**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-KSB/A**


(Amendment
        No. 2)


(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.)





**Suite
                590 - 999 West Hastings Street**
              **Vancouver,
                BC Canada**
              (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**





Principal
      Executive office telephone Number: **(604)
      685-7552**





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
        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)
        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.





The
        effects of these errors are summarized in the table:




**As**
              
              
              
              
              
              **As****Reported**
              
              
              **Adjustments**
              
              
              **Restated****Statement
                  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
              
              
              
              
              
              
              
              60,162,280**Balance
                  Sheet**Assets
              
              
              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
              
              
              
              1,228,691**Statement
                  of Cash Flows**Net
                  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**
            **PAGE**ITEM
                1.
            Description
                of Business.
            2ITEM
                2.
            Description
                of Property.
            24ITEM
                3.
            Legal
                Proceedings.
            24ITEM
                4.
            Submission
                of Matters to a Vote of Security Holders.
            24**PART
                II**ITEM
                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.
            30**PART
                III**ITEM
                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 Suite 590 - 999 West Hastings Street, Vancouver,
        B.C. Canada V6C 2W2.  Our mailing address is 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 cleavage**Foliation**
            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
                rock**Mapping**
            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.




*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.







9












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
                1**Reconnaissance
                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
            
            $
            1000.00**Subtotal**
            
            $
            16,000.00Management
                Fee @ 15%
            
            $
            2400.00Contingency
                @ 10%
            
            $
            1600.00**Total**
            
            $
            20,000.00







GST@
                6% (July 1, 2006)
            
            $
            1200.00**NET
                TOTAL**
            
            $
            21,200.00**Phase
                2**Detailed
                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.
            
            $
            85,000.00**Phase
                3**1000
                meters of diamond drilling @ 100.00 per metre, plus
                geologicalsupervision,
                camp and supplies, transportation, assays, report and other ancillary
                costs.$
            175,000.00**TOTAL**
            
            $
            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.




In
      the
      event we successfully acquire the remaining share capital of Flex Fuels, we
      anticipate expanding our management team and expanding our board of directors,
      and therefore, we would be subject to the same or what we hope to be lesser
      extent to the aforementioned risks. However, until such time, as summarized
      above, there may be significant risks to the company from a corporate governance
      perspective.








17










***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.








18







***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.




19




***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.









20





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.







21









***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.










22







***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.








23







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.










24








**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.







25







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.







26





**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.











27







**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.






28





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.







29








**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.







However,
          giving full consideration to the material weaknesses described below, we
          performed additional analyses and other procedures, including among other
          things, additional transaction reviews, control activities, and account
          reconciliations, in order to provide assurance that our Consolidated Financial
          Statements included in this Annual Report were prepared in accordance with
          generally accepted accounting principles (“GAAP”) and present fairly, in all
          material respects, our financial position, results of operations and cash
          flows
          for the periods presented in conformity with GAAP. As a result of these
          and
          other expanded procedures we concluded that the Consolidated Financial
          Statements included in this Annual Report present fairly, in all material
          respects, our financial position, results of operations and cash flows
          for the
          periods presented in conformity with GAAP.





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.







During
          July 2007 the Company reviewed the internal controls as of December 31,
          2006,and identified and remedied in the third quarter of 2007 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.





·
                The
                    Company’s knowledge of US GAAP was
                    limited.





In
          the
          opinion of management the material weaknesses described above have been
          remedied
          as a result of 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.


30







*Limitations
      on the Effective of Controls*





Our
      management 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 costs.
 These limitations also include the realities that judgments in
      decision-making can be faulty and that breakdowns can occur because of simple
      error or mistake.  Additionally, controls can be circumvented by the
      individual acts of some persons, by collusion of two or more people or by
      management override of a control.  A design of a control system is also
      based upon certain assumptions about potential future conditions; over time,
      controls may become inadequate because of changes in conditions, or the degree
      of compliance with the policies or procedures may deteriorate.  Because of
      the inherent limitations in a cost-effective control system, misstatements
      due
      to error or fraud may occur and may not be detected.




(b)
      Changes in Internal Controls




There
      were no changes in our internal controls over financial reporting that could
      significantly, or are reasonably likely to materially affect, our internal
      controls over financial reporting that occurred during the period from inception
      (March 10, 2006) to December 31, 2006.







31












**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
                  Since**James
                  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.









32







**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.







33







**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 Awards****Name**
            
            **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.





34





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.








35





**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
              
              —
              
              —
              
              —
              
              —
              
              —
              
              4,000**Thomas
                  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.










36





**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 of****owner**
              **Title
                  of Class**
              **Capacity
                  with****Company**
              **Number
                  of Shares****Beneficially Owned**
                **(1)**
              **Percentage
                  of Class**James
                  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.








37







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.




38







**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.








39








**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.







40








**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.








41










**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: September
                  12, 2007
              By:
              /s/ 
                  *Gordon Ewart*Gordon
                  EwartChief
                  Executive OfficerDate: September
                  12, 2007
              By:
              /s/ 
                  *Paul Gothard*Paul
                  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/
                  Gordon Ewart*
              
              Chief
                  Executive Officer and Director
              
              September
                  12, 2007Gordon
                  Ewart*/s/
                  Paul Gothard*
              
              Chief
                  Financial Officer and Director
              
              September
                  12, 2007Paul
                  Gothard*/s/
                  James Laird*
              
              Vice
                  President of Mineral Exploration Operations and Director
              
              September
                  12, 2007James
                  Laird*/s/
                  Thomas Barr*
              
              Vice
                  President of Alternative Fuels Division and Director
              
              September
                  12, 2007Thomas
                  Barr







42








**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) to****December
                  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)**Deficit****Accumulated****Additional**
              
              **During****Common
                  Stock**
              
              
              **Paid
                  in**
              
              **Exploration**
              
              **Total****Shares**
              
              
              **Amount**
              
              
              **Capital**
              
              **Stage**
              
              **Equity**March
                  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) to****December
                  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
              
              
              
              
              
              4,000**Net
                  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
              
              
              
              
              
              1,635,000**Net
                  cash provided by financing activities**
              
              
              
              
              $
              1,645,000Net
                  change in cash
              
              
              
              
              
              1,612,500Cash
                  at beginning of period
              
              
              
              
              
              -**Cash
                  at end of period**
              
              
              
              
              **$**
              **1,612,500**Cash
                  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) to****December
                  31, 2006**Net
                  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**
              
              
              
              
              
              **As****Reported**
              
              
              **Adjustments**
              
              
              **Restated****$**
              
              
              
              **$**
              
              
              
              **$****Statement
                  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
              
              
              
              
              
              
              
              60,162,280**Balance
                  Sheet**Assets
              
              
              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
              
              
              
              1,228,691**Statement
                  of Cash Flows**Net
                  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