UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-Q
 
 x           QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGEACT OF
1934
 
 FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009
 
 Or
 
 o           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
  Commission
File #333-74638
 
 ADINO
ENERGY CORPORATION
 (Exact
name of registrant as specified in its charter)
 
 MONTANA
              
              82-0369233(State
      or other jurisdiction of incorporation)
              
              (IRS
      Employer Identification Number)2500
      City West Boulevard, Suite 300,  Houston, Texas
              
              77042(Address
      of principal executive offices)
              
              (Zip
      Code)
 (281)
209-9800
 (Registrant's
telephone no., including area code)
 
 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   Noo
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes o  Nox
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  (See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act).
 Large
      accelerated filer
              o
              Accelerated
      filer
              oNon-accelerated
      filer
              o
              Smaller
      reporting company
              x(Do
      not check if smaller reporting company
 Indicate by a check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act): Yes  o Nox
 
 State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date:
 
 On
November 10, 2009, there were 93,260,579 shares of common stock
outstanding.
 
 
 
 TABLE
OF CONTENTS
  PART
I FINANCIAL INFORMATION
  Page
      No.Item
      1.
              Financial
      StatementsConsolidated
      Balance Sheets – September 30, 2009 (Unaudited) and December 31,
      2008
              3Unaudited
      Consolidated Statements of Operations-Three and Nine Months
      Ended September 30, 2009 and 2008
              4Unaudited
      Consolidated Statement of Changes in Stockholders’ Deficit – Period Ended
      September 30, 2009
              5Unaudited
      Consolidated Statements of Cash Flows - Nine Months Ended September 30,
      2009 and 2008
              6Notes
      to Unaudited Consolidated Financial Statements
              7Item
      2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              10Item
      3.
              Quantitative
      and Qualitative Disclosures About Market Risks
              12Item
      4T.
              Controls
      and Procedures
              12PART
      II OTHER INFORMATIONItem
      1.
              Legal
      Proceedings
              12Item
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              12Item
      3.
              Defaults
      Upon Senior Securities
              13Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              13Item
      5.
              Other
      Information
              13Item
      6.
              Exhibits
              13Signatures
              
              17
 
 2
 
 ITEM
1. FINANCIAL STATEMENTS
 
 
 ADINO
ENERGY CORPORATION
 Consolidated
Balance Sheets
 AS
OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
 
 
 September
      30,
                2009(Unaudited)
              
              
              December
      31,
                2008ASSETSCash
      in bank
              
              $
              162,212
              
              
              $
              30,228Accounts
      receivable
              
              
              91,581
              
              
              
              81,472Note
      receivable – current portion
              
              
              61,921
              
              
              
              60,094Prepaid
      assets
              
              
              264
              
              
              
              5,702Total
      current assets
              
              
              315,978
              
              
              
              177,496Fixed
      assets, net of accumulated depreciation of  $25,824 and $26,758,
      respectively
              
              
              35,201
              
              
              
              62,793Goodwill
              
              
              1,559,240
              
              
              
              1,559,240Notes
      receivable – long term
              
              
              840,300
              
              
              
              847,096Other
      assets
              
              
              375,208
              
              
              
              375,208Total
      non-current assets
              
              
              2,809,949
              
              
              
              2,844,337TOTAL
      ASSETS
              
              $
              3,125,927
              
              
              $
              3,021,833LIABILITIES
      AND STOCKHOLDERS’ DEFICITAccounts
      payable
              
              $
              605,287
              
              
              $
              702,753Accrued
      liabilities
              
              
              222,019
              
              
              
              133,521Accrued
      liabilities – related party
              
              
              1,008,472
              
              
              
              766,214Notes
      payable – current portion
              
              
              291,399
              
              
              
              397,751Interest
      payable
              
              
              472,500
              
              
              
              360,000Deferred
      gain - current portion
              
              
              391,272
              
              
              
              391,278Total
      current liabilities
              
              
              2,990,949
              
              
              
              2,751,517Deferred
      gain – long term
              
              
              1,173,842
              
              
              
              1,467,295Notes
      payable – long term
              
              
              1,524,496
              
              
              
              1,554,813TOTAL
      LIABILITIES
              
              
              5,689,287
              
              
              
              5,773,625STOCKHOLDERS’
      DEFICITPreferred
      stock, $0.001 par value, 20,000,000 shares authorized,
                no
      shares outstanding
              
              
              -
              
              
              
              -Capital
      stock, $0.001 par value, 500,000,000 shares authorized,
                93,260,579
      and 83,260,579 shares issued and outstanding at
                September
      30, 2009 and  December 31, 2008, respectively
              
              
              93,260
              
              
              
              83,260Additional
      paid in capital
              
              
              13,527,242
              
              
              
              13,306,247Retained
      deficit
              
              
              (16,183,862
              )
              
              
              (16,141,299
              )Total
      stockholders’ deficit
              
              
              (2,563,360
              )
              
              
              (2,751,792
              )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
              
              $
              3,125,927
              
              
              $
              3,021,833
 
 The
accompanying notes are an integral part of these financial
statements.
 
 3
 
  ADINO
      ENERGY CORPORATIONConsolidated
      Statements of OperationsFOR
      THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND
  2008(Unaudited)
  Three
      months ended
              
              
              Nine
      months endedSeptember
      30,
              
              
              September
      30,
              
              
              September
      30,
              
              
              September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008(Restated)
              
              
              
              
              
              (Restated)REVENUESRevenues
              
              $
              533,998
              
              
              $
              494,059
              
              
              $
              1,524,985
              
              
              $
              1,504,499OPERATING
      EXPENSESCost
      of product sales
              
              
              100,374
              
              
              
              89,787
              
              
              
              355,868
              
              
              
              297,844Terminal
      management
              
              
              99,990
              
              
              
              107,500
              
              
              
              300,990
              
              
              
              318,500General
      and administrative
              
              
              129,245
              
              
              
              36,868
              
              
              
              396,034
              
              
              
              110,771Legal
      and professional
              
              
              36,992
              
              
              
              114,569
              
              
              
              129,102
              
              
              
              235,284Consulting
      fees
              
              
              127,058
              
              
              
              171,725
              
              
              
              599,239
              
              
              
              393,727Repairs
              
              
              419
              
              
              
              65
              
              
              
              602
              
              
              
              5,994Depreciation
      expense
              
              
              2,542
              
              
              
              59,967
              
              
              
              9,629
              
              
              
              179,445Operating
      supplies
              
              
              4,406
              
              
              
              3,407
              
              
              
              7,656
              
              
              
              8,264Total
      operating expenses
              
              
              501,026
              
              
              
              583,888
              
              
              
              1,799,120
              
              
              
              1,549,829OPERATING
      INCOME (LOSS)
              
              
              32,972
              
              
              
              (89,829
              )
              
              
              (274,135
              )
              
              
              (45,330
              )OTHER
      INCOME AND EXPENSESInterest
      income
              
              
              16,923
              
              
              
              18,894
              
              
              
              49,141
              
              
              
              56,698Interest
      expense
              
              
              (42,391
              )
              
              
              (190,517
              )
              
              
              (124,828
              )
              
              
              (493,478
              )Gain
      (loss) from stock valuation
              
              
              -
              
              
              
              (279,212
              )
              
              
              -
              
              
              
              (64,072
              )Gain
      from lawsuit / lease settlement
              
              
              97,819
              
              
              
              24,673
              
              
              
              301,355
              
              
              
              74,019Other
      income
              
              
              3,700
              
              
              
              -
              
              
              
              5,904
              
              
              
              -Total
      other income and expense
              
              
              76,051
              
              
              
              (426,162
              )
              
              
              231,572
              
              
              
              (426,833
              )NET
      INCOME (LOSS)
              
              $
              109,023
              
              
              $
              (515,991
              )
              
              $
              (42,563
              )
              
              $
              (472,163
              )Net
      income (loss) per share, basic and fully diluted
              
              $
              0.00
              
              
              $
              (0.01
              )
              
              $
              (0.00
              )
              
              $
              (0.01
              )Weighted
      average shares outstanding
              
              
              93,260,579
              
              
              
              72,777,010
              
              
              
              89,879,627
              
              
              
              60,647,489
  The
accompanying notes are an integral part of these financial
statements.
 
 4
  ADINO
      ENERGY CORPORATIONConsolidated
      Statement of Changes in Stockholders' Equity (Deficit)FOR
      THE PERIOD ENDED SEPTEMBER 30, 2009(Unaudited)
  AdditionalPaid
      in
              
              
              RetainedShares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              TotalBalance
      December 31, 2008
              
              
              83,260,579
              
              
              $
              83,260
              
              
              $
              13,306,247
              
              
              $
              (16,141,299
              )
              
              $
              (2,751,792
              )Shares
      issued for services - officers
              
              
              3,500,000
              
              
              
              3,500
              
              
              
              49,000
              
              
              
              -
              
              
              
              52,500Shares
      issued for services
              
              
              1,000,000
              
              
              
              1,000
              
              
              
              18,000
              
              
              
              -
              
              
              
              19,000Options
      issued for services
              
              
              -
              
              
              
              -
              
              
              
              21,995
              
              
              
              -
              
              
              
              21,995Shares
      issued for lawsuit settlement
              
              
              5,500,000
              
              
              
              5,500
              
              
              
              132,000
              
              
              
              -
              
              
              
              137,500Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (42,563
              )
              
              
              (42,563
              )Balance
      September 30, 2009
              
              
              93,260,579
              
              
              $
              93,260
              
              
              $
              13,527,242
              
              
              $
              (16,183,862
              )
              
              $
              (2,563,360
              )
  The
accompanying notes are an integral part of these financial
statements.
  5
  ADINO
      ENERGY CORPORATIONConsolidated
      Statements of Cash FlowsFOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008(Unaudited)
  Nine
      Months
              
              
              Nine
      MonthsEnded
              
              
              EndedSeptember
      30, 2009
              
              
              September
      30, 2008(Restated)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
              
              $
              (42,563
              )
              
              $
              (472,163
              )Adjustments
      to reconcile net loss to net cash provided by  operating
      activities:Depreciation
      and amortization
              
              
              9,629
              
              
              
              179,445Options
      issued for services
              
              
              21,995
              
              
              
              39,003Stock
      based compensation
              
              
              52,500
              
              
              
              -Shares
      issued for services
              
              
              19,000
              
              
              
              -Amortization
      of note receivable discount
              
              
              (39,876
              )
              
              
              -Change
      in stock payable valuation
              
              
              -
              
              
              
              64,072Gain
      from lawsuit / lease settlement
              
              
              (301,355
              )
              
              
              (74,019
              )Gain
      on asset disposal
              
              
              (2,204
              )
              
              
              -Change
      in operating assets and liabilities:Accounts
      receivable
              
              
              (10,109
              )
              
              
              (87,949
              )Inventory
              
              
              -
              
              
              
              (5,913
              )Other
      assets
              
              
              5,438
              
              
              
              (55,228
              )Accounts
      payable and accrued liabilities
              
              
              391,186
              
              
              
              218,936Lease
      obligation
              
              
              -
              
              
              
              216,737Net
      cash provided by operating activities
              
              
              103,641
              
              
              
              22,921CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchases
      of equipment
              
              
              (10,264
              )
              
              
              (58,640
              )Principal
      payments on note receivable
              
              
              44,845
              
              
              
              -Net
      cash provided by (used in) investing activities
              
              
              34,581
              
              
              
              (58,640
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Borrowings
      on note payable-related party
              
              
              -
              
              
              
              10,500Principal
      payments on note payable
              
              
              (6,238
              )
              
              
              (13,270
              )Net
      cash used in financing activities
              
              
              (6,238
              )
              
              
              (2,770
              )Net
      change in cash and cash equivalents
              
              
              131,984
              
              
              
              (38,489
              )Cash
      and cash equivalents, beginning of period
              
              
              30,228
              
              
              
              91,264Cash
      and cash equivalents, end of period
              
              $
              162,212
              
              
              $
              52,775Cash
      paid for:Interest
              
              $
              12,378
              
              
              $
              14,148Income
      taxes
              
              
              -
              
              
              
              -
 
 The
accompanying notes are an integral part of these financial
statements.
  6
  ADINO
ENERGY CORPORATION
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 
 NOTE
1 - BASIS OF PRESENTATION
  The
accompanying unaudited interim consolidated financial statements of Adino Energy
Corporation (the “Company”) have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules of
the Securities and Exchange Commission (“SEC”), and should be read in
conjunction with the audited financial statements and notes thereto contained in
Adino Energy Corporation’s Annual Report filed with the SEC on Form 10-K.
 In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of financial position
and the results of operations for the interim periods presented have been
reflected herein.  The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year.
 
 NOTE
2 - GOING CONCERN
 
 As of
September 30, 2009, the Company has a working capital deficit of $2,674,971 and
retained deficit of $16,183,862. These factors raise substantial doubt
regarding the Company’s ability to continue as a going concern. The ability of
the Company to continue as a going concern depends upon its ability to obtain
funding for its working capital deficit.  The Company believes that the
current cash flow and planned increase in operations are adequate to satisfy the
working capital deficit.  Certain officers and directors have agreed in
writing to postpone payment if necessary should the Company need capital it
would otherwise pay these individuals. Lastly, the Company plans to grow through
merger and acquisition opportunities including the expansion of existing
business opportunities. The Company expects these growth opportunities to be
financed through a combination of equity and debt capital; however, in the event
the Company is unable to obtain additional debt and equity financing, the
Company may not be able to continue its operations.
 
 NOTE
3 - LEASE COMMITMENTS
  On April
1, 2007, the Company’s wholly-owned subsidiary, Intercontinental Fuels LLC
(“IFL”) agreed to lease a bulk fuel terminal from 17617 Aldine Westfield Road,
LLC for 18 months at $15,000 per month. The lease contained an option to
purchase the terminal for $3.55 million by September 30, 2008. The Company
evaluated this lease and determined that it qualified as a capital lease for
accounting purposes.  The terminal was capitalized at $3,179,572,
calculated using the present value of monthly rent at $15,000 for the months
April 2007 – September 2008 and the final purchase price of $3.55 million
discounted at the Company’s incremental borrowing rate of 12.75%.  The
terminal was depreciated over its useful life of 15 years resulting in monthly
depreciation expense of $17,664.
  Due to
the difficult credit markets, the Company was unable to secure financing for the
purchase of the Houston terminal facility and assigned its rights to purchase
the terminal to Lone Star Fuel Storage and Transfer, LLC (“Lone
Star”).  Lone Star purchased the terminal from 17617 Aldine Westfield
Road, LLC on September 30, 2008.  Lone Star then entered into a five
year operating lease with option to purchase with the Company.  The
five-year lease has monthly rental payments of $30,000, escalating 3% per
year.  The Company’s purchase option allowed for the terminal to be
purchased at any time prior to October 1, 2009 for $7,775,552.  The
sale price escalates $1,000,000 per year after this date, through the lease
expiration date of September 30, 2013.  The Company recognizes the
escalating lease payments on a straight line basis.
  The Lone
Star lease was evaluated and deemed to be an operating lease.
 
 The
transactions that led to the above two leases both resulted in gains to the
Company.  The lease with 17617 Aldine Westfield Road, LLC was the
result of a lawsuit settlement and led to a gain to the Company of
$1,480,383.  The Company amortized this gain over the life of the
capital asset, or 15 years.   At the expiration of the capital
lease, September 30, 2008, the remaining gain of $1,332,345 was rolled into the
gain on the sale assignment transaction with Lone Star of
$624,047.  The total remaining gain to be amortized as of September
30, 2008 of $1,956,392 will be amortized over the life of the Lone Star
operating lease, or 60 months, through September 30, 2013.  During the
quarter ended September 30, 2009, the Company recognized gain from lawsuit of
$97,819, with year to date gain recognition of $293,458.  This
treatment is consistent with sale leaseback gain recognition.
 
 7
 
 NOTE
4 – NOTES RECEIVABLE
  On March
2, 2009, the Company agreed to extend the maturity date on the $750,000 note
receivable with Mr. Sundlun.  The note receivable from Mr. Sundlun
matured on November 6, 2008.  The Company extended the note’s maturity
date to August 8, 2011, with no additional interest accrual to occur past
November 6, 2008.  Due to the fact that there will be no interest
accrued on the note going forward, the Company recorded a discount on the note
principal of $179,671.  This amount will amortize until the note’s
maturity in August 2011.  The unamortized note discount balance at
September 30, 2009 is $128,905.
  September
      30, 2009
              
              
              December
      31, 2008Sundlun,
      net of unamortized discount
              
              $
              621,095
              
              
              $
              581,219Fuel
      Streamers
              
              
              281,126
              
              
              
              325,971Total
      notes receivable
              
              
              902,221
              
              
              
              907,190Less:  current
      portion
              
              
              (61,921
              )
              
              
              (60,094
              )Total
      long-term notes receivable
              
              $
              840,300
              
              
              $
              847,096
 
 NOTE
5 – ACCRUED LIABILITIES
 
 Other
liabilities and accrued expenses consisted of the following as of September 30,
2009 and December 31, 2008:
 
 September
      30, 2009
              
              
              December
      31, 2008Accrued
      accounting and legal fees
              
              
              127,467
              
              
              
              126,362Accrued
      property taxes and other
              
              
              17,794
              
              
              
              -Due
      to officers
              
              
              19,500
              
              
              
              -Customer
      deposit
              
              
              35,000
              
              
              
              -Deferred
      lease liability
              
              
              22,258
              
              
              
              7,159Total
      accrued liabilities
              
              $
              222,019
              
              
              $
              133,521Accrued
      salaries-related party
              
              $
              1,008,472
              
              
              $
              766,214
  Deferred lease
liability:The Lone Star lease is being expensed by the
straight line method, resulting in a deferred lease liability that will be
extinguished by the lease termination date of September 30, 2013.
  NOTE
6 – STOCK
 
 COMMON
STOCK
 
 The
Company's common stock has a par value of $0.001. At December 31, 2008, there
were 500,000,000 shares authorized and 83,260,579 shares
outstanding.
 
 In
February 2009, the Company awarded the members of the Board of Directors shares
of restricted stock for their services.  Both Messrs. Byrd and Wooley
were awarded 1,500,000 shares each and Ms. Behrens was awarded 500,000
shares.  This resulted in an expense to the Company of
$52,500.
 
 On March
20, 2009, the Board approved a stock issuance of 1,000,000 shares of restricted
common stock to Stuart Sundlun for consulting services.  This issuance
resulted in an expense to the Company of $19,000.
 
 As of May
1, 2009, the Company settled all claims with all parties in the lawsuit known
asAdino Energy Corporation v.
CapNet Securities Corporation, et. al. In the settlement, the
Company issued 4,500,000 shares of restricted common stock to CapNet Securities
Corporation and 1,000,000 shares of restricted common stock to CapNet Risk
Management.  All shares issued are to be restricted until January 1,
2012.  Starting January 1, 2012 and in every six month period
thereafter, no more than 250,000 of the CapNet Risk Management shares and no
more than 1,000,000 of the CapNet Securities Corporation shares may be released
for sale.  The Company paid no cash to any involved party as a result
of the settlement.  The Company realized a gain of $7,896 on the
transaction.
 
 As a
result of the above common stock issuances, as of September 30, 2009 there were
93,260,579 shares outstanding.
 
 8
 
 PREFERRED
STOCK
 
 In 1998,
the Company amended its articles to authorize Preferred Stock. There are
20,000,000 shares authorized with a par value of $0.001. The shares are
non-voting and non-redeemable by the Company. The Company further designated two
series of its Preferred Stock: Series “A” $12.50 Preferred Stock with 2,159,193
shares of the total shares authorized and Series “A” $8.00 Preferred Stock, with
the number of authorized shares set at 1,079,957 shares. As of September 30,
2009 and December 31, 2008, there are no shares issued and outstanding.
 
 Any
holder of either series may convert any or all of such shares into shares of
common stock of the Company at any time. Said shares shall be convertible at a
rate equal to three (3) shares of common stock of the Company for each one (1)
share of Series “A” $12.50 Preferred Stock. The Series “A” $12.50 Preferred
Stock shall be convertible, in whole or in part, at any time after the common
stock of the Company shall maintain an average bid price per share of at least
$12.50 for ten (10) consecutive trading days.
 
 Series
“A” $8.00 Preferred Stock shall be convertible at a rate equal to three (3)
shares of common stock of the Company for each one (1) share of Series “A” $8.00
Preferred Stock. The Series “A” $8.00 Preferred Stock shall be convertible, in
whole or in part, at any time after the common stock of the Company shall
maintain an average bid price per share of at least $8.00 for ten (10)
consecutive trading days.
 
 The
preferential amount payable with respect to shares of either Series of Preferred
Stock in the event of voluntary or involuntary liquidation, dissolution, or
winding-up, shall be an amount equal to $5.00 per share, plus the amount of any
dividends declared and unpaid thereon.
 
 
 NOTE
7 - STOCK OPTIONS / STOCK WARRANTS
 
 In
September 2007, the Company entered into a consulting agreement with Small Cap
Support Services, Inc. (“Small Cap”) to provide investor relations services.
 In addition to monthly compensation, Small Cap is entitled to 500,000
options, vesting ratably over 8 quarters, through August 30, 2009, priced at
166,667 shares at $0.15, $0.25, and $0.35, each.   Using the Black-Scholes
valuation model and an expected life of 3.5 years, volatility of 271%, and a
discount rate of 4.53%, the Company has determined the aggregate value of the
500,000 seven year options to be $59,126.  The Company recorded
stock-based compensation expense of $7,391 and $14,782 during the three and nine
months ended September 30, 2009, respectively.
 
 In
November 2007, the Company entered into an agreement with Ms. Nancy Finney, the
Company’s Controller. In addition to monthly compensation, Ms. Finney is
entitled to 500,000 options, vesting over 24 months as certain milestones are
met, priced at $0.10 each. Using the Black-Scholes valuation model and an
expected life of 2.5 years, volatility of 277%, and a discount rate of 4.16%,
the Company has determined the aggregate value of the 500,000 five year options
to be $24,044.  Of this amount, $7,213 was recorded as stock-based
compensation expense during the nine months ended September 30,
2009.
 
 
 NOTE
8 – CONCENTRATIONS
 
 The
following table sets forth the amount and percentage of revenue from those
customers that accounted for at least 10% of revenues for the three and nine
months ended September 30, 2009 and 2008.
 
 
 Three
      Months
              
              
              
              
              
              Three
      Months
              
              
              
              
              
              Nine
      Months
              
              
              
              
              
              Nine
      MonthsEnded
              
              
              
              
              
              Ended
              
              
              
              
              
              Ended
              
              
              
              
              
              EndedSeptember
      30,2009
              
              
              %
              
              
              September
      30,2008
              
              
              %
              
              
              September
      30,2009
              
              
              %
              
              
              September
      30,2008
              
              
              %Customer
      A
              
              $
              53,550
              
              
              
              9
              
              
              $
              53,550
              
              
              
              10
              
              
              $
              160,650
              
              
              
              10
              
              
              $
              189,780
              
              
              
              11Customer
      B
              
              $
              48,906
              
              
              
              9
              
              
              $
              159,269
              
              
              
              30
              
              
              $
              308,103
              
              
              
              20
              
              
              $
              561,243
              
              
              
              33Customer
      C
              
              $
              219,744
              
              
              
              39
              
              
              $
              200,412
              
              
              
              37
              
              
              $
              545,693
              
              
              
              35
              
              
              $
              517,637
              
              
              
              31Customer
      D
              
              $
              116,023
              
              
              
              20
              
              
              $
              115,811
              
              
              
              22
              
              
              $
              347,325
              
              
              
              22
              
              
              $
              401,227
              
              
              
              24Customer
      E
              
              $
              90,000
              
              
              
              16
              
              
              $
              -
              
              
              
              -
              
              
              $
              90,000
              
              
              
              6
              
              
              $
              -
              
              
              
              -
 
 The
Company had two customers that represented 73% and 23% of outstanding
receivables at September 30, 2009 and one customer that represented 79% of
outstanding receivables at December 31, 2008.
  9
  NOTE
9 – SUBSEQUENT EVENTS
  There are
no significant subsequent events to report through November 10, 2009, the date
the financial statements were issued.
  NOTE
10 – RESTATEMENT OF QUARTER ENDED SEPTEMBER 30, 2008
 
 The
Company has restated its quarterly financial statements from amounts previously
reported for periods ended March 31, June 30 and September 30,
2008.  The Company has determined that there was an error in the
amortization of the gain of $1,480,383 resulting from the lawsuit settlement
dated March 2007.  The gain was initially amortized over the life of
the capital lease with 17617 Aldine Westfield Road, LLC, or 18
months.  The Company determined that the gain should have been
amortized over the life of the leased asset, or 15 years.  The
restated financial statements were initially presented in the December 31, 2008
Form 10-K.  This filing includes the restated consolidated statement
of operations for the three and nine months ended September 30, 2008, and the
restated consolidated statement of cash flows for the nine months
ended September 30, 2008.
  ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
 
 The
following discussion should be read in conjunction with our unaudited
consolidated interim financial statements and related notes thereto included in
this quarterly report and in our audited consolidated financial statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") contained in our Form 10-K for the year ended December
31, 2008. Certain statements in the following MD&A are forward looking
statements. Words such as "expects", "anticipates", "estimates" and similar
expressions are intended to identify forward looking statements. Such statements
are subject to risks and uncertainties that could cause actual results to differ
materially from those projected.
 
 RESULTS
OF OPERATIONS
 
 The
Company continues to lease the terminal at 17617 Aldine Westfield Road, Houston,
Texas from Lone Star Fuel Storage and Transport, LLC (“Lone
Star”).  Utilizing a fuel storage and throughput model, revenues
continue to remain strong.
 
 Revenue:Revenue
generated in the three months ended September 30, 2009 was $533,998 compared to
$494,059 in 2008.  Revenue for the nine months ended September 30,
2009 and 2008 was $1,524,985 and $1,504,499, respectively, a year to date
increase of 1%.  The new customer contracts signed in February and
August 2009 and increased throughput volume at the Houston terminal have
partially offset the Company’s reduced consulting revenue.
 
 Cost of Product
Sales:Additive expense for the three months ended September
30, 2009 and 2008 was $100,374 and $89,787, respectively, for an increase of
$10,587. For the nine months ended September 30, expense has increased 19%
from $297,844 in 2008 to $355,868 in 2009.  As fuel passes through the
rack, it is blended with various fuel additives.   The increase
results from increased throughput at the IFL terminal, requiring additional
additive volume.
 
 Terminal
Management:Expense for the three and nine months
ended September 30, 2009 was $99,990 and $300,990, compared to
$107,500 and $318,500 for the same periods in 2008.  The Company
realized a slight decrease in the monthly terminal expense due to personnel
changes.
 
 General and Administrative
Expense: Expense for the three and nine months ended September 30,
2009 was $129,245 and $396,034, respectively, compared to $36,868 and
$110,771 for the same periods in 2008, resulting in a year to date increase of
$285,263 or 357%.  The increase is almost wholly due to rent expense
at the Houston terminal of $286,686 for the nine months ended
2009.  In September 2008, the Company began an operating lease on the
terminal facility at 17617 Aldine Westfield Road in Houston, Texas with Lone
Star, resulting in monthly rent expense of $31,854.   Prior to
September 2008, the terminal was under a capital lease and did not recognize
rent expense.
 
 Legal and Professional
Expense:Legal and professional expense was $36,992 and
$114,569 for the three months ended September 30, 2009 and 2008,
respectively.   Expense for the nine months ended September 30,
2009 and 2008 was $129,102 and $235,284, respectively, a decrease of $106,182 or
45%.  These expenses were higher in 2008 due to increased auditing
fees associated with the Company’s restatement of its 2007 financial
statements.  Additionally, the Company recognized significant closing
costs and legal expenses with the Lone Star transaction in September
2008.
 
 Consulting
Expense:Expense for the three and nine months ended September
30, 2009 was $127,058 and $599,239, respectively, compared to $171,725 and
$393,727 for the same periods in 2008, resulting in a year to date increase of
$205,512 or 52%.  In the first quarter of 2009, the Company incurred
stock issuance expense to the Board of Directors and Mr. Sundlun totaling
$71,500.  Additionally, during the second quarter of 2009, the Board
granted additional compensation to Adino’s officers and controller totaling
$148,907.
 
 Repairs:The
Company’s repair expense has drastically decreased from 2008 to
2009.  Expenses for the nine months ended September 30, 2009 and
2008 were $602 and $5,994, respectively.  Repairs necessary on the
Houston terminal have primarily been covered by the terminal management contract
during 2009.
 
 10
 Depreciation
Expense:The Company recorded depreciation expense for the
nine months ended September 30, 2009 and 2008 of $9,629 and $179,445,
respectively, a decrease of $169,816, or 95%.  The Company operated
the Houston terminal under a capital lease until September 2008.  As
the capital lease was terminated in 2008, only vehicles and leasehold
improvements are depreciated going forward, accounting for the sharp decrease in
depreciation expense.
 
 Operating
Supplies:The Company’s operating supplies expense for the
nine months ended September 30, 2009 and 2008 were $7,656 and $8,264,
respectively.  Costs remain relatively consistent, primarily due to
the fact that the terminal management contract allows for most operating
supplies to be included in the monthly terminal management fee, thereby
containing costs.
 
 Interest
Income:Interest income for the three months ended September
30, 2009 and 2008 was $16,923 and $18,894, respectively.  Income for
the nine months ended September 30, 2009 and 2008 was $49,141 and $56,698,
respectively.  As of November 2008, the Company no longer recognizes
monthly interest income of $6,250 from the note receivable with Mr. Sundlun, as
explained in Note 4 of the Company’s financial statements.  The income
from 2009 results from amortization of the note discount with Mr. Sundlun and
interest income recognized on the note receivable with Fuel
Streamers.
 
 Interest
Expense:Interest expense for the three months ended September
30, 2009 and 2008 was $42,391 and $190,517, respectively.  Expense for
the nine months ended September 30, 2009 and 2008 was $124,828 and $493,478,
respectively, a year to date decrease of $368,650.  The decrease
results primarily from the expiration of the capital lease on the terminal
located at 17617 Aldine Westfield Road in Houston, Texas, at September 30,
2008.  The Company continues to recognize expense on the note payable
with Mr. Sundlun.
 
 Gain(Loss)from Stock
Valuation:As ofDecember 31, 2007, the
Company had a significant stock payable outstanding due to inadequate authorized
capital.  In January 2008, the Company’s shareholders approved an
amendment increasing the amount of authorized shares and the Company
subsequently issued shares to satisfy all outstanding stock
payables.  For the three months ended September 30, 2008, the Company
recorded a loss of $279,212.  For the nine months ended September
30, 2008, the Company recorded a loss of $64,072.   The Company
had no stock payable issuance activity for the nine month period ending
September 30, 2009.
  Gain from Lawsuit/Lease Settlement:The lawsuit
settlement on March 23, 2007 resulted in a gain to the Company of
$1,480,383.  The transaction was deemed to be a sale/leaseback, and
therefore the gain was recognized over the life of the capitalized asset, 15
years. On September 30, 2008, the Company assigned its rights to purchase the
IFL terminal to Lone Star.  As of this date, the unamortized gain from
the lawsuit was $1,332,345.  The Company’s transaction with Lone Star
resulted in an additional gain of $624,047.  These amounts, totaling
$1,956,392, will be amortized over the 60 month life of the Lone Star operating
lease, resulting in a gain of $32,606 per month.  See Note 3 of the
Company’s financial statements for more information regarding these
transactions. Additionally, the Company recognized a gain from the lawsuit
settlement with CapNet Securities Corporation of $7,896.  See Note 3
of the Company’s financial statements for a more detailed explanation of this
gain.
  Net Income(Loss):  As a result of
the foregoing, the Company realized a net income of $109,023 and a net loss of
$515,991 for the three months ended September 30, 2009 and 2008,
respectively.  The Company had net losses of $42,563
and  $472,163 for the nine months ended September 30, 2009 and 2008,
respectively.
 
 CAPITAL
RESOURCES AND LIQUIDITY
 
 As of
September 30, 2009, our cash and cash equivalents were $162,212, compared to
$30,228 at December 31, 2008.  Cash flow has been an ongoing concern
for the Company due to the large amount of legacy liabilities that Adino
accumulated in the years in which it was a non-operating entity. These
liabilities will likely continue to be a drag on the Company’s financial
statements unless and until Adino obtains financing that allows us to pay off
these liabilities.
 
 Our
working capital deficit at September 30, 2009 was $2,674,971 compared to
$2,574,021 at December 31, 2008. The Company believes that the current cash flow
and planned increase in operations are adequate to satisfy the working capital
deficit.  Certain officers and directors have agreed in writing to postpone
payment if necessary should the Company need capital it would otherwise pay
these individuals. Lastly, the Company plans to grow through merger and
acquisition opportunities including the expansion of existing business
opportunities. The Company expects these growth opportunities to be financed
through a combination of equity and debt capital; however, in the event the
Company is unable to obtain additional debt and equity financing, the Company
may not be able to pursue these opportunities or continue its
operations.
 
 For the
nine months ended September 30, 2009, cash provided by operating activities
was $103,641 compared to cash provided by operating activities of $22,921 for
the nine months ended September 30, 2008.  The increase in cash
provided during 2009 was primarily due to an increase in accounts receivable
collections and a drastically decreased year to date net loss.
  11
  RISK
FACTORS
 
 The
market price of the Company's common stock has fluctuated significantly since it
began to be publicly traded and may continue to be highly volatile. Factors such
as the ability of the Company to achieve development goals, the ability of the
Company to compete in the petroleum distribution industry, the ability of the
Company to raise additional funds, general market conditions and other factors
affecting the Company's business that are beyond the Company's control may cause
significant fluctuations in the market price of the Company's common stock. Such
market fluctuations could adversely affect the market price for the Company's
common stock.
 
 As of
September 30, 2009, the Company has a working capital deficit of $2,674,971 and
retained deficit of $16,183,862. These factors raise substantial doubt
regarding the Company’s ability to continue as a going concern. The ability of
the Company to continue as a going concern depends upon its ability to obtain
funding for its working capital deficit.  The Company believes that the
current cash flow and planned increase in operations are adequate to satisfy the
working capital deficit.  Certain officers and directors have agreed in
writing to postpone payment if necessary should the Company need capital it
would otherwise pay these individuals. Lastly, the Company plans to grow through
merger and acquisition opportunities including the expansion of existing
business opportunities. The Company expects these growth opportunities to be
financed through a combination of equity and debt capital; however, in the event
the Company is unable to obtain additional debt and equity financing, the
Company may not be able to pursue these opportunities or continue its
operations.
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 As a
smaller reporting company, we are not required to provide the information
required by this Item.
 
 
 ITEM
4T. CONTROLS AND PROCEDURES
 
 Evaluation of disclosure controls
and procedures. We carried out an evaluation, under the supervision and
with the participation of our management, including our principal executive
officer and principal financial officer, of the effectiveness of our disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)).  Based upon that evaluation, our principal executive
officer and principal financial officer concluded that, as of the end of the
period covered in this report, our disclosure controls and procedures were
ineffective ensuring that information required to be disclosed in reports filed
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the required time periods and is accumulated and communicated to
our management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required
disclosure.
 
 Our
management, including our principal executive officer and principal financial
officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all error or fraud.  A control system,
no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are
met.  Further, the design of a control system must reflect the fact
that there are resource constraints and the benefits of controls must be
considered relative to their costs.  Due to the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, have been detected. We
performed additional analysis and other post-closing procedures in an effort to
ensure our consolidated financial statements included in this quarterly report
have been prepared in accordance with generally accepted accounting principles.
Accordingly, management believes that the financial statements included in this
report fairly present in all material respects our financial condition, results
of operations and cash flows for the periods presented.
 
 Changes in internal controls.
There have not been any changes in our internal control over financial reporting
that occurred during the quarter ended September 30, 2009 that have materially
affected or are reasonably likely to materially affect internal control over
financial reporting.
 
 
 PART
II
 
 ITEM
1. LEGAL PROCEEDINGS
 
 None.
 
 ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
 None.
 
 ITEM
3. DEFAULTS UPON SENIOR SECURITIES
 
 None.
 
 ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 None.


12
  ITEM
5. OTHER INFORMATION
 
 None.
 
 ITEM 6. EXHIBITS
 3.1
              Articles
      of Incorporation (incorporated by reference to our Form 10-K filed on
      March 18, 2009)
 
 
 3.2
              By-Laws
      of Golden Maple Mining and Leaching Company, Inc. (now Adino Energy
      Corporation) (incorporated by reference to our Form 10-K filed on March
      18, 2009)
 
 
 10.1
              Contract
      with Metropolitan Transit Authority of Harris County, Texas (incorporated
      by reference to our Form 10-K filed on March 18,
  2009)
 
 
 10.2
              Lease
      with Lone Star Fuel Storage and Transfer, LLC (incorporated by reference
      to our Form 10-K filed on March 18,
2009)
 
 
 10.3
              Terminal
      Management Agreement with Summit Terminaling LLC (incorporated by
      reference to our Form 10-Q  filed on May 15,
    2009)
 
 
 10.4
              Resolution
      of the Board of Directors of February 20, 2009* (incorporated by reference
      to our Form 10-Q filed on August 7,
2009)
 
 
 10.5
              Resolution
      of the Board of Directors of March 26, 2009* (incorporated by reference to
      our Form 10-Q filed on August 7,
2009)
 
 
 14
              Code
      of Business Conduct and Ethics (incorporated by reference to our Form 10-K
      filed on March 18, 2009)
 
 
 31.1
              Certification  of  Chief  Executive  Officer  pursuant  to  Rule
      15d-14(a) of the Exchange Act
 
 
 31.2
              Certification
      of Chief Financial Officer pursuant to Rule 15d-14(a) of the Exchange
      Act
 
 
 32.1
              Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002
 
 
 32.2
              Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002
  *
Management contract or compensatory plan or arrangement
 
 13
 
 SIGNATURES
 
 Pursuant
to the requirements of section 13 or 15(d) of the Securities Exchange Act of
1934, the undersigned has duly caused this Form 10-Q to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Houston, Texas, on
November 10, 2009.
 
 ADINO ENERGY
      CORPORATIONBy:
                /s/  Timothy  G.
       Byrd,  Sr.Timothy  G.  Byrd,
       Sr.Chief  Executive
       Officer, Chief FinancialOfficer,
    and Director
 
 14