**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**




(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





**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)





Issuer’s
      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 7,357,141 shares held by non affiliates at a price of $0.70 (price
      at which shares of common stock were last sold).




As
      of
      December 31, 2006, there were outstanding 12,258,816 shares of common stock,
      0.001 par value per share.




1










**TABLE
      OF CONTENTS**





**PART
                I**
            **PAGE**ITEM
                1.
            Description
                of Business.
            3ITEM
                2.
            Description
                of Property.
            14ITEM
                3.
            Legal
                Proceedings.
            14ITEM
                4.
            Submission
                of Matters to a Vote of Security Holders.
            14**PART
                II**ITEM
                5.
            Market
                for Common Equity and Related Stockholder Matters.
            14ITEM
                6.
            Management’s
                Discussion and Analysis or Plan of Operations.
            17ITEM
                7.
            Financials
                Statements.
            21ITEM
                8.
            Changes
                In and Disagreements with Accountants on Accounting and Financial
                Disclosure.
            21ITEM
                8A.
            Controls
                and Procedures.
            21**PART
                III**ITEM
                9.
            Directors,
                Executive Officers, Promoters, Control Persons and Corporate Governance;
                Compliance With Section 16(a) of the Exchange Act.
            22ITEM
                10.
            Executive
                Compensation.
            24ITEM
                11.
            Security
                Ownership of Certain Beneficial Owners and Management Related Stockholder
                Matters.
            26ITEM
                12.
            Certain
                Relationships and Related Transactions, and Director
                Independence.
            27ITEM
                13.
            Exhibits.
            29ITEM
                14.
            Principal
                Accounting Fees and Services.
            20Signatures
            
            32







2


**ITEM
      1. DESCRIPTION OF BUSINESS**





**Information
      Regarding Forward Looking Statements**





Malibu
      Minerals, Inc. (the "Company" or "we" or “us” or "our") 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


6.
      General economic conditions.





**Organizational
      History**





We
      were
      incorporated in the State of Nevada on March 10, 2006, to operate as a
      developmental 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.





**Overview**





We
      are a
      developmental 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
      shareholders 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.”





We
      have
      elected a fiscal year end of December 31.





**Recent
      Developments**





We
      have
      recently completed the following transactions:





*Form
      211*





In
      November of 2006, we filed a Form 211 application with the NASD to obtain its
      approval for the listing of our common stock, $0.001 par value per share (the
      “Common Stock”) on the Over-The-Counter Bulletin Board (the
“OTCBB”).





3


*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.





*Flex
      Fuels Agreement*





On
      December 29, 2006 we entered into an Acquisition Agreement (the “Agreement”)
      with Flex Fuels Energy Limited, a company formed under the laws of England
      and
      Wales (“Flex Fuels”), the shareholders of Flex Fuels (collectively the
“Shareholders”) 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 Flex Fuels (the “Shares”) and agreed to acquire and, Flex Fuels
      and the Shareholders agreed to sell, the remaining 85% of the entire authorized
      share capital of Flex Fuels, subject to the satisfaction of various closing
      conditions as more fully described below (the “Completion Conditions”). In
      consideration for the Shares, we paid to Flex Fuels $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 Flex Fuels for the purpose of
      overseeing the achievement of the Completion Conditions and Flex Fuels’ 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 Flex
      Fuels for which we would be required to issue the Shareholders 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 Flex Fuels 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 Flex Fuels’ 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 Flex Fuels of
      the
      Voting Trust Agreements entered into by our shareholders holding in aggregate
      at
      least 10.5% of the issued and outstanding shares of our Common Stock at closing
      (the “10.5% Shareholders”), (vi) the delivery by us to Flex Fuels of the Lock-up
      Agreements entered into by the our shareholders holding at least 10.5% of our
      Common Stock then issued and outstanding, (vii) the delivery by us to Flex
      Fuels
      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 Flex Fuels into all of the Completion Agreements set forth in Schedule 7
      attached to the Agreement, and (ix) completion and delivery to us by Flex Fuels’
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. Flex Fuels
      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.





*December
      Private Placement*


Also,
      on
      December 29, 2006, we entered into a financing arrangement with several
      investors (the “Investors”) pursuant to which we sold $1,650,000 (the
“Proceeds”) of shares of our Common Stock at a per share price of $0.70 for an
      aggregate of 2,357,143 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*




Malibu
      Minerals purchased the Malibu Gold Property for USD $10,000.00 on March 27,
      2006.




*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 2000 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 BC, 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 in the property area 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.




Laird
      Exploration Ltd. first explored the property area 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.




12


*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:





Flex
      Fuels 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.





*Cost
      Estimates of Exploration Programs*




The
      anticipated costs 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


13


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




**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 no employees. 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 total comprehensive loss of $60,905 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 cashflow 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.






14





***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 April 17, 2007,
      our independent auditors stated that our accompanying financial statements
      filed
      herewith were prepared assuming that we will continue as a going concern.
      However, we have incurred a net loss of $60,905 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. We have $112,550 of cash in hand
      and
      working capital of $112,550 as of December 31, 2006. 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 proceeds of $1,650,000 for the sale of 2,357,143 shares
      of
      our Common Stock to certain investors and we utilized $1,500,000 out of these
      proceeds to acquire a 15% equity interest in Flex Fuels (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
      shareholders. 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.




**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.




15




***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 shareholder 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,
      shareholders 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. Shareholders
      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.




***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 shareholders. 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
      shareholders will be dependent upon Mr. Laird exercising, in a manner fair
      to
      all of our shareholders, 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 shareholder 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 shareholders.




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




We
      are a
      small company with no employees 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.




16




***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, shareholders 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 shareholder desired to sue, shareholders would have to
      serve
      a summons and complaint. Even if personal service is accomplished and a judgment
      is entered against that person, the shareholder 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 Flex Fuels, 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 shareholders would likely have difficulty in enforcing such liabilities
      against them. In the event we successfully acquire the remaining share capital
      of Flex Fuels 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.




***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.




17




***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 FLEX FUELS,
      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 Flex Fuels, 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.




In
      the
      event we successfully acquire the remaining share capital of Flex Fuels, 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 FLEX FUELS,
      (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 Flex Fuels, 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 Flex Fuels, 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.




18




***IN
      THE EVENT WE SUCCESSFULLY ACQUIRE THE REMAINING SHARE CAPITAL OF FLEX FUELS,
      (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 Flex Fuels, 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 Flex Fuels, 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 Flex Fuels, 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, including investors in this offering.




19


***THERE
      IS NO MARKET FOR OUR COMMON STOCK, WHICH LIMITS OUR SHAREHOLDERS' 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.




***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 Flex Fuels, 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 SHAREHOLDERS TO
      SELL THEIR SHARES AND, AS A RESULT, OUR SHAREHOLDERS 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.






20


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, and our telephone number
      is
      (604) 685-7552. 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.





**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 24 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
      shareholders.





**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.





21


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


6.
      General economic conditions.





**Overview**





We
      are a
      developmental 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.





22


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 exploitable 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
      shareholders 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.”





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.




**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) the our 3 Phases of our Business plan outlined
      in
      subsection titled ** “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 $21,200.00, $85,000.00 and $175,000.00 respectively.
      We had cash on hand in the amount of $112,550 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 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:




·
            $875.00
                to be paid to the Provincial government to keep the claim
                valid;·
            $21,200,000.00
                in connection with the completion of Phase 1 of our recommended geological
                work program;·
            $85,000.00
                in connection with the completion of Phase 2 of our recommended geological
                work program;·
            $175,000.00
                in connection with the completion of Phase 3 of our recommended geological
                work program; and·
            $10,000.00
                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
      $60,905 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**




23


At
      December 31, 2006, our cash was $112,550 and we had no accounts payable. Since
      our inception on March 10, 2006, to the end of our fiscal year ended December
      31, 2006, we have incurred a loss of $60,905. We attribute our net loss to
      having no revenues to offset our operating expenses and professional fees
      incurred as part of our efforts to become a reporting and a publicly trading
      company. Net cash used in operating activities was $50,905 for the period ended
      December 31, 2006. At December 31, 2006, we had an accumulated deficit of
      $60,905.




From
      our
      inception on March 10, 2006 to the end of the period December 31, 2006, net
      cash
      provided by financing activities was $1,673,455, 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 of capital stock of Flex Fuels was $1,500,000, resulting from our
      acquisition of Flex Fuels which occurred on December 29, 2006 and gross proceeds
      of $1,650,000 raised on same date in connection with said
      acquisition.




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 sufficient
      cash
      and 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 cash equivalents amounts to execute our operations
      subsequent to this period. In addition, subject the satisfaction of the
      Completion Conditions, if we successfully acquire Flex Fuels 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. Additional financing, whether through public or private
      equity or debt financing, arrangements with  shareholders
      or other sources to fund operations, 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
      shareholders 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 Moore & Associates, Chartered,
      independent certified public accountants, 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 under Item 14 starting with page F-1.





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





None.





**ITEM
      8A. CONTROLS AND PROCEDURES.**




(a)
      Evaluation of Disclosure Controls and Procedures




Based
      on
      an evaluation of our disclosure controls and procedures (as defined in Rules
      13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended)
      required by paragraph (b) of Rule 13a-15 or Rule 15d-15, as of December 31,
      2006, our sole executive officer serving dual capacities as our Chief Executive
      Officer and Chief Financial Officer, has concluded that our disclosure controls
      and procedures were effective in ensuring that information required to be
      disclosed by us 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 Commission's rules and forms. Our sole executive officer serving dual
      capacities as our Chief Executive Officer and Chief Financial Officer, also
      concluded that, as of December 31, 2006, our disclosure controls and procedures
      were effective in ensuring that information required to be disclosed by us
      in
      the reports that we file or submit under the Exchange Act is accumulated and
      communicated to our management, including our Chief Executive Officer and Chief
      Financial Officer, to allow timely decisions regarding required
      disclosure.




In
      designing and evaluating our disclosure controls and procedures, management
      recognizes that any controls and procedures, no matter how well designed and
      operated, can provide only reasonable assurance of achieving the desired control
      objectives, and management necessarily is required to apply its judgment in
      evaluating the relationship between the benefit of desired controls and
      procedures and the cost of implementing new controls and
      procedures.




(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 affect
      internal controls over financial reporting that occurred during the our fiscal
      quarter ended December 31, 2006.





24


**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)
            
            __
            
            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.





**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% shareholders 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.







25





**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
            
            --
            
            --
            
            --
            
            **--**
            
            --
            
            --
            
            --
            
            --





*
      Market
      value of the underlying securities based on the closing price, $0.17, of our
      common stock on December 29, 2006, the last trading day of 2006 fiscal
      year.





(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,
      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.





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.




**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 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.





26


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.





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.





27


**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)**
            
            —
            
            —
            
            —
            
            —
            
            —
            
            —
            
            —**Thomas
                Barr (2)**
            
            —
            
            —
            
            —
            
            —
            
            —
            
            —
            
            —









(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, 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.




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.





**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 Malibu Minerals, Inc., Suite 590 - 999 West Hastings
      Street, Vancouver, B.C. Canada V6C 2W2.





**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
            5,000,000
                (2)
            40.24%Thomas
                Barr
            Common
                Stock
            Vice
                President of Alternative Fuel Operations and Director
            68,673
                (2)
            *Firewatch
                Asset Ltd.
            Common
                Stock
            --
            1,088,571
            8.77%All
                Officers and
              Directors
                As a Group
              (2
                persons)
            
            
            5,068,673
            40.79%





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


(1)
      Percentage ownership is based upon 12,425,816 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
      and assumes the conversion of preferred shares held by such person (but not
      by
      anyone else).


(2)
      Beneficial ownership consists entirely of our common stock.








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.





28


**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**





During
      the year ended December 31, 2006, there have not been any transactions or
      proposed transactions to which we were or is are to be a party, in which our
      officers, directors or nominees had or are to have a direct or indirect material
      interest.




**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 the 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.




**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 shareholder 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.





29


**ITEM
      13. EXHIBITS**





The
                following financial statements for Malibu Minerals, Inc., are filed
                as a
                part of this Annual Report:For
                the Years Ended December 31, 2006 and 2005
            PageReport
                of Independent Registered Certified Public Accounting Firm
            F-2Balance
                Sheets as of December 31, 2006 and December 31, 2005
            F-3Statements
                of Operations for the years ended December 31, 2006 and December 31,
                2005
            F-4Statement
                of Changes in Stockholders’ Equity (Deficit) for the years ended December
                31, 2006 and December 31, 2005
            F-5Statements
                of Cash Flows for the years ended December 31, 2006 and December 31,
                2005
            F-6Notes
                to Financial Statements
            F-7





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 shareholders 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. *10.7+
            
            Employment
                Agreement dated April 12, 2007 entered into by and between the Company
                and
                Thomas Barr. *21.1
            
            List
                of subsidiaries of the Company. *31.1
            
            Certification
                by Chief Executive Officer and acting 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 acting 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.





**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





The
      following is a summary of the fees billed to our company by our principal
      accountants for professional services rendered in connection with the fiscal
      year ended December 31, 2006.





30


December
                31, 2006
            
            December
                31, 2005Fee
                TypeAudit
                fees
            
            $
            4,500
            
            $
            --Audit
                related fees
            
            
            0
            
            
            --Registration
                statement fees
            
            
            37,450
            
            
            --Tax
                fees
            
            
            0
            
            
            --All
                other fees
            
            
            3,100
            
            
            --Total
                fees
            
            $
            45,055
            
            $
            --





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."





Registration
      statement fees consist of fees billed to review the Form SB-1 registration
      statement filed by the Company during 2006. The Company filed its Form SB-1
      on
      August 4, 2006.





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.


31


**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.




**MALIBU
              MINERALS, INC.**Date: April
              17, 2007
            By:
            /s/ *James
              Laird*James
              LairdChief
                Executive Officer, President, acting Chief Financial Officer and
                acting
                Principal Accounting Officer and
                Director







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/
                James Laird*
            
            Chief
                Executive Officer, President,
            
            April
                17, 2007James
                Laird
            
            acting
                Chief Financial Officer, acting PrincipalAccounting
                Officer and Director*/s/
                Thomas Barr*
            
            Director
            
            April
                17, 2007Thomas
                Barr




















32


**MALIBU
      MINERALS, INC.**


**** **INDEX TO FINANCIAL STATEMENTS**





For
                the Years Ended December 31, 2006 and 2005
            PageReport
                of Independent Registered Certified Public Accounting Firm
            F-2Balance
                Sheets as of December 31, 2006 and December 31, 2005
            F-3Statements
                of Operations for the years ended December 31, 2006 and December 31,
                2005
            F-5Statement
                of Stockholders’ Equity (Deficit) for the years ended December 31, 2006
                and December 31, 2005
            F-6Statements
                of Cash Flows for the years ended December 31, 2006 and December 31,
                2005
            F-7Notes
                to Financial Statements
            F-8





F-1




**MOORE
        & ASSOCIATES, CHARTERED**
 *ACCOUNTANTS
        AND ADVISORS*
 *PCAOB
        REGISTERED*
 
 
 REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To
        the
        Board of Directors
 Malibu
        Minerals Inc ( A Exploration Stage Company)
 Las
        Vegas, Nevada
 
 We
        have
        audited the accompanying balance sheet of Malibu Minerals Inc (A Exploration
        Stage Company) as of December 31, 2006, and the related statements of
        operations, stockholders’ equity and cash flows from inception March 10, 2006
        through December 31, 2006 and the period then ended. 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 audits.
 
 We
        conducted our audits in accordance with standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audits to obtain reasonable assurance about whether the
        financial statements are free of material misstatement. An audit includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements. An audit also includes assessing the accounting
        principles used and significant estimates made by management, as well as
        evaluating the overall financial statement presentation. We believe that
        our
        audits provide a reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of Malibu Minerals Inc (A Exploration
        Stage Company) as of December 31, 2006 and the results of its operations
        and its
        cash flows from inception March 10, 2006 through December 31, 2006 and the
        period then ended, 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 3 to the financial
        statements, the Company’s net losses and accumulated deficit of $23,455 as of
        December 31, 2006 raise substantial doubt about its ability to continue as
        a
        going concern. Management’s plans concerning these matters are also described in
        Note 3. The financial statements do not include any adjustments that might
        result from the outcome of this uncertainty.
 
 
 ***/s/
        Moore & Associates, Chartered***
 
 Moore
        & Associates Chartered
 Las
        Vegas, Nevada
 April
        17,
        2007
 
   
 
 *2675
        S. Jones Blvd. Suite 109, Las Vegas, NV 89146 (702) 253-7511 Fax (702)
        253-7501*











F-2


**MALIBU
                  MINERALS INC**(An
                    Exploration Stage Company)Balance
                    Sheet(Stated
                    in US Dollars)
  **As
                    of****December
                    31**
                
                **June
                    30****2006**
                
                **2006**(Audited)
                
                (Audited)AssetsCash
                
                $
                112,550
                
                $
                -Total
                    current assets
                
                
                112,550
                
                
                -Flex
                    Fuels Investments
                
                $
                1,500,000
                
                $
                -Total
                    Investments
                
                $
                1,500,000
                
                $
                -Total
                    Assets
                
                
                1,612,550
                
                
                -LiabilitiesCurrent
                    liabilities
                
                $
                -
                
                $
                -Accounts
                    payable
                
                $
                -
                
                $
                5,855Total
                    current liabilities
                
                
                -
                
                
                5,855Long
                    term liabilities
                
                
                -
                
                
                -Shareholders
                    loan
                
                
                13,455
                
                
                -Total
                    Liabilities
                
                
                13,455
                
                
                5,855Equity100,000,00
                    Common Shares Authorized, 12,425,814 issued and outstanding @
                    $0.001
                    Par
                
                
                12,425
                
                
                10,000Paid
                    in Capital
                
                
                1,525,665Retained
                    earnings (deficit)
                
                
                60,905
                
                
                (15,855
                )Total
                    stockholders equity
                
                
                1,598,995
                
                
                (5,855
                )Total
                    liabilities and stockholders equity
                
                $
                1,612,450
                
                $
                -The
                    accompanying notes are an integralpart
                    of these financial statements.
   F-3
  **MALIBU
                  MINERALS INC**(An
                    Exploration Stage Company)Income
                    Statement(Stated
                    in US Dollars)
  **For
                    the year ended**
                
                **From
                    inception**
                  **(March
                    10, 2006) to****December
                    31, 2006**
                
                **December
                    31, 2006**Revenue
                
                $
                -
                
                $
                -ExpensesRecognition
                    of an Impairment Loss(Mineral
                    Claims)
                
                
                10,000
                
                
                10,000Accounting
                    & Legal Fees
                
                
                45,050
                
                
                45,050Professional
                    Fees
                
                
                5,000
                
                
                5,000Incorporation
                
                
                855
                
                
                855Total
                    Expenses
                
                
                60,905
                
                
                60,905Net
                    Income (Loss)
                
                $
                (60,905
                )
                $
                (60,905
                )Basic
                    & Diluted (Loss) per Share
                
                
                (0.006
                )
                
                (0.006
                )Weighted
                    Average Number of Shares
                
                
                10,019,938
                
                
                10,019,938The
                    accompanying notes are an integralpart
                    of these financial statements.
    F-4
  **MALIBU
                    MINERALS INC**(An
                  Exploration Stage Company)STATEMENT
                    OF STOCKHOLDER’S EQUITYFrom
                    Inception (March 10, 2006) to December 31, 2006(Stated
                    in US Dollars)**Deficit****Accumulated****During****Common
                    Stock**
                
                **Paid
                    in**
                
                **Development**
                
                **Total****Shares**
                
                **Amount**
                
                **Capital**
                
                **Stage**
                
                **Equity**Shares
                    issued to founders at $0.001 per share
                
                
                10,000,000
                
                $
                10,000
                
                $
                -
                
                
                
                
                $
                10,000Shares
                    issued in Lieu of Payment for Service
                
                
                68,673
                
                $
                69
                
                $
                (69
                )
                
                
                
                $
                (0
                )Shares
                    issued at $0.70 per share
                
                
                2,357,141
                
                $
                2,357
                
                $
                1,647,643
                
                
                
                
                $
                1,650,000Net
                    (Loss) for period
                
                
                
                
                
                
                
                
                
                
                
                60,905
                
                
                60,905Balance,
                    December 31, 2006
                
                
                12,425,814
                
                
                12,426
                
                
                1,647,574
                
                
                60,905
                
                
                1,720,905The
                    accompanying notes are an integralpart
                    of these financial statements.
  
 F-5
 **MALIBU
                MINERALS INC**(An
                  Exploration Stage Company)Statement
                  of Cash Flows
  **For
                  the year ended**
              
              **From
                  inception**
                **(March
                  10, 2006) to****December
                  31, 2006**
              
              **December
                  31, 2006**Cash
                  Flow From Operating ActivitiesNet
                  income (loss)
              
              $
              (60,905
              )
              $
              (60,905
              )Recognition
                  of an Impairment Loss(Mineral
                  Claims)
              
              
              10,000
              
              
              10,000Accounts
                  payable
              
              
              -
              
              
              -**Net
                  cash used in operating activities**
              
              
              **(50,905**
              **)**
              
              **(50,905**
              **)**Cash
                  Flow From Investing ActivitiesFlex
                  Fuels Energy Limited
              
              
              (1,500,000
              )
              
              (1,500,000
              )Purchase
                  of mineral claim
              
              
              (10,000
              )
              
              (10,000
              )**Net
                  cash used in investing activities**
              
              $
              (1,510,000
              )
              $
              (1,510,000
              )Cash
                  Flow from Financing ActivitiesLoan
                  from Shareholders
              
              
              13,455
              
              
              13,45510,000,000
                  Common shares issued at founders
                @
                  $0.001 per share
              
              
              10,000
              
              
              10,00068,673
                  Shares issued in Lieu of Payment for Service
              
              
              68
              
              
              -2,357,141
                  Common shares issued @$0.70 per share
              
              
              2,357
              
              
              1,650,000**Net
                  cash provided by financing activities**
              
              $
              25,880
              
              $
              1,673,455Cash
                  at beginning of period
              
              
              -
              
              
              -**Cash
                  at end of period**
              
              **$**
              **(1,535,025**
              **)**
              **$**
              **112,550**Cash
                  Paid For:Interest
              
              $
              -
              
              $
              -Income
                  Tax
              
              $
              -
              
              $
              -Non-Cash
                  ActivitiesShares
                  issued in Lieu of Payment for Service
              
              $
              -
              
              $
              -Stock
                  issued for accounts payable
              
              $
              -
              
              $
              -Stock
                  issued for notes payable and interest
              
              $
              -
              
              $
              -Stock
                  issued for convertible debentures and interest
              
              $
              -
              
              $
              -Convertible
                  debentures issued for services
              
              $
              -
              
              $
              -Warrants
                  issued
              
              $
              -
              
              $
              -Stock
                  issued for penalty on default of convertible debentures
              
              $
              -
              
              $
              -Note
                  payable issued for finance charges
              
              $
              -
              
              $
              -Forgiveness
                  of note payable and accrued interest
              
              $
              -
              
              $
              -The
                  accompanying notes are an integralpart
                  of these financial statements.
    F-6
  
 MALIBU
        MINERALS INC
 (An
        Exploration Stage Company)
 Footnotes
        to the Financial Statements
 From
        inception (March 10, 2006) to December 31, 2006
 (Stated
        in US Dollars)
 
 NOTE
        1
        -  ORGANIZATION
        AND DESCRIPTION OF BUSINESS
 
 Malibu
        Minerals, Inc. **** (“Malibu
        Minerals” or the “Company”) was organized under the laws of the State of Nevada
        on March 10, 2006 to explore mining claims and property in North America.
 
 Our
        property, known as the Malibu Gold Property comprises one MTO mineral claim
        containing 8 cell claim units totaling 165.685 hectares.
 
 NOTE
        2
        -  SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES
 
 a.   
        Accounting Method
  The
        Company’s financial statements are prepared using the accrual method of
        accounting. The Company has elected a December 31 year-end.
 
 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.  
         Income Taxes
  The
        Company prepares its tax returns on the accrual basis. The Company has elected
        to file its taxes as a Limited Liability Company, whereby its profits and
        losses
        are passed through to its members. Accordingly, the Company does not pay
        or
        accrue income taxes. Also, the Company does not record an asset for the value
        of
        its net operating loss carry forwards.
 
 d.    
        Use of Estimates
  The
        preparation of the financial statements in conformity with generally accepted
        accounting principles 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.
 
 
 e. Assets
  The
        company holds assets of 112,500 in cash as of December 31, 2006 and an
        investment of 15% of the entire authorized share capital of Flex Fuels Energy
        Limited, a developmental stage company headquartered in London, England for
        a
        value of $1,500,000. 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.
 
 F-7
 
  
 MALIBU
        MINERALS INC
 (An
        Exploration Stage Company)
 Footnotes
        to the Financial Statements
 From
        inception (March 10, 2006) to December 31, 2006
 (Stated
        in US Dollars)
 
 NOTE
        2
        -  SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 Mineral
        Property
 
 During
        the period from inception (March 10, 2006) to December 31, 2006, the Company
        purchased mining claims located in the Malibu Gold Property which comprises
        one
        MTO mineral claim containing 8 cell claim units totaling 165.685
        hectares.
 The
        anticipated costs 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 man-days @ $100.00/day
              
              $
              1500.00Misc.
                  sampling and field supplies
              
              $
              500.00Report
                  and reproduction costs
              
              $
              1000.00Subtotal
              
              $
              16,000.00
 
 
  
 F-8
 
 MALIBU
        MINERALS INC
 (An
        Exploration Stage Company)
 Footnotes
        to the Financial Statements
 From
        inception (March 10, 2006) to December 31, 2006
 (Stated
        in US Dollars)
 
 NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 Management
                  Fee @ 15%
              
              $
              2400.00Contingency
                  @ 10%
              
              $
              1600.00Total
              
              $
              20.000.00GST@
                  6% (July 1, 2006)
              
              $
              1200.00NET
                  TOTAL
              
              $
              21,200.00
 
 Phase
        2
  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, four-man crew with camp and supplies,
        transportation, report.
  $
                85,000.00
 Phase
        3
  1000
        metres of diamond drilling @ 100.00 per metre, plus geological supervision,
        camp
        and supplies, transportation, assays, report and other ancillary
        costs.
  $
              175,000.00TOTAL
              
              $
              281,200.00
 
 Exploration
        costs have been estimated in Canadian Dollars.  Based on the noon
        buying rate in New York City on December 29, 2006 of $1.1652 for cable
        transfers in foreign currencies as certified for customs purposes by the
        Federal
        Reserve Bank of New York for the conversion of Canadian dollars into
        United States dollars, estimates of exploration costs for all three phases
        of
        the Company's exploration program approximately equal a total cost of US$
        241,331.96
 
 In
        accordance with FASB No. 89 paragraph 14 “Additional Disclosure by Enterprises
        with Mineral Resources Assets” the Company since inception (March 10, 2006) has
        yet to establish proven or probable mining reserves and has no quantities
        of
        proved mineral reserves or probable mineral reserves. Moreover, the Company
        has
        not purchased or sold proved or probable minerals reserves since inception.
        Due
        to the fact that we have no proven or probable mining reserves the Company
        will
        record our exploration and development costs within operating expenses, as
        opposed to capitalizing those costs.
 
 
 
 
 
 F-9
 
 MALIBU
        MINERALS INC
 (An
        Exploration Stage Company)
 Footnotes
        to the Financial Statements
 From
        inception (March 10, 2006) to December 31, 2006
 (Stated
        in US Dollars)
 
 NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 f.  Income
 
 Income
        represents all of the company’s revenue less all its expenses in the period
        incurred. The Company has no revenues for the year ended on December 31,
        2006
        and has paid expenses for $60,905 $45,050 representing accounting, legal
        and
        filing fees, $855 representing incorporation costs, $5,000 in professional
        fees
        and $10,000 as a result of the impairments of the mineral claims.
 
 In
        accordance with FASB/ FAS 142 option 12, paragraph 11 “Intangible Assets Subject
        to Amortization”, a recognized intangible asset shall be amortized over its
        useful life to the reporting entity unless that life is determined to be
        indefinite. If an intangible asset has been has a finite useful life, but
        the
        precise length of that life is not known, that intangible asset shall be
        amortized over the best estimate of its useful life. The method of amortization
        shall reflect the pattern in which the economic benefits of the intangible
        asset
        are consumed or otherwise used up. If that pattern cannot be reliable
        determined, a straight-line amortization method shall be used. An intangible
        asset shall not be written down or off in the period of acquisition unless
        it
        becomes impaired during that period.
 
 The
        Company has determined that its Malibu
        Gold property
        is to be held and used for impairment, 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.
  
 F-10
 
 
 
 MALIBU
        MINERALS INC
 (An
        Exploration Stage Company)
 Footnotes
        to the Financial Statements
 From
        inception (March 10, 2006) to December 31, 2006
 (Stated
        in US Dollars)
  NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
  **For
                    the year ended**
                
                **From
                    inception**
                  **(March
                    10, 2006) to****December
                    31, 2006**
                
                **December
                    31, 2006**Revenue
                
                $
                -
                
                $
                -ExpensesRecognition
                    of an Impairment Loss(Mineral
                    Claims)
                
                
                10,000
                
                
                10,000Accounting
                    & Legal Fees
                
                
                45,050
                
                
                45,050Professional
                    Fees
                
                
                5,000
                
                
                5,000Incorporation
                
                
                855
                
                
                855Total
                    Expenses
                
                
                60,905
                
                
                60,905Net
                    Income (Loss)
                
                $
                (60,905
                )
                $
                (60,905
                )
 
 g.  Basic
        Income (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 common stockholders by
        the
        weighted average number of common shares outstanding. Diluted loss per common
        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.
  
 **For
                  the year ended**
              
              **From
                  inception**
                **(March
                  10, 2006) to****December
                  31, 2006**
              
              **December
                  31, 2006**Net
                  Income (Loss)
              
              $
              (60,905
              )
              $
              (60,905
              )Basic
                  & Diluted (Loss) per Share
              
              
              (0.006
              )
              
              (0.006
              )Weighted
                  Average Number of Shares
              
              
              10,019,938
              
              
              10,019,938
   
 F-11
 
 MALIBU
        MINERALS INC
 (An
        Exploration Stage Company)
 Footnotes
        to the Financial Statements
 From
        inception (March 10, 2006) to December 31, 2006
 (Stated
        in US Dollars)
 
 NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 i.  Cash
        and
        Cash Equivalents
 
 For
        purposes of the statement of cash flows, the company considers all highly
        liquid
        investments purchased with maturity of three months or less to be cash
        equivalents. As of December 31, 2006 there was $112,550 in cash.
  **As
                    of****December
                    31**
                
                **June
                    30****2006**
                
                **2006**(Audited)
                
                (Audited)AssetsCash
                
                $
                112,550
                
                $
                -Total
                    current assets
                
                
                112,550
                
                
                -
 
 j.  Liabilities
  Liabilities
        are made up of current and long-term liabilities.
  Long-term
        liabilities includes a shareholders’ loan of $13,455, $7,600 representing
        accounting, legal and filing fees for the three months ended on September
        30,
        2006, $855 representing incorporation costs and $5,000 in professional fees
        as
        of December 31, 2006.
  **As
                    of****December
                    31**
                
                **June
                    30****2006**
                
                **2006**(Audited)
                
                (Audited)LiabilitiesCurrent
                    liabilities
                
                $
                -
                
                $
                -Accounts
                    payable
                
                $
                -
                
                $
                5,855Total
                    current liabilities
                
                
                -
                
                
                5,855Long
                    term liabilities
                
                
                -
                
                
                -Shareholders
                    loan
                
                
                13,455
                
                
                -Total
                    Liabilities
                
                
                13,455
                
                
                5,855
 
 
  
 F-12
 
 
 
 MALIBU
        MINERALS INC
 (An
        Exploration Stage Company)
 Footnotes
        to the Financial Statements
 From
        inception (March 10, 2006) to December 31, 2006
 (Stated
        in US Dollars)
 
 NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 Share
        Capital
  a)
        Authorized:
 
 100,000,000
        common shares with a par value of $0.001
 
 b)
        Issued:
 As
        of
        December 31, 2006, there are Ten Million (12,425,814) shares issued and
        outstanding at a 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.
 
 NOTE
            3 -
  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 ($60,905) 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.