, 2001, we announced the formation of a wholly owned subsidiary, Qwik
Track, Inc., to engage in web-based information distribution services and to
provide timely and accurate thoroughbred handicapping analytical data and
statistical information to the international account wagering
market.  However, due to our limited finances and lack of funding, we
have suspended the further development of Qwik-Track, Inc. for an indefinite
period.





Effective
October 1, 2002, we acquired Pita King Bakeries International, Inc. (“Pita
King”). Up until we dissolved our business relationship with Pita King, this
company operated as our wholly-owned subsidiary engaged in the production and
marketing of a variety of pita breads and chips.  However, effective
January 1, 2004, we and the principals of Pita King mutually agreed to dissolve
our business relationship pursuant to a Mutual Agreement to Dissolve Business
Relationship (the “Dissolution Agreement”).  Pursuant to the terms of
the Dissolution Agreement, we forgave a debt owing from Pita King to our Company
in the aggregate amount of $35,000, and in exchange, the principals and officers
of Pita King agreed to return 4,000,000 shares of our common stock that was
issued in connection with our acquisition of Pita King.  We agreed
that the remaining 139,500 shares of our common stock that was issued to the
original shareholders of Pita King in connection with the acquisition would
remain the property of such shareholders and would be unaffected by the
Dissolution Agreement.  As a result, Pita King no longer operates as
our wholly-owned subsidiary.





2




On
January 10, 2006, we entered into a joint venture agreement with Resolve Capital
Funding Corporation, Inc. (“Resolve”) for the formation of Star-Resolve Detrital
Wash, LLC to engage in the development and commercial exploitation of the
Detrital Wash Property.  The joint venture agreement provided that
each of Resolve and our Company would have a 50% membership interest in
Star-Resolve Detrital Wash, LLC.  As our capital contribution to the
joint venture, upon the formation of Star-Resolve Detrital Wash, LLC, we were
required to contribute our mineral rights in the Detrital Wash Property under a
mining property lease.  As Resolve’s capital contribution to
Star-Resolve Detrital Wash, LLC, Resolve was required to contribute 600,000
Canadian Dollars (equivalent to approximately $598,620 translated into U.S.
Dollars using the exchange rate as of March 17, 2008) within 60 to 90 days of
the joint venture’s formation.  In addition, Resolve was required to
use its best efforts to manage Star-Resolve Detrital Wash, LLC, including,
without limitation, providing Star-Resolve Detrital Wash, LLC with access to its
industry related contracts and its expertise in the commercial exploitation of
mineral rights.  Resolve was to be the exclusive managing member of
Star-Resolve Detrital Wash, LLC.  Although the LLC was formed pursuant
to the joint venture agreement, Resolve did not make the required cash
contribution and, as of the date of filing of this report, remains in default
under the joint venture agreement.  Our management has suspended
further pursuit of the joint venture and its efforts to obtain a resolution to
Resolve’s breach of the joint venture agreement.





Exploration
Planning – Speculative Nature of Mineral Exploration





Exploration
for and production of minerals is highly speculative and involves greater risks
than exist in many other industries.  Many exploration programs do not
result in the discovery of minerals and any mineralization discovered may not be
of a sufficient quantity or quality to be profitably mined.  Also,
because of the uncertainties in determining metallurgical amenability of any
minerals discovered, the mere discovery of mineralization may not warrant the
mining of the minerals on the basis of available technology.





Although
we have processed and tested mineralized materials and produced very small
amounts of precious metals on a testing basis (these have come from the testing
of mineralized material from both the Detrital Wash and Wikieup Properties), our
decision as to whether any of the mineral properties we now hold, or which we
may acquire in the future, contain commercially mineable deposits, and whether
such properties should be brought into production, will depend upon the results
of the exploration programs and independent feasibility analysis and the
recommendation of engineers and geologists.  The decision will involve
the consideration and evaluation of a number of significant factors, including,
but not limited to:





·
            the
      ability to obtain all required
permits;




·
            costs
      of bringing the property into production, including exploration and
      development or preparation of feasibility studies and construction of
      production facilities;




·
            availability
      and costs of financing;




·
            ongoing
      costs of production;




·
            market
      prices for the metals to be produced;
and




·
            the
      existence of reserves or mineralization with economic grades of metals or
      minerals.





We cannot
be certain that any of our properties contain commercially mineable mineral
deposits, and no assurance can be given that we will ever generate a positive
cash flow from production operations on such properties.





3




Regulation





Our
exploration activities are subject to various federal, state and local laws and
regulations governing such matters as:





·
            prospecting;




·
            development;




·
            taxes;




·
            labor
      standards;




·
            waste
      disposal;




·
            occupational
      safety and health;




·
            protection
      of the environment;




·
            reclamation
      of the environment; and




·
            toxic
      substances.





We
believe we are currently in substantial compliance with any such regulations
that apply to us.  However, we may not be able to anticipate all
liabilities that may arise in the future under existing regulations, or the
costs of compliance.  If we are not in compliance, we may be subject
to fines, clean-up orders, restrictions on our operations or other
penalties.





Federal,
state and local provisions regulating the discharge of material into the
environment, or otherwise relating to the protection of the environment, such as
the Clean Air Act, Clean Water Act, the Resource Conservation and Recovery Act,
and the Comprehensive Environmental Response, Compensation and Liability Act
affect mineral operations.  For exploration and mining operations,
applicable environmental regulation includes a permitting process for mining
operations, an abandoned mine reclamation program and a permitting program for
industrial development and siting.  Other non-environmental
regulations can impact exploration and mining operations and indirectly affect
compliance with environmental regulations.  For example, a state
highway department may have to approve a new access road to make a project
accessible at lower costs, but the new road itself may raise environmental
issues.  Compliance with these laws, and any regulations, can make the
development of mining claims prohibitively expensive, thereby impeding the sale
or lease of properties, or curtailing profits or royalties, which might have
been received.  We cannot anticipate what the further costs and/or
effects of compliance with any environmental laws might be.





Facilities





We own no
production, laboratory or storage facilities and rent space as appropriate when
necessary.  Our executive offices are located at 1818 Marshall Street,
Shreveport, Louisiana 71101.





Employees





As of
December 31, 2007, we had no employees other than our executive officers, nor
any plans to recruit employees within the next twelve
months.  However, employees, consultants and expertise will be added
to the Company as management deems necessary and when financing
permits.





Competition





The
business of mineral exploration is highly competitive, and tends to be dominated
by a limited number of major mining companies.  Inasmuch as we have
exclusive exploration rights to the properties that are the targets of our
current exploration activities, we do not compete directly against any
particular firm for sales or market share.  However, many of the human
and physical resources we may require, such as engineering professionals,
managers, skilled equipment operators, and metallurgical and extractive
processes and equipment, among others, are also sought by companies with
substantially greater financial resources than we possess, which places us at a
competitive disadvantage in obtaining such resources for our own
use.  Accordingly, such competition may make our exploration
activities more difficult than for a larger, more substantial
company.





4




Subsidiaries





Qwik Track,
Inc.





On
October 15, 2001, we organized Qwik Track, Inc. as our wholly-owned subsidiary
to operate as a web-based service business providing the wagering enthusiast
with thoroughbred handicapping, analytical data and statistical information for
racetrack wagering over the Internet.  As of November 2003, we
suspended business development of our Qwik Track subsidiary in order to focus
our limited resources on exploring our mineral properties.  As a
result, Qwik Track, Inc. is not currently an active business
entity.  At the time of this filing, we do not have plans to
reactivate this subsidiary.





Pita King Bakeries
International, Inc.





Effective
October 1, 2002, we acquired Pita King Bakeries International, Inc. (“Pita
King”) and appointed Hassan Alaeddine to our Board of
Directors.  Until we dissolved our business relationship with Pita
King, this subsidiary produced and marketed a variety of pita breads and
chips.  However, effective January 1, 2004, we and the principals of
Pita King mutually agreed to dissolve our business relationship pursuant to a
Mutual Agreement to Dissolve Business Relationship (the “Dissolution
Agreement”).  Pursuant to the terms of the Dissolution Agreement, we
forgave a debt owing from Pita King to our Company in the aggregate amount of
$35,000, and in exchange, the principals and officers of Pita King agreed to
return 4,000,000 shares of our common stock that were issued in connection with
our acquisition of Pita King.  We agreed that the remaining 139,500
shares of our common stock that were issued to the original shareholders of Pita
King in connection with the acquisition would remain the property of such
shareholders and would be unaffected by the Dissolution Agreement.  As
of January 1, 2004, Pita King no longer operates as our wholly-owned
subsidiary.  We recognized a loss of $99,472 on the divestiture of
Pita King during 2004.





Star-Resolve Detrital Wash,
LLC





On
January 10, 2006, we entered into a joint venture agreement with Resolve Capital
Funding Corporation, Inc. (“Resolve”) for the formation of Star-Resolve Detrital
Wash, LLC to engage in the development and commercial exploitation of the
Detrital Wash Property.  The joint venture agreement provided that
each of Resolve and our Company would have a 50% membership interest in
Star-Resolve Detrital Wash, LLC.  As our capital contribution to the
joint venture, upon the formation of Star-Resolve Detrital Wash, LLC, we were
required to contribute our mineral rights in the Detrital Wash Property under a
mining property lease.  As Resolve’s capital contribution to
Star-Resolve Detrital Wash, LLC, Resolve was required to contribute 600,000
Canadian Dollars (equivalent to approximately $598,620 translated into U.S.
Dollars using the exchange rate as of March 17, 2008) within 60 to 90 days of
the joint venture’s formation.  In addition, Resolve was required to
use its best efforts to manage Star-Resolve Detrital Wash, LLC, including,
without limitation, providing Star-Resolve Detrital Wash, LLC with access to its
industry related contracts and its expertise in the commercial exploitation of
mineral rights.  Resolve was to be the exclusive managing member of
Star-Resolve Detrital Wash, LLC.  Although the LLC was formed pursuant
to the joint venture agreement, Resolve did not make the required cash
contribution and, as of the date of filing of this report, remains in default
under the joint venture agreement.  Our management has suspended
further pursuit of the joint venture and its efforts to obtain a resolution to
Resolve’s breach of the joint venture agreement.  As a result,
Star-Resolve Detrital Wash, LLC is not currently an active business
entity.  At the time of this filing, we do not have plans to seek
reactivation of this subsidiary.





ITEM
2. DESCRIPTION OF
PROPERTY





We
currently hold interests in two properties that we believe show potential for
mineral development.  Both properties are unpatented mining claims
located on federal public land managed by the United States Department of
Interior, Bureau of Land Management (“BLM”).  We are obligated to pay
a maintenance fee of $125 per claim per year to the BLM.





Unpatented
mining claims are “located” or “staked” by individuals or companies on
particular parcels of federal public land upon which the individual or company
asserts the right to extract and develop a mineral deposit.  Mining
claims may be one of two types: lode and placer.  Lode claims are
claims on land where mineral deposits have been discovered encased in or
surrounded by hard rock, such as veins, fissures, lodes and disseminated ore
bodies.  Placer claims are claims upon land containing deposits of
loose, unconsolidated material, such as gravel beds, or containing certain
consolidated sedimentary deposits lying at the surface.  Federal law
limits each lode claim to no more than 1,500 feet along the length of the
deposit and no more than 300 feet to either side of the center line of the
deposit.  A placer claim may be up to 20 acres for a single individual
or corporation, and up to as many as 160 acres for an association of at least
eight owners.





5




If the
statutes and regulations for the location and maintenance of a mining claim are
complied with, the locator obtains a valid possessory right to the contained
minerals.  Failure to pay maintenance fees or make the required
filings (such as described above) may render the mining claim void or
voidable.  We believe we have valid claims, but, because mining claims
are self-initiated and self-maintained, it is impossible to ascertain their
validity solely from public real estate records.  If the government
challenges the validity of an unpatented mining claim, we would have the burden
of proving the present economic feasibility of mining minerals located on the
claims.





Property
title uncertainties exist in the mining industry.  We believe that we
have good title to our properties; however, defects in such title could have a
material adverse effect on us.  We have investigated our rights to
explore, exploit and develop our various properties in manners consistent with
industry practice, and except as described below, to the best of our knowledge,
those rights are in good standing.  However, we cannot assure that the
title to our properties will not be challenged or impugned by third parties or
governmental agencies or that
third parties have not staked claims, or will not in the future stake claims, on
lands for which we believe we have good title to existing
claims.  In addition, we cannot assure that the properties in
which we have an interest are not subject to prior unregistered
agreements.  Any such undetected defects could cause us to lose our
rights to the property or to incur substantial expense in defending our
rights.




We have
reason to believe that a third party may have staked placer claims on several of
our existing placer claims in our Detrital Wash Property.  We are
currently in the process of ascertaining our rights with respect to these
properties.
  Detrital
Wash, Mohave County, Arizona Property





Property and
Location





The
Detrital Wash Property consists of approximately 21,000 acres of land located
approximately 56 miles from Las Vegas, Nevada, and 22 miles south of the Hoover
Dam on U.S. Highway 93, Mohave County, Arizona.  The property is
easily accessed by partially paved entry off Highway 93 and has availability to
electricity and water.





The
Detrital Wash Property is comprised of both placer and lode mining
claims.  In March 1998, we entered into a mineral lease with James R.
Ardoin for eight placer claims located one mile east of mile marker 22 on
Highway 93, lying in Section 36, Township 28 North, Range 21 West, Mohave
County, Arizona.  The lease does not require any minimum payments, and
charges a royalty of 2% of net smelter returns (“NSR”).  The term of
the lease is for 20 years with an option to renew for an additional, successive
20-year term.





In July
2004, we entered into an exploration rights agreement with the holders, some of
whom were then directors or officers of the Company, of 131 placer association
claims covering approximately 20,000 acres adjacent to and surrounding our
original eight claims.  The agreement granted us exploration rights on
the claims, and first right of refusal to enter into a mineral lease agreement
in exchange for a 0.25% NSR payable to the claimholders should the Company bring
the property into production.  The agreement required us to expend a
minimum of $125,000 on exploration during the three-year period following the
execution of the exploration agreement and to maintain the claims in good
standing by paying the required maintenance fees to the BLM.  We are
currently exploring options to obtain clear title to these
claims.





These
20,000-plus acres of placer claims cover the Detrital Wash drainage as well as
areas of the surrounding Black Mountains and White Hills in northwestern
Arizona.  The Detrital Wash area is composed of alluvial materials
eroded and deposited from the surrounding mountains as well as from upstream to
the south and west.  Based on the presence of gold and silver
producing mines in the Black Mountains and the White Hills, we believe placer
deposits of precious metals may exist on the Detrital Wash
Property.  We cannot assure that we will discover such deposits or
that, if such deposits are discovered, we will be able to commercially produce
such mineral deposits.





Our
Detrital Wash Property also consists of 200 lode claims located along the
western front of the White Hills.  These lode claims have been
converted from our existing placer claims based on the existence of
mineralization in the bedrock.  The lode claims cover known and
anticipated northerly extensions of veins found in the White Hills and
mineralized structures to the south.





6




In 2007,
we paid an aggregate of $16,875 in maintenance fees to the BLM for the Detrital
Wash Property.





Operations





We are
aggressively pursuing a program to increase our land holdings in the Detrital
Wash area by adding new lode claims and converting placer claims to lode claims
where mineralization occurs in the bedrock.  In addition, we currently
have engaged consultants who are conducting a program of testing geological
samples from the property for mineralization and mapping the existing
geology.  We plan to extend this sampling and geology mapping program
to any new claims added to our inventory as well as surrounding areas of
interest we believe may contain valuable mineralization.  We intend to
utilize the initial results of this program to evaluate our Detrital Wash
Property and further design an exploration program to best determine its mineral
potential.





Wikieup,
Arizona Property





Property and
Location





Our
Wikieup Property consists of 42 lode claims located approximately three miles
west of U.S. Highway 93 in Section 36, Township 16N, Range 14W in the Hualapai
Mountain Range at Wikieup, Arizona.  These claims comprise
approximately 840 acres of mountainous terrain.  The property is
easily accessible by paved and dirt roads west of Wikieup, Arizona, from U.S.
Highway 93 and has nearby access to electricity and water.





The
Hualapai Mountain Range consists of pre-cambrian gneiss and schist that has
locally been intruded by quartz monzonite and granitic rocks of probable
Laramide age.  Laramide age intrusives are traditionally one of the
primary host rocks for Arizona porphyry copper deposits.  Notable ore
deposits and mines nearby are the Oatman Mining District to the northwest and
the Bagdad open pit copper mine to the southeast of this area.





We
purchased the Wikieup claims from Gold Standard Mines, Inc. in March 2001 in
exchange for which we issued 1,000,000 shares of our restricted common stock
having an aggregate value of $400,000 as of the date of the
acquisition.  We received from Gold Standard Mines a notarized
quitclaim deed granting us all rights, interest and title to 51 lode mining
claims.  The deed was subsequently recorded at the United States
Bureau of Land Management office in Phoenix, Arizona, and at Mohave County in
Kingman, Arizona.





In 2007,
we paid an aggregate of $5,250 in maintenance fees to the BLM for the Wikieup
Property.





Operations





Due to
our limited financial resources, we do not currently have plans to engage in
development activities on the Wikieup Property during 2008.  However,
should adequate financing become available, management may implement an
aggressive campaign to identify through accepted geological processes any
mineralization occurring on our Wikeiup claims.





ITEM
3. LEGAL
PROCEEDINGS





From time
to time we are involved in legal proceedings relating to claims arising out of
operations in the normal course of business, as well as claims arising from our
status as an issuer of securities and/or a publicly reporting
company.  At December 31, 2007, we know of no current or threatened
legal proceedings involving us or our properties reportable under this Item
3.





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





None.




7





PART
II





ITEM
5. MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS





Until May
23, 2003, our common stock was traded on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc. (“NASD”) under the symbol
ISRI.  Since May 23, 2003, our common stock has been traded on the
Pink Sheets under the Symbol ISRI.PK.  On February 22, 2005, the
NASDAQ assigned our Company a new trading symbol and our common stock began
trading on the Pink Sheets under the symbol ILST.PK.  On June 20,
2005, our common stock was approved by the NASD for listing on the OTC Bulleting
Board, and since such date, our common stock has been trading under the symbol
ILST.OB.  The following table indicates quarterly high and low price
per share for our common stock during the fiscal years ended December 31, 2007
and 2006.  These prices represent quotations among dealers without
adjustments for retail mark-ups, markdowns or commissions, and may not represent
actual transactions.  The market for our shares has been sporadic and
at times very limited.





Fiscal
      Year Ended December 31, 2007HIGH
            
            
            LOW4th
      Quarter ended December 31, 2007
            
            $
            0.020
            
            
            $
            0.0073rd
      Quarter ended September 30, 2007
            
            $
            0.028
            
            
            $
            0.0102nd
      Quarter ended June 30, 2007
            
            $
            0.038
            
            
            $
            0.0131st
      Quarter ended March 31, 2007
            
            $
            0.022
            
            
            $
            0.0124th
      Quarter ended December 31, 2006
            
            $
            0.018
            
            
            $
            0.0103rd
      Quarter ended September 30, 2006
            
            $
            0.045
            
            
            $
            0.0162nd Quarter ended June 30, 2006
            
            $
            0.068
            
            
            $
            0.0251st
      Quarter ended March 31, 2006
            
            $
            0.041
            
            
            $
            0.036




The
closing price of our common stock as of March 17, 2008 was $0.010 per
share.





Number
of Shareholders





At March
17, 2008, we had approximately 165 stockholders of record of our common
stock.  This figure does not include beneficial owners of common stock
held in nominee or street name, as we cannot accurately estimate the number of
these beneficial owners.





Dividend
Policy





We did
not declare or pay any dividends during our fiscal years ended December 31, 2007
and 2006.  There are no legal, contractual or other restrictions,
which limit our ability to pay dividends.  Payment of future
dividends, if any, on our common stock, will be dependent upon the amounts of
our future after-tax earnings, if any, and will be subject to the discretion of
our Board of Directors.  Our Board of Directors is not legally
obligated to declare dividends, even if we are profitable.  We have
never paid any dividends on or common stock, and we have no plans to do so in
the near future.  Instead, we plan to retain any earnings to finance
the development of the business and for general corporate purposes.





Penny
Stock





Our
common stock is subject to the provisions of Section 15(g) and Rule 15g-9 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), commonly
referred to as the “penny stock rule.”  Section 15(g) sets forth
certain requirements for transactions in penny stocks, and Rule 15g-9(d)(1)
incorporates the definition of “penny stock” that is found in Rule 3a51-1 of the
Exchange Act.  The SEC generally defines “penny stock” to be any
equity security that has a market price less than $5.00 per share, subject to
certain exceptions.  If our Common Stock is deemed to be a penny
stock, trading in the shares will be subject to additional sales practice
requirements on broker-dealers who sell penny stocks to persons other than
established customers and accredited investors.  “Accredited
investors” are persons with net worth, or joint net worth with their spouse, in
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse, for each of the past two years and with the reasonable
expectation of attaining the same level of income in the current
year.  For transactions covered by these rules, broker-dealers must
make a special suitability determination for the purchase of such security and
must have the purchaser’s written consent to the transaction prior to the
purchase.  Additionally, for any transaction involving a penny stock,
unless exempt, the rules require the delivery, prior to the first transaction,
of a risk disclosure document prepared by the SEC relating to the penny stock
market.  A broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative, and current quotations
for the securities.  Finally, monthly statements must be sent
disclosing recent price information for the penny stocks held in an account and
information on the limited market in penny stocks.  Consequently,
these rules may restrict the ability of broker-dealers to trade and/or maintain
a market in our Common Stock and may affect the ability of our shareholders to
sell their shares.





8




Securities
Authorized For Issuance Under Equity Compensation Plans





On
September 13, 2006, our Board unanimously voted to adopt a Stock Option and
Restricted Stock Plan (the “Plan”) and to submit such Plan to a vote of our
shareholders.  Our shareholders voted and approved the adoption of the
Plan on December 1, 2006, at our annual shareholders meeting.  The
Plan provides for a share reserve of 18,000,000 common shares for future
issuances as direct awards or upon exercise of options granted under the
Plan.  As of the date of this filing, no stock options or stock awards
have been granted to our executive officers or our directors pursuant to the
Plan.





The
following table provides information with respect to the shares authorized for
issuance under equity compensation plans of the Company.





Equity
Compensation Plan Information





Plan
      category
            
            Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
              (a)
            
            Weighted-average
      exercise price of outstanding options, warrants and rights
              (b)
            
            Number
      of securities remaining available for issuance under equity compensation
      plans (excluding securities reflected in column (a))
              (c)Equity
      compensation plans approved by security holders
            
            
            —
            
            —
            
            
            18,000,000Equity
      compensation plans not approved by security holders
            
            
            —
            
            —
            
            
            —Total
            
            
            —
            
            —
            
            
            18,000,000





Recent
Sales of Unregistered Securities





We did
not engage in any sales of our securities that were not registered under the
Securities Act of 1933, as amended (the “Securities Act”), during the fiscal
quarter ended December 31, 2007.  Our sales of unregistered securities
during the fiscal years ended December 31, 2005 and 2006, and during the nine
months ended September 30, 2007, have been previously reported in our Annual
Reports on Form 10-KSB, our Quarterly Reports on Form 10-QSB and/or our Current
Reports on Form 8-K filed with the SEC.  In our Quarterly Report on
Form 10-QSB for the fiscal quarter ended March 31, 2007, we inadvertently
reported an issuance of 1,437,500 shares of our common stock on January 6,
2007.  This transaction occurred on January 6, 2006, and was disclosed
in our Annual Report on Form 10-K for the year ended December 31,
2006.  No such issuance occurred on January 6, 2007.





9




Purchases
of Equity Securities





We did
not repurchase any of our securities during the fourth quarter of our fiscal
year ended December 31, 2007.





ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





GENERAL





The
following presentation of Management’s Discussion and Analysis or Plan of
Operation has been prepared by internal management and should be read in
conjunction with the Financial Statements and notes thereto included in Item 7
of this Annual Report on Form 10-KSB. Except for the historical information
contained herein, the discussion in this report contains certain forward-looking
statements that involve risks and uncertainties, such as statements of our
business plans, objectives, expectations and intentions as of the date of this
filing.  The cautionary statements about reliance on forward-looking
statements made earlier in this document should be given serious consideration
with respect to all forward-looking statements wherever they appear in this
report, notwithstanding that the “safe harbor” protections available to some
publicly reporting companies under applicable federal securities law do not
apply to us as an issuer of penny stocks.  Our actual results could
differ materially from those discussed here.





We were
organized under the laws of the State of Nevada on October 28, 1993, as Mattress
Showrooms, Inc.  In 1997, we changed our corporate name to
International Star, Inc. and became engaged in the business of construction,
sale and operation of state of the art waste management systems, specializing in
turnkey systems for management of hospital, industrial, petroleum, chemical and
municipal solid waste collection systems.  Despite our efforts, we
were unable to develop this business beyond the start-up
stage.  Following our unsuccessful venture in waste management, we
refocused our business efforts on mineral exploration in
1998.  Currently, we are primarily engaged in the acquisition and
exploration of precious metals mineral properties.  Since 1998, we
have examined various mineral properties prospective for precious metals and
minerals and have acquired interests in those we believe may contain precious
metals and minerals.  Our properties are located in
Arizona.  We have not established that any of our properties contain
reserves.  A reserve is that part of a mineral deposit which could be
economically and legally extracted or produced at the time of the reserve
determination.  Further exploration will be needed before a final
determination can be made whether any property is economically and legally
feasible.  Therefore, at present we have no reserves and no income
from mineral production.





The
business of mineral exploration is inherently speculative and involves a number
of general risks which could materially adversely affect our results of
operation and financial condition, including among others, the rarity of
commercial mineral deposits, environmental and other laws and regulations,
physical dangers to personnel associated with exploration activity, and
political events.





There is
generally no way to recover any of the funds expended on exploration unless the
company establishes the existence of mineable reserves and then exploits those
reserves by either commencing mining operations, selling or leasing its interest
in the property, or entering into a joint venture with a larger resource company
that can develop the property to the production stage.  Unless we can
establish and exploit reserves before our funds are exhausted, we will have to
discontinue operations, which could make our stock valueless.





Reserves,
by definition, contain mineral deposits in a quantity and in a form from which
the target minerals may be economically and legally extracted or produced. We
have not established that such reserves exist on our properties, and unless and
until we do so, we will not have any income from our mineral
operations.





Our
directors and executive officers lack significant experience or technical
training in exploring for precious metal deposits and developing
mines.  Accordingly, our management may not be fully aware of many of
the specific requirements related to working within this
industry.  Their decisions and choices may not take into account
standard engineering or managerial approaches that mineral exploration companies
commonly use.  Consequently, our operations, earnings, and ultimate
financial success could suffer irreparable harm due to our management’s lack of
experience in the mining industry.  We are currently in the process of
aligning our Company with reputable, knowledgeable experts in the mining
industry to overcome this lack of experience and expertise.





10




Any
changes in government policy may result in changes to laws affecting ownership
of assets, land tenure, mining policies, taxation, environmental regulations,
labor relations, or other factors relating to our exploration activities. Such
changes could cause us to incur significant unforeseen expenses of compliance or
even require us to suspend our activities altogether.





Our
directors and executive officers own a significant amount of our voting capital
common stock, and accordingly, exert considerable influence over
us.  As of March 17, 2008, our directors and executive officers
beneficially owned common stock which would equal in the aggregate approximately
22.55% of the voting power of our outstanding common stock.  As a
result, these stockholders are potentially able to significantly influence the
decision on all matters requiring stockholder approval, including the election
of directors and the approval of significant corporate
transactions.  This concentration of ownership could also delay or
prevent a change in control that may be favored by other
stockholders.





Going
Concern





We have
incurred substantial operating and net losses, as well as negative operating
cash flow, since our inception. Accordingly, we continued to have significant
stockholder deficits and working capital deficits during the year ended December
31, 2007.  In recognition of these trends, our independent registered
accountants included cautionary statements in their report on our financial
statements for the year ended December 31, 2007, that expressed “substantial
doubt” regarding our ability to continue as a going
concern.  Specifically, our independent accountants have opined that
the continuation of our Company as a going concern is dependent upon obtaining
sufficient working capital to be successful in that effort.





Our
ability to continue as a going concern is dependent on obtaining additional
working capital.  Our
management intends to develop a long-term strategy to accomplish this objective
through additional equity funding and long-term financing.  However,
we cannot assure that we will be able to obtain such additional equity or debt
financing.




Plan
of Operation





Over the
next twelve months, we intend to focus on obtaining financing necessary to add
additional claims that may hold commercial mining value for further exploration
of both the Detrital Wash Property and the Wikieup Property, and to assess the
commercial viability of mineral extraction from deposits on these properties and
the establishment of precious and base metal reserves.





With
respect to our Detrital Wash Property, we are aggressively seeking to add new
lode claims and convert placer claims to lode claims where mineralization occurs
in the bedrock.  We have currently engaged consultants who are
conducting a program of testing geological samples for the existence of minerals
and mapping the existing geology.  We intend to extend this sampling
and geology program to any new claims added to our inventory and to surrounding
areas of interest anticipated to contain valuable mineralization.  We
plan to utilize the initial results of this program to evaluate our Detrital
Wash Property and further design an exploration program to best determine its
mineral potential.  See “DESCRIPTION OF PROPERTY
– Detrital Wash, Mohave County, Arizona Property.”





As of the
date of this Annual Report, we do not plan to conduct development activities on
the Wikieup Property during 2008.  However, should adequate financial
resources become available, we may aggressively pursue a program to identify any
mineralization occurring on the Wikieup Property.  See “DESCRIPTION OF PROPERTY
– Wikieup, Arizona Property.”





Due to
our limited financial resources, we do not anticipate any purchase or sale of
property, plant, or other significant equipment, and we do not expect any
significant changes in the number of our employees.  However,
employees, consultants and expertise will be added to the Company as management
deems necessary and when financing permits.





11




Financing





We do not
have any revenues and continue to be dependent on debt and equity financing to
meet our immediate cash needs.  We continue to pursue means to expand
our exploration activities, either by seeking additional capital through loans
or private placements of our securities, or by entering into joint venture or
similar arrangements with one or more other, more substantial
companies.





On
December 3, 2007, we obtained a $500,000 revolving line of credit from
Kilpatrick’s Rose-Neath Funeral Homes, Crematorium and Cemeteries, Inc.
(“KRFH”).  The line of credit carries simple interest at the rate of
6% per annum.  All unpaid principal and accrued interest is due on
December 2, 2010 (the “Maturity Date”).  Until the Maturity Date, we
are only required to pay interest, with the first such payment due in arrears on
June 3, 2007, and then with additional payments every 90 days
thereafter.  At any time, KRFH can demand immediate repayment of the
outstanding balance on the line of credit with ten days notice.  Any
payments due from us that are not paid within ten days of the due date are
subject to late fee of 5%.  We have the right to prepay any amounts
due KRFH at any time without penalty.





We plan
to use the line of credit to fund our operating and compliance
costs.  In the event we are unable to achieve sufficient revenues for
the repayment of the line of credit, we will need to raise such funds through
debt and equity financings.  We can provide no assurance that we will
be able to raise the funds necessary for the repayment of the line of credit on
terms favorable to us or at all.  If we raise capital by selling our
equity stock, the proportionate ownership of existing shareholders will be
diluted.





The line
of credit is secured by a 51% interest in our Detrital Wash Property and Wikieup
Property and in any future claims acquired by us, as well as all proceeds and
products from such properties (collectively, the “Collateral”).  In
the event we default, KRFH may institute legal action against us and foreclose
against the Collateral.  In such event, KRFH would be entitled to its
collection costs, including attorney fees and courts costs.





Our
Chairman of the Board, Ms. Virginia Shehee, may be deemed the beneficial owner
of over 50% of the outstanding shares of KRFH due to the voting power she has
obtained pursuant to a voting agreement.  Due to the voting power she
has obtained pursuant to a similar voting agreement, Ms. Shehee may also be
deemed the beneficial owner of over 50% of the outstanding shares of Kilpatrick
Life Insurance Company, one of our major shareholders.  The Kilpatrick
Life Insurance Company employs Ms. Shehee as its President and Chief Executive
Officer and Ms. Jacqulyn Wine as its Assistant
Secretary/Treasurer.  Ms. Wine is our Acting Secretary, Acting
Treasurer/Chief Financial Officer and one of our directors.





During
our fiscal year ended December 31, 2007, we secured additional funding through
the private placement of our restricted common stock shares at prices ranging
from $0.012 to $0.035 per share.  In the aggregate, we sold 15,668,982
restricted common stock shares during our fiscal year 2007 for a net purchase
price of $210,000.  We believe the issuances were exempt from
registration under Section 4(2) of the Securities Act.  See “MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS – Recent Sales of Unregistered
Securities.”





In
addition, certain of our directors have from time to time advanced funds to our
Company for the payment of operating expenses.  These advances have
been repaid in cash and through the issuance of restricted shares of our common
stock.  There were no amounts owing to the Company’s directors at
December 31, 2007 and 2006.  During the year ended December 31, 2007,
our directors did not advance any funds to the Company.





LIQUIDITY





Liquidity
and Capital Resources





2007
            
            
            2006Net
      cash used in operating activities
            
            $
            (342,119
            )
            
            $
            (492,560
            )Net
      cash used in investing activities
            
            
            —
            
            
            
            —Net
      cash provided by financing activities
            
            
            96,141
            
            
            
            290,600





12




General





Overall,
we had positive cash flows of $92,881 for the year ended December 31, 2007,
resulting from $342,119 used in our operating activities and $435,000 provided
by our financing activities.  No cash was provided by our investing
activities for the fiscal year 2007.





Cash
Used in Our Operating Activities





For the
year ended December 31, 2007, net cash used in our operating activities of
$342,119 was due primarily to general and administrative expenses and expenses
associated with professional services and management fees and
compensation.





Cash
Provided by Our Financing Activities





Net cash
provided by our financing activities of $435,000 in the year ended December 31,
2007, was comprised of cash provided by the issuance of shares of our common
stock and by proceeds from a line of credit we obtained in December
2007.





Internal
Sources of Liquidity





For the
year ended December 31, 2007, the funds generated from our operations were
insufficient to fund our daily operations.  We can provide no
assurance that funds from our operations will meet the requirements of our daily
operations in the future.  In the event that funds from our operations
are insufficient to meet our operating requirements, we will need to seek other
sources of financing to maintain liquidity.





External
Sources of Liquidity





We
continue to pursue all potential financing options as we look to secure
additional funds to both stabilize and grow our business
operations.  Our management will review any financing options at their
disposal, and will judge each potential source of funds on its individual
merits.





On
December 3, 2007, we obtained a $500,000 revolving line of credit from
Kilpatrick’s Rose-Neath Funeral Homes, Crematorium and Cemeteries, Inc.
(“KRFH”).  We plan to use the line of credit to fund our operating and
compliance costs.  In the event we are unable to achieve sufficient
revenues for the repayment of the line of credit, we will need to raise such
funds through debt and equity financings.  We can provide no assurance
that we will be able to raise the funds necessary for the repayment of the line
of credit on terms favorable to us or at all.  See “MANAGEMENT’S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION – GENERAL – Financing” for additional
discussion of the Company’s line of credit and other financing.





Inflation





Management
believes that inflation has not had a material effect on our results of
operations, and does not expect that it will in fiscal year 2008, except that
rising oil and gas prices may materially and adversely impact the economy
generally.





Forward
Looking Statements





This
Management’s Discussion and Analysis or Plan of Operation includes a number of
forward-looking statements that reflect our management’s current views with
respect to future events and financial performance.  Those statements
include statements regarding our intent, belief or current expectations, and
those of members of our management team, as well as the assumptions on which
such statements are based.  Prospective investors are cautioned that
any such forward-looking statements are not guarantees of future performance and
involve risk and uncertainties, and that actual results may differ materially
from those contemplated by such forward-looking statements.  Readers
are urged to carefully review and consider the various disclosures made by us
throughout this Annual Report, as well as in our other reports filed by us with
the SEC.  Important factors currently known to management could cause
actual results to differ materially from those in forward-looking
statements.  We undertake no obligation to update or revise
forward-looking statements to reflect changed assumptions, the occurrence of
unanticipated events or changes in future operating results over
time.  We believe that our assumptions are based upon reasonable data
derived from and known about our business and operations. No assurances are made
that actual results of operations or the results of any future activities will
not differ materially from our assumptions.





13




Since our
trading shares are classified as “penny stocks”, we are not entitled to rely
upon the “safe harbor” provisions adopted by the SEC under the Exchange Act with
respect to forward-looking statements.  Nevertheless, investors are
urged to give serious consideration to those factors which we have identified as
outside of our control, and the consequences to us and our investors if our
anticipated results do not come to pass as expected as a result of material
deviations which may occur from the assumptions we have relied upon in making
forward-looking statements.





Off-Balance
Sheet Arrangements





We do not
have any off-balance sheet arrangements.





ITEM
7. FINANCIAL
STATEMENTS





Our
Financial Statements and supplementary data are included beginning immediately
following the signature page to this Annual Report.  See Item 13 for a
list of the Financial Statements and financial statement schedules included with
this filing.





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





None.





ITEM
8A. CONTROLS AND
PROCEDURES





(a)           Disclosure
Controls and Procedures.





Our
management evaluated, with the participation of our President and our Acting
Treasurer/Chief Financial Officer, the effectiveness of our disclosure controls
and procedures as of the end of the period covered by this Annual Report on Form
10-KSB, December 31, 2007.  Based on this evaluation, our President
and our Acting Treasurer/Chief Financial Officer have concluded that our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) as of the end of the period covered by this report were
effective in timely alerting management to material information relating to us
and required to be included in our periodic filings with the SEC.





Disclosure
controls and procedures are controls and procedures that are designed to ensure
that information required to be disclosed in our periodic reports under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Commission’s rules and forms.  Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed in our periodic
reports that we file under the Exchange Act is accumulated and communicated to
our management, including our principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.





(b)           Internal
Control over Financial Reporting





Management’s Annual Report
on Internal Control Over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rules
13a-15(f) and 15d-15(f).  Internal control over financial reporting is
a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles.  Internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
conformity with U.S. generally accepted accounting principles, and that our
receipts and expenditures are being made only in accordance with authorizations
of our management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of our assets that could have a material effect on the financial
statements.





14




Because
of its inherent limitations, our controls and procedures may not prevent or
detect misstatements.  A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the
objectives of the controls system are met.  Because of the inherent
limitations in all controls systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, have
been detected.





Our
management has assessed the effectiveness of our internal control over financial
reporting based on the criteria in Internal Control — Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission.  Based on our evaluation under the criteria in
Internal Control — Integrated
Framework, we concluded that our internal control over financial
reporting was effective as of December 31, 2007.





Under the
rules of the SEC, the effectiveness of our internal control over financial
reporting as of December 31, 2007, is not required to be attested to by an
Independent Registered Public Accounting Firm.  The attestation
requirement currently does not become applicable to small business issuers, such
as the Company, until fiscal year 2008.





Changes in Internal Control
Over Financial Reporting





There was
no change in our internal controls that occurred during the fourth quarter of
the period covered by this report that has materially affected, or is reasonably
likely to affect, the Company’s internal controls over financial
reporting.





ITEM
8B. OTHER
INFORMATION





None.




PART
III





ITEM
9. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT




Our
executive officers and directors and their respective ages as of the date of
this report are as follows:





Name
            
            Age
            
            Position(s)
      Held
            
            Date
      Service BeganVirginia
      K. Shehee
            
            84
            
            Chairman
      of the Board of Directors
            
            January
      2005Sterling
      M. Redfern
            
            74
            
            President,
      Director
            
            December
      2007Jacqulyn
      B. Wine
            
            64
            
            Acting
      Secretary, Acting Treasurer / Chief Financial Officer,
      Director
            
            January
      2007Joe
      C. Rice
            
            60
            
            Director
            
            January
      2008





Ms. Virginia K. Sheheehas
served as the Chairman of our Board of Directors since May 2005 and as a
director of the Company since January 2005.  Ms. Shehee concurrently
serves as the President and Chief Executive Officer of Kilpatrick Life Insurance
Company, a major shareholder of our Company, and Kilpatrick’s Rose-Neath Funeral
Homes and Cemeteries, Inc.  Ms. Shehee has served as the President and
Chief Executive Officer of Kilpatrick Life Insurance Company and Kilpatrick’s
Rose-Neath Funeral Homes, Crematorium and Cemeteries, Inc. since October
1971.  She oversees all operations of Kilpatrick Life Insurance
Company and Kilpatrick’s Rose-Neath Funeral Homes, Crematorium and Cemeteries,
Inc.  Ms. Shehee is a former State Senator of Louisiana and has served
on the Forum 500 Board of Governors and on the Committee on Committees of the
American Council of Life Insurance (ACLI).  She has also served on the
Board of Directors and on the Taxation Steering Committee of the
ACLI.  In addition, Ms. Shehee is Chairman Emeritus of the Biomedical
Research Foundation of Northwest Louisiana, for which she has previously served
as the President and Chairman of its board of directors.  Ms. Shehee
is a director of the Louisiana Insurers’ Conference and has previously served in
various executive capacities for the Life Insurers Conference.  She is
the chairman of the Louisiana Life & Health Insurance Guaranty Association
and a member of the National Organization of Life and Health Insurance Guaranty
Association.





15




Mr. Sterling M. Redfern has
served as President and as a director of the Company since December
2007.  From March 2001 through September 2003, Mr. Redfern served as a
director of Cryocon, Inc, but has otherwise been retired since December
2003.  From June 1960 to December 1994, Mr. Redfern was the
President/Chief Executive Officer of Educational Employees Credit Union (EECU)
located in Bridgeton, Missouri.  Mr. Redfern has also served as a
director of the Missouri Credit Union League, the Credit Union National
Association, and the Metro Collegian Baseball League.  He has also
served as President of the Metro Collegian Baseball League, as a member of the
Governor’s White House Conference on Education in Missouri and as a member of
the Board of Deduction, Pattonville School District, Bridgeton,
Missouri.  In 1955, Mr. Redfern received a Bachelors of Arts Degree in
Mathematics from Arkansas State University, located in Jonesboro,
Arkansas.





Ms. Jacqulyn B. Wine has
served as Acting Secretary of the Company since January 2007, as Acting
Treasurer/Chief Financial Officer of the Company since August 2007 and as a
director of the Company since July 2007.  Ms. Wine is also the
Assistant Secretary/Treasurer for Kilpatrick Life Insurance Company, a major
shareholder of our Company, a position she has held since March
1995.  She began working for Kilpatrick Life Insurance Company as
Executive Assistant to the President in 1990.  From February 1979 to
September 1990, Ms. Wine concurrently served as Corporate Secretary of two
related companies, McConathy Oil and Gas Company and McConathy Production,
Inc.





Dr. Joe C. Ricehas served as
a director of the Company since January 2008.  Dr. Rice is a physician
and a native of Shreveport, Louisiana.  He received a B.A. in
philosophy from Centenary College of Louisiana in 1969.  He earned his
Master of Divinity from Duke University in 1972 and served in the ministry until
he entered pre-med studies at Louisiana State University in Baton Rouge in
1976.  He graduated from Louisiana State University School of Medicine
in 1981.  He is currently a practicing radiologist in
Shreveport.  He is a member of Omicron Delta Kappa, has been a
clinical instructor of radiology, an acting chief of radiology and has served on
the hospital ethics board.





Term
of Office





Our
directors are elected for a one-year term to hold office until the next annual
meeting of our shareholders, or until removed from office in accordance with our
bylaws and applicable law.  Our officers are appointed by our Board of
Directors and hold office until the earlier of their resignation or removal by
the Board, except for our President, Sterling Redfern.  On March 19,
2008, the Company entered into a formal employment agreement with Mr. Sterling,
effective as of April 1, 2008.  Under the agreement, Mr. Redfern will
serve as our President for a term of one year, after which he may continue to
serve at the will of the parties.  See “EXECUTIVE COMPENSATION –
Employment Agreements.”





Family
Relationships





There are
no familial relationships among any of our directors, executive officers, or
persons nominated or chosen to become directors or executive
officers.





Involvement
in Certain Legal Proceedings





During
the past five years, no present or former director, executive officer or person
nominated to become a director or an executive officer of the
Company:





(1)
            was
      a general partner or executive officer of any business against which any
      bankruptcy petition was filed, either at the time of the bankruptcy or
      within two years prior to that
time;


(2)
              was
      convicted in a criminal proceeding or named subject to a pending criminal
      proceeding (excluding traffic violations and other minor
      offenses);


16


(3)
            was
      subject to any order, judgment or decree, not subsequently reversed,
      suspended or vacated, of any court of competent jurisdiction, permanently
      or temporarily enjoining, barring, suspending or otherwise limiting his
      involvement in any type of business, securities or banking activities;
      or





(4)
            was
      found by a court of competent jurisdiction (in a civil action), the SEC,
      the Commodity Futures Trading Commission to have violated a Federal or
      state securities or commodities law, and the judgment has not been
      reversed, suspended or vacated.





Director
Nomination Procedures





We have
not adopted formal procedures for nomination director candidates.  Our
Board of Directors identifies qualified director nominees from among persons
known to the members of the Board, by reputation or otherwise, and through
referrals from trusted sources, including management, existing Board members,
and shareholders.  The Board evaluates candidates based upon the
candidate’s qualifications, recommendations, or other relevant information,
which includes a personal interview.  The Board then considers and
approves candidates for nomination.





Section
16 Beneficial Ownership Reporting Compliance





Section
16(a) of the Exchange Act requires our executive officers and directors, and
persons who beneficially own more than ten percent of our equity securities, to
file reports of ownership and changes in ownership with the SEC on Forms 3, 4
and 5.  Officers, directors and greater than ten percent shareholders
are required by SEC regulation to furnish us with copies of all Section 16(a)
forms they file.  Based solely upon review of the copies of such
reports furnished to us during, and with respect to, the fiscal year ended
December 31, 2007, or any written representations we received from a director,
officer, or beneficial owner of more than 10% of our common stock that no other
reports were required during that period, we believe that, for the fiscal year
ended December 31, 2007, all Section 16(a) filing requirements applicable to our
reporting persons were met except for as follows:  Sterling Redfern
failed to timely file a Form 3.





Code
of Ethics





We have
adopted a Code of Ethics applicable to our principal executive officers,
principal financial officers, principal accounting officers or controllers, or
persons performing similar functions, a copy of which was filed as an exhibit to
our Annual Report on Form 10-KSB for the fiscal year ended December 31,
2005.  In addition, a copy of our code of ethics can be obtained by
writing our Company at P.O. Box 7202, Shreveport, Louisiana 71137.





Audit
Committee and Financial Expert Disclosures





Section
301 of the Sarbanes-Oxley Act of 2003, and SEC regulations implementing that
provision require that public companies disclose a determination by their Board
of Directors as to the existence of a financial expert on their audit committee
and, if none is determined to exist, that the Board of Directors has determined
that no one serving on its Board of Directors meets the qualification of a
financial expert as defined in the Sarbanes-Oxley Act and implementing
regulations.





As of
December 31, 2007, and as of the date of filing of this report, we have not
created any standing committees of the Board of Directors, including an audit
committee.  Accordingly, our entire Board of Directors serves as our
audit committee.





We also
disclose that our Board has determined that we have not, and we do not, possess
on our Board of Directors anyone who qualifies as an audit committee financial
expert and, unless and until one is identified and agrees to serve, we will
continue to rely on outside professional consultants who advise us with respect
to audit matters.





17


ITEM
10. EXECUTIVE
COMPENSATION





Summary Compensation Table





The
following table sets forth information concerning the compensation of our
executive officers during the fiscal years ended December 31, 2007 and
2006:





Summary
Compensation Table




Name
      and principal position
              Year
              
              Salary
              
              
              Bonus
              
              
              Stock
      awards
              
              
              Option
      awards
              
              
              Non-equity
      incentive plan compensation
              
              
              Change
      in pension value and non-qualified deferred compensation
      earnings
              
              
              All
      other
                  compensation
              
              
              TotalSterling
      M. Redfern, President(1)
              2007
              
              $
              2,700
              
              
              
              --
              
              
              $
              1,500
              (2)
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              $
              10,000
              (3)
              
              $
              14,200Jacqulyn
      B. Wine,Acting
      Secretary and Acting Treasurer / Chief Financial Officer(4)
              2007
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Virginia
      K. Shehee,Chairman
      of the Board of Directors(5)
              2007
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Joseph
      E. Therrell, Jr.(6)
              2007
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Denver
      Cashatt, Jr.(7)
              2007
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --2006
              
              
              55,530
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              20,166
              (8)
              
              
              75,696Robert
      M. Glover(9)
              2007
              
              
              45,000
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              45,0002006
              
              
              61,250
              
              
              
              --
              
              
              
              30,000
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              8,669
              (10)
              
              
              99,919Dorothy
      Wommack(11)
              2007
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              8,500
              (12)
              
              
              8,5002006
              
              
              47,500
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              27,654
              (13)
              
              
              75,154


(1)
            Mr.
      Redfern was appointed President of the Company by our Board of Directors
      on December 6, 2007.




(2)
            Represents
      100,000 shares of our common stock, valued based upon the closing price of
      our common stock on December 31, 2007, of $0.015 per
      share.  These shares will be issued by the Company to Mr.
      Redfern on or about March 31, 2008.




(3)
            Includes
      $10,000 in fees paid to Mr. Redfern as compensation for consulting
      services provided to the Company by Mr. Redfern from August 2007 to
      November 2007 prior to his appointment as our
  President.




(4)
            Ms.
      Wine was appointed Acting Secretary by our Board of Directors on January
      16, 2007, and Acting Treasurer/Chief Financial Officer on August 16,
      2007.  She did not receive compensation for her services as an
      officer of the Company during 2007.




(5)
            Mrs.
      Shehee served as our Acting President on a temporary basis from August 16,
      2007, to December 6, 2007.  She did not receive compensation for
      her services as an officer of the
Company.




(6)
            Mr.
      Therrell was appointed Acting President and Acting Treasurer/Chief
      Financial Officer by our Board of Directors on January 16,
      2007.  He resigned as our Acting President and Acting
      Treasurer/Chief Financial Officer and as a director of the Company on
      August 7, 2007.  Mr. Therrell did not receive compensation for
      his services as an officer of the
Company.


18
 
  (7)
                Mr.
      Cashatt resigned as our President and Chief Executive Officer and as a
      director of the Company on January 8, 2007.  Mr. Cashatt did not
      receive compensation for his services during
  2007.


(8)
            Includes
      commissions for private placements of our common stock, $5,319; rent
      payments on personal residence, $24,667; auto allowance, $9,000; repairs
      for personal car, $847; and other reimbursements, $5,000.  The
      rent payments for Mr. Cashatt’s personal residence are valued at
      two-thirds of the total rent payment for the property, which was also used
      as an office for the Company, based on the percentage of the property used
      as a residence.


(9)
              Mr.
      Glover resigned as our Director of Operations and as a director of the
      Company on August 10, 2007.  He did not receive any compensation
      for his services as a director of the Company during 2006 and
      2007.
  (10)
              Includes
      auto allowance, $8,000; and repairs for personal car,
  $669.




(11)
            The
      Board of Directors removed Ms. Wommack as our Secretary and
      Treasurer/Chief Financial Officer on January 16, 2007.  She did
      not receive compensation for her services as an officer of the Company
      during 2007.  However, during 2007, we paid Ms. Wommack an
      aggregate of $7,500 in consulting fees for temporary assistance she
      provided to our Acting Secretary following Ms. Wommack’s
      removal.




(12)
            Includes
      consulting fees, $7,500; and unpaid auto allowance accrued from 2006,
      $1,000.




(13)
            Includes
      commissions for private placements of our common stock, $9,100; auto
      allowance, $4,000; reimbursements for federal income taxes, $9,500; and
      other reimbursements, $5,054.





Employment
Agreements





On
December 6, 2007, our Board of Directors appointed Sterling M. Redfern to be our
President and a director of the Company.  As compensation for serving
as our President, the Board agreed to pay Mr. Redfern $2,700 a month and to
issue to him 100,000 shares of our common stock per month.  Mr.
Redfern agreed to be responsible for all withholding taxes on this
compensation.  All shares of Company common stock received by Mr.
Redfern as part of his compensation would not be adjusted for any reverse
split., and the shares would be issued to him on a quarterly basis, with the
first installment to be issued on March 31, 2008.  The terms of Mr.
Redfern’s compensation were partially documented in the Board resolution
offering Mr. Redfern his position.





On March
19, 2008, our Board of Directors renegotiated Mr. Redfern’s compensation and
entered into a formal employment agreement with Mr. Redfern to be effective
April 1, 2008.  Under the agreement, Mr. Redfern will serve as our
President for a term of one year, after which he may continue to serve at the
will of the parties.  As compensation for serving as our President,
Mr. Redfern will receive an annual salary of $42,000.  He will also
receive two non-qualified stock options pursuant to the Company’s 2006 Stock
Option Plan, the first of which will be for 5,000,000 shares of our common stock
at an exercise price of $0.01 per share and the second of which will be for an
additional 5,000,000 shares of our common stock at an exercise price of $0.03
per share.  These options will be issued as of April 1, 2008, and will
vest based on performance incentives to be designated by the Board of
Directors.  The options will expire on April 1, 2013.





Prior to
Mr. Redfern’s appointment as our President, he served as a consultant to the
Company from August 2007 to November 2007.  During that time, the
Company paid Mr. Redfern an aggregate of $10,000 in fees for his consulting
services.





We do not
have any written employment agreement for Ms. Wine to serve as our Acting
Secretary and Acting Treasurer/Chief Executive Officer, nor have any terms of
compensation for Ms. Wine been approved by our Board of Directors.  As
of the date of this filing, she has not received compensation for her services
as an officer of the Company.  She may or may not receive compensation
for her services in the future.





Stock
Option and Stock Award Grants





No stock
options were granted to our executive officers or directors during the year
ended December 31, 2007.





On
December 6, 2007, our Board of Directors agreed to issue to our President,
Sterling M. Redfern, 100,000 shares of our common stock per month as
compensation for his services as an officer of the Company.  The
shares earned by Mr. Redfern for the month of December 2007 will be issued to
him on or about March 31, 2008.  See “ – Employment
Agreements.”




19




Exercises
of Stock Options and Year-End Option Values
 
 No stock
options were exercised by our named executive officers during the fiscal year
ended December 31, 2007, nor have any stock options been exercised by our named
executive officers since December 31, 2007, through and including the filing
date of this report.


No
unexercised stock options or unvested stock awards were outstanding as of
December 31, 2007.





Pension
and Other Benefits





We do not
currently have in effect any plan that provides for payment to our executive
officers of specified retirement benefits or benefits that will be paid
primarily following retirement.





Nonqualified
Deferred Compensation





We do not
currently have in effect any defined contribution or other plan that provides
for the deferral of compensation to any of our executive officers on a basis
that is not tax-qualified.





Payments
Upon Termination or Change-In-Control





We do not
currently have in effect any compensatory plan or other arrangement that
provides for payments or the provision of benefits to any of our executive
officers upon their termination of employment with the Company or upon a change
in control of the Company or a change in the officer’s
responsibilities.





Compensation
of Directors





The
following table sets forth various elements of compensation awarded to or paid
by us to our directors, other than our named executive officers, during the
fiscal year ended December 31, 2007:





Name
            
            Fees
      earned or paid in cash
            
            
            Stock
      awards
            
            
            Option
      awards
            
            
            Non-equity
      incentive plan compensation
            
            
            Change
      in pension value and nonqualified compensation
    earnings
            
            
            All
      other compensation
            
            
            TotalJohn
      E. Tuma(1)
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --


__________________




(1)
            Mr.
      Tuma resigned from the Board of Directors on August 10,
      2007.  He did not receive any compensation for his services as a
      director of the Company during
2007.





Our
directors did not receive any fees for the services they provided to the Company
as directors during 2007.  We do not anticipate providing any such
fees to our directors for their service during 2008.





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





Security
Ownership of Certain Beneficial Owners and Management





The
following table sets forth certain information concerning the number of shares
of our common stock owned beneficially as of the date of this Report by: (i)
each person (including any group) known to us to own more than five percent (5%)
of any class of our voting securities; (ii) each of our directors and named
executive officers; and (iii) all of our officers and directors as a
group.  Except as otherwise indicated, all stockholders have sole
voting and investment power with respect to the shares listed as beneficially
owned by them, subject to the rights of spouses under applicable community
property laws.





[Table
follows on next page]


20





Name
      of Beneficial Owner
            
            Amount
      and Nature of Beneficial Ownership
            
            
            Percent
      of Shares Outstanding (1)5%
      or greater holders:Kilpatrick
      Life Insurance Company
            
            
            52,351,682
            
            
            
            19.15%Kamal
      Alawas (2)
            
            
            27,964,524
            
            
            
            10.23%Directors
      and executive officers:Sterling
      M. Redfern (3)
            
            
            --
            
            
            
            --Joe
      C. Rice
            
            
            350,000
            
            
            
            *Virginia
      K. Shehee (4)
            
            
            61,022,590
            
            
            
            22.32%Jacqulyn
      B. Wine (5)
            
            
            266,667
            
            
            
            *All
      directors and executive officers as a group (4 persons)
            
            
            61,639,257
            
            
            
            22.55%






*
            Less
      than 1%.




(1)
            The
      percentage of our common stock beneficially owned was calculated based on
      273,362,274 shares of our common stock outstanding as of March 17,
      2008.




(2)
            Includes
      1,500,000 shares beneficially owned by Alawas Investments, an entity
      controlled by Mr. Alawas.




(3)
            Mr.
      Redfern does not own any shares of our common stock as of March 17,
      2008.




(4)
            Includes
      52,351,682 shares beneficially owned by Kilpatrick Life Insurance Company,
      a privately-owned company controlled by Ms. Shehee, and an aggregate of
      4,090,098 shares held in Mrs. Shehee’s IRA
  accounts.




(5)
            Includes
      166,667 shares owned by Ms. Wine’s
husband.





Securities
Authorized For Issuance Under Equity Compensation Plans





See “MARKET FOR COMMON
EQUITY, RELATED STOCKHOLDER MATTERS, AND SMALL ISSUER PURCHASES OF EQUITY
SECURITIES – Securities Authorized For Issuance Under Equity Compensation Plans”
for information regarding the shares of our common stock authorized for issuance
under our 2006 Stock Option Plan.





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





Certain
Relationships and Related Transactions





Except
for the transactions described below, during 2007, none of our directors,
officers or principal stockholders, nor any associate or affiliate of the
foregoing have any interest, direct or indirect, in any transaction, or in any
proposed transactions, which has materially affected or will materially affect
us.





Transactions with Executive
Officers and Directors





During
2007, we paid $10,000 in consulting fees to Sterling M. Redfern for services he
provided to the Company from August 2007 to November 2007.  Mr.
Redfern was appointed as our President on December 6, 2007.  We paid
$8,500 in consulting fees during 2007 to Dorothy Wommack, who served as our
Secretary and Treasurer/Chief Financial Officer until her removal by the Board
of Directors on January 16, 2007, for temporary assistance she provided to our
Acting Secretary following Ms. Wommack’s removal as an officer of the
Company.


21




Transactions with Other
Related Parties





As
discussed above, on December 3, 2007, we obtained a $500,000 revolving line of
credit from Kilpatrick’s Rose-Neath Funeral Homes, Crematorium and Cemeteries,
Inc. (“KRFH”).  The line of credit carries simple interest at the rate
of 6% per annum.  All unpaid principal and accrued interest is due on
December 2, 2010 (the “Maturity Date”).  Until the Maturity Date, we
are only required to pay interest, with the first such payment due in arrears on
June 3, 2007, and then with additional payments every 90 days
thereafter.  At any time, KRFH can demand immediate repayment of the
outstanding balance on the line of credit with ten days notice.  Any
payments due from us that are not paid within ten days of the due date are
subject to late fee of 5%.  We have the right to prepay any amounts
due KRFH at any time without penalty.





Our
Chairman of the Board, Ms. Virginia Shehee, may be deemed the beneficial owner
of over 50% of the outstanding shares of KRFH due to the voting power she has
obtained pursuant to a voting agreement.  Due to the voting power she
has obtained pursuant to a similar voting agreement, Ms. Shehee may also be
deemed the beneficial owner of over 50% of the outstanding shares of Kilpatrick
Life Insurance Company, one of our major shareholders.  The Kilpatrick
Life Insurance Company employs Ms. Shehee as its President and Chief Executive
Officer and Ms. Jacqulyn Wine as its Assistant
Secretary/Treasurer.  Ms. Wine is our Acting Secretary, Acting
Treasurer/Chief Financial Officer and one of our directors.





We
believe the terms of this of the line of credit are no less favorable to us than
we could have obtained from an unaffiliated third party.   See “MANAGEMENT’S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION – GENERAL – Financing” for more information
regarding the line of credit.





Director
Independence





Our
Articles of Incorporation allow us to have a Board of Directors consisting of no
less than two and no more than five directors.  Currently, our Board
of Directors consists of four directors.  We believe one of our
directors, Joe C. Rice, would qualify as “independent” under the listing
standards of The Nasdaq Stock Market, which we use to determine whether each of
our directors is independent.  Under Nasdaq rules, an “independent
director” generally means a person other than an officer or employee of the
listed company or its subsidiaries, or any other individual having a
relationship which, in the opinion of the listed company’s board of directors,
would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.  Certain categories of persons are
deemed not to be independent under the Nasdaq rules, such as persons employed by
the listed company within the last three years, and persons who have received
(or whose immediate family members have received) payments exceeding a specified
amount from the listed company within the last three years, excluding payments
that are not of a disqualifying nature (such as compensation for board service,
payments arising solely from investments in the listed company’s securities, and
benefits under a tax-qualified retirement plan).




[The
remainder of this page is intentionally left blank.]


22


ITEM
13. EXHIBITS





Exhibit
Index





Exhibit
      No.
            Description




2.1
            Acquisition
      Agreement and Plan of Reorganization dated November 15, 2002, by and among
      the Company, Pita King Bakeries and the Shareholders of Pita King
      (incorporated by reference to Exhibit 2.1 to the Company’s Current Report
      on Form 8-K filed on November 19, 2002)3.1
            Articles
      of Incorporation of the Company dated October 26, 1993 (incorporated by
      reference to Exhibit 3.(I) to the Company’s registration statement on Form
      10-SB filed on January 12, 2000)3.2
            Certificate
      of Amendment to Articles of Incorporation, as filed with the Nevada
      Secretary of State on January 22, 1997 (incorporated by reference to
      Exhibit 3.(i) to the Company’s Annual Report on Form 10-KSB, as amended,
      for the year ended December 31, 2005, filed on August 18,
      2006)3.3
            Certificate
      of Amendment to Articles of Incorporation, as filed with the Nevada
      Secretary of State on February 18, 1997 (incorporated by reference to
      Exhibit 3.(i) to the Company’s Annual Report on Form 10-KSB, as amended,
      for the year ended December 31, 2005, filed on August 18,
      2006)3.4
            Certificate
      of Amendment to Articles of Incorporation, as filed with the Nevada
      Secretary of State on April 30, 1997 (incorporated by reference to Exhibit
      3.(i) to the Company’s Annual Report on Form 10-KSB, as amended, for the
      year ended December 31, 2005, filed on August 18, 2006)3.5
            Certificate
      of Amendment to Articles of Incorporation, as filed with the Nevada
      Secretary of State on April 30, 1997 (incorporated by reference to Exhibit
      3.(i) to the Company’s Annual Report on Form 10-KSB, as amended, for the
      year ended December 31, 2005, filed on August 18, 2006)3.6
            Certificate
      of Amendment to Articles of Incorporation, as filed with the Nevada
      Secretary of State on December 21, 2004 (incorporated by reference to
      Exhibit 3.(i) to the Company’s Annual Report on Form 10-KSB, as amended,
      for the year ended December 31, 2005, filed on August 18,
      2006)3.7*
            Bylaws
      of the Company, as amended4.1
            Form
      of 2006 Stock Option Plan (incorporated by reference to Exhibit A to the
      Company’s Proxy Statement for the Annual Meeting of Shareholders filed on
      November 13, 2006)10.1
            Mining
      Property Lease Agreement dated March 2, 1998, between the Company and
      James R. Ardoin (incorporated by reference to Exhibit 10.1 to the
      Company’s Annual Report on Form 10-KSB for the year ended December 31,
      2002, filed on July 22, 2004)10.2
            Exploration
      Rights Agreement dated February 13, 2004, between the Company and
      Associated Placer Group (incorporated by reference to Exhibit 10.1 to the
      Company’s Quarterly Report on Form 10-QSB for the quarter ended March 31,
      2004, filed on July 30, 2004)10.3
            Service
      Agreement dated February 16, 2005, between the Company and Zereko Nevada,
      Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current
      Report on Form 8-K, as amended, filed on February 25,
  2005)10.4
            Joint
      Venture Agreement dated January 10, 2006, between the Company and Resolve
      Capital Funding Corporation, Inc. (incorporated by reference to Exhibit
      10.5 to the Company’s Current Report on Form 8-K filed on January 17,
      2006)




23




10.5
            Agreement
      dated September 23, 2000, between the Company, Gold Standard Mines, Inc.
      and Howard Sadlier (incorporated by reference to Exhibit 10.6 to the
      Company’s Annual Report on Form 10-KSB for the year ended December 31,
      2005, filed on April 14, 2006)10.6
            Assignment
      of Rights to Proprietary Formula dated March 21, 2001, between the
      Company, Gold Standard Mines, Inc. and Howard Sadlier (incorporated by
      reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-KSB
      for the year ended December 31, 2005, filed on April 14,
    2006)10.7
            Mutual
      Agreement to Dissolve Business Relationships with an effective date of
      January 1, 2004, between the Company Pita King Bakeries International,
      Inc. (incorporated by reference to Exhibit 10.9 to the Company’s Annual
      Report on Form 10-KSB for the year ended December 31, 2005, filed on April
      14, 2006)10.8
            Subscription
      Agreement dated March 9, 2006, between the Company and Davy Palmans
      (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report
      on Form 10-KSB for the year ended December 31, 2006, filed on April 20,
      2007)10.9
            Subscription
      Agreement dated March 13, 2006, between the Company and Robert Brown
      (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report
      on Form 10-KSB for the year ended December 31, 2006, filed on April 20,
      2007)10.10
            Subscription
      Agreement dated March 13, 2006, between the Company and Tim Harts
      (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report
      on Form 10-KSB for the year ended December 31, 2006, filed on April 20,
      2007)10.11
            Subscription
      Agreement dated August 4, 2006, between the Company and Plaut Holding Co.
      – J, L.P. (incorporated by reference to Exhibit 10.14 to the Company’s
      Annual Report on Form 10-KSB for the year ended December 31, 2006, filed
      on April 20, 2007)10.12
            Subscription
      Agreement dated August 4, 2006, between the Company and Joseph Burk and
      Marlene Burk JTWROS (incorporated by reference to Exhibit 10.15 to the
      Company’s Annual Report on Form 10-KSB for the year ended December 31,
      2006, filed on April 20, 2007)10.13
            Subscription
      Agreement dated August 18, 2006, between the Company and Joseph C.
      Stauffer (incorporated by reference to Exhibit 10.16 to the Company’s
      Annual Report on Form 10-KSB for the year ended December 31, 2006, filed
      on April 20, 2007)10.14
            Subscription
      Agreement dated October 30, 2006, between the Company and Kilpatrick Life
      Insurance Company (incorporated by reference to Exhibit 10.17 to the
      Company’s Annual Report on Form 10-KSB for the year ended December 31,
      2006, filed on April 20, 2007)10.15*
            Subscription
      Agreement dated January 12, 2007, between the Company and John E.
      Tuma10.16*
            Subscription
      Agreement dated January 15, 2007, between the Company and RMRB, LLC
      (Kenneth Rodney Reeves)10.17*
            Subscription
      Agreement dated January 18, 2007, between the Company and John E.
      Tuma10.18*
            Subscription
      Agreement dated January 24, 2007, between the Company and Snyder Land
      Management, LLC10.19*
            Subscription
      Agreement dated April 9, 2007, between the Company and Kenneth Rodney
      Reeves10.20*
            Subscription
      Agreement dated April 17, 2007, between the Company and MoMe Investments,
      LLC10.21*
            Subscription
      Agreement dated April 17, 2007, between the Company and Jill W.
      Folks




24




10.22*
            Subscription
      Agreement dated April 17, 2007, between the Company and Kenneth Rodney
      Reeves10.23
            Corporate
      Loan Agreement, entered into on December 3, 2007, by Kilpatrick’s
      Rose-Neath Funeral Homes, Crematorium and Cemeteries, Inc. and the Company
      (incorporated by reference to Exhibit 10.1 to the Company’s Current Report
      on Form 8-K filed on December 26, 2007)10.24
            Corporate
      Promissory Note, dated December 3, 2007, and issued by the Company to
      Kilpatrick’s Rose-Neath Funeral Homes, Crematorium and Cemeteries, Inc.
      (incorporated by reference to Exhibit 10.2 to the Company’s Current Report
      on Form 8-K filed on December 26, 2007)10.25
            Security
      Agreement, entered into on December 3, 2007, by Kilpatrick’s Rose-Neath
      Funeral Homes, Crematorium and Cemeteries, Inc. and the Company
      (incorporated by reference to Exhibit 10.3 to the Company’s Current Report
      on Form 8-K filed on December 26, 2007)14.1
            Code
      of Ethics for Principal Executive Officers and Senior Financial Officers
      of the Company (incorporated by reference to Exhibit 14.1 to the Company’s
      Annual Report on Form 10-KSB for the year ended December 31, 2005, filed
      on April 14, 2006)21.1*
            List
      of Subsidiaries of the Company31.1*
            Certification
      of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.31.2*
            Certification
      of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.32.1*
            Certification
      of Chief Executive Officer pursuant to pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      200232.2*
            Certification
      of Chief Financial Officer pursuant to pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002


_________________________________


* Filed
herewith





Financial
Statements





PageReport
      of Independent Registered Accounting Firm
            F-1Balance
      Sheet as of December 31, 2007
            F-2Statement
      of Operations for the years ended December 31, 2007 and
    2006
            F-3Statement
      of Cash Flows for the years ended December 31, 2007 and
    2006
            F-4Statement
      of Stockholders’ Equity for the years ended December 31, 2007 and
      2006
            F-5Notes
      to Financial Statements for the years ended December 31, 2007 and
      2006
            F-9





Financial Statement
Schedules





The
financial statement schedules required by Regulation S-X are omitted because
they are not applicable or the required information is shown in the Financial
Statements or notes thereto.




25




ITEM 14. PRINCIPAL ACCOUNTANT
FEES AND SERVICES





We
appointed the accounting firm of Madsen & Associates CPA’s, Inc. (“Madsen”)
to serve as our independent auditors for the fiscal years ended December 31,
2007 and 2006.  The following table represents aggregate fees billed
for professional audit services rendered by Madsen to provide the audit of our
annual financial statements for the years ended December 31, 2007, and December
31, 2006, respectively:





2007
            
            
            2006Audit
      fees
            
            $
            21,013
            
            
            $
            13,276Audit-related
      fees
            
            
            --
            
            
            
            --Tax
      fees
            
            
            --
            
            
            
            --All
      other fees
            
            
            --
            
            
            
            --





Audit
Fees





Audit
Fees consist of fees billed for professional services rendered for auditing our
annual financial statements, reviews of our interim financial statements
included in our quarterly reports and services performed in connection with
other filings with the SEC.  We incurred audit fees from Madsen of
$21,013 during 2007 and $13,276 during 2006.





Audit
Related Fees





Audit
Related Fees may consist of fees billed for professional services rendered in
connection with comfort letters and other services that are normally provided by
our independent auditors in connection with statutory and regulatory filings or
engagements.  We did not incur any audit related fees from Madsen
during 2007 or 2006.





Tax
Fees





Tax Fees
may consist of fees for professional services for tax compliance, tax advice and
tax planning.  These services include assistance regarding federal,
state and local tax compliance and consultation in connection with various
transactions and acquisitions.  We did not incur any tax fees from
Madsen during 2007 or 2006.





All
Other Fees





We did
not incur any other fees from Madsen during 2007 or 2006.




[The
remainder of this page is intentionally left blank.]





26


SIGNATURES





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







Date:  March
      31, 2008
            INTERNATIONAL
      STAR, INC.
              
              By: /s/ Sterling
      M.
      Redfern
              Sterling M. Redfern
              President and
Director






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





Signature
            Title
            Date/s/
      Sterling M.
      Redfern
              Sterling
      M. Redfern
            President
      and Director
              (Principal
      Executive Officer)
            March
      31, 2008/s/
      Joe C.
      Rice
              Joe
      C. Rice
            Director
            March
      31, 2008/s/
      Virginia K.
      Shehee
              Virginia
      K. Shehee
            Chairman
      of the Board of Directors
            March
      31, 2008/s/
      Jacqulyn B.
      Wine
              Jacqulyn
      B. Wine
            Acting
      Secretary, Acting Treasurer/Chief Financial Officerand
      Director
              (Principal
      Financial Officer and Principal Accounting Officer)
            March
      31, 2008




27




Board of
Directors


International
Star, Inc. and Subsidiaries


Shreveport,
Louisiana





REPORT OF INDEPENDENT
REGISTERED ACCOUNTING FIRM





We have
audited the accompanying consolidated balance sheet of International Star, Inc.
and Subsidiaries (an Exploration Stage Company) as of December 31, 2007 and the
consolidated statements of operations, stockholders’ equity and cash flows for
the years ended December 31, 2007 and 2006, and for the period from inception of
exploration stage (January 1, 2004) through December 31, 2007.  These
consolidated financial statements are the responsibility of the Company’s
management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.





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





In our
opinion, these consolidated financial statements referred to above present
fairly, in all material aspects, the consolidated financial position of the
Company as of December 31, 2007, and the consolidated results of its operations
and cash flows for the years ended December 31, 2007 and 2006, and for the
period from inception of exploration stage (January 1, 2004) through December
31, 2007, in conformity with accounting principles generally accepted in the
United States of America.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  The Company does not have the
necessary working capital to service its debt and for its planned activity,
which raises substantial doubt about its ability to continue as a going
concern.  Management’s plans in regard to these matters are described
in Note F to the financial statements.  These financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.





Madsen
& Associates CPA’s, Inc.


March 26,
2008


Salt Lake
City, Utah




F-1




INTERNATIONAL
STAR, INC.


AND
SUBSIDIARIES


(An
Exploration Stage Company)


BALANCE
SHEET




ASSETSDecember
      31,2007Current
      Assets:Cash
            
            $
            96,141Total Current
    Assets
            
            
            96,141Property
      and Equipment (net of accumulated depreciation)
            
            
            12,535Total Assets
            
            $
            108,676LIABILITIES
      AND STOCKHOLDERS’ DEFICIENCYCurrent
      Liabilities:Accounts
payable
            
            $
            296,358Accrued
expenses
            
            
            2,625Total Current
      Liabilities
            
            
            298,983Long
      Term Note Payable – Related Party
            
            
            225,000Stockholders’
      Deficiency:Preferred Stock20,000,000 shares
      authorized,Undesignated par value – none
      issued
            
            $
            --Common Stock780,000,000 shares authorized, at
      $.001 par value;273,362,274 shares issued and
      outstanding at December 31, 2007
            
            
            273,362Capital in excess of par
      value
            
            
            4,376,659Deficit accumulated during the
      exploration stage
            
            
            (5,065,328
            )Total Stockholders’
      Deficiency
            
            
            (415,307
            )Total
      Liabilities and Stockholders’ Deficiency
            
            $
            108,676See
      the accompanying notes to the financial
  statements.


F-2





INTERNATIONAL
STAR, INC.


AND
SUBSIDIARIES


(An
Exploration Stage Company)


STATEMENT
OF OPERATIONS


December
31, 2007





Year
      Ended December 31,
            
            
            January
      1,
              2004
      (date of inception of exploration
              stage)
      to December 31,2007
            
            
            2006
            
            
            
            2007Revenue:Total Revenue
            
            $
            --
            
            
            $
            --
            
            
            $
            --Expenses:Mineral exploration
      costs
            
            
            44,737
            
            
            
            57,217
            
            
            
            580,739Professional
    fees
            
            
            251,119
            
            
            
            110,601
            
            
            
            473,968Compensation & management
      fees
            
            
            36,500
            
            
            
            426,355
            
            
            
            1,380,409Depreciation &
      amortization
            
            
            3,400
            
            
            
            3,400
            
            
            
            11,273General &
      administrative
            
            
            53,442
            
            
            
            211,986
            
            
            
            401,416Total Operating
      Expenses
            
            
            389,198
            
            
            
            809,559
            
            
            
            2,847,805Net
      (Loss) from Operations
            
            $
            (389,198
            )
            
            $
            (809,559
            )
            
            $
            (2,847,805
            )Other
      Income and ExpensesInterest income
            
            
            2,612
            
            
            
            --
            
            
            
            2,612Interest
expense
            
            
            (1,125
            )
            
            
            (12,500
            )
            
            
            (54,153
            )Loss on disposal of
      assets
            
            
            (12,629
            )
            
            
            --
            
            
            
            (12,629
            )Loss on divestiture of
      subsidiary
            
            
            --
            
            
            
            --
            
            
            
            (99,472
            )Total Other
      Expenses
            
            
            (11,142
            )
            
            
            (12,500
            )
            
            
            (163,642
            )Net
      (Loss)
            
            
            (400,340
            )
            
            
            (822,059
            )
            
            
            (3,011,447
            )Weighted
      Average SharesCommon Stock
      Outstanding
            
            
            272,674,974
            
            
            
            234,642,916Net
      Loss Per Common Share(Basic and
      dilutive)
            
            $
            (0.00
            )
            
            $
            (0.00
            )See
      the accompanying notes to the financial statements.


F-3


INTERNATIONAL
STAR, INC.


AND
SUBSIDIARIES


(An
Exploration Stage Company)


STATEMENT
OF CASH FLOWS


December
31, 2007




Year
      Ended December 31,
            
            
            January
      1,
              2004
      (date of inception of exploration
              stage)
      to December 31,2007
            
            
            2006
            
            
            2007Cash
      flows from operating activities:Net (loss)
            
            $
            (400,340
            )
            
            $
            (822,059
            )
            
            $
            (3,011,447
            )Adjustments to reconcile net
      loss to cash used in operating activities:Depreciation &
      amortization
            
            
            3,400
            
            
            
            3,400
            
            
            $
            11,273Loss on disposal of
      assets
            
            
            12,629
            
            
            
            --
            
            
            
            12,629Loss on divestiture of
      subsidiary
            
            
            --
            
            
            
            --
            
            
            $
            99,472Common stock issued for
      services
            
            
            --
            
            
            
            76,000
            
            
            $
            207,500Changes to operating assets and
      liabilities:(Increase) decrease in accounts
      receivable and prepaids
            
            
            --
            
            
            
            --
            
            
            $
            79,795(Increase) decrease in
      inventories
            
            
            --
            
            
            
            --
            
            
            $
            63,812(Increase) decrease in other
      assets
            
            
            --
            
            
            
            --
            
            
            $
            95,474(Decrease) increase in accounts
      payables and accrued interest
            
            
            42,192
            
            
            
            250,099
            
            
            $
            250,417Net cash used in operating
      activities
            
            
            (342,119
            )
            
            
            (492,560
            )
            
            
            (2,191,075
            )Cash
      flows from investing activities:Purchase of fixed
      assets
            
            
            --
            
            
            
            --
            
            
            $
            (29,355
            )Net cash provided by investing
      activities
            
            
            --
            
            
            
            --
            
            
            
            (29,355
            )Cash
      flows from financing activities:Deposits
            
            
            --
            
            
            
            20,000
            
            
            
            --Repayments of long term
      borrowings
            
            
            (25,000
            )
            
            
            --
            
            
            
            (25,000
            )Proceeds from long term
      borrowings
            
            
            250,000
            
            
            
            --
            
            
            
            250,000Proceeds from sale of common
      stock
            
            
            210,000
            
            
            
            270,600
            
            
            $
            1,727,426Net cash provided by financing
      activities
            
            
            435,000
            
            
            
            290,600
            
            
            
            1,952,426Net
      increase (decrease) in cash and cash equivalents
            
            
            92,881
            
            
            
            (201,960
            )
            
            
            (286,005
            )Cash
      and cash equivalents, beginning of period
            
            
            3,260
            
            
            
            205,220
            
            
            
            364,146Cash
      and cash equivalents, end of period
            
            $
            96,141
            
            
            $
            3,260
            
            
            $
            96,141Supplemental
      non-cash financing activities:Common
      stock issued for deposit
            
            $
            20,000
            
            
            
            
            
            
            $
            20,000Common
      stock issued for payment of notes payable and accrued
    interest
            
            
            
            
            
            $
            278,875
            
            
            $
            278,875Common
      stock issued for accrued compensation
            
            
            
            
            
            $
            57,500
            
            
            $
            57,500Capital
      contributed for payment of loans, cash advances and
    interest
            
            $
            120,767
            
            
            
            
            
            
            $
            202,159See
      the accompanying notes to the financial statements.


F-4


INTERNATIONAL
STAR, INC.


AND
SUBSIDIARIES


STATEMENT
OF STOCKHOLDERS’ EQUITY




Cumulative
from Inception of Exploration Stage (January 1, 2004) through December 31,
2007






Common
            
            
            CommonStock
            
            
            Stock
            
            
            Paid-In
            
            
            Accumulated
            
            
            TotalShares
            
            
            Amount
            
            
            Capital
            
            
            Deficit
            
            
            EquityBalances
      at December 31, 2003
            
            
            180,126,681
            
            $
            180,127
            
            $
            2,183,198
            
            $
            (2,053,882
            )
            $
            309,443Shares
      cancelled from divestiture of Pita King Bakeries, Int’l,
    Inc.
            
            
            (12,000,000
            )
            $
            (12,000
            )
            $
            4,000
            
            $
            
            
            $
            (8,000
            )Shares
      retained to Company and cancelled
            
            
            (105,000
            )
            $
            (105
            )
            $
            (2,895
            )
            $
            
            
            $
            (3,000
            )Common
      stock issued for cash, February 20, 2004Valued
      at $.05 per share
            
            
            90,000
            
            $
            90
            
            $
            1,410
            
            $
            
            
            $
            1,500Common
      stock issued for cash, February 20, 2004Valued
      at $.06 per share
            
            
            300,000
            
            $
            300
            
            $
            5,700
            
            $
            
            
            $
            6,000Common
      stock issued for cash, April 27, 2004Valued
      at $.11 per share
            
            
            409,092
            
            $
            409
            
            $
            14,591
            
            $
            
            
            $
            15,000Common
      stock issued for cash, May 28, 2004Valued
      at $.07 per share
            
            
            454,545
            
            $
            455
            
            $
            9,545
            
            $
            
            
            $
            10,000Common
      stock issued for cash, June 7, 2004Valued
      at $.07 per share
            
            
            4,090,908
            
            $
            4,091
            
            $
            85,909
            
            $
            
            
            $
            90,000Capital
      contributed for interest expenses, June 30, 2004
            
            
            
            
            $
            
            
            $
            7,500
            
            $
            
            
            $
            7,500Common
      stock issued for services, September 30, 2004Valued
      at $.03 per share
            
            
            6,000,000
            
            $
            6,000
            
            $
            54,000
            
            $
            
            
            $
            60,000Common
      stock issued for cash, October 6, 2004Valued
      at $.10 per share
            
            
            2,250,000
            
            $
            2,250
            
            $
            72,750
            
            $
            
            
            $
            75,000Common
      stock issued for cash, November 29, 2004Valued
      at $.10 per share
            
            
            1,500,000
            
            $
            1,500
            
            $
            48,500
            
            $
            
            
            $
            50,000Common
      stock issued for cash, December 8, 2004Valued
      at $.10 per share
            
            
            9,750,000
            
            $
            9,750
            
            $
            315,250
            
            $
            
            
            $
            325,000Common
      stock issued for services, December 31, 2004Valued
      at $.10 per share
            
            
            420,000
            
            $
            420
            
            $
            13,580
            
            $
            
            
            $
            14,000Capital
      contributed for services and accrued expenses
            
            
            
            
            $
            
            
            $
            73,892
            
            $
            
            
            $
            73,892Net
      (loss) for year ended December 31, 2004
            
            
            
            
            $
            
            
            $
            
            
            $
            (799,281
            )
            $
            (799,281
            )Balances
      at December 31, 2004
            
            
            193,286,226
            
            $
            193,286
            
            $
            2,886,930
            
            $
            (3,043,648
            )
            $
            36,569


(continued
below)




F-5




INTERNATIONAL
STAR, INC.
 AND
SUBSIDIARIES
 STATEMENT
OF STOCKHOLDERS’ EQUITY
 (CONTINUED)
 Cumulative
from Inception of Exploration Stage (January 1, 2004) through December 31,
2007


Common
              
              
              CommonStock
              
              
              Stock
              
              
              Paid-In
              
              
              Accumulated
              
              
              TotalShares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              Equity1
      for 3 forward stock split, February 22, 2005Common
      stock issued for cash, February 4, 2005Valued
      at $.05 per share
              
              
              199,500
              
              $
              200
              
              $
              9,776
              
              
              
              
              $
              9,975Common
      stock issued for cash, February 4, 2005Valued
      at $.05 per share
              
              
              1,151,013
              
              $
              1,151
              
              $
              56,400
              
              
              
              
              $
              57,551Common
      stock issued for cash, March 3, 2005Valued
      at $.049
              
              
              509,036
              
              $
              509
              
              $
              24,447
              
              
              
              
              $
              24,956Common
      stock and warrants issued for cash, March 3, 2005Valued
      at $.03
              
              
              1,666,667
              
              $
              1,667
              
              $
              48,313
              
              
              
              
              $
              49,980Common
      stock and warrants issued for cash, March 3, 2005Valued
      at $.02
              
              
              4,500,000
              
              $
              4,500
              
              $
              85,477
              
              
              
              
              $
              89,977Common
      stock issued for cash, March 31, 2005Valued
      at $.10
              
              
              500,000
              
              $
              500
              
              $
              49,500
              
              
              
              
              $
              50,000Common
      stock and warrants issued for cash, April 26, 2005Valued
      at $.12
              
              
              833,334
              
              $
              833
              
              $
              99,137
              
              
              
              
              $
              99,970Common
      stock issued for cash, June 1, 2005.Valued
      at $.066
              
              
              150,000
              
              $
              150
              
              $
              9,850
              
              
              
              
              $
              10,000Common
      stock and warrants issued for cash, June 8, 2005Valued
      at $.06
              
              
              975,000
              
              $
              975
              
              $
              57,495
              
              
              
              
              $
              58,470Common
      stock and warrants issued for cash, August 22, 2005Valued
      at $.02
              
              
              6,300,000
              
              $
              6,300
              
              $
              119,700
              
              
              
              
              $
              126,000Common
      stock and warrants issued for cash, August 22, 2005Valued
      at $.12
              
              
              166,667
              
              $
              167
              
              $
              19,833
              
              
              
              
              $
              20,000Common
      stock issued for cash, December 16, 2005.Valued
      at $.02
              
              
              2,500,000
              
              $
              2,500
              
              $
              47,450
              
              
              
              
              $
              49,950Common
      stock issued for cash, December 30, 2005.Valued
      at $.04
              
              
              250,000
              
              $
              250
              
              $
              9,750
              
              
              
              
              $
              10,000Net
      (loss) for year ended December 31, 2005
              
              
              
              
              
              
              
              
              
              
              
              (799,281
              )
              $
              (799,281
              )212,987,443
              
              $
              212,987
              
              $
              3,524,059
              
              $
              (3,842,929
              )
              $
              (105,883
              )
  (continued
below)
  F-6
 INTERNATIONAL
STAR, INC.
 AND
SUBSIDIARIES
 STATEMENT
OF STOCKHOLDERS’ EQUITY
 (CONTINUED)
 Cumulative
from Inception of Exploration Stage (January 1, 2004) through December 31,
2007
 Common
                  
                  
                  CommonStock
                  
                  
                  Stock
                  
                  
                  Paid-In
                  
                  
                  Accumulated
                  
                  
                  TotalShares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Deficit
                  
                  
                  EquityCommon
      stock issued for services, January 6, 2006Valued
      at $ .04
                  
                  
                  1,437,500
                  
                  $
                  1,438
                  
                  $
                  56,062
                  
                  
                  
                  
                  $
                  57,500Common
      stock issued for cash, March 14, 2006Valued
      at $.015
                  
                  
                  1,666,667
                  
                  $
                  1,667
                  
                  $
                  23,333
                  
                  
                  
                  
                  $
                  25,000Common
      stock and warrants issued for cash, March 18, 2006Valued
      at $ .015
                  
                  
                  2,500,000
                  
                  $
                  2,500
                  
                  $
                  35,000
                  
                  
                  
                  
                  $
                  37,500Common
      stock issued for cash, March 20, 2006Valued
      at $.01
                  
                  
                  9,100,000
                  
                  $
                  9,100
                  
                  $
                  81,900
                  
                  
                  
                  
                  $
                  91,000Common
      stock issued for cash, June 12, 2006Valued
      at $.027
                  
                  
                  731,261
                  
                  $
                  731
                  
                  $
                  19,269
                  
                  
                  
                  
                  $
                  20,000Common
      stock issued for services, June 15, 2006Valued
      at $.038
                  
                  
                  2,000,000
                  
                  $
                  2,000
                  
                  $
                  74,000
                  
                  
                  
                  
                  $
                  76,000Common
      stock issued for cash, July 31, 2006Valued
      at $.01
                  
                  
                  235,000
                  
                  $
                  235
                  
                  $
                  2,115
                  
                  
                  
                  
                  $
                  2,350Common
      stock issued for cash, August 2, 2006Valued
      at $.01
                  
                  
                  3,575,000
                  
                  $
                  3,575
                  
                  $
                  32,175
                  
                  
                  
                  
                  $
                  35,750Common
      stock issued for cash, August 7, 2006Valued
      at $.0125
                  
                  
                  1,600,000
                  
                  $
                  1,600
                  
                  $
                  18,400
                  
                  
                  
                  
                  $
                  20,000Common
      stock issued for cash, August 11, 2006Valued
      at $.015
                  
                  
                  1,000,000
                  
                  $
                  1,000
                  
                  $
                  14,000
                  
                  
                  
                  
                  $
                  15,000Common
      stock issued for cash, August 22, 2006Valued
      at $.015
                  
                  
                  1,000,000
                  
                  $
                  1,000
                  
                  $
                  14,000
                  
                  
                  
                  
                  $
                  15,000Common
      stock issued for cash, September 29, 2006Valued
      at $ .01 per share
                  
                  
                  1,000,000
                  
                  $
                  1,000
                  
                  $
                  9,000
                  
                  
                  
                  
                  $
                  10,000Common
      stock issued for note payable and accrued interest, October 30,
      2006Valued
      at $ .015 per share
                  
                  
                  18,591,682
                  
                  $
                  18,592
                  
                  $
                  260,283
                  
                  
                  
                  
                  $
                  278,875Net
      (loss) for year ended December 31, 2006
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  $
                  (822,059
                  )
                  $
                  (822,059
                  )257,693,292
                  
                  $
                  257,694
                  
                  $
                  4,162,327
                  
                  $
                  (4,664,988
                  )
                  $
                  (244,967
                  )(continued below)


F-7


INTERNATIONAL
STAR, INC.
 AND
SUBSIDIARIES
 STATEMENT
OF STOCKHOLDERS’ EQUITY
 (CONTINUED)
 Cumulative
from Inception of Exploration Stage (January 1, 2004) through December 31,
2007
 Common
                      
                      
                      CommonStock
                      
                      
                      Stock
                      
                      
                      Paid-In
                      
                      
                      Accumulated
                      
                      
                      TotalShares
                      
                      
                      Amount
                      
                      
                      Capital
                      
                      
                      Deficit
                      
                      
                      EquityCommon
      stock issued for deposit, January 13, 2007Valued
      at $ .018 per share
                      
                      
                      1,064,595
                      
                      $
                      1,064
                      
                      $
                      18,936
                      
                      
                      
                      
                      $
                      20,000Common
      stock issued for cash, January 15, 2007Valued
      at $ .015 per share
                      
                      
                      4,166,666
                      
                      $
                      4,167
                      
                      $
                      45,833
                      
                      
                      
                      
                      $
                      50,000Common
      stock issued for cash, January 18, 2007Valued
      at $ .012 per share
                      
                      
                      833,334
                      
                      $
                      833
                      
                      $
                      9,167
                      
                      
                      
                      
                      $
                      10,000Common
      stock issued for cash, January 24, 2007Valued
      at $ .013 per share
                      
                      
                      7,692,308
                      
                      $
                      7,692
                      
                      $
                      92,308
                      
                      
                      
                      
                      $
                      100,000Common
      stock issued for cash, April 9, 2007Valued
      at $ .013 per share
                      
                      
                      769,232
                      
                      $
                      769
                      
                      $
                      9,231
                      
                      
                      
                      
                      $
                      10,000Common
      stock issued for cash, April 17, 2007Valued
      at $ .035 per share
                      
                      
                      1,142,847
                      
                      $
                      1,142
                      
                      $
                      38,857
                      
                      
                      
                      
                      $
                      40,000Net
      (loss) for year ended December 31, 2007
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      $
                      (400,340
                      )
                      $
                      (400,340
                      )Balances
      at December 31, 2007
                      
                      
                      273,362,274
                      
                      $
                      273,362
                      
                      $
                      4,376,659
                      
                      $
                      (5,065,328
                      )
                      $
                      (415,307
                      )See
      accompanying notes to financial
statements.
 F-8




INTERNATIONAL
STAR, INC.


AND
SUBSIDIARIES





NOTES
TO FINANCIAL STATEMENTS





DECEMBER
31, 2007





A.      ORGANIZATION
AND HISTORY





International
Star, Inc. (the “Company”) was incorporated October 28, 1993 as a Nevada
corporation.  On November 5, 1993, the Company issued 2,500 shares, no
par value, for cash consideration of $5,000 in a 504 intrastate
offering.  The Company amended its Articles of Incorporation on
January 22, 1997, increasing its authorized common stock from 2,500 shares to
100,000,000 shares and modifying its par value to $.001 per share.





In
January 1997, the Company forward split its common stock to 6,000,000 shares in
a 2400:1 exchange.  In April 1997, the Company again forward split its
stock 5:1, increasing the total outstanding shares to 30,000,000 and, in a
reorganization of outstanding shares, canceled 17,400,000 shares, forward split
the balance of the shares 8:1 for an additional issuance of 10,080,000 shares to
the 12,600,000 shares outstanding, and then issued 300,000 shares to the
shareholders who canceled the 17,400,000 shares, resulting in 22,980,000 shares
issued and outstanding.  Also, in April 1997, the Company issued
4,500,000 shares (valued at $10,000) in consideration of services performed by
various individuals and corporations.  The 4,500,000-share
transaction, which predates the 5:1 and 8:1 transactions, were apparently not
impacted by either of the two aforementioned forward splits, but resulted in a
total of 27,480,000 shares of common stock issued and outstanding.





In April
1997, the Company entered the waste management business.  The Company
and an affiliated entity, American Holding Group entered into an oral agreement
under which American Holding Group loaned the Company $50,000 at an interest
rate of 3%.  A portion of the loan was used to open a Company office
in Idaho Falls, Idaho.





Due to a
lack of capital, the Company sold its waste management business to Asia Kingtec
Co., Ltd. in December 1997 in a small instrumentation sale for
$17,444.  The Company closed its office in January 1998 and abandoned
the computers and office equipment, purchased at $6,981, to the three
individuals who lead the Company into the waste management
business.  The Company accounts payable reflect $11,455 in disputed
bills from these discontinued operations, which the Company does not intend to
pay.




The three
officers and directors who were appointed at the time of the Company’s
connection with the foray into the waste management business, resigned in August
1999.  The Company accepted the resignations on September 8,
1999.





On July
17, 1998, the Company entered into an extraction agreement with AuRic
Metallurgical Laboratories, Inc., a Utah limited liability corporation, with the
requirement that the Company pay a 1% net smelter return to AuRic for
utilization of its technology.





On
October 12, 1998, the Company entered into a letter of intent with North
American Industrial Development Authority, Inc. (NAIDA) of Kingman,
Arizona.  The original proposal involved constructing an investment in
a mineral processing plant in order to process ores from the Company’s mineral
property.  In exchange, NAIDA would receive 15% of the total ore
produced. However, because of NAIDA’s inability to perform, the proposal was
never set into motion.





On
October 15, 2001, the Company formed a wholly owned subsidiary called Qwik
Track, Inc. (Qwik Track). Qwik Track operated as an internet web-based business
that provides handicapping, analytical data and statistical information for
wagering on thoroughbred horse races.  Qwik Track also offers wagering
enthusiasts the opportunity to participate in multiple racetracks wagering via
the internet.




F-9




On
October 1, 2002, the Company acquired all of the outstanding shares of common
stock of Pita King Bakeries International, Inc. (Pita King) making Pita King a
wholly owned subsidiary of the Company.  Pita King operated a retail
bakery outlet in Everett, Washington which commenced operations in September of
2001.





On
January 1, 2004, the original shareholders of Pita King and the management of
the Company mutually agreed to dissolve their business relationship (see Note
C).





The
Company’s main focus of business, commencing January 1, 2004, is the exploration
of mining claims and mining properties.  The Company has, in
accordance with guidelines of the Securities and Exchange Commission (SEC),
appropriately disclosed that the company is considered an exploration stage
company.





During
2006 the Company relocated its principal offices from Henderson, Nevada to Mount
Pleasant, Texas and then to Shreveport, Louisiana.





B.      SIGNIFICANT
ACCOUNTING POLICIES





1.      Principles
of Consolidation and Accounting Methods





These
consolidated financial statements include the accounts of International Star,
Inc., and Qwik Track, Inc. (a wholly owned subsidiary) for the fiscal year ended
December 31, 2007.  Qwik Track, Inc. has no assets and has not had any
operations during the previous three years.





2.      Use of
Estimates





The
preparation of consolidated financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those
estimates.





3.      Dividend
Policy





The
Company did not declare or pay any dividends during the fiscal years ended
December 31, 2007 and 2006.  There are no legal, contractual or other
restrictions, which limit the Company’s ability to pay dividends. Payment of
future dividends, if any, on the Company’s common stock, will be dependent upon
the amounts of its future after-tax earnings, if any, and will be subject to the
discretion of its Board of Directors.  The Company’s Board of
Directors is not legally obligated to declare dividends, even if the Company is
profitable.  The Company has never paid any dividends on its common
stock and has no plans to do so in the near future.  Instead, the
Company plans to retain any earnings to finance the development of its business
and for general corporate purposes.





4.      Mineral
Properties and Equipment





The
Company has expensed the costs of acquiring and exploring its properties during
the periods in which they were incurred, and will continue to do so until it is
able to determine that commercially recoverable ore reserves are present on the
properties.  If it determines that such reserves exist, it will
capitalize further costs.





5.      Basic and
Dilutive Net Income (Loss) Per Share





Basic net
incomes (loss) per share amounts are computed based on the weighted average
number of shares actively outstanding in accordance with SFAS NO. 128 “Earnings
Per Share.”  Diluted net income (loss) per share amounts are computed
using the weighted average number of common shares and common equivalent shares
outstanding as if shares had been issued on the exercise of any common share
rights unless the exercise becomes anti-dilutive and then only the basic per
share amounts are shown in the report. At December 31 2007, the Company had no
common equivalent shares of stock outstanding.




F-10




6.      Comprehensive
Income





The
Company adopted SFAS No. 130, “Reporting Comprehensive Income”, which requires
inclusion of foreign currency translation adjustments, reported separately in
its Statement of Stockholders’ Equity, in other comprehensive
income.  Such amounts are immaterial and have not been reported
separately.  The Company had no other forms of comprehensive income
since inception.





7.      Stock
Based Compensation





The
Company has elected to follow the provisions of Statement of Financial
Accounting Standards No. 123(R) – fair value reporting and related
interpretations in accounting for its stock based compensation and stock option
plans.  Under this accounting standard, share-based awards are fair
valued and the related stock compensation expense, when applicable, is reported
in the current financial statements.





8.      Income
Taxes





The
Company has adopted SFAS No. 109 “Accounting for Income Taxes”.  The
Company accounts for income taxes under an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in the Company’s
financial statements or tax returns.  In estimating future tax
consequences, all expected future events, other than enactment of changes in the
tax laws or rates, are considered.





Due to
the uncertainty regarding the Company’s future profitability, the future tax
benefits of its net operating losses have been fully offset by a valuation
allowance.





9.      Fair
Value of Financial Instruments





The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values.  These financial instruments include
cash, tax credit recoverable, reclamation bond, accounts payable and accrued
liabilities, amount due to a director and loan payable.





10.    Recent
Accounting Pronouncements





The
Company does not expect that the adoption of other recent account pronouncements
will have a material effect on its financial statements.





11.    Revenue
Recognition





Revenue
will be recognized on the sale and delivery of a product or the completion of a
service provided.





12.    Statement of
Cash Flows





For the
purposes of the statement of cash flows, the Company considers all highly liquid
investments with a maturity of nine months or less to be cash
equivalents.





13.    Financial
and Concentration Risk





The
Company does not have any concentration or related financial credit
risk.





C.      DIVESTITURE
OF PITA KING BAKERIES INTERNATIONAL, INC.





Effective
January 1, 2004, the original shareholders of Pita King Bakeries International,
Inc. and the management of International Star, Inc. (the Company) mutually
agreed to dissolve their business relationship.  Under terms of this
dissolution, the original shareholders of Pita King Bakeries International, Inc.
returned 4,000,000 shares of common stock to the Company and the Company agreed
to forgive a $35,000 loan made to Pita King Bakeries International,
Inc.  The original shareholders of Pita King Bakeries International,
Inc. were allowed to retain 139,500 share of the Company’s common stock which
they had received as part of the original purchase of Pita King Bakeries
International, Inc. by the Company.  The Company has recognized a loss
of $99,472 on the divestiture of Pita King Bakeries International,
Inc.




F-11




D.      COMMON
STOCK





During
the period ended December 31, 2007, the Company issued 15,668,982 shares of
common stock for $210,000 cash and a $20,000 deposit.  At December 31,
2006 there were 8,333,333 warrants to purchase additional shares of common
stock.  All of these outstanding warrants were either canceled by the
Company or expired during the period ended December 31, 2007.  During
the period ended December 31, 2006 the Company issued 22,676,667 shares of
common stock for cash in the amount of $271,600.  During this same
period, the Company issued 3,437,500 shares of common stock for accrued
compensation in the amount of $133,500.  The Company also issued
18,591,682 common shares as payment for a note payable with a principal amount
due of $250,000 and accrued interest of $28,875 on October 30,
2006.  There were no outstanding stock warrants or stock options at
December 31, 2007.





E.      LONG
TERM NOTE PAYABLE – RELATED PARTY





The
Company entered into a loan agreement with Kilpatrick’s Rose-Neath Funeral
Homes, Crematorium and Cemeteries, Inc.on December 3, 2007.  This
Company is controlled through ownership by a shareholder/director of
International Star, Inc.  Under terms of the agreement, the Company
has an available credit line balance of $500,000 with interest accruing at 6%
per annum.  The interest is due and payable on a quarterly basis
(every three months).  The loan is  collateralized by a
security interest to the above mentioned lender in the amount of 51% interest in
the mineral rights of all mining claims owned by or having an interest in now or
in the future in the Detrital Wash and Wickieup properties located in Mohave
County, Arizona along with any future claims acquired by the
Company.  At December 31, 2007, the Company had borrowed $225,000
under the terms of this loan agreement.  The principal amount
borrowed, together with accrued interest, is due and payable on December 3,
2010.





F.      GOING
CONCERN





The
Company will need additional working capital for its future planned activity and
to service its debt, which raises substantial doubt about its ability to
continue as a going concern.  Continuation of the Company as a going
concern is dependent upon obtaining sufficient working capital to be successful
in that effort.  The management of the Company has developed a
strategy, which it believes will accomplish this objective, through additional
loans, and equity funding, which will enable the Company to operate for the
coming year.