UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-KSB/A




(Mark
one)





|X|
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
fiscal year ended: 
December
31, 2006




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




For the
transition period from _________ to ___________




Commission
file number 000-51430





FLEX FUELS ENERGY,
INC.


(formerly
Malibu Minerals, Inc)


(Name of
small business issuer in its charter)





Nevada
              (State
      or other jurisdiction of incorporation or organization)
            
            20-5242826
              (I.R.S.
      Employer Identification No.)





502
      East John Street
              Carson
      City, Nevada 89706
              (Address of
      principal executive offices)
            
            V6C 2W2
              (Zip
      Code)





Mailing
Address


30 St. Mary Ave, London EC3A
8EP, United Kingdom


Issuer’s
telephone Number: +44 (0)8445 862
780











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





Securities
registered under Section 12(g) of the Exchange Act: NONE




Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No |_|




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-K. |_|




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




The
Issuer's revenue for its fiscal year ended December 31, 2006 is:
Nil.





As of
March 31, 2007, the aggregate market value of the registrant's Common Stock held
by non-affiliates of the registrant was approximately $5,149,999 based on
approximately 44,142,846 shares held by non affiliates at a price of $0.1167
(price at which shares of Common Stock were last sold).




As of
December 31, 2006, there were outstanding 74,554,884 shares of Common Stock,
0.001 par value per share.














Explanatory
Note





This
third amended Annual Report on Form 10-KSB/A (the “Amended Report”) amends the
amended Annual Report on Form 10-KSB/A filed by the Company with the Securities
and Exchange Commission on September 12, 2007 (the “Report”) solely to correct
(i) unrecorded liabilities incurred in the year ended December 31, 2006, (ii)
certain legal costs associated with the investment in Flex Fuels Energy Limited
and the private placement that were expensed incorrectly in the Statement of
Operations for the fiscal year ended December 31, 2006, (iii)  to
amend the fair value attributed to the stock issued to Mr. Tom Barr, (iv) to
consolidate the balance sheet and results of Flex Fuels Energy Limited and (v)
to correctly disclose related party transactions and to address the SEC comment
letter received by the Company dated November 27, 2007..





The
effects of these errors are summarized in the table:




As
            
            
            
            
            
            AsReported
            
            
            Adjustments
            
            
            RestatedStatement
      of Operations
            
            $
            
            
            $
            
            
            $Net
      Loss
            
            
            (60,905
            )
            
            
            (1,320,293
            )
            
            
            (1,381,198
            )Basic
      and diluted loss per share
            
            
            (0.00
            )
            
            
            (0.02
            )
            
            
            (0.02
            )Weighted
      average number of shares
            
            
            60,162,280
            
            
            
            
            
            
            
            60,162,280Balance
      SheetAssets
            
            
            1,612,550
            
            
            
            2,209
            
            
            
            1,614,759Liabilities
            
            
            13,455
            
            
            
            60,740
            
            
            
            74,195Stockholders
      Equity
            
            
            1,599,095
            
            
            
            (1,287,222
            )
            
            
            311,873Minority
      Interest
            
            
            -
            
            
            
            1,228,691
            
            
            
            1,228,691Statement
      of Cash FlowsNet
      cash used in operating activities
            
            
            (50,905
            )
            
            
            48,405
            
            
            
            (2,500
            )Net
      cash used in investing activities
            
            
            (1,510,000
            )
            
            
            1,480,000
            
            
            
            (30,000
            )Net
      cash provided by financing activities
            
            
            1,673,455
            
            
            
            (28,455
            )
            
            
            1,645,000




Unrecorded
liabilities




The
Company identified $4,050 in unrecorded liabilities for the period ended
December 31, 2006.




Adjustments
of certain legal costs




The
Company incorrectly included legal costs in the Statement of Operations for the
period ended December 31, 2006 for the private placement ($15,000) and the
acquisition of a 15% holding in FFE Ltd ($20,000).  These costs have
been correctly accounted for with the associated transactions.









Fair
value attributed to the stock issued to Mr. Tom Barr




On
December 18, 2006 the Company issued 412,038 shares of Common Stock in
recognition of services provided to the Company as director. Originally the fair
value attributed to these shares was $0.001667. On the same day the Company
approved a private placement of 14,142,846 shares of Common Stock at $0.1167 per
share to independent third parties. The management concluded that a value of
$0.1167 per share was more appropriate which resulted in a charge of $48,071 in
the amended Statement of Operations for the period ended December 31, 2006 (as
opposed to previously recorded $69).




Consolidation
of Flex Fuels Energy Limited (“FFE Ltd”)




As the
Company has determined that FFE Ltd is a Variable Interest Entity under FIN46R
“Consolidation of Variable Interest Entities” the balance sheet and results of
FFE Ltd have been consolidated with the Company’s balance sheet and results.
This has resulted in the excess of purchase price over net assets acquired of
$1,303,172 being expensed in the period to December 31, 2006 due to FFE Ltd’s
development stage status. The determination was based on the basis that although
the Company acquired a 15% holding in FFE Ltd the Company provided all of the
initial capital for the operations of FFE Ltd and therefore took on risks in
excess of its percentage holding or voting rights.




Related
party transactions




The
related party disclosures (Item 12) have been amended to reflect the
following:




On March
27, 2006, the Company acquired a mineral license for the Malibu Gold Property
from Mr. James Laird, a director and stockholder, for $10,000.





Since
non-Canadian individuals or companies cannot directly hold mineral licenses in
British Columbia, James Laird (CEO, CFO and director) initially held the license
on behalf of the Company.  In June of 2006 the license was transferred
by Mr. Laird to Esther Briner (a stockholder), a licensed Canadian prospecting
agent and stockholder,  In July of 2007 Ms. Briner subsequently
transferred the license to Coalharbour Consulting, Inc (“Coalharbour”), a
licensed Canadian prospecting agent owned and controlled by Esther
Briner.  Coalharbour currently holds the license on behalf of the
Company.




The
Company has not modified or updated disclosures presented in the 10-KSB/A
(Amendment No. 1) in this Form 10-KSB/A (Amendment No. 2), except as
required to reflect the effects of the items discussed above. Accordingly, this
Form 10-KSB/A (Amendment No.2) does not reflect events occurring after the
filing of the Form 10-KSB/A (Amendment No. 1) or modify or update those
disclosures affected by subsequent events or discoveries. Information not
affected by this restatement is unchanged and reflects the disclosures made at
the time of the original filing of the Form 10-K/A (Amendment No.1) on April 26,
2007. Events occurring after the filing of the Form 10-KSB/A (Amendment No. 1)
or other disclosures necessary to reflect subsequent events are addressed in the
Company’s Quarterly Reports on Form 10-QSB for the quarterly period ended
June 30, 2007, which was filed concurrently with the filing of this
Form 10-KSB/A (Amendment No. 2), and any reports filed with the Securities
and Exchange Commission subsequent to the date of this filing.




The
following items have been amended as a result of the restatements described
above:






Part I—
            Item 1—
            Description
      of Business – information on Variable Interest EntityPart II—
            Item 6—
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      OperationsPart  II—
            Item 7—
            Financial
      StatementsPart II—
            Item 8—
            Changes
      in and Disagreements with Accountants on Accounting and Financial
      DisclosurePart II—
            Item
      9A—
            Controls
      and ProceduresPart III—
            Item
      10—
            Executive
      CompensationPart III—
            Item
      12—
            Certain
      Relationships and Related TransactionsPart III—
            Item
      14—
            Principal
      Accountant Services and fees




Additionally
the Report in full has been amended to reflect the change of name of the Company
from Malibu Minerals, Inc to Flex Fuels Energy, Inc that occurred on July 16,
2007.













NOTE
REGARDING SHARE AND PER SHARE DATA





On May
21, 2007, the Board of Directors declared a stock split, distributable May 22,
2007, in the form of a dividend of five additional shares of the Company's
Common Stock for each share owned by stockholders of record at the close of
business on May 21, 2007. Accordingly, all share and per share data has been
restated to reflect the split.








TABLE OF CONTENTS





PART
      I
            PAGEITEM
      1.
            Description
      of Business.
            2ITEM
      2.
            Description
      of Property.
            24ITEM
      3.
            Legal
      Proceedings.
            24ITEM
      4.
            Submission
      of Matters to a Vote of Security Holders.
            24PART
      IIITEM
      5.
            Market
      for Common Equity and Related Stockholder Matters.
            25ITEM
      6.
            Management’s
      Discussion and Analysis or Plan of Operations.
            26ITEM
      7.
            Financials
      Statements.
            29ITEM
      8.
            Changes
      In and Disagreements with Accountants on Accounting and Financial
      Disclosure.
            29ITEM
      8A.
            Controls
      and Procedures.
            30PART
      IIIITEM
      9.
            Directors,
      Executive Officers, Promoters, Control Persons and Corporate Governance;
      Compliance With Section 16(a) of the Exchange Act.
            32ITEM
      10.
            Executive
      Compensation.
            33ITEM
      11.
            Security
      Ownership of Certain Beneficial Owners and Management Related Stockholder
      Matters.
            37ITEM
      12.
            Certain
      Relationships and Related Transactions, and Director
      Independence.
            38ITEM
      13.
            Exhibits.
            40ITEM
      14.
            Principal
      Accounting Fees and Services.
            41Signatures
            
            42













1


ITEM
1. DESCRIPTION OF BUSINESS





Information
Regarding Forward Looking Statements





Flex
Fuels Energy, Inc. (the "Company" or "we" or “us” or "our") (formerly Malibu
Minerals, Inc) has made forward-looking statements (within the meaning of the
Private Securities Litigation Reform Act of 1995) in this Annual Report on Form
10-KSB (the “Annual Report”) that are not historical facts are "forward-looking
statements" which can be identified by the use of terminology such as
"estimates," "projects," "plans," "believes," "expects," "anticipates,"
"intends," or the negative or other variations, or by discussions of strategy
that involve risks and uncertainties. We urge you to be cautious of the
forward-looking statements, that such statements, which are contained in this
Annual Report, reflect our current beliefs with respect to future events and
involve known and unknown risks, uncertainties and other factors affecting our
operations, market growth, mineral claims, mineral exploration activities and
licenses. No assurances can be given regarding the achievement of future
results, as actual results may differ materially as a result of the risks we
face, and actual events may differ from the assumptions underlying the
statements that have been made regarding anticipated events. Factors that may
cause actual results, our performance or achievements, or industry results, to
differ materially from those contemplated by such forward-looking statements
include without limitation:





1. Our
ability to attract and retain management;


2. Our
ability to successfully engage in mineral exploration activities;


3. The
intensity of competition;


4.
Fluctuations in the price of gold and other minerals;


5.
Regulation by federal and provincial governments in territories where we
operate;


6. Our
ability to successfully integrate, if at all, our alternative fuel operations;
and


7.
General economic conditions.





Organizational
History





We were
incorporated in the State of Nevada on March 10, 2006, to operate as an
exploration stage company engaged in the business of exploration and discovery
of gold, minerals, mineral deposits and reserves.





Our
headquarters are located at  30 St. Mary Ave., London EC3A 8EP, United
Kingdom.





Overview





We are an
exploration stage company engaged in the business of exploration and discovery
of gold, minerals, mineral deposits and reserves. We have staked one mineral
claim containing 8 cell claim units totaling 165.685 hectares. Throughout this
Annual Report, we refer to these mining claims as the “Malibu Gold Mine
Property” or “Malibu Gold Property”. We purchased the Malibu Gold Property in
March of 2006. The Malibu Gold Property is located approximately 110 km
northwest of Vancouver, BC, and 75 km north of Sechelt, BC. The property is
situated on the south side of Queen’s Reach on upper Jervis Inlet, due south of
Malibu at the entrance to Princess Louisa Inlet. Access to the property is
available via plane from Vancouver or Sechelt, or by boat from Egmont or Pender
Harbour on the Sechelt Peninsula.





We have
not earned any revenues to date. We plan to earn revenues from sales of any
discovered gold, minerals, mineral deposits and reserves. We do not anticipate
earning revenues until such time as we commercially exploit the mineral deposits
or reserves located on the property, if any. We have not attained profitable
operations and are dependent upon obtaining financing to pursue our business
plan.





During
the fourth quarter of our 2006 fiscal year, for the purpose of diversifying our
business, acquiring capital, gaining greater access to the capital markets and
with the assistance of newly acquired capital promotion of our business of
exploration and discovery of gold, minerals, mineral deposits and reserves, we
entered into an Acquisition Agreement with Flex Fuels Energy Limited and the
stockholders of Flex Fuels Energy Limited as more fully described
below.





In
addition to our management’s approach of diversification of our business, our
management’s goal of gaining greater access to capital markets, subject to the
availability of resources and personnel and existence of proven and probable
gold and mineral reserves, we are currently continuing to and intend to proceed
in the future with (1) our business of acquiring and exploring gold and mineral
properties with proven and probable reserves principally, with the objective of
identifying gold and mineralized deposits economically worthy of continued
production and/or subsequent development, mining or sale, (2) mining and
development of the Malibu Gold Property, and (3) the 3 Phases of our Business
outlined in subsection titled “Proposed
Program of Exploration.”










2





We have
elected a fiscal year end of December 31.





Recent
Developments





We have
recently completed the following transactions:







Appointment
of New Director





On
December 18, 2006, Mr. Thomas Barr was appointed as a member of our board of
directors effective as of equal date for the purpose of overseeing our business
plan and achievement of plan of diversification of our business.





FFE
Ltd Agreement





On
December 29, 2006 we entered into an Acquisition Agreement (the “Agreement”)
with Flex Fuels Energy Limited, a development stage company formed under the
laws of England and Wales (“FFE Ltd”), the stockholders of FFE Ltd (collectively
the “Stockholders”) and the individuals signatories thereto for the purpose of
diversifying our business, acquiring capital, gaining greater access to the
capital markets and with the assistance of newly acquired capital promotion of
our business of exploration and discovery of gold, minerals, mineral deposits
and reserves. Pursuant to the Agreement we acquired 15% of the entire authorized
share capital of FFE Ltd (the “Shares”) and agreed to acquire and, FFE Ltd and
the Stockholders agreed to sell, the remaining 85% of the entire authorized
share capital of FFE Ltd, subject to the satisfaction of various closing
conditions as more fully described below (the “Completion Conditions”). In
consideration for the Shares, we paid to FFE Ltd $1,500,000 out of the Proceeds
(as defined below). Also, effective as of December 19, 2006 and in connection
with the Agreement, Thomas Barr, a member of our board of directors was
appointed to the board of directors of FFE Ltd for the purpose of overseeing the
achievement of the Completion Conditions and FFE Ltd’s business during the
Interim Period (as defined below).





Pursuant
to the Agreement, subject to the satisfaction of the Completion Conditions, we
would acquire the remaining 85% of the entire authorized share capital of FFE
Ltd for which we would be required to issue the Stockholders an aggregate of
24,854,480 shares of our Common Stock. Subject to satisfaction of the Completion
Conditions and attainment of government approvals, if any, the closing of the
acquisition of FFE Ltd is expected to occur no later than five months from the
date of this Agreement (the “Interim Period”). We are presently conducting, and
will continue to conduct, due diligence efforts to ensure that the Completion
Conditions are satisfied.





The
Completion Conditions include, but are not limited to (i) the satisfaction of
various material terms of the Agreement, (ii) the closing of a financing in the
minimum amount of net proceeds of $12,150,000 to our company, (iii) during the
third and fourth months of the Interim Period, in our absolute discretion, us
not concluding that the prospects for success of the FFE Ltd’s business do not
justify proceeding to closing, (iv) the transactions contemplated under the
Agreement having been approved by any regulatory authorities having jurisdiction
over the transactions contemplated; (v) the delivery by us to FFE Ltd of the
Voting Trust Agreements entered into by our stockholders holding in aggregate at
least 10.5% of the issued and outstanding shares of our Common Stock at closing
(the “10.5% Stockholders”), (vi) the delivery by us to FFE Ltd of the Lock-up
Agreements entered into by the our stockholders holding at least 10.5% of our
Common Stock then issued and outstanding, (vii) the delivery by us to FFE Ltd in
a reasonable manner of a confirmation that our Common Stock has been approved
for listing on the Principal Market (as defined in the Agreement), (viii) entry
by FFE Ltd into all of the Completion Agreements set forth in Schedule 7
attached to the Agreement, and (ix) completion and delivery to us by FFE Ltd’s
of its audited financial statements and interim financial statements (as more
fully set forth in the agreement). For a further description of Completion
Conditions, see the Agreement, a copy of which was annexed as Exhibit 10.1 to
our Current Report filed with the SEC on Form 8-K on January 5,
2007.





We cannot
provide any guarantee that the Completion Conditions will be satisfied or that
we will be successful in our efforts to complete the Main Funding. FFE Ltd is a
developmental stage company headquartered in London, England. Flex Fuels plans
to construct, own and manage seed processing facilities, refineries producing
bio diesel products (and associated power generation facilities if commercially
desirable) and to engage in the business of selling supplying and distributing
bio diesel products.









3








As the
Company has determined that FFE Ltd is a Variable Interest Entity under FIN46R
“Consolidation of Variable Interest Entities” the balance sheet and results of
FFE Ltd have to be consolidated with the Company’s balance sheet and results.
The determination was based on the basis that although the Company acquired a
15% holding in FFE Ltd the Company provided all of the initial capital for the
operations of FFE Ltd and therefore took on risks in excess of its percentage
holding or voting rights. The investment of 15% of FFE Ltd has been accounted
for using the purchase method of accounting and, accordingly, the assets
acquired and liabilities assumed have been recorded at their fair values as of
the date of the acquisition.





FFE Ltd
Purchase Price Allocation on Acquisition of 15% holding:





Net
      assets acquired
            
            
            216,828Excess
      of Purchase Price over Net Assets Acquired
            
            
            1,303,172$
            1,520,000








Under
United States Generally Accepted Accounting Principles (“GAAP”) where the
acquired company is a “development stage” enterprise then any Excess of Purchase
Price over Net Assets Acquired is expensed at the time of
acquisition.





The
Financial Accounting Standards Board (“FASB”) has provided guidelines as to
identifying a “development stage” enterprise:





“an
enterprise shall be considered to be in the development stage if it is devoting
substantially all of its efforts to establishing a new business and either of
the following conditions exists:





a)
Planned principal operations have not commenced.





b)
Planned principal operations have commenced, but there has been no significant
revenue there from.





A
development stage enterprise will typically be devoting most of its efforts to
activities such as financial planning; raising capital; exploring for natural
resources; developing natural resources; research and development; establishing
sources of supply; acquiring property, plant, equipment, or other operating
assets, such as mineral rights; recruiting and training personnel; developing
markets; and starting up production.”





The
Company has determined that FFE Ltd is a development stage company and therefore
the Excess of Purchase Price over Net Assets Acquired of $1,303,172 and has been
expensed in the period to December 31, 2006.








December
Private Placement





Also, on
December 29, 2006, we entered into a financing arrangement with several
investors (the “Investors”) pursuant to which we sold $1,635,000 (the
“Proceeds”) of shares of our Common Stock at a per share price of $0.1167 for an
aggregate of 14,142,846 shares sold (the “Common Shares”).





The
Common Shares were offered and sold to the Investors in a private placement
transaction made in reliance upon exemptions from registration pursuant to
Regulation S promulgated under the Securities Act of 1933, as amended (the
“Securities Act”). The offers and sales to the Investors were made in offshore
transactions. None of the Investors were a U.S. person as defined in Rule 902(k)
of Regulation S, and no sales efforts were conducted in the U.S., in accordance
with Rule 903(c). Such Investors acknowledged that the securities purchased must
come to rest outside the U.S., and the certificates contain a legend restricting
the sale of such securities until the Regulation S holding period is
satisfied.







4




Business
Overview





Glossary of Mining
Terms





Archean
            Of
      or belonging to the earlier of the two divisions of Precambrian time, from
      approximately 3.8 to 2.5 billion years ago, marked by an atmosphere with
      little free oxygen, the formation of the first rocks and oceans, and the
      development of unicellular life. Of or relating to the oldest known rocks,
      those of the Precambrian Eon, that are predominantly igneous in
      composition.





Assaying
            Laboratory
      examination that determines the content or proportion of a specific metal
      (i.e.: gold) contained within a sample. Technique usually involves
      firing/smelting.Conglomerate
            A
      coarse-grained clastic sedimentary rock, composed of rounded to subangular
      fragments larger than 2 mm in diameter (granules, pebbles, cobbles,
      boulders) set in a fine-grained matrix of sand or silt, and commonly
      cemented by calcium carbonate, iron oxide, silica, or hardened clay; the
      consolidated equivalent of gravel. The rock or mineral fragments may be of
      varied composition and range widely in size, and are usually rounded and
      smoothed from transportation by water or from wave
  action.Cratons
            Parts
      of the Earth's crust that have attained stability, and have been little
      deformed for a prolonged period.Development
              Stage
            A
      “development stage” project is one which is undergoing preparation of an
      established commercially mineable deposit for its extraction but which is
      not yet in production. This stage occurs after completion of a feasibility
      study.Dolomite
      Beds
            Dolomite
      beds are associated and interbedded with limestone, commonly representing
      postdepositional replacement of limestone.Doré
            unrefined
      gold bullion bars containing various impurities such as silver, copper and
      mercury, which will be further refined to near pure
  gold.Dyke
      or Dike
            A
      tabular igneous intrusion that cuts across the bedding or foliation of the
      country rock.Exploration
      Stage
            An
      “exploration stage” prospect is one which is not in either the development
      or production stage.Fault
            A
      break in the continuity of a body of rock. It is accompanied by a movement
      on one side of the break or the other so that what were once parts of one
      continuous rock stratum or vein are now separated. The amount of
      displacement of the parts may range from a few inches to thousands of
      feet.










5







Feldspathic
            Said
      of a rock or other mineral aggregate containing
  feldspar.Fold
            a
      curve or bend of a planar structure such as rock strata, bedding planes,
      foliation, or cleavageFoliation
            A
      general term for a planar arrangement of textural or structural features
      in any type of rock; esp., the planar structure that results from
      flattening of the constituent grains of a metamorphic
  rock.Formation
            a
      distinct layer of sedimentary rock of similar
  composition.Gabbro
            A
      group of dark-colored, basic intrusive igneous rocks composed principally
      of basic plagioclase (commonly labradorite or bytownite) and clinopyroxene
      (augite), with or without olivine and orthopyroxene; also, any member of
      that group. It is the approximate intrusive equivalent of basalt. Apatite
      and magnetite or ilmenite are common accessory
minerals.Geochemistry
            the
      study of the distribution and amounts of the chemical elements in
      minerals, ores, rocks, solids, water, and the
  atmosphere.Geophysicist
            one
      who studies the earth; in particular the physics of the solid earth, the
      atmosphere and the earth’s magnetosphere.Geotechnical
            the
      study of ground stability.Gneiss
            A
      foliated rock formed by regional metamorphism, in which bands or
      lens-shaped strata or bodies of rock of granular minerals alternate with
      bands or lens-shaped strata or bodies or rock in which minerals having
      flaky or elongate prismatic habits predominate.Granitic
            Pertaining
      to or composed of granite.Heap
      Leach
            a
      mineral processing method involving the crushing and stacking of an ore on
      an impermeable liner upon which solutions are sprayed that dissolve metals
      such as gold and copper; the solutions containing the metals are then
      collected and treated to recover the
metals.












6





Intrusions
            Masses
      of igneous rock that, while molten, were forced into or between other
      rocks.Kimberlite
            A
      blue/gray igneous rock that contains olivine, serpentine, calcite and
      silica and is the principal original environment of
    diamonds.Lamproite
            Dark-colored
      igneous rocks rich in potassium and magnesium.Lithospere
            The
      solid outer portion of the Earth.Mantle
            The
      zone of the Earth below the crust and above the core.Mapped
      or
              Geological
            the
      recording of geologic information such as the distribution and nature of
      rockMapping
            units
      and the occurrence of structural features, mineral deposits, and fossil
      localities.Metavolcanic
            Said
      of partly metamorphosed volcanic rock.Migmatite
            A
      composite rock composed of igneous or igneous-appearing and/or metamorphic
      materials that are generally distinguishable
    megascopically.Mineral
            a
      naturally formed chemical element or compound having a definite chemical
      composition and, usually, a characteristic crystal
form.Mineralization
            a
      natural occurrence in rocks or soil of one or more metal yielding
      minerals.Mineralized
              Material
            The
      term “mineralized material” refers to material that is not included in the
      reserve as it does not meet all of the criteria for adequate demonstration
      for economic or legal extraction.







7





Mining
            Mining
      is the process of extraction and beneficiation of mineral reserves to
      produce a marketable metal or mineral product. Exploration continues
      during the mining process and, in many cases, mineral reserves are
      expanded during the life of the mine operations as the exploration
      potential of the deposit is realized.Outcrop
            that
      part of a geologic formation or structure that appears at the surface of
      the earth.Pipes
            Vertical
      conduits.Plagioclase
            Any
      of a group of feldspars containing a mixture of sodium and calcium
      feldspars, distinguished by their extinction angles.Probable
      Reserve
            The
      term “probable reserve” refers to reserves for which quantity and grade
      and/or quality are computed from information similar to that used for
      proven (measured) reserves, but the sites for inspection, sampling, and
      measurement are farther apart or are otherwise less adequately spaced. The
      degree of assurance, although lower than that for proven reserves, is high
      enough to assume continuity between points of
  observation.Production
      Stage
            A
      “production stage” project is actively engaged in the process of
      extraction and beneficiation of mineral reserves to produce a marketable
      metal or mineral product.Proterozoic
            Of
      or relating to the later of the two divisions of Precambrian time, from
      approximately 2.5 billion to 570 million years ago, marked by the buildup
      of oxygen and the appearance of the first multicellular eukaryotic life
      forms.













8







Reserve
            The
      term “reserve” refers to that part of a mineral deposit which could be
      economically and legally extracted or produced at the time of the reserve
      determination. Reserves must be supported by a feasibility study done to
      bankable standards that demonstrates the economic extraction. (“Bankable
      standards” implies that the confidence attached to the costs and
      achievements developed in the study is sufficient for the project to be
      eligible for external debt financing.) A reserve includes adjustments to
      the in-situ tonnes and grade to include diluting materials and allowances
      for losses that might occur when the material is mined.Sedimentary
            Formed
      by the deposition of sediment.Shear
            a
      form of strain resulting from stresses that cause or tend to
      causecontiguous
      parts of a body of rock to slide relatively to each other in a direction
      parallel to their plane of contact.Sill
            A
      concordant sheet of igneous rock lying nearly horizontal. A sill may
      become a dike or vice versa.Strike
            the
      direction or trend that a structural surface, e.g. a bedding or fault
      plane, takes as it intersects the horizontal.Strip
            to
      remove overburden in order to expose ore.Till
            Generally
      unconsolidated matter, deposited directly by and underneath a glacier
      without subsequent reworking by meltwater, and consisting of a mixture of
      clay, silt, sand, gravel, and boulders ranging widely in size and
      shape.Unconformably
            Not
      succeeding the underlying rocks in immediate order of age or not fitting
      together with them as parts of a continuous whole.Vein
            a
      thin, sheet like crosscutting body of hydrothermal mineralization,
      principally quartz.Wall
      Rock
            the
      rock adjacent to a vein.








Property
Acquisition Details




On March
27, 2006, the Company acquired a mineral license for the Malibu Gold Property
from Mr. James Laird, a director and stockholder, for $10,000.





Since
non-Canadian individuals or companies cannot directly hold mineral licenses in
British Columbia, James Laird (CEO, CFO and director) initially held the license
on behalf of the Company.  In June of 2006 the license was transferred
by Mr. Laird to Esther Briner (a stockholder), a licensed Canadian prospecting
agent and stockholder,  In July of 2007 Ms. Briner subsequently
transferred the license to Coalharbour Consulting, Inc, a licensed Canadian
prospecting agent owned and controlled by Esther Briner.  Coalharbour
currently holds the license on behalf of the Company.













9


Land Status, Topography,
Location, and Access
  The
Malibu Gold Property is located approximately 110 km northwest of Vancouver, BC,
and 75 km north of Sechelt, BC. The property is situated on the south side of
Queen’s Reach on upper Jervis Inlet, due south of Malibu at the entrance to
Princess Louisa Inlet.




Access is
by float plane from Vancouver or Sechelt, or by boat from Egmont or Pender
Harbour on the Sechelt Peninsula. Several campsite locations with good water
supplies can be found within a few kilometers of the property. Supplies and
services are available in Egmont or Pender Harbour.




The
topography along Jervis Inlet extents from sea level to mountain tops in excess
of 2,000 meters elevation. In the vicinity of the old mining tunnels on the
Malibu Gold Property, short, steep cliffs extend to tidewater, but elsewhere on
the property slopes are more manageable.




The
climate is typical of the west coast of British Columbia, mild and wet overall
with some snowfall in the winter months. The summers are usually warm with less
rainfall, and year-round work is possible on the property. Vegetation is a dense
growth of coniferous forest, with cedar, fir, spruce, alder and maple trees.
Ground vegetation is usually salal and various berry bushes.





Mining
Claims




The
Malibu Gold Property comprises one MTO mineral claim containing 8 cell claim
units totaling 165.685 hectares.





BC
      Tenure #
            Work
      Due Date
            Staking
      Date
            Total
      Area (Ha.)525215
            Jan.
      12, 2007
            Jan.
      12, 2006
            165.685











10













Geology of the Mineral
Claims




The
Malibu Gold Property hosts gold and base metal deposits within quartz veins and
quartz-filled shear zones. Two short tunnels (adits) have been driven on the
mineralized areas, exposing lower grade gold, silver, copper, lead and zinc in
the 9 metre long #1 adit, and a high-grade gold vein in the #2 adit. The #2 adit
was driven 2 meters on a shallow-dipping 40 cm wide quartz vein with
arsenopyrite, minor pyrite, chalcopyrite and native gold. The vein pinches and
swells and can be followed for at least 200 meters along the shoreline cliffs.
The #2 adit gave a gold assay 0.72 oz/t Au, with minor values in cobalt, copper
and bismuth.













11















The Upper
Jervis Inlet area is underlain by a variety of Jurassic to Tertiary granitic
intrusives of the Coast Plutonic Complex. The granitic rocks intrude and
metamorphose Jurassic to Lower Cretaceous argillaceous sediments and andesitic
to felsic volcanics of the Gambier Group. The Gambier Group hosts the 60 MT
Britannia copper, zinc, lead, silver, gold deposit on Howe Sound about 80 km to
the southeast.




The
Malibu Gold Property is underlain by a relatively small stock of gabbro-diorite
that has intruded dark grey, partly limey argillaceous shale and slate of the
Gambier Group. Silicification and mineralization occurs on the contact and
within the stock in a number of areas.




On the
contact of the gabbroic stock with argillite at the #1 adit, copper, zinc, lead,
silver and gold values are found within quartz-carbonate veins, shear zones and
fractured gabbro-diorite. A pronounced gold in soil anomaly follows the contact
for more than 200 meters. Gold values in soil reached ore-grade, 3710 ppb or
3.71 g/t gold. Additional soil and rock sampling is clearly
justified.




The #2
adit was driven 2 meters on a shallow-dipping 40 cm wide quartz vein with
arsenopyrite, minor pyrite, chalcopyrite and native gold. The #2 adit gave a
gold assay 0.72 oz/t Au, with minor values in cobalt, copper and bismuth. The
vein can be followed for at least 200 meters along the shoreline cliffs. The
mineralization is hosted entirely within the intrusive gabbro-diorite stock, and
is typical of Tertiary-aged arsenical gold veins found on Vancouver Island and
near Harrison Lake on the mainland.




Exploration History and
Previous Operations




The
Malibu Gold Property has at least one adit dating prior to 1907, when the first
and only mention of the working was made in a Geological Survey Report dated
1908. GSC geologist O. E. LeRoy noted that pyrrhotite and chalcopyrite occurred
along a diorite-slate contact and a 9 metre long adit had been driven on the
zone. A second 2 metre long adit nearby was not mentioned, so it may post-date
LeRoy’s visit.





There are
physical work records of additional work being done on the property during the
1940’s, however, the prospector’s hand-drawn maps attached do not show exactly
where the development is in relation to recognizable land features. This work
apparently consisted of at least four shafts up to 6 meters deep and a 30 metre
long trench.







12






Laird
Exploration Ltd. first explored the property in 1983 as part of the BC
Prospector’s Grant Program. Several assays were taken and the area was
geologically mapped. Two assays from the #1 adit gave moderate values in gold,
silver, copper, lead and zinc. The maximum gold assay was 0.08 oz/t Au. The #2
adit was driven 2 meters on a shallow-dipping 40 cm wide quartz vein with
arsenopyrite, minor pyrite, chalcopyrite and native gold. The vein pinches and
swells and can be followed for at least 200 meters along the shoreline cliffs.
The #2 adit gave a gold assay 0.72 oz/t Au, with minor values in cobalt, copper
and bismuth.




The
location was sold by Laird Exploration Ltd. to Oriole Resources Ltd. in 1988. A
work program consisting of geological mapping, rock sampling, and a soil
geochemical survey was completed in 1988. The #2 adit gold values were confirmed
by assay and additional gold-bearing areas were located at the #1 adit. The soil
grid showed a 200 metre-long gold anomaly extending northwest from the #1 adit,
with values up to 3710 ppb (3.7 g/t Au or 0.11 oz/t Au) in soils. Additional
work was recommended but no further work has been recorded on the property since
1988. Although poorly documented, there has clearly been in excess of $100,000
spent on property development to date.







Proposed Program of
Exploration




Our work
program includes geological mapping and rock sampling of surface showings and
underground workings, construction of a control grid, a soil and silt
geochemical sampling program, EM and magnetometer geophysical surveys, and rock
trenching. Based on a compilation of these results, a diamond drill program will
be designed to explore and define any potential resources. We intend to
implement the following three result-contingent phases for the Malibu Gold
Property, as well as to other potential properties containing mineral rights and
claims:





Phase
1





· Engage in
reconnaissance geological mapping, prospecting, rock and soil
sampling.


· Retain the services
of a geologist, consultant/project manager and a sampler/geological assistant in
order to implement phase I.


· Evaluate rock, soil
and silt samples obtained in order to render a geological map of the Malibu Gold
Property.


· Acquire various
sampling and field supplies to be used in connection with the geological mapping
and prospecting and to implement the evaluation and analysis of the obtained
samples.





Phase
2





· Generate detailed
surface and underground geological mapping and rock sampling, cutline grid
construction, soil and silt geochemical survey, EM and Mag surveys.


· Establish drill and
trenching targets based on the results of the surveys.


· Retain the services
of a four-man crew capable of executing required drilling programs.


· Produce a summary
report of the current geological and mineral state of the Malibu Gold
Property.





Phase
3





· Engage in diamond
drilling at a depth of 1000 meters and retain qualified geological experts to
implement the drilling program.





Proposed Program of
Diversification of Our Business





Subject
to the successful satisfaction of the Completion Conditions, if we are
successful in our efforts to diversify our business via the acquisition of Flex
Fuels pursuant to the terms and conditions of the Agreement (as more fully set
forth above), we intend to implement the following program for Flex
Fuels:





FFE Ltd
would be our wholly owned subsidiary and it would aim to deliver a number of
high yielding renewable energy projects that logically fit into its vertically
integrated structure. We believe that this strategy along with our goal to
diversify our business via (i) alternative fuel and exploration and (ii)
discovery and exploration of minerals and gold subsidiaries is attractive to
capital markets and allows for maximum valuation of our business as a whole.
Such strategy could require approximately $75 million of funding in order for us
to achieve and deliver our long term objectives. Ultimately, if we are
successful in our efforts of completing this acquisition, we would operate our
alternative fuel and our mineral business via two divisions responsible for the
respective business.










13





Cost Estimates of
Exploration Programs




The
anticipated costs (in Canadian Dollars) of this development are presented in
three results-contingent stages.





Phase
      1Reconnaissance
      geological mapping, prospecting,rock
      and soil sampling. Three days on site, two days travel.Geologist
      - 5 days @ $450/day
            
            $
            2250.00Consultant/Project
      Manager - 5 days @ $450/day
            
            $
            2250.00Sampler/Geological
      Assistant - 5 days @ $250/day
            
            $
            1250.00Boat
      rental (including fuel, etc) - 5 days @ $160.00/day
            
            $
            800.00Truck
      rental - 1000 km @ 0.75/km inclusive
            
            $
            750.00Rock
      samples - 50 @ $50.00 per sample
            
            $
            2500.00Soil
      and silt samples - 100 @ $30.00 per sample
            
            $
            3000.00BC
      Ferries
            
            $
            200.00Per
      diem (with camp rental) - 15 labor-days @ $100.00/day
            
            $
            1500.00Misc.
      sampling and field supplies
            
            $
            500.00Report
      and reproduction costs
            
            $
            1000.00Subtotal
            
            $
            16,000.00Management
      Fee @ 15%
            
            $
            2400.00Contingency
      @ 10%
            
            $
            1600.00Total
            
            $
            20,000.00




GST@
      6% (July 1, 2006)
            
            $
            1200.00NET
      TOTAL
            
            $
            21,200.00Phase
      2Detailed
      surface and underground geological mapping and rock sampling, cutline grid
      construction, soiland
      silt geochemical survey, EM and Mag surveys, establish drill and trenching
      targets, four-man crewwith
      camp and supplies, transportation, report.
            
            $
            85,000.00Phase
      31000
      meters of diamond drilling @ 100.00 per metre, plus
    geologicalsupervision,
      camp and supplies, transportation, assays, report and other ancillary
      costs.$
            175,000.00TOTAL
            
            $
            281,200.00







14




Compliance with Government
Regulation




We will
be required to conduct all mineral exploration activities in accordance with the
state and federal regulations. Such operations are subject to various laws
governing land use, the protection of the environment, production, exports,
taxes, labor standards, occupational health, waste disposal, toxic substances,
well safety and other matters. Unfavorable amendments to current laws,
regulations and permits governing operations and activities of resource
exploration companies, or more stringent implementation thereof, could have a
materially adverse impact and cause increases in capital expenditures which
could result in a cessation of operations. We have had no material costs related
to compliance and/or permits in recent years, and anticipate no material costs
in the next year. We will not be required to obtain a permit in order to conduct
Phases 1 and 2 of our proposed exploration program.





Employees




As of
December 31, 2006, we had one employee. We anticipate that we will be conducting
most of our business through agreements with consultants and third parties. To
the extent that we are successful in developing our business and in our efforts
to diversify our business, we would anticipate hiring additional
employees/contractors in the next year to handle anticipated
growth.





RISK
FACTORS





You
should carefully consider the risks described below as well as other information
provided to you in this Annual Report, including information in the section of
this Annual Report entitled “Information Regarding Forward Looking Statements.”
The risks and uncertainties described below are not the only ones facing the
Company. Additional risks and uncertainties not presently known to our company
or that we currently believe are immaterial may also impair our business
operations. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially adversely
affected, the value of our Common Stock could decline, and you may lose all or
part of your investment.





Risks Related to Our
Financial Results





WE
HAVE INCURRED LOSSES SINCE INCEPTION,HAVE YET TO ATTAIN PROFITABLE OPERATIONS
AND ANTICIPATE THAT WE WILL CONTINUE TO INCUR LOSSES FOR THE FORESEEABLE
FUTURE.





As of
December 31, 2006, we have incurred a net loss of $1,381,198 and have no
revenues to date. We also have plans to significantly increase our expenses
associated with our exploration of mineral claims and properties and in the
event of successful acquisition of Flex Fuels, costs associated with our
operation for our alternative fuels business. There is no assurance, we will be
able to derive revenues from our exploration of our mineral claims, successfully
achieve positive cash flow or that our mineral exploration business will be
successful. Furthermore, in light of our losses, we will need to generate
revenues in order to achieve and sustain profitability. If we do achieve
profitability, we may be unable to sustain or increase profitability on a
quarterly or annual basis. Any of these factors could cause our stock price to
decline.





Management
believes that long-term profitability and growth will depend on our ability
to:




o
            attract
      and retain our management and hire and retain qualified
      employees;




o
            successfully
      engage in mineral exploration activities;o
            commercially
      exploit the mineral deposits or reserves located on the Malibu Gold
      Property;o
            identify
      and commercially exploit gold and mineralized deposits economically worthy
      of continued production and/or subsequent development, mining or
      sale




o
            integrate,
      if at all, our alternative fuel operations;o
            successfully
      implement the 3 Phases of our Business outlined in subsection titled “Proposed Program
      of Exploration;” and





o
            Maintain
      sufficient volume of inflow of advertising
  clients.








15




WE
HAVE A LIMITED OPERATING HISTORY AND HAVE YET TO ATTAIN PROFITABLE OPERATIONS
AND BECAUSE WE WILL NEED ADDITIONAL FINANCING TO FUND THE EXPLORATION AND
FINDING OF COMMERCIALLY EXPLOITABLE MINERAL DEPOSITS OR RESERVES, OUR AUDITORS
BELIEVE THAT THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN.




In their
report dated September 12, 2007, our independent auditors stated that there was
substantial doubt about our ability to continue as a going concern.. We have
incurred a net loss of $1,381,198 for the period from March 10, 2006 (inception)
to December 31, 2006 and have no revenues to date. Our future is dependent upon
future profitable operations from exploration of commercially exploitable
mineral deposits or reserves. The exploration for commercially exploitable
mineral deposits or reserves, as well as general, legal, accounting and
administrative expenses associated with our reporting requirements with the SEC,
is expected to require from us total expenditures over the next twelve months in
an approximate amount of $150,000. On December 29, 2006, we received net
proceeds of $1,635,000 for the sale of 14,142,846 shares of our Common Stock to
certain investors and we utilized $1,520,000 out of these proceeds to acquire a
15% equity interest in FFE Ltd (for more information see Section “Recent
Developments” set forth above). Despite this recent financing, our working
capital is not sufficient to enable us to complete all phases of our exploration
program and pursue our stated plan of operation for the next twelve-month
period. Therefore, we will require additional financing for our operational
expenses, and further exploration work for commercially exploitable mineral
deposits or reserves. We are seeking these additional funds via equity
financing, private placements or loans from our directors or current
stockholders. Currently, we do not have definite arrangements for additional
funds.




We expect
to continue to experience net losses. Our ability to continue as a going concern
is subject to our ability to successfully explore for commercially exploitable
mineral deposits or reserves and/or obtain necessary funding from outside
sources, including obtaining additional funding from the sale of our securities,
increasing sales or obtaining loans and grants from various financial
institutions where possible. The going concern uncertainty modification in the
auditor's report increases the difficulty in meeting such goals and there can be
no assurances that such methods will prove successful. If we are not able to
continue as a going concern, it is likely our investors will lose their
investment.




IF
WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.




We will
need to obtain additional financing in order to complete our business plan. We
currently have no revenues to date. We do not have any definite arrangements for
financing and we may not be able to find such financing if required. Obtaining
additional financing would be subject to a number of factors, including investor
acceptance of mineral claims and investor sentiment. These factors may adversely
affect the timing, amount, terms, or conditions of any financing that we may
obtain or make any additional financing unavailable to us.




To date,
our sources of cash have been primarily limited to the sale of equity
securities. We cannot be certain that additional funding will be available on
acceptable terms, or at all. To the extent that we raise additional funds by
issuing equity securities, our stockholders may experience significant dilution.
Any debt financing, if available, may involve restrictive covenants that impact
our ability to conduct our business. If we are unable to raise additional
capital, when required, or on acceptable terms, we may have to significantly
delay, scale back or discontinue our products and services. The going concern
uncertainty modification in the auditor's report increases the difficulty in
meeting such goals and there can be no assurances that such methods will prove
successful.




IF
WE DO NOT CONDUCT MINERAL EXPLORATION ON OUR MINERAL CLAIMS AND KEEP THE CLAIMS
IN GOOD STANDING, THEN OUR RIGHT TO THE MINERAL CLAIMS WILL LAPSE AND WE WILL
LOSE EVERYTHING THAT WE HAVE INVESTED AND EXPENDED TOWARDS THESE
CLAIMS.




We must
complete mineral exploration work on our mineral claims and keep the claims in
good standing. If we do not fulfill our work commitment requirements on our
claims or keep the claims in good standing, then our right to the claims will
lapse and we will lose all interest that we have in these mineral
claims.










16






Risks
Related to Our Business and Our Industry




OUR
COMPANY WAS RECENTLY FORMED, AND WE HAVE NOT PROVEN THAT WE CAN GENERATE A
PROFIT. IF WE FAIL TO GENERATE REVENUES AND INCOME AND ULTIMATE ACHIEVE
PROFITABILITY, AN INVESTMENT IN OUR SECURITIES MAY BE WORTHLESS.




We have
no operating history and have not proved that we can operate successfully. We
face all of the risks inherent in a new business. If we fail, your investment in
our Common Stock will become worthless. From inception on March 10, 2006 to the
end of our fiscal year ended December 31, 2006, we have not earned any revenue.
The purchase or ownership of our securities must therefore be regarded as the
placing of funds at a high risk in a new or "start-up" venture with all the
unforeseen costs, expenses, problems, and difficulties to which such ventures
are subject.






WE
HAVE NO OPERATING HISTORY. THERE CAN BE NO ASSURANCE THAT WE WILL BE SUCCESSFUL
IN GROWING OUR GOLD AND OTHER MINERAL EXPLORATION ACTIVITIES.




We have
no history of operations. As a result, there can be no assurance that we will be
successful in our exploration activities. Our success to date in entering into
ventures to acquire interests in exploration blocks is not indicative that we
will be successful in entering into any further ventures. Any potential
for future growth in our mineral exploration activities will place additional
demands on our executive officers, and any increased scope of our operations
will present challenges due to our current limited management resources. Our
future performance will depend upon our management and their ability to locate
and negotiate additional exploration opportunities in which we are solely
involved or participate in as a joint venture partner. There can be no assurance
that we will be successful in our efforts. Our inability to locate additional
opportunities, to hire additional management and other personnel, or to enhance
our management systems, could have a material adverse effect on our results of
operations. There can be no assurance that our operations will be
profitable.




OUR
MANAGEMENT TEAM CONSISTS OF ONE MEMBER, MR. JAMES LAIRD, OUR SOLE EXECUTIVE
OFFICER, AND WE ARE SOLELY GOVERNED BY TWO DIRECTORS, AS SUCH, THERE MAY BE
SIGNIFICANT RISK TO THE COMPANY FROM A CORPORATE GOVERNANCE
PERSPECTIVE.




James
Laird, our sole executive officer, and our sole two members of our board of
directors, make decisions such as the approval of related party transactions,
the compensation of executive officers, and the oversight of the accounting
function. There will be no segregation of executive duties and there may not be
effective disclosure and accounting controls to comply with applicable laws and
regulations, which could result in fines, penalties and assessments against us.
Accordingly, the inherent controls that arise from the segregation of executive
duties may not prevail. Our only two directors exercise control over all matters
requiring stockholder approval including the election of directors and the
approval of significant corporate transactions. We have not voluntarily
implemented various corporate governance measures, in the absence of which,
stockholders may have more limited protections against the transactions
implemented by Mr. Laird and our board of directors, conflicts of interest and
similar matters.





We have
not adopted corporate governance measures such as an audit or other independent
committees as we presently only have one independent director. Stockholders
should bear in mind our current lack of corporate governance measures in
formulating their investment decisions.
















17





Thereafter, on May 29,
2007, the Company completed the acquisition of Flex Fuels Energy Limited. In
connection with and following the completion of such transaction, management of
the Company changed and, thereafter, the Company engaged new independent
accountants. Following such changes, in July 2007, the Company’s executive
officers after having discussions with the Company’s board of directors noticed
that the while the Company had filed their Form 10-KSB/A in April, the Company
continued to state that the Company’s Controls and Procedures were
effective.  The Company’s executive officers concluded that the
Company’s previously issued financial statements covering the fiscal year ended
December 31, 2006, along with the Report of Independent Registered Certified
Public Accounting Firm and quarterly period ended March 31, 2007 which had been
filed by the Company with the Securities and Exchange Commission on Form
10-KSB/A and Form 10-QSB on April 26, 2007 and May 15, 2007, respectively,
should no longer be relied upon because of errors in such financial statements
as further addressed below. Subsequently, during July 2007 the Company reviewed
the internal controls as of December 31, 2006, and identified the following
material weaknesses in our internal control over financial reporting:




·
            We did not
      maintain a proper in-house finance function and relied upon a third party
      to maintain the finance function and prepare the financial reports;


·
            We did not
      maintain a timely and accurate period-end financial statement closing
      process or effective procedures for reconciling and compiling our
      financial records in a timely fashion. With respect to these procedures
      management determined that the material weakness arose due to the lack of
      training, experience or knowledge of persons preparing the financial
      records;


·
            We did not
      effectively monitor the third-party accounting function and our oversight
      of financial controls; and


·
            The Company’s
      knowledge of US GAAP was limited




The
Company consequently prepared and filed in September 2007 a further amended Form
10-KSB for the fiscal year ended December 31, 2006, as well as an amended Form
10-QSB for the fiscal quarter ended March 31, 2007, which reports included
audited financial statements that had been audited by the Company’s new
independent accountants and restated unaudited financial statements that
corrected all of the prior errors contained in such financial statements and
filings. Specifically, (a) the amended Annual Report on Form 10-KSB/A was filed
by the Company solely to correct:




(i)
            unrecorded
      liabilities incurred in the year ended December 31, 2006;


(ii)
            certain legal
      costs associated with the investment in Flex Fuels Energy Limited and the
      private placement that were expensed incorrectly in the Statement of
      Operations for the fiscal year ended December 31, 2006;


(iii)
            to amend the fair
      value attributed to the stock issued to Mr. Tom Barr;


(iv)
            to consolidate
      the balance sheet and results of Flex Fuels Energy Limited; and


(v)
            to correctly
      disclose related party transactions.




In
addition , the amended Quarterly Report on Form 10-QSB was filed by the Company
solely to correct:




(i)
            unrecorded
      liabilities of $42,000 and other errors totaling $10,050 incurred in the
      quarter ended March 31, 2007;


(ii)
            to amend the
      balance sheets to reflect adjustments made in the Financials Statements
      for the period ended December 31, 2006 filed in the further amended Form
      10-KSB;


(iii)
            to include the
      periods missing from the previous filing (Inception to March 31, 2006 and
      Inception to March 31, 2007) in the Statements of Operations and
      Statements of Cash Flows;


(iv)
            to consolidate
      the balance sheet and results of Flex Fuels Energy Limited; and


(v)
            to correctly
      disclose related party disclosures.







18








BECAUSE
OUR SOLE EXECUTIVE OFFICER, MR. JAMES LAIRD, CONTROLS APPROXIMATELY 40% OF OUR
OUTSTANDING COMMON STOCK, INVESTORS MAY FIND THAT CORPORATE DECISIONS INFLUENCED
BY MR. LAIRD ARE INCONSISTENT WITH THE BEST INTERESTS OF OTHER
STOCKHOLDERS.





Mr. James
Laird, our sole executive officer and a member of our board of directors,
controlled approximately 40% of our issued and outstanding shares of Common
Stock, as of March 31, 2007. Accordingly, in accordance with our articles of
incorporation and bylaws, Mr. Laird is able to control who is elected to our
board of directors and thus could act, or could have the power to act, as our
management. The interests of Mr. Laird may not be, at all times, the same as
those of other stockholders. Since Mr. Laird is not simply a passive investor
but is also our sole executive, his interests as an executive may, at times, be
adverse to those of passive investors. Where those conflicts exist, our
stockholders will be dependent upon Mr. Laird exercising, in a manner fair to
all of our stockholders, his fiduciary duties as an officer or as a member of
our board of directors. Also, Mr. Laird will have the ability to significantly
influence the outcome of most corporate actions requiring stockholder approval,
including the merger of the Company with or into another company, the sale of
all or substantially all of our assets and amendments to our articles of
incorporation. This concentration of ownership with Mr. Laird may also have the
effect of delaying, deferring or preventing a change in control of the Company
which may be disadvantageous to minority stockholders.




WE WILL NEED TO INCREASE THE SIZE OF OUR
ORGANIZATION, AND MAY EXPERIENCE DIFFICULTIES IN MANAGING
GROWTH.




We are a
small company with one employee as of December 31, 2006. We hope to experience a
period of expansion in headcount, facilities, infrastructure and overhead and
hope that further expansion will be required to address potential growth and
market opportunities. Furthermore, in the event we successfully acquire the
remaining share capital of Flex Fuels, we would experience a period of expansion
in headcount, facilities, infrastructure and overhead and would be required to
address potential growth and market opportunities associated with the Flex Fuels
acquisition. Future growth will impose significant added responsibilities on
members of management, including the need to identify, recruit, maintain and
integrate additional independent contractors and managers. Our future financial
performance and our ability to compete effectively will depend, in part, on our
ability to manage any future growth effectively. In the event we successfully
acquire the remaining share capital of Flex Fuels, we would expect to be subject
to the same or greater extent to the aforementioned risks.





SINCE
MR. JAMES LAIRD, OUR EXECUTIVE OFFICER AND A MEMBER OF OUR BOARD OF DIRECTORS,
IS NOT A RESIDENT OF THE UNITED STATES, IT MAY BE DIFFICULT TO ENFORCE ANY
LIABILITIES AGAINST HIM.




Accordingly,
if an event occurs that gives rise to any liability, stockholders would likely
have difficulty in enforcing such liabilities because Mr. Laird, our sole
executive officer and a member of our board of directors, resides outside the
United States. If a stockholder desired to sue, stockholders would have to serve
a summons and complaint. Even if personal service is accomplished and a judgment
is entered against that person, the stockholder would then have to locate assets
of that person, and register the judgment in the foreign jurisdiction where the
assets are located. Furthermore, in the event we successfully acquire the
remaining share capital of FFE Ltd, we anticipate expanding our management team
and expanding our board of directors. One or more members of management team and
expanded board of directors may not be residents of the United States and
stockholders would likely have difficulty in enforcing such liabilities against
them. In the event we successfully acquire the remaining share capital of FFE
Ltd and as a result experience expansion of our management team and expansion of
our board of directors, we would expect to be subject to the same or greater
extent to the aforementioned risks.





BECAUSE MR. JAMES
LAIRD, OUR SOLE EXECUTIVE OFFICER HAS OTHER BUSINESS INTERESTS, HE MAY NOT BE
ABLE OR WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS
OPERATIONS, CAUSING OUR BUSINESS TO FAIL.




It is
possible that the demands on Mr. James Laird, our sole executive officer and a
member of our board of directors, from other obligations could increase with the
result that he would no longer be able to devote sufficient time to the
management of our business. In addition, he may not possess sufficient time for
our business if the demands of managing our business increased substantially
beyond current levels.








19





THE IMPRECISION
OF MINERAL DEPOSIT ESTIMATES MAY PROVE ANY RESOURCE CALCULATIONS THAT WE MAKE TO
BE UNRELIABLE.




Mineral
deposit estimates and related databases are expressions of judgment based on
knowledge, mining experience, and analysis of drilling results and industry
practices. Valid estimates made at a given time may significantly change when
new information becomes available. By their nature, mineral deposit estimates
are imprecise and depend upon statistical inferences, which may ultimately prove
unreliable. Mineral deposit estimates included here, if any, have not been
adjusted in consideration of these risks and, therefore, no assurances can be
given that any mineral deposit estimate will ultimately be reclassified as
reserves.




WE
ARE SENSITIVE TO FLUCTUATIONS IN THE PRICE OF GOLD AND OTHER MINERALS, WHICH IS
BEYOND OUR CONTROL. THE PRICE OF GOLD AND OTHER METALS IS VOLATILE AND PRICE
CHANGES ARE BEYOND OUR CONTROL.




The
prices for gold and other metals fluctuate and are affected by numerous factors
beyond our control. Factors that affect the price of gold and other metals
include consumer demand, economic conditions, over supply from secondary sources
and costs of production. Price volatility and downward price pressure, which can
lead to lower prices, could have a material adverse effect on the costs of and
the viability of our projects.




MINERAL
EXPLORATION AND PROSPECTING IS HIGHLY COMPETITIVE AND SPECULATIVE BUSINESS AND
WE MAY NOT BE SUCCESSFUL IN SEEKING AVAILABLE OPPORTUNITIES.




The
process of mineral exploration and prospecting is a highly competitive and
speculative business. In seeking available opportunities, we will compete with a
number of other companies, including established, multi-national companies that
have more experience and financial and human resources than us. Because we may
not have the financial and managerial resources to compete with other companies,
we may not be successful in our efforts to acquire new projects. However, while
we compete with other exploration companies, there is no competition for the
exploration or removal of mineral from our claims.




COMPLIANCE
WITH ENVIRONMENTAL CONSIDERATIONS AND PERMITTING COULD HAVE A MATERIAL ADVERSE
EFFECT ON THE COSTS OR THE VIABILITY OF OUR PROJECTS. THE HISTORICAL TREND
TOWARD STRICTER ENVIRONMENTAL REGULATION MAY CONTINUE, AND, AS SUCH, REPRESENTS
AN UNKNOWN FACTOR IN OUR PLANNING PROCESSES.




All
mining in Canada is regulated by the government agencies at the Federal and
Provincial levels in that country. Compliance with such regulation could have a
material effect on the economics of our operations and the timing of project
development. Our primary regulatory costs will be related to obtaining licenses
and permits from government agencies before the commencement of mining
activities. An environmental impact study that must be obtained on each
property, in order to obtain governmental approval to mine on the properties, is
also a part of the overall operating costs of a mining company.




The gold
and mineral mining business is subject not only to worker health and safety, and
environmental risks associated with all mining businesses, but is also subject
to additional risks uniquely associated with gold and other minerals mining.
Although we believe that our operations will be in compliance, in all material
respects, with all relevant permits, licenses and regulations involving worker
health and safety, as well as the environment, the historical trend toward
stricter environmental regulation may continue. The possibility of more
stringent regulations exists in the areas of worker health and safety, the
dispositions of wastes, the decommissioning and reclamation of mining and
milling sites and other environmental matters, each of which could have an
adverse material effect on the costs or the viability of a particular project.
In the event we successfully acquire the
remaining share capital of Flex Fuels, we would expect to be subject to the same
or greater extent to the aforementioned risks.






20






MINING
AND EXPLORATION ACTIVITIES ARE SUBJECT TO EXTENSIVE REGULATION BY FEDERAL AND
PROVINCIAL GOVERNMENTS IN CANADA. FUTURE CHANGES IN GOVERNMENTS, REGULATIONS AND
POLICIES, COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS FOR A PARTICULAR
PERIOD AND OUR LONG-TERM BUSINESS PROSPECTS.




Mining
and exploration activities are subject to extensive regulation by Federal and
Provincial Governments in Canada. Such regulation relates to production,
development, exploration, exports, taxes and royalties, labor standards,
occupational health, waste disposal, protection and remediation of the
environment, mine and mill reclamation, mine and mill safety, toxic substances
and other matters. Compliance with such laws and regulations has increased the
costs of exploring, drilling, developing, constructing, operating mines and
other facilities. Furthermore, future changes in governments, regulations and
policies, could adversely affect our results of operations in a particular
period and its long-term business prospects.




The
development of mines and related facilities is contingent upon governmental
approvals, which are complex and time consuming to obtain and which, depending
upon the location of the project, involve various governmental agencies. The
duration and success of such approvals are subject to many variables outside of
our control.




WE
ARE SUBJECT TO COMPLIANCE WITH SECURITIES LAW, WHICH EXPOSES US TO POTENTIAL
LIABILITIES, INCLUDING POTENTIAL RESCISSION RIGHTS.




We have
periodically offered and sold our Common Stock to investors pursuant to certain
exemptions from the registration requirements of the Securities Act, as well as
those of various state securities laws. The basis for relying on such exemptions
is factual; that is, the applicability of such exemptions depends upon our
conduct and that of those persons contacting prospective investors and making
the offering. While we believe that such exemptions were applicable to offers
and sales of our Common Stock, we have not received a legal opinion to the
effect that any of our prior offerings were exempt from registration under any
federal or state law. Instead, we have relied upon the operative facts as the
basis for such exemptions, including information provided by investors
themselves.




If any
prior offering did not qualify for such exemption, an investor would have the
right to rescind its purchase of the securities if it so desired. It is possible
that if an investor should seek rescission, such investor would succeed. A
similar situation prevails under state law in those states where the securities
may be offered without registration in reliance on the partial preemption from
the registration or qualification provisions of such state statutes under the
National Securities Markets Improvement Act of 1996. If investors were
successful in seeking rescission, we would face severe financial demands that
could adversely affect our business and operations. Additionally, if we did not
in fact qualify for the exemptions upon which we have relied, we may become
subject to significant fines and penalties imposed by the SEC and state
securities agencies. In the event we successfully acquire the remaining share
capital of Flex Fuels, we would expect to be subject to the same or greater
extent to the aforementioned risks.




IN
THE EVENT WE SUCCESSFULLY ACQUIRE THE REMAINING SHARE CAPITAL OF FFE LTD, WE MAY
BE SUBJECT TO (I) GREATER LIABILITY RISKS, WHICH COULD BE COSTLY AND NEGATIVELY
IMPACT OUR BUSINESS AND FINANCIAL RESULTS; AND (II) COMPLIANCE WITH FEDERAL AND
STATE REGULATIONS AND SUCH COMPLIANCE WOULD BE AN EXPENSIVE AND TIME-CONSUMING
PROCESS, AND ANY FAILURE TO COMPLY COULD RESULT IN SUBSTANTIAL PENALTIES
..




In the
event we successfully acquire the remaining share capital of FFE Ltd, we
anticipate being subject to a greater extent to liability claims. There are
currently many known hazards associated with the alternative energy industry.
Other significant hazards may be discovered in the future. To protect against
possible liability, we and our partners would be required to obtain liability
insurance with coverage that we believe would then be consistent with industry
practice and appropriate in light of the risks attendant to our business.
However, if we and our partners are unable to maintain insurance in the future
at an acceptable cost or at all, or if our insurance does not fully cover us and
a successful claim was made against us and/or our partners, we could be exposed
to liability. Any claim made against us not fully covered by insurance could be
costly to defend against, result in a substantial damage award against us and
divert the attention of our management from our operations, which could have an
adverse effect on our financial performance.












21


In the
event we successfully acquire the remaining share capital of FFE Ltd, we
anticipate that our operations would be directly or indirectly subject to
extensive and continually changing regulation affecting the alternative fuel
industry. Many departments and agencies, both federal and state, are authorized
by statute to issue, and have issued, rules and regulations binding on the
alternative fuel industry and its individual participants. The failure to comply
with such rules and regulations can result in substantial penalties. The
regulatory burden on the alternative fuel industry would increase our cost of
doing business and, consequently, affect our profitability. If our operations
are found to be in violation of any of the laws and regulations to which we may
be subject, we may be subject to the applicable penalty associated with the
violation, including civil and criminal penalties, damages, fines and the
curtailment of its operations. Any penalties, damages, fines or curtailment of
our then operations, individually or in the aggregate, could adversely affect
our ability to operate our business and our financial results. The risk of us
being found in violation of these laws and regulations is increased by the fact
that many of them have not been fully interpreted by the regulatory authorities
or the courts, and their provisions are open to a variety of interpretations.
Any action against us for violation of these laws or regulations, even if we
successfully defend against it, could cause us to incur significant legal
expenses and divert our management’s attention from the operation of our
business.




IN
THE EVENT WE SUCCESSFULLY ACQUIRE THE REMAINING SHARE CAPITAL OF FFE LTD, (I)
THE AVAILABILITY AND THE PRICE OF THE AGRICULTURAL COMMODITIES AND AGRICULTURAL
COMMODITY PRODUCTS THAT WE MAY THEN PRODUCE AND MERCHANDISE MAY BE AFFECTED BY
WEATHER, DISEASE, GOVERNMENT PROGRAMS AND OTHER FACTORS BEYOND OUR CONTROL; AND
(II) FLUCTUATIONS IN ENERGY PRICES COULD ADVERSELY AFFECT OUR OPERATING
RESULTS.




In the
event we successfully acquire the remaining share capital of FFE Ltd, the
availability and price of agricultural commodities that we may then produce, may
be subject to wide fluctuations due to unpredictable factors such as weather,
plantings, government (domestic and foreign) farm programs and policies, changes
in global demand resulting from population growth and changes in standards of
living, and global production of similar and competitive crops. These factors
have historically caused volatility in the agricultural commodities industry
and, consequently, may cause volatility in our future operating
results. Reduced supply of agricultural commodities due to weather-related
factors could adversely affect our profitability by increasing the cost of raw
materials used in our agricultural processing operations. Reduced supplies of
agricultural commodities could also limit our ability to procure, transport,
store, process, and merchandise agricultural commodities in an efficient manner
which could adversely affect our future profitability. In addition, the
availability and price of agricultural commodities can be affected by other
factors such as plant disease which can result in crop failures and reduced
harvests.




In the
event we successfully acquire the remaining share capital of FFE Ltd, our
operating costs and selling prices of certain finished products will be
sensitive to changes in energy prices. Our processing plants, if any, will be
powered principally by electricity, natural gas, and coal. Our then
transportation operations will be dependent upon diesel fuel and other petroleum
products. Significant increases in the cost of these items could adversely
affect our production costs and profitability. We may produce certain finished
products, such as ethanol and bio-diesel, which are closely related to, or may
be substituted for, petroleum products. Therefore, the selling prices of ethanol
and bio-diesel relate to the selling prices of unleaded gasoline and diesel
fuel. A significant decrease in the price of unleaded gasoline or diesel fuel
could result in a significant decrease in the selling price of our energy
products resulting from conversion of oil seed bearing crops and could adversely
affect our revenues and operating results.









22






IN
THE EVENT WE SUCCESSFULLY ACQUIRE THE REMAINING SHARE CAPITAL OF FFE LTD, (I)
GOVERNMENT POLICIES AND ENVIRONMENTAL REGULATIONS AFFECTING THE AGRICULTURAL
SECTOR AND RELATED INDUSTRIES COULD ADVERSELY AFFECT OUR OPERATIONS AND
PROFITABILITY; AND (II) WE WOULD BE SUBJECT TO FOOD AND FEED INDUSTRY
RISKS.




In the
event we successfully acquire the remaining share capital of FFE Ltd, we maybe
subject to government policies and regulations associated with agricultural
production and trade flows. Governmental policies affecting the agricultural
industry, such as taxes, tariffs, duties, subsidies and import and export
restrictions on agricultural commodities and commodity products, can influence
the planting of certain crops, the location and size of crop production,
whether unprocessed or processed commodity products are traded, the volume and
types of imports and exports, and industry profitability. In addition,
international trade disputes can adversely affect agricultural commodity trade
flows by limiting or disrupting trade between countries or regions. Future
government policies may adversely affect the supply, demand for, and prices of
our products, restrict our ability to do business in our then existing and
target markets and could negatively impact our operating results.




In the
event we successfully acquire the remaining share capital of FFE Ltd, a
significant part of our operations will be regulated by environmental laws and
regulations. The production of our then products would require the use of
materials which can create emissions of certain regulated substances. We cannot
be assured that we would be in compliance with all environmental requirements at
all times, or that we will not incur material costs or liabilities to comply
with environmental requirements. In addition, changes to environmental
regulations may require us to modify our then existing processing facilities and
could significantly increase operating costs.




In the event we successfully
acquire the remaining share capital of FFE Ltd, we would be subject to food
industry risks which include, but are not limited to, food spoilage or food
contamination, shifting consumer preferences, federal, state, and local food
processing regulations, and customer product liability claims. In addition, we
may not always be able to obtain adequate liability insurance related to product
liability and food safety matters. The occurrence of any of the matters
described above could adversely affect our revenues and operating
results.




Risks Related to this
Offering and Our Common Stock




WE
MAY NEED ADDITIONAL CAPITAL THAT COULD DILUTE THE OWNERSHIP INTEREST OF
INVESTORS.




We
require substantial working capital to fund our business. If we raise additional
funds through the issuance of equity, equity-related or convertible debt
securities, these securities may have rights, preferences or privileges senior
to those of the rights of holders of our Common Stock may experience additional
dilution. We cannot predict whether additional financing will be available to us
on favorable terms when required, or at all. Since our inception, we have
experienced negative cash flow from operations and expect to experience
significant negative cash flow from operations in the future. The issuance of
additional Common Stock by our management, may have the effect of further
diluting the proportionate equity interest and voting power of holders of our
Common Stock.







THERE
IS NO MARKET FOR OUR COMMON STOCK, WHICH LIMITS OUR STOCKHOLDERS' ABILITY TO
RESELL THEIR SHARES OR PLEDGE THEM AS COLLATERAL.




As of the
date of this Annual Report, our Common Stock has not been approved for listing,
or commended trading, on Over-The-Counter Bulletin Board (the “OTCBB”), any
quotation service, national exchange or any other exchange. In November of 2006,
we filed a Form 211 application with the NASD to obtain its approval for the
listing of our Common Stock on the OTCBB; however, we cannot guarantee that we
will be successful in our efforts to successfully list our Common Stock on
OTCBB. Thus, currently there is no public market for our shares, and we cannot
assure you that a market for our stock will develop. Consequently, investors may
not be able to use their shares for collateral or loans and may not be able to
liquidate at a suitable price in the event of an emergency. In addition,
investors may not be able to resell their shares at or above the price they paid
for them or may not be able to sell the shares at all.










23




THE
SHARES OF COMMON STOCK ELIGIBLE FOR FUTURE SALE COULD NEGATIVELY AFFECT THE
MARKET PRICE OF OUR COMMON STOCK




If we
ever achieve a listing of our Common Stock, sales of substantial amounts of
Common Stock in the public market could adversely affect the market price of the
Common Stock. These sales also may make it more difficult for us to sell equity
or equity-related securities in the future at a time and price that we deem
reasonable or appropriate. In the event we successfully acquire the remaining
share capital of FFE Ltd, stockholders who have been issued shares in this
Acquisition will be able to sell their shares pursuant to Rule 144 under the
Securities Act of 1933, beginning one year after the stockholders acquired their
shares.




IF
WE EVER ACHIEVE A LISTING OF OUR COMMON STOCK, OUR SHARES MAY QUALIFY AS PENNY
STOCK AND. AS SUCH, WE ARE SUBJECT TO THE RISKS ASSOCIATED WITH “PENNY STOCKS”.
REGULATIONS RELATING TO “PENNY STOCKS” LIMIT THE ABILITY OF OUR STOCKHOLDERS TO
SELL THEIR SHARES AND, AS A RESULT, OUR STOCKHOLDERS MAY HAVE TO HOLD THEIR
SHARES INDEFINITELY.




The
Company’s common shares may be deemed to be “penny stock” as that term is
defined in Regulation Section “240.3a51 -1” of the Securities and Exchange
Commission (the “SEC”). Penny stocks are stocks: (a) with a price of less than
U.S. $5.00 per share; (b) that are not traded on a “recognized” national
exchange; (c) whose prices are not quoted on the NASDAQ automated quotation
system (NASDAQ - where listed stocks must still meet requirement (a) above); or
(d) in issuers with net tangible assets of less than U.S. $2,000,000 (if the
issuer has been in continuous operation for at least three years) or U.S.
$5,000,000 (if in continuous operation for less than three years), or with
average revenues of less than U.S. $6,000,000 for the last three
years.




Section
“15(g)” of the United States Securities Exchange Act of 1934, as amended, and
Regulation Section “240.15g(c)2” of the SEC require broker dealers dealing in
penny stocks to provide potential investors with a document disclosing the risks
of penny stocks and to obtain a manually signed and dated written receipt of the
document before effecting any transaction in a penny stock for the investor’s
account. Potential investors in the Company’s common shares are urged to obtain
and read such disclosure carefully before purchasing any common shares that are
deemed to be “penny stock”.




Moreover,
Regulation Section “240.15g -9” of the SEC requires broker dealers in penny
stocks to approve the account of any investor for transactions in such stocks
before selling any penny stock to that investor. This procedure requires the
broker dealer to: (a) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (b)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (c) provide the investor with a written statement
setting forth the basis on which the broker dealer made the determination in
(ii) above; and (d) receive a signed and dated copy of such statement from the
investor confirming that it accurately reflects the investor’s financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for investors in the Company’s
common shares to resell their common shares to third parties or to otherwise
dispose of them. Stockholders should be aware that, according to Securities and
Exchange Commission Release No. 34-29093, dated April 17, 1991, the market for
penny stocks has suffered in recent years from patterns of fraud and abuse. Such
patterns include:




(i)
control of the market for the security by one or a few broker-dealers that are
often related to the promoter or issuer;




(ii)
manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases;




(iii)
boiler room practices involving high-pressure sales tactics and unrealistic
price projections by inexperienced sales persons;




(iv)
excessive and undisclosed bid-ask differential and markups by selling
broker-dealers; and




(v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor
losses.








24




Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our
securities.




ITEM
2. DESCRIPTION OF PROPERTY





Principal
Executive Offices





Our
principal executive offices are located at: Suite 510 - 999 West Hastings
Street, Vancouver, British Columbia, Canada V6C 2W2.  Our mailing
address is 30 St. Mary Ave., London EC3A 8EP, United Kingdom, and out telephone
number is +44 (0) 8445 862 780.   We utilize our principal
executive offices without having a formal agreement with the landlord.
 We do not own any real estate.





Malibu
Gold Property





For a
description of Malibu Gold Property and our mineral properties, see Item 1
“Description of Business.”





ITEM
3. LEGAL PROCEEDINGS





We are
currently not a party to any material pending legal proceedings or government
actions, including any bankruptcy, receivership, or similar proceedings.
However, from time to time we may be a defendant and plaintiff in various legal
proceedings arising in the normal course of our business. In addition,
management is not aware of any known litigation or liabilities involving the
operators of our properties that could affect our operations. Should any
liabilities incurred in the future, they will be accrued based on management’s
best estimate of the potential loss. As such, there is no adverse effect on our
consolidated financial position, results of operations or cash flow at this
time. Furthermore, our management does not believe that there are any
proceedings to which any of our directors, officers, or affiliates, any owner of
record of the beneficially or more than five percent of our Common Stock, or any
associate of any such director, officer, affiliate, or security holder is a
party adverse to our company or has a material interest adverse to
us.





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





There
were no matters submitted to a vote of our security holders during the fiscal
year ended December 31, 2006.










25





PART
II





ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.





Market
Information





As of the
date of this Annual Report, our Common Stock has not been approved for listing,
or commended trading, on Over-The-Counter Bulletin Board (the “OTCBB”), any
quotation service, national exchange or any other exchange. In November of 2006,
we filed a Form 211 application with the NASD to obtain its approval for the
listing of our Common Stock on the OTCBB; however, we cannot guarantee that we
will be successful in our efforts to successfully list our Common Stock on
OTCBB.





Holders





As of
December 31, 2006 there were 17 stockholders of record of our Common
Stock.





Dividends





We have
never declared any cash dividends and do not anticipate paying such dividends in
the near future. We anticipate future earnings, if any, to be retained for use
in our business. Any future determination to pay cash dividends will be at the
discretion of the Board of Directors and will be dependent upon our results of
operations, financial conditions, contractual restrictions, and other factors
deemed relevant by the Board of Directors. We are under no contractual
restrictions in declaring or paying dividends to our common or preferred
stockholders.





Sales
of Unregistered Securities





Information
regarding our sales of our unregistered securities for the period from inception
to fiscal year ended December 31, 2006, has been previously furnished in our
Registration Statement on Form SB-2 and our Current Reports on Form
8-K.





All of
the above offerings and sales were deemed to be exempt under either rule 506 of
Regulation D and/or Section 4(2) of the Securities Act or pursuant to Regulation
S promulgated under the Securities Act. For offerings and sales deemed to be
exempt from registration under either rule 506 of Regulation D and/or Section
4(2) of the Securities Act, no advertising or general solicitation was employed
in offering the securities. The offerings and sales were made to a limited
number of persons, all of whom were accredited investors, business associates of
our company or executive officers of our company, and transfer was restricted by
us in accordance with the requirements of the Securities Act. In addition to
representations by the above-referenced persons, we have made independent
determinations that all of the above-referenced persons were accredited or
sophisticated investors, and that they were capable of analyzing the merits and
risks of their investment, and that they understood the speculative nature of
their investment. Furthermore, all of the above-referenced persons were provided
with access to our Securities and Exchange Commission filings.







26




For
offerings and sales deemed to be exempt from registration pursuant to Regulation
S promulgated under the Securities Act, the offers and sales to the purchasers
were made in offshore transactions. None of the purchasers were a U.S. person as
defined in Rule 902(k) of Regulation S, and no sales efforts were conducted in
the U.S., in accordance with Rule 903(c). Such purchasers acknowledged that the
securities purchased must come to rest outside the U.S., and the certificates
contain a legend restricting the sale of such securities until the Regulation S
holding period is satisfied.





Purchases
of Equity Securities by the Issuer and Affiliated Purchasers





None





Equity
Compensation Plan Information





As of
December 31, 2006, we have not adopted any equity compensation plan pursuant to
which we may grant equity awards to eligible persons.




The
following table summarizes our equity compensation plan information as of
December 31, 2006.





Plan Category(1)
            
            Number of Shares to
              Be Issued upon
              Exercise of
              Outstanding
              Options, Warrants
              and Rights)
            
            Weighted-Average
              Exercise Price of
              Outstanding Options,
              Warrants and Rights
              (b)
            
            Number of Shares
              Remaining Available
              for Future Issuance
              Under Equity
              Compensation Plans
              (Excluding Shares
              Reflected in
              Column (a))
              (c)Equity
      Compensation plans approved by stockholders
            
            N/A
            
            N/A
            
            N/AEquity
      Compensation plans not approved by stockholders
            
            N/A
            
            N/A
            
            N/ATotal
            
            N/A
            
            N/A
            
            N/A




ITEM
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS





Some of
the information contained in this Annual Report that are not historical facts
are forward-looking statements (within the meaning of the Private Securities
Litigation Reform Act of 1995) which can be identified by the use of terminology
such as "estimates," "projects," "plans," "believes," "expects," "anticipates,"
"intends," or the negative or other variations, or by discussions of strategy
that involve risks and uncertainties. We urge you to be cautious of the
forward-looking statements, that such statements, which are contained in this
Annual Report, reflect our current beliefs with respect to future events and
involve known and unknown risks, uncertainties and other factors affecting our
operations, market growth, mineral claims, mineral exploration activities and
licenses. No assurances can be given regarding the achievement of future
results, as actual results may differ materially as a result of the risks we
face, and actual events may differ from the assumptions underlying the
statements that have been made regarding anticipated events. Factors that may
cause actual results, our performance or achievements, or industry results, to
differ materially from those contemplated by such forward-looking statements
include without limitation:





1. Our
ability to attract and retain management;


2. Our
ability to successfully engage in mineral exploration activities;


3. The
intensity of competition;


4.
Fluctuations in the price of gold and other minerals;


5.
Regulation by federal and provincial governments in territories where we
operate;


6. Our
ability to successfully integrate, if at all, our alternative fuel operations;
and


7.
General economic conditions.





27




Overview





We are an
exploration stage company engaged in the business of exploration and discovery
of gold, minerals, mineral deposits and reserves. We have staked one mineral
claim containing 8 cell claim units totaling 165.685 hectares. Throughout this
Annual Report, we refer to these mining claims as the “Malibu Gold Mine
Property” or “Malibu Gold Property”. We purchased the Malibu Gold Property in
March of 2006. The Malibu Gold Property is located approximately 110 km
northwest of Vancouver, BC, and 75 km north of Sechelt, BC. The property is
situated on the south side of Queen’s Reach on upper Jervis Inlet, due south of
Malibu at the entrance to Princess Louisa Inlet. Access to the property is
available via plane from Vancouver or Sechelt, or by boat from Egmont or Pender
Harbour on the Sechelt Peninsula.







We have
not earned any revenues to date. We plan to earn revenues from sales of any
discovered gold, minerals, mineral deposits and reserves. We do not anticipate
earning revenues until such time as we commercially exploit the mineral deposits
or reserves located on the property, if any. We have not attained profitable
operations and are dependent upon obtaining financing to pursue our business
plan.





During
the fourth quarter of our 2006 fiscal year, for the purpose of diversifying our
business, acquiring capital, gaining greater access to the capital markets and
with the assistance of newly acquired capital promotion of our business of
exploration and discovery of gold, minerals, mineral deposits and reserves, we
entered into an Acquisition Agreement with Flex Fuels Energy Limited and the
stockholders of Flex Fuels Energy Limited as more fully described
below.





In
addition to our management’s approach to diversification of our business, our
management’s goal of gaining greater access to capital markets, subject to the
availability of resources and personnel and the existence of proven and probable
gold and mineral reserves, we are currently continuing to and intend to proceed
in the future with (1) our business of acquiring and exploring gold and mineral
properties with proven and probable reserves principally, with the objective of
identifying gold and mineralized deposits economically worthy of continued
production and/or subsequent development, mining or sale, (2) mining and
development of the Malibu Gold Property, and (3) our 3 Phase Business
Development Plan outlined in Item 1 Description of Business -“Proposed
Program of Exploration.”





The
following discussion of our financial condition and plan of operations should be
read in conjunction with our financial statements and the notes to those
statements included in this Annual Report starting on Page F-1. In addition to
the historical consolidated financial information, the following discussion and
analysis contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including
those set forth under "Risk Factors" and elsewhere in this
prospectus.














28




Plan
of Operations




Subject
to the availability of resources and personnel, our business plan for the next
twelve months is to proceed with (i) the exploration of the Malibu Gold Prospect
to determine whether there is any potential for gold on our mineral claim, (ii)
our business of acquiring and exploring gold and mineral properties with proven
and probable reserves principally, with the objective of identifying gold and
mineralized deposits economically worthy of continued production and/or
subsequent development, (iii) our 3 Phase  Business Development Plan
outlined in Item 1. Description of Business - “Proposed Program of Exploration”
and (iv) diversification of our business, if any, including pursuant to the
terms of the Acquisition Agreement, to the extent feasible and appropriate.
Currently, we have decided to proceed with the three phases of a staged
exploration program recommended by the geological report. We anticipate that
these phases of the recommended geological exploration program will cost
approximately CAD $21,200, $85,000 and $175,000 respectively. We had cash on
hand in the amount of $1,612,500 in as of December 31, 2006, which was entirely
acquired by us late in the fourth quarter of our fiscal year ended December 31,
2006. The Company’s lack of cash during our fiscal year ended December 31, 2006,
has kept us from conducting any exploration work on the Malibu Gold Property or
to otherwise acquire and explore other gold and mineral properties.




Weather
permitting, we will commence Phase 1 of the exploration program during the
second calendar quarter of 2007. Phase 2 and Phase 3 will commence after
completion of the Phase 1 program. As such, we anticipate that we will incur the
following expenses over the next twelve months:




·
            $875
      to be paid to the Provincial government to keep the claim
      valid;·
            $21,200
      in connection with the completion of Phase 1 of our recommended geological
      work program;·
            $85,000
      in connection with the completion of Phase 2 of our recommended geological
      work program;·
            $175,000
      in connection with the completion of Phase 3 of our recommended geological
      work program; and·
            $10,000
      for operating expenses, including professional legal and accounting
      expenses associated with compliance with the periodic reporting
      requirements after we become a reporting issuer under the Securities
      Exchange Act of 1934, but excluding expenses of the
    offering.




If we
decide not to proceed with the exploration of our mineral claim due to our
determination that the results of our initial geological program do not warrant
further exploration or due to an inability to finance further exploration, we
plan to pursue the acquisition of an interest in other mineral claims. We
anticipate that any future acquisition would involve the acquisition of an
option to earn an interest in a mineral claim as we anticipate that we would not
have sufficient cash to purchase a mineral claim of sufficient merit to warrant
exploration. This means that we might offer shares of our stock to obtain an
option on a property. Once we obtain an option, we would then pursue finding the
funds necessary to explore the mineral claim by one or more of the following
means: engaging in an offering of our stock; engaging in borrowing; or locating
a joint venture partner or partners.




Results
of Operations




The
accompanying financial statements show that we have incurred a net loss of
$1,381,198 for the period from March 10, 2006 (inception) to December 31, 2006
and have not yet generated any revenues that can offset operating expenses. We
anticipate that we will not earn revenues until such time as we have entered
into commercial production, if any, of our mineral properties. We are presently
in the exploration stage of our business and we can provide no assurance that we
will discover commercially exploitable levels of mineral resources on our
properties, or if such resources are discovered, that we will enter into
commercial production of our mineral properties.





Liquidity
and Capital Resources




At
December 31, 2006, our cash was $1,612,500 and we had total liabilities of
$74,195. Since our inception on March 10, 2006, to the end of our fiscal year
ended December 31, 2006, we have incurred a net loss of $1,381,198. Net cash
used in operating activities was $2,500 for the period ended December 31, 2006.
At December 31, 2006, we had an accumulated deficit of $1,381,198.




From our
inception on March 10, 2006 to the end of the period December 31, 2006, net cash
provided by financing activities was $1,645,000, which was derived from the
issuance and sales of our Common Stock and was substantially acquired by us late
in the fourth quarter of our fiscal year ended December 31, 2006. For the period
ended December 31, 2006, net cash used in the purchase of the Malibu Gold Mine
Property was $10,000, and net cash used as a result of the purchase of 15%
interest in FFE Ltd was $20,000, resulting from legal costs incurred in the
acquisition of FFE Ltd which occurred on December 29, 2006 and net proceeds of
$1,635,000 was raised on same date in connection with said
acquisition.







29




Based on
our current operating plan, we do not expect to generate revenue that is
sufficient to cover our expenses for at least the next twelve months. In
addition, while we believe that recent financing will provide us with sufficient
cash and/or cash equivalents to execute our Phase I operations, unless we are
successful in achieving Completion of the Acquisition Agreement, we do not
anticipate having sufficient cash and/or cash equivalents to execute our
operations subsequent to this period. In addition, subject to the satisfaction
of the Completion Conditions, if we successfully acquire FFE Ltd per the terms
of the Acquisition Agreement, we will need to obtain additional financing in
considerably larger amounts. Thus, we may need to obtain additional financing to
operate our business for the next twelve months. We hope to raise the capital
necessary to fund our business through a private placement and public offering
of our Common Stock. Moreover, additional financing required to fund operations,
whether raised through a public offering, private equity, debt financing,
arrangements withstockholders or other sources, may
not be available, or if available, may be on terms unacceptable to us. Our
ability to maintain sufficient liquidity is dependent on our ability to raise
additional capital. If we issue additional equity securities to raise funds, the
ownership percentage of our existing stockholders would be reduced. New
investors may demand rights, preferences or privileges senior to those of
existing holders of our Common Stock. Debt incurred by us would be senior to
equity in the ability of debt holders to make claims on our assets. The terms of
any debt issued could impose restrictions on our operations. If adequate funds
are not available to satisfy either short or long-term capital requirements, our
operations and liquidity could be materially adversely affected and we could be
forced to cease operations.




Recent
Accounting Pronouncements





For
recent accounting pronouncements, see Note 2 of our Financial Statements
filed herewith.





ITEM
7. FINANCIAL STATEMENTS





Financial
statements as of and for the fiscal year ended December 31, 2006 been examined
to the extent indicated in their report by BDO Stoy Hayward LLP, independent
registered public accounting firm, and have been prepared in accordance with
Generally Accepted Accounting Principles and pursuant to Regulation S-B as
promulgated by the SEC. The aforementioned financial statements are included
herein starting with page F-1.





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





On June
29, 2007, Flex Fuels Energy, Inc. (the "Company") dismissed Moore &
Associates, Chartered (“Moore”) as its independent accountants. Effective as of
the same date, the Company's Board of Directors approved the decision to change
the independent accountants.





Except
for a “Going Concern” disclaimer issued by Moore in connection with the audit of
the Company’s financial statements for the fiscal year ended December 31, 2006,
the report of Moore on the financial statements for the last fiscal year
contained no adverse opinion or disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting principle.





In
connection with its audit for the most recent fiscal year and up to the date of
the Current Report filed on July 3, 2007, there have been no disagreements with
Moore on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of Moore would have caused them to make reference thereto in
their report on the financial statements for such years.





During
the two most recent fiscal years Moore did not advise the Company with respect
to items listed in Regulation S-B Item 304(a)(1)(iv)(B)). The Company has
requested that Moore furnish it with a letter addressed to the Securities and
Exchange Commission stating whether or not it agrees with the above statements.
A copy of such letter was filed as exhibit #16.1 to the Company’s Current Report
on Form 8-K filed with the SEC on July 3, 2007.





Subsequent
to their dismissal significant errors were discovered leading to this amended
Annual Report. In light of the discovery of these errors, BDO Stoy Hayward LLP
was engaged by the Company to also re-audit the Company’s financial statements
for the fiscal year ended December 31, 2006, included in the Company’s Annual
Report on Form 10-KSB/A filed by the Company with the SEC on April 26,
2007.





The
Company engaged BDO Stoy Hayward LLP (“BDO”) as its new independent accountants
as of June 29, 2007. During the two most recent fiscal years and through the
date of this Current Report, the Company has not consulted with BDO regarding
either (i) the application of accounting principles to a specified transaction,
either completed or proposed; or the type of audit opinion that might be
rendered on the Company's financial statements, and neither a written report was
provided to the Company nor oral advice was provided that BDO concluded was an
important factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue; or (ii) any matter that was
either the subject of a disagreement, as that term is defined in Item
304(a)(1)(iv) of Regulation S-B and the related instructions to Item 304 of
Regulation S-B.







30





ITEM 8A. CONTROLS AND PROCEDURES.




(a) Evaluation of
Disclosure Controls and Procedures





Disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) are controls and other
procedures that are designed to provide reasonable assurance that the
information that we are required to disclose in the reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms, and that such
information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.





In connection with the
preparation of this amended Annual Report, our management, with the
participation of our Chief Executive Officer and our Chief Financial Officer,
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as of December 31, 2006. In making this
evaluation, our management considered the material weaknesses in our internal
control over financial reporting and the status of their remediation. Based on
this evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were not effective as of
December 31, 2006.





A “material weakness” is a
significant deficiency, or combination of significant deficiencies, which
results in more than a remote likelihood that a material misstatement of the
annual or interim financial statements presented will not be prevented or
detected. A “significant deficiency” is a control deficiency, or combination of
control deficiencies, that adversely affects a company’s ability to initiate,
authorize, record, process or report external financial data reliably in
accordance with GAAP such that there is more than a remote likelihood that a
misstatement of the annual or interim financial statements presented that is
more than inconsequential will not be prevented or detected.





In April
2007, the Company determined, after consultation with its independent registered
public accounting firm, that a restatement of its financial statements for the
year ended December 31, 2006 filed as part of its Annual Report on Form 10-KSB
filed with the Securities and Exchange Commission on April 17, 2007, was
necessary due to certain erroneous entries appearing in its financial
statements. Specifically, the Company filed an amended Annual Report on Form
10-KSB/A that amended and restated the Report solely to:





(i) amend and restate
the Company’s financial statements filed as part of the Report to correct:





(a) erroneous “Paid in
Capital” entry and “Retained earnings (deficit)” entry and resulting changes in
“Total stockholders equity” and “Total liabilities and stockholders equity”
entries as of December 31, 2006, set forth in the Balance Sheet located on page
F-2 of this Amended Report,





(b) erroneous
“Deficiency Accumulated During Development Stage” entry and “Total Equity” entry
as of December 31, 2006, set forth in the Statement of Shareholders Equity on
page F-5 of the Amended Report,





(c) erroneous “Cash
Flow from Financing Activities” entry, “Cash at end of period” entry, and
“Shares issued in Lieu of Payment for Service” entry for the fiscal year ended
December 31, 2006, set forth in the Statement of Cash Flows located on page F-6
of the Amended Report, and





(ii) correctly disclose
director compensation paid to a member of the Company’s board of directors
during the fiscal year ended December 31, 2006, set forth on page 28 of the
Amended Report.





Thereafter,
on May 29, 2007, the Company completed the acquisition of Flex Fuels Energy
Limited. In connection with and following the completion of such transaction,
management of the Company changed and, thereafter, the Company engaged new
independent accountants. Following such changes, in July 2007, the Company’s
executive officers after having discussions with the Company’s board of
directors noticed that the while the Company had filed their Form 10-KSB/A in
April, the Company continued to state that the Company’s Controls and Procedures
were effective.  The Company’s executive officers concluded that the
Company’s previously issued financial statements covering the fiscal year ended
December 31, 2006, along with the Report of Independent Registered Certified
Public Accounting Firm and quarterly period ended March 31, 2007 which had been
filed by the Company with the Securities and Exchange Commission on Form
10-KSB/A and Form 10-QSB on April 26, 2007 and May 15, 2007, respectively,
should no longer be relied upon because of errors in such financial statements
as further addressed below. Subsequently, during July 2007 the Company
reviewed the internal controls as of December 31, 2006, and identified the
following material weaknesses in our internal control over financial reporting:




·
            We did not
      maintain a proper in-house finance function and relied upon a third party
      to maintain the finance function and prepare the financial reports;


·
            We did not
      maintain a timely and accurate period-end financial statement closing
      process or effective procedures for reconciling and compiling our
      financial records in a timely fashion. With respect to these procedures
      management determined that the material weakness arose due to the lack of
      training, experience or knowledge of persons preparing the financial
      records;


·
            We did not
      effectively monitor the third-party accounting function and our oversight
      of financial controls; and


·
            The Company’s
      knowledge of US GAAP was limited





The Company
consequently prepared and filed in September 2007 a further amended Form 10-KSB
for the fiscal year ended December 31, 2006, as well as an amended Form 10-QSB
for the fiscal quarter ended March 31, 2007, which reports included audited
financial statements that had been audited by the Company’s new independent
accountants and restated unaudited financial statements that corrected all of
the prior errors contained in such financial statements and filings.
Specifically, (a) the amended Annual Report on Form 10-KSB/A was filed by the
Company solely to correct:






31







(vi)
            unrecorded
      liabilities incurred in the year ended December 31, 2006;


(vii)
            certain legal
      costs associated with the investment in Flex Fuels Energy Limited and the
      private placement that were expensed incorrectly in the Statement of
      Operations for the fiscal year ended December 31, 2006;


(viii)
            to amend the fair
      value attributed to the stock issued to Mr. Tom Barr;


(ix)
            to consolidate
      the balance sheet and results of Flex Fuels Energy Limited; and


(x)
            to correctly
      disclose related party transactions.





In
addition, the amended Quarterly Report on Form 10-QSB was filed by the Company
solely to correct:





(vi)
            unrecorded
      liabilities of $42,000 and other errors totaling $10,050 incurred in the
      quarter ended March 31, 2007;


(vii)
            to amend the
      balance sheets to reflect adjustments made in the Financials Statements
      for the period ended December 31, 2006 filed in the further amended Form
      10-KSB;


(viii)
            to include the
      periods missing from the previous filing (Inception to March 31, 2006 and
      Inception to March 31, 2007) in the Statements of Operations and
      Statements of Cash Flows;


(ix)
            to consolidate
      the balance sheet and results of Flex Fuels Energy Limited; and


(x)
            to correctly
      disclose related party disclosures.





We
believe that the issues surrounding the restatements of these reports, mainly
the maintenance of a proper in-house finance function, maintenance of internal
controls related to the financial closing, review, and analysis process,
oversight of financial controls, and the Company’s knowledge of US GAAP have
been addressed as of the date of filing the amended Forms 10-KSB and 10-QSB
(September 12, 2007). We further believe that the addition of new management
personnel, including new management which resulted from the Company’s
acquisition of Flex Fuels Energy Limited with its own finance function and the
appointment of Paul Gothard, an experienced qualified accountant, as Chief
Financial Officer., has
addressed and remedied the material weaknesses described above, strengthened our
internal controls and ensure that they will be effective in future periods. We
note that the Company expended the sum of $60,000 in connection with the
re-audit of the Company’s historical financial statements by its new independent
accountant’s.





To
remedy such material weaknesses, controls installed in the quarter to September
30, 2007  include but are not limited to the following:





·
            Hiring staff
      experienced in both US GAAP and SEC reporting requirements


·
            Segregating
      preparation and review duties of quarterly and annual reports


·
            Installing a
      monthlyfinancial closing and  management reporting process
      including reconciliations of material and significant accounts (such as
      bank, payables and fixed assets)


·
            Formal purchasing
      and approval policies and associated limits


·
            Establishing
      budgetry and forecasting procedures


·
            Ensuring staff
      are properly trained


·
            Appointing new
      independent auditors




Limitations
on the Effectiveness of Controls




The
Company's disclosurecontrols
are designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposesin
accordance with generally accepted accounting principles.




Management,
including the Company’s Chief Executive Officer and Chief Financial officer,does not expect that our disclosure controls or our internal controls
over financial reporting will prevent all error and fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, but no
absolute, assurance that the objectives of a control system are
met.  Further, any control system reflects limitations on resources,
and the benefits of a control system must be considered relative to its
costsBecause of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and may not be detected.Also,
any evaluation of the effectiveness of controls in future periods are subject to
the risk that those internalcontrols
may become inadequate because of changes inbusiness
conditions, or thatthe
degree of compliance with the policies or procedures may deteriorate.





(b)
Changes in Internal Controls


There
were changes in the
Company's internal control
over financial reporting during
the period covered by this Annual Report on Form 10-KSB/A, which were identified
in connection with management's evaluation required by paragraph (d) of rules
13a-15 and 15d-15 under the Exchange Act, that have materially affected,
or are reasonably likely to materially affect, the
Company's internal control
over financial reporting.










32







PART
III





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





The
following table sets forth information regarding our directors and executive
officers as of December 31, 2006:





Name
            
            Age
            
            Position
            
            Director
      SinceJames
      Laird
              (1)
            
            50
            
            Founder,
      Chief Executive Officer, acting Chief Financial Officer, President and
      Director
            
            March
      2006Thomas
      Barr
              (2)
            
            47
            
            Vice
      President of Alternative Fuel Operations and Director
            
            December
      2006





(1) Mr.
Laird was appointed as our Chief Executive Officer, acting Chief Financial
Officer, President and director from the date of inception of our company, March
10, 2006.


(2) Mr.
Barr was appointed as our director on December 18, 2006, and as our Vice
President of Alternative Fuel Operations on April 12, 2007.




The term
of office of each director of the Company ends at the next annual meeting of the
Company’s stockholders or when such director’s successor is elected and
qualifies. No date for the annual meeting of stockholders is specified in the
Company’s bylaws or has been fixed by the Board of Directors.




The
following information sets forth the backgrounds and business experience of the
directors, executive officers and key employees:





Jim Laird. Jim Laird has been
a prospector and mining exploration contractor for more than 25 years. Mr. Laird
completed the BC EMPR course “Advanced Mineral Exploration for Prospectors,
1980”. Mr. Laird is familiar with the geology of the project area and has more
than 20 years experience consulting in the Harrison Lake - Fraser Valley area.
Mr. Laird’s address is PO Box 672, Lions Bay, BC, V0N 2E0





Thomas Barr. Thomas Barr was
appointed as a member of our board of directors on December 18, 2006. From
February 1 of 2006 to date, Mr. Barr has served as a consultant to Index Oil and
Gas Inc. providing investor and public relations advice. From January 1 of 2005
to January 31 of 2006, Mr. Barr acted as a consultant to small and medium sized
private enterprises regarding prospective funding, investor and public relations
strategy, collateral creation and public market quotation. From December of 2001
to December of 2004 Mr. Barr served as a consultant to EasyScreen PLC, a fully
listed London Stock Exchange Company, at which Mr. Barr’s main duties were to
draft and implement corporate statements and was an integral part of the team
involved in several private placement funding rounds prior to the company’s
acquisition. From January 1996 to November 2001 Mr. Barr was private analyst and
investor in publicly quoted stocks. From 1981 to 1996, Mr. Barr worked for 15
years in the North Sea as a professional saturation diver involved in oil and
gas field sub-sea construction.





Family
Relationships





There are
no family relationships between any of our directors or executive officers. None
of the other directors and executive officers are related by blood, marriage or
adoption.




Board
Committees




At this
time the board has no committees, including audit, nominating or compensation
committee, but we intend to create such committees sometime in the second
calendar quarter of 2007.




Code
of Ethics





As of the
date of this Annual Report, we have not adopted a Code of Ethics (the “Code of
Ethics”) applicable to our principal executive, financial and accounting officer
or persons performing similar functions. We intend to adopt the Code of Ethics
sometime in the second calendar quarter of 2007.









33




Compliance
with Section 16 of the Exchange Act.





Section
16(a) of the Exchange Act requires our directors, officers and persons who own
more than 10% of a registered class of our equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Directors, officers and greater than 10% stockholders are required by SEC
regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely upon our review of the copies of such forms that we received during
the fiscal year ended December 31, 2006, we believe that each person who at any
time during the fiscal year was a director, officer or beneficial owner of more
than 10% of our Common Stock complied with all Section 16(a) filing requirements
during such fiscal year.







ITEM
10. EXECUTIVE COMPENSATION





The
following table provides certain summary information concerning compensation
awarded to, earned by or paid to our Chief Executive Officer and other named
executive officers and directors of our company whose total annual salary and
bonus exceeded $100,000 (collectively, the “named officers”) for the period from
March 10, 2006 (date of inception) to the end of our fiscal year ended December
31, 2006.





Summary
Compensation Table





Name & Principal Position
            
            Year
            
            Salary
              ($)
            
            Bonus
              ($)
            
            Stock
              Awards
              ($)
      (4)
            
            Option
              Awards ($)
            
            Non-Equity
              Incentive
              Plan
              Compens-
              ation
              ($)
            
            Change in
              Pension
              Value and Non-
              Qualified
              Deferred
              Compensation
              Earnings ($)
            
            All
              Other
              Compensation
              ($) (1)
            
            Total ($)James
      Laird
              Founder,
      Chief Executive Officer, acting Chief Financial Officer, President and
      Director (2)
            
            2006
            
            --
      (3)
            
            --
            
            --
            
            --
            
            --
            
            --
            
            --
            
            --





(1) With
the exception of reimbursement of expenses incurred by our named executive
officers during the scope of their employment and stated stock award amounts,
none of the named executive received any other compensation, perquisites, and
personal benefits in excess of $10,000.


(2) Mr.
Laird was appointed as our Chief Executive Officer, acting Chief Financial
Officer, President and Director from the date of inception of our company, March
10, 2006.


(3) Mr.
Laird did not receive any compensation during the 2006 fiscal year. However, in
accordance with his employment agreement entered into with the Company on April
12, 2007, and effective as of December 1, 2006, Mr. Laird received compensation
of $4,000 for his services to the Company for the month of December of
2006.





In
addition, we do not have either (i) a plan that provides for the payment of
retirement benefits, or benefits that will be paid primarily following
retirement, including but not limited to tax-qualified defined benefit plans,
supplemental executive retirement plans, tax-qualified defined contribution
plans and nonqualified defined contribution plans, nor (ii) any contract, agreement, plan or arrangement, whether
written or unwritten, that provides for payment(s) to any of our named executive
officers at, following, or in connection with the resignation, retirement or
other termination of any of our named executive officers, or in connection with
the change in control of our company or a change in any of our named executive
officers’ responsibilities following a change in control, with respect to each
of our named executive officers.









34





OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END




The
following table sets forth information with respect concerning unexercised
options; stock that has not vested; and equity incentive plan awards for each of
our named executive officers outstanding as of the end of our fiscal year ended
December 31, 2006 and grants of options to purchase our Common Stock under our
equity compensation plans, if any, to the named executive officers during the
fiscal year ended December 31, 2006. As of December 31, 2006, we have not
adopted any equity compensation plan pursuant to which we may grant equity
awards to eligible persons.





Option Awards
            
            Stock AwardsName
            
            Number
              of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
            
            Number
              of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Unexercisable
            
            Equity
              Incentive
              Plan
              Awards:
              Number
              of
              Securities
              Underlying
              Unexercised
              Unearned
              Options
              (#)
            
            Option
              Exercise
              Price
              ($)
            
            Option
              Expiration
              Date
            
            Number
              of Shares
              or Units
              of Stock
              That
              Have
              Not
              Vested
              (#)
            
            Market
              Value
              of
              Shares
              or
              Units
              of
              Stock
              That
              Have
              Not
              Vested
              ($)
            
            Equity
              Incentive
              Plan
              Awards:
              Number
              of
              Unearned
              Shares,
              Units or
              Other
              Rights
              That
              Have
              Not
              Vested
              (#)
            
            Equity
              Incentive
              Plan Awards:
              Market or
              Payout
              Value
              of
              Unearned
              Shares,
              Units or
              Other
              Rights
              That Have
              Not
              Vested
              ($)James
      Laird
            
            ---
            
            ---
            
            —
            
            ---
            
            —
            
            —
            
            —
            
            —
            
            —





Employment
Agreements





James
Laird





Effective
December 1, 2006 we executed an employment agreement dated April 12, 2007 with
Mr. James Laird (“Laird Employment Agreement”), our Chief Executive Officer,
President, acting Chief Financial Officer, Secretary, Treasurer and a member of
our board of directors, for the services of Mr. Laird to us in the stated
capacities for a one year term ending November 30, 2007 (the “Laird Employment
Term”). The Laird Employment Agreement shall be subject to renewal at our sole
discretion for successive one (1) year periods if we deliver to Mr. Laird a
written notice of our intent to renew the Employment Term by giving notice to
Mr. Laird per the terms of the Laird Employment Agreement. The Laird Employment
Agreement provides for compensation to Mr. Laird solely in the form of a Base
Salary at a monthly rate of $4,000 for the first four months of the Laird
Employment Term, and at a rate of $2,500 thereafter for the remaining duration
of the Laird Employment Term (collectively, the “Base Salary”). Subject to
renewal of the Laird Employment Term, we and Mr. Laird shall mutually agree to
in writing of the amount of the Base Salary that we shall pay to Mr.
Laird.




Pursuant
to the terms of the Laird Employment Agreement, Mr. Laird shall be provided by
us with reimbursement of expenses related to his employment by us on a basis no
less favorable than that which may be authorized from time to time by the Board,
in its sole discretion, for senior level Employees as a group. During the Laird
Employment Term Mr. Laird shall be entitled to standard vacation and holiday
benefits, as more fully set forth in the Laird Employment Agreement. Except as
expressly provided in Sections 1.4 through 1.6, Employee shall not be entitled
to any other compensation or benefits.





In
addition, Mr. Laird and our company agreed to certain confidentiality,
non-competition, non-solicitation provisions, as more fully set forth in the
Laird Employment Agreement.








35


The Laird
Employment Agreement may terminated in accordance with the following provisions:
(1) by Company with Cause (as provided in the Laird Employment Agreement), (2)
by Company without cause upon not less than 60 days advance written notice to
Mr. Laird; (3) by Mr. Laird’s death or disability, provided that such disability
expected to result in death or to be of a continuous duration of no less than
six (6) months, and the Employee is unable to perform his usual and essential
duties for the Company; (4) for any reason by Mr. Laird voluntarily terminating
the Laird Employment Agreement upon sixty days prior written notice to the
Company.





In the
event we terminate Mr. Laird’s employment, all payments under the Laird
Employment Agreement shall cease, except for the Base Salary to the extent
already accrued. In the event of termination by reason of Mr. Laird’s death
and/or permanent disability, Mr. Laird or his executors, legal representatives
or administrators, as applicable, shall be entitled to an amount equal to Mr.
Laird’s Base Salary accrued through the date of termination. Upon termination of
Mr. Laird, if Mr. Laird executes a written release, substantially in the form
attached to the Laird Employment Agreement, of any and all claims against us and
all related parties with respect to all matters arising out of Mr. Laird’s
employment by us, unless the Employment Term expires or termination is for
Cause, Mr. Laird shall receive, in full settlement of any claims Mr. Laird may
have related to his employment by us, Base Salary for one month from the date of
termination, provided Mr. Laird is otherwise in full compliance with the terms
of the Laird Employment Agreement.





Thomas
Barr





Effective
January 1, 2007, we executed an employment agreement with Mr. Thomas Barr (“Barr
Employment Agreement”), our Vice President of Alternative Fuel Operations and a
member of our board of directors, for the services of Mr. Barr to us in the
stated capacities for a three month term ending March 31, 2007 (the “Barr
Employment Term”). The Barr Employment Agreement shall be subject to renewal at
our sole discretion on a month to month basis if we deliver to Mr. Barr a
written notice of our intent to renew the Barr Employment Term by giving notice
to Mr. Barr per the terms of the Barr Employment Agreement. The Barr Employment
Agreement provides for compensation to Mr. Barr solely in the form of a Base
Salary at a monthly rate of $10,000 through out the Barr Employment Term (the
“Base Salary”). Subject to renewal of the Barr Employment Term, we and Mr. Barr
shall mutually agree to in writing of the amount of the Base Salary that we
shall pay to Mr. Barr. Effective as of April 1, 2007, the Barr Employment
Agreement was effectively extended for one more month upon the same terms and
conditions.





Pursuant
to the terms of the Barr Employment Agreement, Mr. Barr shall be provided by us
with reimbursement of expenses related to his employment by us on a basis no
less favorable than that which may be authorized from time to time by the Board,
in its sole discretion, for senior level Employees as a group. During the Barr
Employment Term Mr. Barr shall be entitled to standard vacation and holiday
benefits, as more fully set forth in the Barr Employment Agreement. Except as
expressly provided in Sections 1.4 through 1.6, Employee shall not be entitled
to any other compensation or benefits.





In
addition, Mr. Barr and we agreed to certain confidentiality, non-competition,
non-solicitation provisions, as more fully set forth in the Barr Employment
Agreement.





The Barr
Employment Agreement may terminated in accordance with the following provisions:
(1) by us with Cause (as provided in the Barr Employment Agreement), (2) by us
without cause upon not less than 60 days advance written notice to Mr. Barr; (3)
as a result of Mr. Barr’s death or disability, provided that such disability
expected to result in death or to be of a continuous duration of no less than
six (6) months, and the Employee is unable to perform his usual and essential
duties for the Company; (4) for any reason by Mr. Barr voluntarily terminating
the Barr Employment Agreement upon sixty days prior written notice to the
Company.





In the
event we terminate Mr. Barr’s employment, all payments under the Barr Employment
Agreement shall cease, except for the Base Salary to the extent already accrued.
In the event of termination by reason of Mr. Barr’s death and/or permanent
disability, Mr. Barr or his executors, legal representatives or administrators,
as applicable, shall be entitled to an amount equal to Mr. Barr’s Base Salary
accrued through the date of termination. Upon termination of Mr. Barr, if Mr.
Barr executes a written release, substantially in the form attached to the Barr
Employment Agreement, of any and all claims against us and all related parties
with respect to all matters arising out of Mr. Barr’s employment by us, unless
the Employment Term expires or termination is for Cause, Mr. Barr shall receive,
in full settlement of any claims Mr. Barr may have related to his employment by
us, Base Salary for one month from the date of termination, provided Mr. Barr is
otherwise in full compliance with the terms of the Barr Employment
Agreement.










36


Director
Compensation




The
following table sets forth with respect to each of our directors, compensation
information inclusive of equity awards and payments made in the fiscal year
ended December 31, 2006.





Name
              (a)
            
            Fees
              Earned
              or
              Paid
              in
              Cash
              ($)
              (b)
            
            Stock
              Awards
              ($)
              (c)
            
            Option
              Awards
              ($)
              (d)
            
            Non-Equity
              Incentive
              Plan
              Compensation
              ($)
              (e)
            
            Change in
              Pension Value
              and
              Nonqualified
              Deferred
              Compensation
              Earnings
              (f)
            
            All Other
              Compensation
              ($)
              (g) (3)
            
            Total
              ($)
              (h)James
      Laird (1)(4)
            
            4,000
            
            —
            
            —
            
            —
            
            —
            
            —
            
            4,000Thomas
      Barr (2)(5)
            
            —
            
            48,071
      (5)
            
            —
            
            —
            
            —
            
            —
            
            48,071




(1) (1)
Mr. Laird was appointed as our Chief Executive Officer, acting Chief Financial
Officer, President and director from the date of inception of our company, March
10, 2006.




(2) Mr.
Barr was appointed as our director on December 18, 2006, and as our Vice
President of Alternative Fuel Operations on April 12, 2007.




(3) With
the exception of reimbursement of expenses incurred by our named executive
officers during the scope of their employment, none of the named executive
received any other compensation, perquisites, and personal benefits in excess of
$10,000.




(4) See
Executive Compensation table below for the total amount of compensation received
by Mr. Laird in his capacities as our sole executive officer and a member of our
board of directors.





(5)
Effective as of December 18, 2006, Mr. Barr received 412,038 shares of our
Common Stock in consideration of his appointment as a member of our board of
directors on the same date. Amount represents stock-based compensation expense
for fiscal year 2006 for awards of stock granted in fiscal year ended December
31, 2006, under SFAS 123R.




Except as
set forth above, directors that are non-officers of our company do not receive a
cash retainer annually nor do they receive any remuneration for attendance at a
board meeting, other than reimbursement for travel expenses.










37




ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT




The
following table sets forth certain information regarding beneficial ownership of
our Common Stock as of March 31, 2007 (i) by each person who is known by us to
beneficially own more than 5% of our Common Stock; (ii) by each of our officers
and directors; and (iii) by all of our officers and directors as a group. Each
person's address is c/o Flex Fuels Energy, Inc., Suite 590 - 999 West Hastings
Street, Vancouver, B.C. Canada V6C 2W2. The percentages in the table have been
calculated on the basis of treating as outstanding for a particular person, all
shares of our capital stock outstanding on March 31, 2007, and all shares of our
Common Stock issuable to that person in the event of the exercise of any
outstanding options and other derivative securities owned by that person which
are exercisable within 60 days of March 31, 2007. Except as otherwise indicated,
the persons listed below have sole voting and investment power with respect to
all shares of our Common Stock owned by them.





Name
      and address ofowner
            Title
      of Class
            Capacity
      withCompany
            Number
      of SharesBeneficially Owned
              (1)
            Percentage
      of ClassJames
      Laird
            Common
      Stock
            Founder,
      Chief Executive Officer, acting Chief Financial Officer, President and
      Director
            30,000,000
      (2)
            40.24%Thomas
      Barr
            Common
      Stock
            Vice
      President of Alternative Fuel Operations and Director
            412,038
      (2)
            *Firewatch
      Asset Ltd.
            Common
      Stock
            --
            6,531,426
            8.77%All
      Officers and
              Directors
      As a Group
              (2
      persons)
            
            
            30,412,038
            40.79%







*
Beneficial ownership set forth above is less than 1%.


(1)
Percentage ownership is based upon 74,554,884 shares of Common Stock outstanding
on March 31, 2007 and is calculated separately for each person on the basis of
the actual number of outstanding shares beneficially owned as of March 31, 2007.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock that are currently
exercisable or exercisable within 60 days of March 31, 2007, are deemed to be
beneficially owned by the person holding such securities for the purpose of
computing the percentage of ownership of such person, but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person.


(2)
Beneficial ownership consists entirely of our Common Stock.


(3)
Emilio Roig as administrator has the voting and investment power with respect to
all shares of the Company’s capital stock owned by Firewatch Asset
Ltd.










38





As of
December 31, 2006, we have not adopted any equity compensation plan pursuant to
which we may grant equity awards to eligible persons.




The
following table summarizes our equity compensation plan information as of
December 31, 2006.







Equity
Compensation Table





Plan Category(1)
            
            Number of Shares to
              Be Issued upon
              Exercise of
              Outstanding
              Options, Warrants
              and Rights)
            
            Weighted-Average
              Exercise Price of
              Outstanding Options,
              Warrants and Rights
              (b)
            
            Number of Shares
              Remaining Available
              for Future Issuance
              Under Equity
              Compensation Plans
              (Excluding Shares
              Reflected in
              Column (a))
              (c)Equity
      Compensation plans approved by stockholders
            
            N/A
            
            N/A
            
            N/AEquity
      Compensation plans not approved by stockholders
            
            N/A
            
            N/A
            
            N/ATotal
            
            N/A
            
            N/A
            
            N/A








ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS




Certain
Relationships and Related Transactions with Related Persons, Promoters and
Certain Control Persons





On March
27, 2006, the Company acquired a mineral license for the Malibu Gold Property
from Mr. James Laird, a director and stockholder, for $10,000.





Since
non-Canadian individuals or companies cannot directly hold mineral licenses in
British Columbia, James Laird (CEO, CFO and director) initially held the license
on behalf of the Company.  In June of 2006 the license was transferred
by Mr. Laird to Esther Briner (a stockholder), a licensed Canadian prospecting
agent and stockholder,  In July of 2007 Ms. Briner subsequently
transferred the license to Coalharbour Consulting, Inc (“Coalharbour”), a
licensed Canadian prospecting agent owned and controlled by Esther
Briner.  Coalharbour currently holds the license on behalf of the
Company.




Review,
Approval or Ratification of Transactions with Related Persons




In the
event we enter into any transaction with persons related to us, our board of
directors will evaluate the terms of all of such transactions to ensure that
such are commercially reasonable and no less favorable to us than we could have
obtained from an unaffiliated third party on an arm’s length basis. Our policy
requires that all related parties recuse themselves from negotiating and voting
on behalf of our company in connection with related party
transactions.




Parents




Not
applicable




Promoter
and Certain Control Persons




Not
applicable.




39




CORPORATE
GOVERNANCE




Board Determination of
      Independence




Our board
of directors has determined that as of December 31, 2006, Mr. Thomas Barr is
“independent” as that term is defined by the National Association of Securities
Dealers Automated Quotations (“NASDAQ”); however, on April 12, 2007, we entered
into an employment agreement with Mr. Barr, and thus our board of directors no
longer believes that Mr. Barr is “independent” as that term is defined by the
NASDAQ. Under the NASDAQ definition, an independent director is a person
who (1) is not currently (or whose immediate family members are not currently),
and has not been over the past three years (or whose immediate family members
have not been over the past three years), employed by the company; (2) has not
(or whose immediate family members have not) been paid more than $60,000 during
the current or past three fiscal years;  (3) has not (or whose immediately
family has not) been a partner in or controlling stockholder or executive
officer of an organization which the company made, or from which the company
received, payments in excess of the greater of $200,000 or 5% of that
organizations consolidated gross revenues, in any of the most recent three
fiscal years; (4) has not (or whose immediate family members have not), over the
past three years been employed as an executive officer of a company in which an
executive officer of our company has served on that company’s compensation
committee; or (5) is not currently (or whose immediate family members are not
currently), and has not been over the past three years (or whose immediate
family members have not been over the past three years) a partner of our
company’s outside auditor. A director who is, or at any time during the past
three years, was employed by the Company or by any parent or subsidiary of the
Company, shall not be considered independent.







40





ITEM
13. EXHIBITS





The
      following consolidated financial statements for Flex Fuels Energy, Inc.,
      are filed as a part of this Annual Report:For
      the period of inception (March 10, 2006) to December 31,
      2006
            PageReport
      of Independent Registered Public Accounting Firm
            F-2Consolidated
      Balance Sheet as of December 31, 2006
            F-3Consolidated
      Statement of Operations for the period of inception (March 10, 2006) to
      December 31, 2006
            F-4Consolidated
      Statement of Stockholders’ Equity for the period of inception (March 10,
      2006) to December 31, 2006
            F-5Consolidated
      Statement of Cash Flows for the period of inception (March 10, 2006) to
      December 31, 2006
            F-6Notes
      to the Consolidated Financial Statements
            F-7
      to F-14





The
following exhibits are included herein, except for the exhibits marked with a
footnote, which are incorporated herein by reference and can be found in the
appropriate document referenced.





Exhibit
              Number
            
            Description3(i)
            
            Articles
      of Incorporation of the Company dated March 10, 2006.
  (1)3(ii)
            
            By-laws
      of the Company. (1)10.1
            
            Asset
      Purchase Agreement dated march 27, 2006, entered into by and between James
      Laird and the Company (1)10.2
            
            Acquisition
      Agreement dated December 29, 2006 entered into by and among the Company,
      Flex Fuels Energy Limited, the stockholders of Flex Fuels Energy Limited
      and the individuals signatory thereto. (2)10.3
            
            Form
      of a Voting Trust Agreement to be entered into in connection with the
      Acquisition Agreement. (2)10.4
            
            Form
      of Lock-up Agreement to be entered into in connection with the Acquisition
      Agreement. (2)10.5
            
            Subscription
      Agreement dated December 29, 2006 entered into by and among the Company
      and the subscribers’ signatories thereto. (2)10.6+
            
            Employment
      Agreement dated April 12, 2007 entered into by and between the Company and
      James Laird. (3)10.7+
            
            Employment
      Agreement dated April 12, 2007 entered into by and between the Company and
      Thomas Barr. (3)21.1
            
            List
      of subsidiaries of the Company. (3)31.1
            
            Certification
      by Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of
      the Exchange Act. *31.2
            
            Certification
      by Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of
      the Exchange Act. *32.1
            
            Certification
      by Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) of
      the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United
      States Code. *32.1
            
            Certification
      by Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) of
      the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United
      States Code. *+
      Compensatory plan or arrangement.*
      Filed herewith.(1)
      Incorporated by reference to the Company’s Registration Statement filed
      with the SEC on Form SB-1 on August 4, 2006.(2)
      Incorporated by reference to the Company’s Current Report filed with the
      SEC on Form 8-K on January 5, 2007.(3)
      Incorporated by reference to the Company’s Annual Report filed with the
      SEC on Form 10-KSB on April 17,
2007.










41





ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES





The
following is a summary of the fees billed to our Company by BDO Stoy Hayward LLP
for professional services rendered in connection with the fiscal year ended
December 31, 2006.





December
      31, 2006Audit
      fees
            
            $
            60,000Audit
      related fees
            
            
            -Tax
      fees
            
            
            -All
      other fees
            
            
            -Total
      fees
            
            $
            60,000





The
following is a summary of the fees billed to our Company by Moore &
Associates, Chartered for professional services rendered in connection with the
fiscal year ended December 31, 2006.





December
      31, 2006Fee
      TypeAudit
      fees
            
            $
            41,950Audit
      related fees
            
            
            -Tax
      fees
            
            
            -All
      other fees
            
            
            -Total
      fees
            
            $
            41,950








Audit
fees consist of billings for professional services rendered for the audit of our
company’s consolidated financial statements and review of the interim
consolidated financial statements included in quarterly reports that are
normally provided by independent accounting firms in connection with regulatory
filings, including audit services performed related to mergers and
acquisitions.





Audit-related
fees consists of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of our company’s
consolidated financial statements, which are not reported under "Audit
Fees."





Tax fees
consist of billings for professional services for tax compliance and tax
planning regarding federal and state tax filings.





All other
fees consist of fees for products and services other than the services reported
above.





Prior to
our engagement of our independent auditor, such engagement was approved by our
board of directors. The services provided under this engagement may include
audit services, audit-related services, tax services and other services.
Pre-approval is generally provided for up to one year and any pre-approval is
detailed as to the particular service or category of services and is generally
subject to a specific budget. Pursuant our requirements, the independent
auditors and management are required to report to our board of directors at
least quarterly regarding the extent of services provided by the independent
auditors in accordance with this pre-approval, and the fees for the services
performed to date. Our board of directors may also pre-approve particular
services on a case-by-case basis. All audit-related fees, tax fees and other
fees incurred by us for the year ended December 31, 2006, were approved by our
board of directors.










42







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.




FLEX
      FUELS ENERGY, INC.Date: February
      26,  2008
            By:
            /s/ Brian
      BarrowsBrian
      BarrowsChief
      Executive Officer and DirectorDate: February
      26,  2008
            By:
            /s/ 
      Paul
      GothardPaul
      GothardChief
      Financial Officer (Acting Principal Accounting
  Officer)







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





Signature
            
            Title
            
            Date/s/
      Brian Barrows
            
            Chief
      Executive Officer and Director
            
            February 26,
      2008Brian
      Barrows/s/
      Paul Gothard
            
            Chief
      Financial Officer and Director
            
            February 26,
      2008Paul
      Gothard/s/
      James Laird
            
            Vice
      President of Mineral Exploration Operations and Director
            
            February 26,
      2008James
      Laird/s/
      Thomas Barr
            
            Vice
      President of Alternative Fuels Division and Director
            
            February 26,
      2008Thomas
      Barr







43





FLEX FUELS ENERGY, INC.


(formerly
Malibu Minerals, Inc)


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS





For
      the period from inception (March 10, 2006) to December 31,
      2006
            PageReport
      of Independent Registered Public Accounting Firm
            F-2Consolidated
      Balance Sheet as of December 31, 2006
            F-3Consolidated
      Statement of Operations period from inception (March 10, 2006) to December
      31, 2006
            F-4Consolidated
      Statement of Stockholders’ Equity for the period from inception (March 10,
      2006) to December 31, 2006
            F-5Consolidated
      Statement of Cash Flows for the period from inception (March 10, 2006) to
      December 31, 2006
            F-6Notes
      to the Consolidated Financial Statements
            F-7
      to F-14











F-1







Report of Independent Registered Public Accounting
Firm




Board of
Directors and Stockholders


Flex
Fuels Inc (Formerly Malibu Minerals Inc)


Las
Vegas, Nevada




We have
audited the accompanying Consolidated BalanceSheet of Flex Fuels Inc. as of
December 31, 2006 and the related Statements of Operations, Stockholders’
Equity, and Cash Flows from the period from inception March 10, 2006 to December
31 2006.  These financial statements are the responsibility of the
Company’s management.  Our responsibility is to express an opinion on
these financial statements based on our audit.




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




In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Flex Fuels Inc at December 31,
2006, and the results of its operations and its cash flows from inception March
10, 2006 through December 31 2006, in conformity with
accounting principles generally accepted in the United States of
America.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 4 to the
financial statements, the Company’s net losses and accumulated deficit of
$1,381,198 as of December 31, 2006 raise substantial doubt about its ability to
continue as a going concern.  Management’s own forecasts confirm that
further finance will be required in less than 12 months from the date of these
financial statements in order to enable the Company to meet its obligations as
they fall due.  Management’s plans in regard to these matters are also
described in Note 4. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.





As
described in Note 3, the financial statements have been restated to reflect
unrecorded liabilities, to correct the accounting for certain legal costs, to
correct the fair value attributed to a stock issuance, and to consolidate a
variable interest entity.







BDO Stoy
Hayward LLP


London,
England




12
September 2007







F-2













FLEX
      FUELS ENERGY, INC(An Exploration Stage Company)Consolidated Balance Sheet(Stated in US Dollars)







As
      of
              December
      31
              2006
              (as
      restated)AssetsCash
            
            1,612,500Other
      current assets
            
            
            499Total
      current assets
            
            
            1,612,999Property
      and Equipment, net of $nil depreciation
            
            
            1,760Total
      Assets
            
            $
            1,614,759Current
      liabilitiesAccounts
      payable
            
            
            19,731Accruals
            
            
            54,464Total
      Liabilities
            
            $
            74,195Minority
      Interest
            
            
            1,228,691Equity100,000,00
      Shares of Common Stock Authorized, 74,554,884 issued and
      outstanding
            
            
            74,555Additional
      Paid in Capital
            
            
            1,618,516Deficit
      accumulated during exploration stage
            
            
            (1,381,198)Total
      stockholders equity
            
            
            311,873Total
      liabilities and stockholders equity
            
            $
            1,614,759




The
accompanying notes are an integral











F-3









FLEX
      FUELS ENERGY, INC.(An Exploration Stage Company)Consolidated
      Statement of Operations(Stated in US Dollars)







(March 10,
      2006) toDecember 31,
      2006(as
      restated)Revenue
            
            $
            -ExpensesRecognition
      of an Impairment Loss – mineral claims
            
            
            10,000Directors
      salaries
            
            
            52,071Accounting
      & Legal Fees
            
            
            10,050Professional
      and Consulting Fees
            
            
            5,000Other
      costs
            
            
            905Excess
      of Purchase Price over Net Assets Acquired
            
            
            1,303,172Total
      Expenses
            
            
            1,381,198Net
      Loss
            
            
            (1,381,198
            )Basic
      & Diluted Loss per Share
            
            
            (0.02
            )Weighted
      Average Number of Shares
            
            
            60,162,280




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







F-4












FLEX FUELS ENERGY, INC(An
      Exploration Stage Company)Consolidate
      Statement of Stockholders EquityFrom
      Inception (March 10, 2006) to December 31, 2006(Stated
      in US Dollars)
              (as
      restated)DeficitAccumulatedAdditional
            
            DuringCommon
      Stock
            
            
            Paid
      in
            
            Exploration
            
            TotalShares
            
            
            Amount
            
            
            Capital
            
            Stage
            
            EquityMarch
      10, 2006: shares of Common Stock issued to founders.
            
            
            60,000,000
            
            
            
            60,000
            
            
            
            (50,000
            )
            
            
            
            10,000December
      18, 2006: fair value of 412,038 shares of Common Stock issued to Mr. Tom
      Barr in payment for services at $0.1167 per share.
            
            
            412,038
            
            
            
            412
            
            
            
            47,659
            
            
            
            
            48,071December
      29, 2006: shares of Common Stock issued at $0.1167 per share net of legal
      costs of $15,000 in a private placement.
            
            
            14,142,846
            
            
            
            14,143
            
            
            
            1,620,857
            
            
            
            
            1,635,000Net
      Loss for period
            
            
            
            
            
            
            
            
            
            
            
            
            (1,381,198)
            
            
            (1,381,198
            )Balance,
      December 31, 2006
            
            
            74,554,884
            
            
            $
            74,555
            
            
            $
            1,618,516
            
            $(1,381,198)
            
            $
            311,873







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











F-5





FLEX
      FUELS ENERGY, INC.(An Exploration Stage Company)Consolidated 
      Statement of Cash Flows(Stated
      in US Dollars)




From
      inception
              (March
      10, 2006) toDecember
      31, 2006
              (as
      restated)Cash
      Flow From Operating ActivitiesNet
      loss
            
            $
            (1,381,198
            )Recognition
      of an Impairment Loss – mineral claims
            
            
            10,000Shares
      of Common Stock issued in Lieu of Payment for Services
            
            
            48,071Excess
      of Purchase Price over Net Assets Acquired
            
            
            1,303,172Accounts
      payable
            
            
            13,455Accruals
            
            
            4,000Net
      cash used in operating activities
            
            
            (2,500
            )Cash
      Flow From Investing ActivitiesCosts
      incurred in acquiring 15% holding in FFE Ltd
            
            
            (20,000
            )Purchase
      of mineral claim
            
            
            (10,000
            )Net
      cash used in investing activities
            
            $
            (30,000
            )60,000,000
      shares of Common Stock issued to founders
              at
      $0.0001667 per share
            
            
            10,00014,142,846
      shares of Common Stock issued at $0.1167 per share in a private
      placement
            
            
            1,635,000Net
      cash provided by financing activities
            
            $
            1,645,000Net
      change in cash
            
            
            1,612,500Cash
      at beginning of period
            
            
            -Cash
      at end of period
            
            $
            1,612,500Cash
      Paid For:Interest
            
            $
            -Income
      Tax
            
            $
            -Non-Cash
      Activities ($)Stock
      issued in Lieu of Payment for Service
            
            
            48,071Excess
      of Purchase Price over Net Assets Acquired expensed in the
      period
            
            
            1,303,172






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







F-6


FLEX
FUELS ENERGY, INC


(An
Exploration Stage Company)


Notes to
the Consolidated Financial Statements


From
inception (March 10, 2006) to December 31, 2006


(Stated
in US Dollars)





NOTE 
      1 -
            BASIS
      OF PRESENTATION





Flex
Fuels Energy, Inc (“Flex Fuels” or the “Company”) (formerly Malibu Minerals,
Inc) has prepared the consolidated financial statements included herein pursuant
to the rules and regulations of the United States Securities and Exchange
Commission (the “SEC”) and in accordance with generally accepted accounting
principles (“GAAP”) of the United States of America (“US GAAP”).





Flex
Fuels was organized under the laws of the State of Nevada on March 10, 2006 to
explore mining claims and property in North America. The Company is diversifying
its business by acquiring a 15% interest in Flex Fuels Energy Limited (“FFE
Ltd”), a development stage company incorporated under the laws of England and
Wales. Flex Fuels plans to construct, own and manage seed processing facilities,
refineries producing bio diesel products (and associated power generation
facilities if commercially desirable) and to engage in the business of selling
supplying and distributing bio diesel products.





On May
21, 2007, the Board of Directors declared a stock split, distributable May 22,
2007, in the form of a dividend of five additional shares of the Company's
Common Stock for each share owned by stockholders of record at the close of
business on May 21, 2007. Accordingly, all share and per share data has been
restated to reflect the split.





The
Company has elected a December 31 year-end.




NOTE
      2 -
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





a.   
Principles of Consolidation




The
accompanying consolidated financial statements include the accounts of Flex
Fuels and its variable interest entities for which the Company is the primary
beneficiary. Intercompany balances and transactions have been eliminated on
consolidation.




b.  
Revenue Recognition




The
Company recognizes revenue when persuasive evidence of an arrangement exists,
goods delivered, the contract price is fixed or determinable, and collectibility
is reasonably assured.





c.    
Use of Estimates




The
preparation of the financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts 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.





d.     Income
Taxes




The
Company computes income taxes in accordance with Financial Accounting Standards
Statement No. 109 "Accounting for Income Taxes" ("SFAS 109").  Under
SFAS 109, deferred taxes are recognized for the tax consequences of temporary
differences by applying enacted statutory rates applicable to future years to
differences between the financial statement carrying amounts and the tax bases
of existing assets and liabilities.  Also, the effect on deferred
taxes of a change in tax rates is recognized in income in the period that
included the enactment date.  Temporary differences between financial
and tax reporting arise primarily from the use of different depreciation methods
for furniture and equipment as well as impairment losses and the timing of
recognition of bad debts.. Valuation allowances are recorded to reduce deferred
tax assets to that amount which is more likely than not to be
realized.







F-7








FLEX
FUELS ENERGY, INC


(An
Exploration Stage Company)


Notes to
the Consolidated Financial Statements


From
inception (March 10, 2006) to December 31, 2006


(Stated
in US Dollars)





NOTE 
      2 -
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(continued)





e.    Fixed
Assets





Fixed
assets are stated at cost, net of depreciation once the asset has come into use.
Computer and office equipment are depreciated in a straight-line basis over two
years.





f.     Stock-Based
Compensation





The
Company has adopted Statement of Financial Accounting Standards No. 123
(revised), Share-Based
Payment, (“ SFAS 123(R)”), which requires that compensation cost
relating to share-based payment transaction be recognized as an expense in the
financial statements, and that measurement of that cost be based on the
estimated fair value of the equity or liability instrument issued at date of
issue.





g.    
Foreign Exchange






The
Company’s functional and reporting currency is US Dollars. The accounts of the
Company’s foreign investment, FFE Ltd are maintained using the local currency as
the functional currency. FFE Ltd’s assets and liabilities are translated into
U.S. dollars at year-end exchange rates, and income and expense accounts are
translated at average monthly exchange rates. Net gains and losses from foreign
currency translation are excluded from operating results and are accumulated as
a separate component of stockholders’ equity.





h.   
 Impairment of long-lived Assets





The
Company has determined that its Malibu Gold property is to be impaired, as per
SFAS 144: “Accounting for the Impairment of Long-Live Assets.” Impairment is the
condition that exists when the carrying amount of a long-lived asset (asset
group) exceeds its fair value. An impairment loss shall be recognized only if
the carrying amount of a long- lived asset (asset group) is not recoverable and
exceeds its fair value. The carrying amount of a long-lived asset (asset group)
is not recoverable if it exceeds the sum of the undisclosed cash flows expected
to result from the use and eventual disposition of the asset (asset group). Our
determination is based on the Company’s current period operating loss combined
with the Company’s history of operating losses and our projection that
demonstrates continuing losses associated with the Malibu Gold
property.





In
accordance with FASB 144, 25, “An impairment loss recognized for a long-lived
asset (asset group) to be held and used shall be included in income from
continuing operations before income taxes in the income statement of a business
enterprise and in income from continuing operations in the statement of
activities of a not-for-profit organization. If a subtotal such as “income from
operations” is presented, it shall include the amount of that loss.” The Company
has recognized the impairment of a long-lived asset by declaring that amount as
a loss in income from operations in accordance with an interpretation of FASB
144.





The
license was originally acquired for $10,000 cash and initially held on behalf of
the Company by Jim Laird – see Note 5 - Related Party Transactions.










F-8








FLEX
FUELS ENERGY, INC


(An
Exploration Stage Company)


Notes to
the Consolidated Financial Statements


From
inception (March 10, 2006) to December 31, 2006


(Stated
in US Dollars)




NOTE 
      2 -
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(continued)




i.     Minority
Interest





The
Minority Interest represents the equity attributable to the external
shareholders of a subsidiary of variable interest entity. It is comprised of the
portion of the net assets attributable to the minority on acquisition plus the
share of any post acquisition profits less the share of any post-acquisition
losses. As the minority has not agreed to fund losses in excess of the share of
net assets acquired losses attributable to the minority are
limited.





j.  
Basic Loss Per Share





In
accordance with SFAS No. 128 “Earnings Per Share”, the basic loss per common
share is computed by dividing net loss available to stockholders by the weighted
average number of common shares outstanding. Diluted loss per share is computed
similar to basic loss per common share except that the denominator is increased
to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. At December 31, 2006, the Company has no stock
equivalents that were anti-dilutive and excluded in the earnings per share
computation.







From
      inception
              (March
      10, 2006) toDecember
      31, 2006Net
      Loss
            
            $
            (1,381,198
            )Basic
      & Diluted Loss per Share
            
            
            (0.02
            )Weighted
      Average Number of Shares
            
            
            60,162,280






k.   Share
Capital




a)
Authorized:





100,000,000
shares of Common Stock with par value of $0.001





b)
Issued:





As of
December 31, 2006, there are 74,554,884 shares of Common Stock issued and
outstanding at par value of $0.001 per share





There are
no preferred shares outstanding. The Company has issued no authorized preferred
shares.




The
Company has no stock option plan, warrants or other dilutive
securities.








F-9







FLEX
FUELS ENERGY, INC


(An
Exploration Stage Company)


Notes to
the Consolidated Financial Statements


From
inception (March 10, 2006) to December 31, 2006


(Stated
in US Dollars)





NOTE 
      3 –
            RESTATEMENT
      OF FINANCIAL STATEMENTS





This
second amended Annual Report on Form 10-KSB/A (the “Amended Report”) amends the
amended Annual Report on Form 10-KSB/A filed by the Company with the Securities
and Exchange Commission on April 26, 2007 (the “Report”) solely to correct (i)
unrecorded liabilities incurred in the year ended December 31, 2006, (ii) and
certain legal costs associated with the investment in Flex Fuels Energy Limited
and the private placement were expensed incorrectly in the Statement of
Operations for the fiscal year ended December 31, 2006, (iii)  to
amend the fair value attributed to the stock issued to Mr. Tom Barr, (iv) to
consolidate the balance sheet and results of Flex Fuels Energy Ltd and (v) to
correctly disclose related party transactions.


.





The
effects of these errors are summarized in the table:





As
            
            
            
            
            
            AsReported
            
            
            Adjustments
            
            
            Restated$
            
            
            
            $
            
            
            
            $Statement
      of OperationsNet
      loss
            
            
            (60,905
            )
            
            
            (1,320,293
            )
            
            
            (1,381,198
            )Basic
      and diluted loss per share
            
            
            (0.00
            )
            
            
            (0.02
            )
            
            
            (0.02
            )Weighted
      average number of shares
            
            
            60,162,280
            
            
            
            
            
            
            
            60,162,280Balance
      SheetAssets
            
            
            1,612,550
            
            
            
            2,209
            
            
            
            1,614,759Liabilities
            
            
            13,455
            
            
            
            60,740
            
            
            
            74,195Stockholders
      Equity
            
            
            1,599,095
            
            
            
            (1,287,222
            )
            
            
            311,873Minority
      Interest
            
            
            -
            
            
            
            1,228,691
            
            
            
            1,228,691Statement
      of Cash FlowsNet
      cash used in operating activities
            
            
            (50,905
            )
            
            
            48,405
            
            
            
            (2,500
            )Net
      cash used in investing activities
            
            
            (1,510,000
            )
            
            
            1,480,000
            
            
            
            (30,000
            )Net
      cash provided by financing activities
            
            
            1,673,455
            
            
            
            (28,455
            )
            
            
            1,645,000








Unrecorded
liabilities




The
Company identified $4,050 in unrecorded liabilities for the period ended
December 31, 2006.








F-10











FLEX
FUELS ENERGY, INC


(An
Exploration Stage Company)


Notes to
the Consolidated Financial Statements


From
inception (March 10, 2006) to December 31, 2006


(Stated
in US Dollars)





Adjustments
of certain legal costs




The
Company incorrectly included legal costs in the Statement of Operations for the
period ended December 31, 2006 for the private placement ($15,000) and the
acquisition of a 15% holding in FFE Ltd ($20,000).  These costs have
been correctly accounted for with the associated transactions.




Fair
value attributed to the stock issued to Mr. Tom Barr






On
December 18, 2006 the Company issued 412,038 shares of Common Stock in
recognition of services provided to the Company as director. Originally the fair
value attributed to these shares was $0.0001667. On the same day the Company
approved a private placement of 14,142,846 shares of Common Stock at $0.1167 per
share to independent third parties. The management concluded that a value of
$0.1167 per share was more appropriate which resulted in a charge of $48,071 in
the amended Statement of Operations for the period ended December 31, 2006 (as
opposed to previously recorded $69).




Consolidation
of Flex Fuels Energy Limited (“FFE Ltd”)






As the
Company has determined that FFE Ltd is a Variable Interest Entity under FIN46R
“Consolidation of Variable Interest Entities” the balance sheet and results of
FFE Ltd have been consolidated with the Company’s balance sheet and results.
This has resulted in the excess of purchase price over net assets acquired of
$1,303,172 being expensed in the period to December 31, 2006 due to FFE Ltd’s
development stage status. The determination was based on the fact that although
the Company acquired 15% of FFE Ltd it provided all of the initial capital for
the operations of FFE Ltd to undertake and therefore took on risks in excess of
its percentage holding or voting rights.






NOTE 
      4 -
            GOING
      CONCERN




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of assets
and the liquidation of liabilities in the normal course of business. However,
the Company has accumulated a loss and is new. This raises substantial doubt
about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustments that might result from this
uncertainty.





As shown
in the accompanying financial statements, the Company has incurred a net loss of
($1,381,198) for the period from March 10, 2006 (inception) to December 31, 2006
and has not generated any revenues. The future of the Company is dependent upon
its ability to obtain financing and upon future profitable operations from the
development of acquisitions. Management has plans to seek additional capital
through a private placement and public offering of its Common Stock. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts of and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.








NOTE 
      5 -
            RELATED
      PARTY TRANSACTIONS





On March
27, 2006, the Company acquired the mineral license from Mr. Jim Laird, a
director and stockholder, for $10,000.





As a
non-Canadian individual or company cannot directly hold a mineral license in
British Columbia therefore it was initially held on behalf of the Company by Jim
Laird (CEO, CFO and director). It was subsequently transferred to Esther Briner
(a licensed prospecting agent and stockholder) in June 2006 who then transferred
it to Coalharbour Consulting, Inc (“Coalharbour”), a licensed prospecting agent
owned and controlled by Esther Briner (a stockholder) in July 2007. Both Esther
Briner and Coalharbour held or hold the license on behalf of the
Company.








F-11





FLEX
FUELS ENERGY, INC


(An
Exploration Stage Company)


Notes to
the Consolidated Financial Statements


From
inception (March 10, 2006) to December 31, 2006


(Stated
in US Dollars)


NOTE 
      6 –
            INCOME
      TAXES







The
income tax provision is summarized as follows for the years ended December
31:




2006CurrentFederal
            
            $
            0State
      and local
            
            
            0Foreign
            
            
            0Deferred
            
            
            0Total
      income tax provision (benefit)
            
            $
            0





Significant
components of deferred tax assets were as follows as of December
31:




Deferred
      Tax Assets
            
            2006($’s)Tax
      loss carry-forward
            
            $
            27,309Capital
      loss carry forward
            
            
            456,110Property
      and plant depreciation methods
            
            
            0Total
            
            
            483,419Valuation
      Allowance
            
            
            (483,419
            )Net
      deferred tax asset
            
            $
            -







The
Company has net operating loss carry-forwards for United States tax purpose to
offset future taxable income of $78,026 expiring in years 2007 through 2019. As
it is not more likely than not that the resulting deferred tax benefits will be
realized, a full valuation allowance has been recognized for such deferred tax
assets. The utilization of net operating loss carry forwards may be
significantly limited under the Internal Revenue Code as a result of ownership
changes due to the Company’s stock and other equity offerings.




Under
United Kingdom taxation, FFE Ltd has $54,812 of net operating loss
carry-forwards to offset future taxable income. As it is not more likely than
not that the resulting deferred tax benefits will be realized, a full valuation
allowance has been recognized for such deferred tax assets.




The
provision for income tax differs from the amount computed by applying the
statutory federal income tax rate to income before the provision for income
taxes. The sources and tax effects of the differences are as follows for the
year ended December 31:




2006Income
      taxes at the federal statutory rates
            
            
            (35%)Change
      in valuation allowance
            
            
            35Foreign
      operations
            
            
            -Effective
      rate of income tax
            
            
            0%





The
Company has net capital losses to be carried forward in the U.S. of $1,303,172
from the impairment of its investment in FFE Ltd to offset against future
capital gains expiring in years 2008 through 2010.






F-12


FLEX
FUELS ENERGY, INC


(An
Exploration Stage Company)


Notes to
the Consolidated Financial Statements


From
inception (March 10, 2006) to December 31, 2006


(Stated
in US Dollars)


NOTE 
      7 –
            VARIABLE
      INTEREST ENTITIES





In
December 2003, the FASB issued Interpretation No. 46 “Consolidation of Variable
Interest Entities Revised” (“FIN 46R”), which addresses how a business
enterprise should evaluate whether it has a controlling financial interest in an
entity through means other than voting rights, and accordingly, whether it
should consolidate the entity. The Company was required to apply FIN 46R to such
variable interest entities (“VIEs”).





The
Company has determined that the FFE Ltd is a variable interest entity and
therefore should be consolidated as the Company has provided funding for all the
initial capital for FFE Ltd’s operations while only acquiring a 15% holding in
the entity.





Upon
consolidation the Company eliminated its previous recorded investment in FFE
Ltd. The acquisition of FFE Ltd has been accounted for using the purchase method
of accounting and, accordingly, the assets acquired and liabilities assumed have
been recorded at their fair values as of the date of the acquisition. The
purchase price reflects the cost of the shares acquired ($1,500,000) plus legal
costs ($20,000) incurred in acquiring the 15% interest in FFE Ltd. Prior to the
acquisition of the remaining 85% of FFE Ltd on May 29, 2007 the maximum loss the
Company could have incurred was $1,500,000.





FFE Ltd
Purchase Price Allocation on Acquisition of 15% holding:




$Current
      assets
            
            
            225,000Current
      liabilities
            
            
            (8,172
            )Net
      assets acquired
            
            
            216,828Excess
      of Purchase Price over Net Assets Acquired
            
            
            1,303,172$
            1,520,000





The
assets and liabilities of FFE Ltd on the date of acquisition comprised the
following:




Assets
            
            
            $Cash
            
            
            1,500,000LiabilitiesAccounts
      payable
            
            
            6,276Accruals
            
            
            48,204







NOTE
      8 –
            DEVELOPMENT
      STAGE COMPANIES





Under
United States Generally Accepted Accounting Principles (“GAAP”) where the
acquired company is a “development stage” enterprise then any Excess of Purchase
Price over Net Assets Acquired is expensed at the time of
acquisition.





The
Financial Accounting Standards Board (“FASB”) has provided guidelines as to
identifying a “development stage” enterprise:





“an
enterprise shall be considered to be in the development stage if it is devoting
substantially all of its efforts to establishing a new business and either of
the following conditions exists:





a)
Planned principal operations have not commenced.





b)
Planned principal operations have commenced, but there has been no significant
revenue there from.





A
development stage enterprise will typically be devoting most of its efforts to
activities such as financial planning; raising capital; exploring for natural
resources; developing natural resources; research and development; establishing
sources of supply; acquiring property, plant, equipment, or other operating
assets, such as mineral rights; recruiting and training personnel; developing
markets; and starting up production.”





The
Company has determined that FFE Ltd is a development stage company and therefore
the Excess of Purchase Price over Net Assets Acquired of $1,303,172 and has been
expensed in the period to December 31, 2006.








F-13




FLEX
FUELS ENERGY, INC


(An
Exploration Stage Company)


Notes to
the Consolidated Financial Statements


From
inception (March 10, 2006) to December 31, 2006


(Stated
in US Dollars)





NOTE 
      9 –
            SEGMENTAL
      REPORTING




Under
SFAS no. 131, Disclosures about segments of an Enterprise and Related
Information, operating segments are defined as components of an enterprise about
which separate financial information is available that is evaluated regularly by
the chief operating decision maker, or decision making group in deciding how to
allocate resources and in assessing performance. Our chief operating decision
making group is composed of the Chief Executive Officer and members of senior
management. The Company’s reportable operating segments are Malibu Gold and
BioFuels.





The
accounting policies of the segments are the same as those described in the
summary of significant accounting policies. We evaluate performance of our
operating segments based on revenue and operating loss. Segments information for
2006 is as follows:





Malibu
      Gold
            
            
            
            
            
            BioFuels
            
            
            
            
            
            Total$
            
            
            
            
            
            
            $
            
            
            
            
            
            
            
            $Net
      revenue to external customers
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            
            
            
            
            -Operating
      loss
            
            
            (29,955
            )
            
            
            
            
            
            
            (1,351,243
            )
            
            
            
            
            
            
            (1,381,198
            )Assets
            
            
            112,500
            
            
            
            
            
            
            
            1,502,259
            
            
            
            
            
            
            
            1,614,759Stock-based
      compensation
            
            
            -
            
            
            
            
            
            
            
            48,071
            
            
            
            
            
            
            
            48,071Expenditure
      on property and equipment
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            
            
            
            
            -





The
Company’s Malibu Gold’s operations are based in Canada and the BioFuels
operations are based in the United Kingdom.








NOTE 
      10 –
            SUBSEQUENT
      EVENTS





On May
21, 2007, the Board of Directors declared a stock split, distributable May 22,
2007, in the form of a dividend of five additional shares of the Company's
Common Stock for each share owned by stockholders of record at the close of
business on May 21, 2007. Accordingly, all share and per share data has been
restated to reflect the split.





On May
11, 2007 the Stockholders of the Company, without direction from the Company,
undertook a re-organization of their respective shareholdings by retiring
varying percentages of their stock. In total 51,685,723 shares of Common Stock
were retired.





On May
22, 2007 the Company issued 137,744 shares of Common Stock to Mr. Tom Barr in
recognition of services provided to the Company as director. The Company has
recognized compensation expense of $124,000 under SFAS 123(R) based upon a fair
value of $0.90 per share of Common Stock – the price of shares issued in the
subsequent private placement on May 29, 2007.





On May
29, 2007 the Company completed a private placement of 16,582,621 shares of
Common Stock at $0.90 per share to independent third parties. The Company
received $13,392,000 net of placement costs of $1,492,000 and legal costs of
$40,000.





On May
29, 2007 the Company completed the acquisition of FFE Ltd and issued 24,854,477
shares of Common Stock to the stockholders of FFE Ltd. The Company has
attributed a fair value of $22,369,000 on the shares issued based upon stock
placed at $0.90 per share under the private placement completed on the same
day.





On July
31, 2007 the Company completed a private placement offering in which it sold an
aggregate of 4,871,838 shares (the “Shares”) of its common stock, $0.001 par
value per share (the “Common Stock”), at a price of $0.90 per Share for
aggregate net proceeds of approximately $3,940,000.













F-14