UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549







FORM
10-K




(Mark
      One)x
            
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934





FOR
THE FISCAL YEAR ENDED APRIL 30, 2010





OR





o
            
            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 333-152608







Management
Energy, Inc.


(Exact
name of registrant as specified in its charter)




NEVADA
            
            26-1749145(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)





30950
      Rancho Viejo Road, Suite 120
              San
      Juan Capistrano, California
            
            92675(Address
      of principal executive offices)
            
            (Zip
      Code)




Registrant’s
telephone number, including area code: (949) 373-7286




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


None




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




None








Indicate by check mark whether the
registrant is a well-known seasoned issuer, as define in Rule 405 of the
Securities Act).  YesoNo x





Indicate
by check mark whether the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  YesoNo x




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





Indicate
by check mark whether the issuer 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 during the past 12 months
(or for such shorter period that the registrant was required to submit and post
such files).  Yes  x   No  o




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 the registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K.   o




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 a smaller reporting company)




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





State
the aggregate market value of the voting and non-voting equity held by
non-affiliates of the Registrant computed by reference to the price at which the
common equity was last sold, or the average bid and asked price of such common
equity, as of August 11, 2010:  $1,425,750.





Indicate
by check mark whether the issuer filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.  Yes  x   No  o





As of August 11, 2010, 39,825,000
shares of the Registrant’s Common Stock were outstanding.









Management
Energy, Inc.





FORM
10-K


For
the Fiscal Year Ended April 30, 2010





INDEX




PART
      IItem
      1.
              Business
              
              1Item
      1A.
              Risk
      Factors
              
              8Item
      2.
              Properties
              
              16Item
      3.
              Legal
      Proceedings
              
              17Item
      4.
              [Removed
      and Reserved]
              
              17PART
      IIItem
      5.
              Market
      for Common Equity, Related Stockholder Matters and Issuer Purchases of
      Equity Securities
              
              17Item
      6.
              Selected
      Financial Information
              
              18Item
      7.
              Management’s
      Discussion and Analysis or Plan of Operations
              
              18Item
      8.
              Financial
      Statements
              
              23Item
      9.
              Changes
      In and Disagreements with Accountants on Accounting and Financial
      Disclosure
              
              23Item
      9A.
              Controls
      and Procedures
              
              23Item
      9B.
              Other
      Information
              
              2425PART
      IIIItem
      10.
              Directors,
      Executive Officers and Corporate Governance
              
              25Item
      11.
              Executive
      Compensation
              
              27Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              
              28Item
      13.
              Certain
      Relationships and Related Transactions, and Director
      Independence
              
              29Item
      14.
              Principal
      Accountant Fees and Services
              
              31Item
      15.
              Exhibits,
      Financial Statement Schedules
              
              32Signatures
              
              
              34




i





PART
I




Item 1.Description of Business.




In
addition to the historical information contained herein, the discussion in this
Form 10-K contains certain forward-looking statements, within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, that involve risks and uncertainties, such as
statements concerning: growth and anticipated operating results; developments in
our markets and strategic focus; new development project;  estimated
recoverable reserves; strategic relationships and future economic and business
conditions. The cautionary statements made in this Form 10-K should be read
as being applicable to all related forward-looking statements whenever they
appear in this Form 10-K. Our actual results could differ materially from
the results discussed in the forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed under the section captioned “Risk Factors” in Item 1.A. of this
Form 10-K as well as those cautionary statements and other factors set
forth elsewhere herein.





Information
regarding market and industry statistics contained in this Form 10-K is included
based on information available to us that we believe is accurate.  It
is generally based on industry and other publications that are not produced for
purposes of securities offerings or economic analysis.  We have not
reviewed or included data from all sources, and cannot assure investors of the
accuracy or completeness of the data included in this Form 10-K.  We
do not assume any obligation to update any forward-looking
statement.  As a result, investors should not place undue reliance on
these forward-looking statements.





General





Our
business plan is to engage in the exploration, extraction and distribution of
coal.  We are currently considered to be an exploration stage company
because we are engaged in the search for coal deposits and are not engaged in
the exploitation of a coal deposit.  We have not engaged in the
preparation of an established commercially mineable coal deposit for extraction
or in the exploitation of a coal deposit. We will be in the exploration stage
until we discover commercially viable coal deposits on the mining property we
currently lease  or any other property that we acquire, if ever. In an
exploration stage company, management devotes most of its activities to
acquiring and exploring mineral properties.





We are
developing the Bridger-Fromberg-Bear Mountain project, a coal mining project in
the vicinity of Bridger in Carbon County, Montana.   The project
consists of 6,254 acres we have under lease (the “Bolzer Property”) and over
50,000 additional acres we are seeking to lease.




Reserve
Estimates




The project is still in the development
stage and requires additional drilling and study to establish reliable reserve
estimates. Based on similar reserves in proximity and related coal seams, our
external consultants have assumed for business planning purposes a reserve size
of at least 200 million tons, a heat rate of more than 11,000 Btu, and less than
1% sulfur.  However, there is no assurance that a commercially viable
coal deposit exists on the project site.





Development
Strategy




Our
current strategy is to pursue the Bridger-Fromberg-Bear Mountain project with a
development partner.  We believe the benefits of this strategy
include:




·
            Reduced
      capital requirements.  Our development partner will have
      responsibility for obtaining funding for the project.   We
      are entitled to an overriding royalty (based on sales and net profits) on
      the coal produced from the project without making any additional capital
      investment.




·
            Option
      to participate in project investment.  We have retained the
      option to participate up to 50% in any acquisition of coal properties that
      become part of the project.




1




·
            Access
      to industry and local market expertise.  Our development partner
      has over 20 years coal industry experience and has successfully developed
      and exited a coal project in
Montana.




In
October 2009, we entered into an agreement with a development partner for the
development of the Bridger-Fromberg-Bear Mountain Project.  The
agreement provides that:




·
            Subject
      to our partner achieving certain development milestones, we will sublease
      to our partner our mining lease to the Bolzer Property covering 6,254
      acres in the project




·
            Our
      partner will pay to us an overriding royalty equal to 2% of the gross
      selling price of all coal produced from any property that is part of the
      Bridger-Fromberg-Bear Mountain
project.




·
            Our
      partner will pay to us an additional overriding royalty equal to 15% of
      the net profits from the mining and sale of all coal produced from any
      property that is part of the Bridger-Fromberg-Bear Mountain
      project.




·
            We
      will have a right of first refusal to acquire up to a 50% interest in any
      property that becomes part of the Bridger-Fromberg-Bear Mountain
      project.




To retain
its project rights, our development partner must meet certain milestones
relating to obtaining financing, completing a drilling program, acquiring
sufficient mining rights to constitute a viable development plan for the
project, and submitting permitting applications.





Status of Bridger-Fromberg-Bear
Mountain Project.





We began development of the
Bridger-Fromberg-Bear Mountain project in April 2009.  To date, we
have not made any significant progress in developing the project, primarily due
to the failure of our development partner to meet milestones for the project and
our own insufficient funding levels.





Our development partner has failed to
meet its development milestones for the Bridger-Fromberg-Bear Mountain project,
including milestones related to obtaining financing and acquiring additional
mining rights for the project.   We have not been in contact with
our development partner regarding the project since April 2010, and are unaware
of the status of its development efforts, if any. We have not exercised our
right to terminate the development agreement.   However, we are
evaluating alternative arrangements to pursue the project.





Due to
our insufficient funding levels, we failed to make the January 2010 scheduled
minimum annual payment of $62,541 under our lease for the Bolzer Property, which
is part of the Bridger-Fromberg-Bear Mountain project and the only mining rights
we currently hold.  Although we have not received a notice of default
or terminations from the lessor of the property, there is no assurance we will
not receive one in the future.





In
addition, we have identified some potential imperfections in our legal rights to
the lease for the Bolzer Property.   We have not had sufficient
financial resources to resolve these potential
imperfections.   Therefore, there is no assurance we have valid
legal rights to the lease for the Bolzer Property.





As a result of these and other factors,
there is no assurance that we will be able to successfully develop the project
or identify, acquire or develop other coal properties that would allow us to
profitably extract and distribute coal and to emerge from the exploration
stage.





Company
History





We were
initially incorporated in the State of Nevada on May 19, 2005, as Inkie
Entertainment Group, Inc., for the purpose of engaging in the production,
distribution and marketing of filmed entertainment products.  On
January 15, 2008, we changed our name to Quantum Information, Inc. In January
2009, we announced that we would transition out of the filmed entertainment
products business and into the coal business.




2





As part
of that transition, on January 14, 2009, we sold all of our assets to Joel
Klandrud, our former officer and director, in exchange for the surrender to us
by Mr. Klandrud of 4,000,000 shares of the our common stock, and the assumption
by Mr. Klandrud all of the our liabilities.  We also changed our name
to MGMT Energy, Inc. on February 5, 2009 and to Management Energy, Inc. on May
28, 2009 to better reflect our business focus.





On April
13, 2009, we entered into a Contribution and Assignment Agreement (the
“Contribution Agreement”) with Carbon County Holdings, LLC, a Delaware limited
liability company (“CCH”), John P. Baugues, Jr., our former Chief Executive
Officer and director, The John Paul Baugues, Sr. Family Trust, the beneficiaries
of which are John P. Baugues, Jr. and his children (the “Baugues Trust”), and
Tydus Richards, the former Chairman of our board of
directors.  Pursuant to the Contribution Agreement, CCH agreed to
contribute and assign to us all of CCH’s rights and obligations under that
certain Mining Lease, dated on or around January 16, 2009, between CCH, on the
one hand, and Edith L. Bolzer and Richard L. Bolzer, as lessors, on the other
hand, for the purpose of mining and removing coal from the Bolzer
Property.  In exchange for the contribution and assignment of the
Bolzer Lease, we agreed to issue to each of Mr. Baugues, the Baugues Trust, and
Mr. Richards, the sole members of CCH, the number of shares of our Common Stock
set forth opposite such member’s name below.




Name of Member
            
            Number of SharesJohn
      P. Baugues, Jr.
            
            
            15,925,000The
      John Paul Baugues, Sr. Family Trust
            
            
            16,575,000Tydus
      Richards
            
            
            27,500,000Total
            
            
            60,000,000




On October 8, 2009, we entered into
an agreement with Mr. Baugues, for the development of the Bridger-Fromberg-Bear
Mountain project.  Under the terms of the agreement, Mr. Baugues
surrendered to us 15,925,000 shares of our common stock for cancellation and
caused to be surrendered 16,575,000 shares of our common stock held by the
Baugues Trust for cancellation.





On May 28, 2009, we completed a
five-for-one stock split of our common stock and an increase in the number of
our authorized shares of common stock to 300,000,000.  The share and
per-share information disclosed within this Form 10-K reflect the completion of
this stock split.





Coal
Characteristics




Coal is a
combustible, sedimentary, organic mineral composition, which is composed mainly
of carbon, hydrogen and oxygen. Coal goes through the process of coalification
as it matures, affecting its chemical and physical properties. There are various
grades of coal, ranging from low rank coals (lignite and sub-bituminous) to hard
coals (bituminous and anthracite). Bituminous coal is used as either thermal
coal or coking coal, depending on its properties. The properties of the coal
determine its value in the market, and include but are not limited to calorific
value, sulfur, moisture and ash content.





In the
event the Bolzer Property is found to contain commercially viable coal deposits,
they are expected to yield high-bituminous low-sulfur coal, which is primarily
used for power generation and industrial uses.





The
Coal Industry





Generally.Global
economic growth, the primary driver of energy demand, is conservatively
forecasted to increase by an average of 3.2% per annum between 2002 and 2030,
according to the World Coal Institute (“WCI”). The world’s population is
expected to increase from its current level of 6.4 billion to 8 billion by 2030,
according to the United Nations’ 2004 world population prospects report.
International Energy Agency (“IEA”) projections indicate that if governments
continue with current energy policies, global demand for energy will increase by
almost 60% by 2030, with more than two-thirds of this increase coming from
developing countries.




3





Fossil
fuels will continue to dominate energy consumption – accounting for around 85%
of the increase in world primary energy demand over the next 30 years, according
to the IEA. Although nuclear energy provides a significant proportion of energy
in some economies, it can face very long permitting and construction cycles and
private financing is difficult to find. Renewable energies are growing fast, but
from a small base and, by 2030, they are still only expected to meet 14% of
total energy demand, according to the IEA.




Coal
prices in the western United States increased during 2008 according to the
Energy Information Administration (“EIA”). This price escalation is primarily
attributable to increased international demand, escalation of oil prices, and
the weakening of the United States dollar. Although it is impossible to predict
whether prices for coal will continue to escalate, as a result of the recent
drop in oil prices and the worldwide economic downturn, we believe that a large
amount of the electricity in the United States will continue to be generated by
coal.




We
believe that rapid economic expansion in developing nations, particularly China
and India, has increased global demand for coal. We expect coal exports from the
United States to increase in response to growing global coal demand,
particularly as some of the traditional coal export nations experience mine,
port, rail and labor challenges. We estimate that higher domestic demand for
coal and higher U.S. coal exports will positively influence domestic coal
demand. Additionally, we expect decreased production, particularly in the
Central Appalachian region of the United States, to adversely impact domestic
coal supply in the coming years. We anticipate continuing demand growth and
weaker coal supplies to exert upward pressure on coal pricing in the
future.




Global Coal Supply and
Demand.   Because of its availability, stability and
affordability, coal is a major contributor to the global energy supply,
providing approximately 40% of the world’s electricity, according to the WCI.
Coal is also used in producing approximately 70% of the world’s steel supply,
according to the WCI. Coal reserves can be found in 70 countries around the
world.




Coal is
traded worldwide and can be transported to demand centers by ship and by rail.
Worldwide coal production approximated 5.9 billion tons in 2006 and 5.4 billion
tons in 2005, according to the WCI. China produces more coal than any other
country in the world. Historically, Australia has been the world’s largest coal
exporter, exporting more than 200 million tons in each of the last three years,
according to the WCI. China, Indonesia and South Africa have also historically
been significant exporters in the global coal markets.  However,
growing demand in China has resulted in declining coal exports and increasing
coal imports. These trends have caused China to become a less significant
seaborne coal supply source.




U.S. Coal
Consumption.  In the United States, coal is used primarily by
power plants to generate electricity, by steel companies to produce coke for use
in blast furnaces and by a variety of industrial users to heat and power
foundries, cement plants, paper mills, chemical plants and other manufacturing
and processing facilities. Coal consumption in the United States has increased
from 505.8 million tons in 1973 to approximately 1.2 billion tons in 2007, based
on information provided by the EIA.




Throughout
the United States, coal has long been favored as a fuel to produce electricity
because of its cost advantage and its availability. Since 1973, the use of coal
to generate electricity in the United States has nearly tripled in response to
growing electricity demand. According to the EIA, coal accounted for
approximately 49% of U.S. electricity generation in 2007 and is projected to
account for approximately 55% in 2030.  Much of the projected growth
in U.S. coal consumption occurs after 2015, when a substantial amount of new
coal-fired generating capacity is projected to come on line.




According
to the National Mining Association (“NMA”), coal is the lowest-cost fossil fuel
used in producing electricity. We estimate that the cost of generating
electricity from coal is less than one-third of the cost of generating
electricity from other fuels. According to the EIA, the average delivered cost
of coal to electric power generators during the first ten months of 2007 was
$1.77 per million British thermal units (“BTUs”).




4




The EIA
projects that power plants will increase their demand for coal as demand for
electricity increases. The EIA estimates that electricity demand may increase up
to 39% by 2030, despite continuing efforts throughout the United States to
become more energy efficient. Coal consumption has generally grown at the pace
of electricity growth because coal-fueled electricity generation is used in most
cases to meet baseload requirements.




Coal is
expected to remain the fuel of choice for domestic power generation through at
least 2030, according to the EIA. Through that time, we expect new technologies
intended to lower emissions of mercury, sulfur dioxide, nitrogen oxide and
particulate matter will be introduced into the power generation industry. We
believe these technological advancements will help coal retain its role as a key
fuel for electric power generation well into the future.




The other
major market for coal is the steel industry. Coal is essential for iron and
steel production. According to the WCI, approximately 64% of all steel is
produced from iron made in blast furnaces that use coal. The steel industry uses
metallurgical coal, which is distinguishable from other types of coal because of
its high carbon content, low expansion pressure, low sulfur content and various
other chemical attributes. As such, the price offered by steel makers for
metallurgical coal is generally higher than the price offered by power plants
and industrial users for steam coal. Rapid economic expansion in China, India
and other parts of Southeast Asia has significantly increased the demand for
steel in recent years.




In recent
years, prices for oil and natural gas in the United States have reached record
levels because of increasing demand and tensions regarding international supply,
although recently prices have dropped markedly. Historically, high oil and gas
prices and global energy security concerns have increased government and private
sector interest in converting coal into liquid fuel, a process known as
liquefaction. Liquid fuel produced from coal can be refined further to produce
transportation fuels, such as low-sulfur diesel fuel, gasoline and other oil
products, such as plastics and solvents. We expect advances in technologies
designed to convert coal into electricity through coal gasification processes
and to capture and sequester carbon dioxide emissions from electricity
generation and other sources. These technologies have garnered greater attention
in recent years due to developing concerns about the impact of carbon dioxide on
the global climate. We believe the advancement of coal-conversion and other
technologies represent a positive development for the long-term demand for
coal.  We believe that this advancement will continue despite the
recent decline in oil and natural gas prices.




U.S. Coal
Production.   The United States produces approximately
one-fifth of the world’s coal and is the second largest coal producer in the
world, exceeded only by China. Coal in the United States represents
approximately 94% of the domestic fossil energy reserves with over 250 billion
tons of recoverable coal, according to the U.S. Geological Survey. The U.S.
Department of Energy estimates that current domestic recoverable coal reserves
could supply enough electricity to satisfy domestic demand for more than 200
years.




The
Bolzer Property




We
currently are developing the Bridger-Fromberg-Bear Mountain project, a coal
mining project in the vicinity of Bridger in Carbon County,
Montana.   The project consists of the Bolzer Property (the only
property we currently have mining rights to) and over 50,000 additional acres we
are seeking to lease.




Property Location and
Access.  We have the rights to mine the Bolzer Property
situated approximately two miles west of Bridger, which is located in Carbon
County, Montana.  The Burlington Northern’s railroad line provides the
principal means of transport to bring in goods and heavy equipment and export
coal.  The road network in Carbon County is Highway
308.   Access to the areas where we intend to mine is by county
road.




Our Lease for the Bolzer
Property.   We have a leasehold interest in the Bolzer
Property. Under the terms of the lease, we are required to pay to the lessors
(1) a minimum annual payment in an amount equal to $62,541 in each year during
the initial ten (10) year term of the Bolzer Lease, subject to increases in
future years (the “Minimum Annual Payment”) and (2) a royalty equal to 12.5% of
the gross proceeds on all coal mined from the Bolzer Property (the
“Royalty”).  In addition, unless coal is mined from minerals owned by
the lessors, for each ton of coal mined from, stored on or transported across
the Bolzer Property, we are required to pay a damage fee of $0.15 per ton for
such coal (the “Damage Fee”).  In the event that the Royalty and/or
the Damage Fee in any year during the term exceeds twice the Minimum Annual
Payment, we are not required to make the Minimum Annual Payment for that
year.




5





The lease
is effective for a 10 year term.  We have the right to renew the lease
for two additional 10 year terms upon at least 90 days written notice to the
lessors prior to the expiration of the then-current term.  After 3
years from the effective date, we have the right to terminate the lease, on any
annual anniversary, upon 90 days prior written notice to the lessors and upon
payment of all damage fees, rentals and royalties accrued through the date of
termination.





Due to our insufficient fund levels,
we failed to make the January 2010 scheduled Minimum Annual Payment of
$62,541.   Although, to date, we have not received a notice of
default or termination from the lessor of the property, there is no assurance we
will not receive one in the future.





In
addition, we have identified some potential imperfections in our legal rights to
the lease for the Bolzer Property.   We have not had sufficient
financial resources to resolve these potential
imperfections.   Therefore, there is no assurance we have valid
legal rights to the lease for the Bolzer Property.





History.  Historically,
the Bridger, Bearcreek and Red Lodge coal fields in Montana were mined from the
late 1880’s until the early 1950’s.  Records indicated that there were
over 700 million tons of coal in these three indicated fields.  The
major customer base for the fields at the time was the
railroads.    There were 16 different underground mines in
operation at various times during the period.   Pacific Corp
mined in this location in 1975.




Property
Condition.  The Bolzer Property currently is ranch land, and
has access to power lines sufficient to provide power for our currently
forecasted needs.




Geology. The Bolzer Property
is sparsely populated, with no streams and no environmental impediments to
mining.  There are three mineable coal seams in the Bolzer Property we
currently hold with seam thickness ranging from three to eight
feet.  Some of the lower seams may contain metallurgical coal
characteristics.  There are approximately four to eight mineable coal
seams in the Bridger, Bearcreek and Red Lodge coal fields, taken as a whole. The
seams contain upper cretaceous mesaverde meeteetsc formations and also paleocene
fort union formations.




Distribution




The
railroad loading for the Bolzer Property would be located near Bridger, Montana
on Burlington Northern’s Thermopolis / Casper railroad line. We plan to build a
rail line of approximately 5 miles to connect our mines to the Burlington
Northern railroad line.  We currently have no distribution contracts
in place.




Strategic
Positioning




Our
strategy is to identify and acquire under-valued mining rights to undeveloped
coal reserves and add significant value by applying our project development
expertise in the following areas:




·
            verification
      of reserves;




·
            acquisition
      of government permitting;




·
            development
      of a project plan;




·
            implementation
      of mining operations;




·
            development
      of distribution relationships; and




·
            development
      of customer relationships.




6




We
believe this strategic focus will position us to compete effectively against our
larger competitors.  Possible purchasers of our products include
larger coal producers, electric utilities and financial institutions (private
equity and hedge funds) who invest in the basic materials and/or energy sectors,
for example: National Coal Corp., AES Corp., Cline Energy, Sempra, James River
Coal Company, Sumitomo, Chinese Coal Company, DTE Energy, Arch Coal, Inc. and
Peabody Energy Corp.




We also
believe we will benefit from the following market factors and
trends:




·
            Long-Term Demand
      Growth:  Coal-based electricity generation represents
      approximately 50% of total electricity produced in the United States and
      is projected to maintain its power generation share as total electricity
      demand continues to grow through 2030 according to the
  WCI.





·
            Favorable Regulatory
      Environment: The current White House administration recently
      outlined a stimulus package providing tax credits and business incentives
      to produce lower cost and cleaner coal, the type of coal we believe is
      represented by our potential
reserves.





·
            Potential Industry-Wide Coal
      Supply Constraints: We believe that incremental coal supply has
      recently been constrained by the limited availability of the capital
      markets, and potential concerns over regulatory changes, such as the
      prohibition of mountaintop removal mining. These supply constraints could
      limit production of various types of coal throughout the United States,
      creating a stronger pricing environment for our
  coal.




Competition




The coal
industry is intensely competitive.  Some of the most important
competitive factors are quality (including sulfur and heat content),
transportation costs from the mine to the customer, and the reliability of
supply. Currently, some of the largest coal producers and competitors include
Alpha Natural Resources, Inc., Arch Coal, Inc., CONSOL Energy, Inc., Foundation
Coal Holdings, Inc., International Coal Group, Inc., James River Coal Company,
Massey Energy Company, Murray Energy, Inc., Patriot Coal Corporation and Peabody
Energy Corp. These coal producers are larger and have greater financial
resources and larger reserve bases than we do.  We also compete
directly with a number of smaller producers in both Montana and
Indiana.  As the price of domestic coal increases, we may also begin
to compete with companies that produce coal from one or more foreign
countries.




Additionally,
coal competes with other fuels, such as petroleum, natural gas, hydropower and
nuclear energy for steam and electrical power generation. Over time, costs and
other factors, such as safety and environmental considerations, may affect the
overall demand for coal as a fuel.




Regulations
and Laws




The coal
mining industry is subject to regulation by federal, state and local authorities
on matters such as:




·
            employee
      health and safety;




·
            mine
      permits and other licensing
requirements;




·
            air
      quality standards;




·
            water
      quality standards;




·
            storage
      of petroleum products and substances which are regarded as hazardous under
      applicable laws or which, if spilled, could reach waterways or
      wetlands;




·
            plant
      and wildlife protection;




·
            reclamation
      and restoration of mining properties after mining is
      completed;




·
            storage
      and handling of explosives;




7




·
            wetlands
      protection;




·
            surface
      subsidence from underground mining;




·
            reduction
      of carbon dioxide emissions; and




·
            the
      effects, if any, that mining has on groundwater quality and
      availability.




In
addition, the utility industry is subject to extensive regulation regarding the
environmental impact of its power generation activities, which could affect
demand for our coal. It is possible that new legislation or regulations may be
adopted, or that existing laws or regulations may be differently interpreted or
more stringently enforced, any of which could have a significant impact on our
mining operations or our customers’ ability to use coal.




We are
committed to conducting mining operations in compliance with applicable federal,
state and local laws and regulations. However, because of the extensive and
detailed nature of these regulatory requirements, compliance with all of these
regulations could be a significant expense.  Although it is not
possible to quantify the costs of compliance with applicable federal and state
laws and the associated regulations, these potential costs are expected to be
significant.  Compliance with these laws and regulations has
substantially increased the cost of coal mining for domestic coal
producers.




Employees




We have
no employees as of August 10, 2010.  We believe that our future
success will depend, in part, on our ability to attract, hire and retain
qualified personnel with knowledge of the coal industry.




Item
1A.Risk Factors.




In
addition to the other information in this Form 10-K, the following factors
should be considered in evaluating Management Energy, Inc. and our
business.





Risks
Relating to Our Company and Business




We
failed to make the required minimum annual payment on our lease for the Bolzer
Property, and that lease could be terminated at any time.




Due to
our insufficient funding levels, we failed to make the January 2010 scheduled
minimum annual payment of $62,541 under our lease for the Bolzer Property, which
is part of the Bridger-Fromberg-Bear Mountain project and the only mining rights
we currently hold.  Although we have not received a notice of default
or termination from the lessor of the property, there is no assurance we will
not receive one in the future.





In
addition, we have identified some potential imperfections in our legal rights to
the lease for the Bolzer Property.   We have not had sufficient
financial resources to resolve these potential
imperfections.   Therefore, there is no assurance we have valid
legal rights to the lease for the Bolzer Property.





If our
lease for the Bolzer Property were terminated, we would likely abandon our
development of the Bridger-Fromberg-Bear Mountain project.





We have not made
significant progress in developing the Bridger-Fromberg-Bear Mountain Project,
and we may not be able to develop the project.





We began development of the
Bridger-Fromberg-Bear Mountain project in April 2009.  To date, we
have not made any significant progress in developing the project, primarily due
to the failure of our development partner to meet milestones for the project and
our own insufficient funding levels.




8





Our development partner has failed to
meet its development milestones for the Bridger-Fromberg-Bear Mountain project,
including milestones related to obtaining financing and acquiring additional
mining rights for the project.   We have not been in contact with
our development partner regarding the project since April 2010, and are unaware
of the status of its development efforts, if any. We have not exercised our
right to terminate the development agreement.   However, we are
evaluating alternative arrangements to pursue the project.





As a result of these and other factors,
there is no assurance that we will be able to successfully develop the project
or identify, acquire or develop other coal properties that would allow us to
profitably extract and distribute coal and to emerge from the exploration
stage.





Because
of the early stage of development and the nature of our business, our securities
are considered highly speculative.




Our
securities are highly speculative because of the nature of our business and the
early stage of its development. We have largely been engaged in the business of
producing motion pictures and only recently entered the coal business.
Accordingly, we have not generated any revenues from continuing operations nor
have we realized a profit from our operations to date and there is little
likelihood that we will generate significant revenues or realize any profits in
the short term. Any profitability in the future from our business will be
dependent upon attaining adequate levels of internally generated revenues
through locating and developing recoverable reserves of coal, which itself is
subject to numerous risk factors as set forth herein. Since we have not
generated any revenues from continuing operations, we will have to raise
additional monies through either securing industry reserve based debt financing,
or the sale of our equity securities or debt, or combinations of the above in
order to continue our business operations, and there is not assurance that we
will be able to obtain such financing or that such financing will be on terms
attractive to us.





We
have never generated any revenue from continuing operations and have a history
of losses.





From
inception through to April 30, 2010, we have incurred aggregate losses of
$4,779,809. Our loss from continuing operations for the fiscal year ended April
30, 2010 was $3,327,161. We have never generated any revenues from continuing
operations.  There is no assurance that we will operate profitably or
will generate positive cash flow in the future. In addition, our operating
results in the future may be subject to significant fluctuations due to many
factors not within our control, such as our ability to acquire mining properties
and leases, the demand for our production and/or services, and the level of
competition and general economic conditions. If we cannot generate positive cash
flows in the future, or raise sufficient financing to continue our operations,
then we may be forced to scale down or even close our operations. Until such
time as we generate significant revenues, we expect an increase in development
costs and operating costs. Consequently, we expect to continue to incur
operating losses and negative cash flow until we receive significant commercial
production from our properties.





We
will need additional capital to execute our business plan and fund operations
and may not be able to obtain such capital on acceptable terms or at
all.





Our
business strategy will require additional substantial capital investment in
future periods.  We require capital for, among other purposes,
acquiring new supplies and equipment, acquiring additional reserves, and
maintaining compliance with environmental laws and regulations. Because cash
generated internally is not sufficient to fund capital requirements in 2010, we
will require additional debt and/or equity financing. However, this type of
financing may not be available or, if available, may not be available on
attractive terms.





Future
debt financing, if available, may result in increased interest and amortization
expense, increased leverage and decreased income available to fund
operations.  In addition, future debt financing may limit our ability
to withstand competitive pressures and render us more vulnerable to economic
downturns.




9





Our
ability to obtain additional capital on acceptable terms or at all is subject to
a variety of uncertainties, including:





·
            investors'
      perceptions of, and demand for, coal
products;




·
            conditions
      of the U.S. and other capital markets in which we may seek to raise
      funds;




·
            our
      future results of operations, financial condition and cash
      flows;




·
            governmental
      regulation of coal mining; and




·
            economic,
      political and other conditions in the United States and other
      countries.




Future
financings through equity investments are likely to be dilutive to the existing
stockholders. Also, the terms of securities we may issue in future capital
transactions may be more favorable for our new investors. Newly issued
securities may include preferences, superior voting rights, the issuance of
warrants or other derivative securities, and the issuances of incentive awards
under equity employee incentive plans, which may have additional dilutive
effects. Further, we may incur substantial costs in pursuing future capital
and/or financing, including investment banking fees, legal fees, accounting
fees, printing and distribution expenses and other costs. We may also be
required to recognize non-cash expenses in connection with certain securities we
may issue, such as convertible notes and warrants, which will adversely impact
our financial condition and results of operations.





If we
fail to generate sufficient cash flow from operations in future periods or to
obtain required capital in the future, we could be forced to reduce or delay
capital expenditures, sell assets or restructure or refinance our indebtedness,
or our business may fail.





There
can be no assurance that we will establish commercial discoveries and/or
profitable production programs on the Bolzer Property or any other properties we
acquire.





Exploration
for recoverable reserves of coal is subject to a number of risk factors. Few
properties that are explored are ultimately developed into producing
coal.





We currently lease approximately 6,254
acres located in the vicinity of Bridger in Carbon County, Montana for the
purpose of mining, removing, marketing and selling coal.  Further
exploration will be required before a final evaluation as to the economic
feasibility of coal extraction on the Bolzer Property can be
determined.  There is no assurance that a commercially viable coal
deposit exists on the Bolzer Property.  Furthermore, there is no
assurance that we will be able to successfully develop the Bolzer Property or
identify, acquire or develop other coal properties that would allow us to
profitably extract and distribute coal and to emerge from the exploration
stage.





Our
future success depends upon our ability to acquire and develop coal reserves
that are economically recoverable.





Our
recoverable reserves, if any, will decline as we produce coal. Our future
success depends upon our conducting successful exploration and development
activities and acquiring properties containing economically recoverable coal
deposits. Our current strategy includes building our coal deposits base through
acquisitions of mineral rights, leases, or producing properties.





Our
planned development and exploration projects and acquisition activities may not
result in the acquisition of significant coal deposits and we may not have
success developing mines.  In order to develop coal deposits, we must
obtain various governmental leases and permits.  We cannot predict
whether we will obtain the leases and permits necessary for us to operate
profitably in the future.





There
are uncertainties in estimating our economically recoverable coal reserves, and
inaccuracies in our estimates could result in lower than expected revenues,
higher than expected costs and decreased profitability.





There are
uncertainties inherent in estimating quantities and values of economically
recoverable coal reserves, including many factors beyond our control. As a
result, estimates of economically recoverable coal reserves are by their nature
uncertain. Information about our reserves consists of estimates based on
engineering, economic and geological data assembled and analyzed by our staff.
Some of the factors and assumptions which impact economically recoverable
reserve estimates include:





·
            geological
      conditions;




10




·
            historical
      production from the area compared with production from other producing
      areas;




·
            the
      assumed effects of regulations and taxes by governmental
      agencies;




·
            assumptions
      governing future prices; and




·
            future
      operating costs, including cost of
materials.




Each of
these factors may, in fact, vary considerably from the assumptions used in
estimating reserves.   For these reasons, estimates of the
economically recoverable quantities of coal attributable to a particular group
of properties, and classifications of these reserves based on risk of recovery
and estimates of future net cash flows, may vary
substantially.  Actual production, revenues and expenditures with
respect to our reserves will likely vary from estimates, and these variances may
be material.   As a result, our estimates may not accurately
reflect our actual reserves.





Our
officers and directors have no prior experience in the coal business and that
lack of experience could harm our business.





Our
current chief executive officer and other members of management were not
involved in the coal industry prior to the time they joined us.  This
lack of experience places us at a significant operational and competitive
disadvantage and makes it difficult for us to obtain the funding we need to
execute our business plan.





If
we are unable to attract and retain additional qualified personnel, our ability
to execute our business plan will be adversely impacted.





We
believe our execution of our business plan will depend upon our ability to
attract and retain skilled personnel with experience in the coal
industry.  There can be no assurance that we will be able to attract
and retain sufficient numbers of highly skilled and experienced employees.
Further, we cannot guarantee that any employee will remain employed by us for
any definite period of time.  Qualified employees periodically are in
great demand and may be unavailable in the time frame required to satisfy our
requirements. We expect competition for such personnel to increase as the demand
for coal and other energy sources expand. Our inability to hire or retain
sufficient personnel at competitive rates or the loss of personnel could impair
the growth of our business.





Public
company compliance may make it more difficult to attract and retain officers and
directors.





The
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and new rules subsequently
implemented by the SEC have required changes in the corporate governance
practices of public companies. As a public company, we expect these new rules
and regulations to increase our compliance costs in 2009 and beyond and to make
certain activities more time consuming and costly. As a public company, we also
expect that these new rules and regulations may make it more difficult and
expensive for us to obtain director and officer liability insurance and we may
be required to accept reduced policy limits and coverage or incur substantially
higher costs to obtain the same or similar coverage. As a result, it may be more
difficult for us to attract and retain qualified persons to serve on our board
of directors or as executive officers.





11




Risks
Relating to Our Industry




Competition
within the coal industry may adversely affect our ability to sell our coal and
overcapacity in the coal industry could adversely affect pricing, either of
which could impair our profitability.





The
market for coal is intensely competitive.  Currently, some of the
largest coal producers and competitors include Alpha Natural Resources, Inc.,
Arch Coal, Inc., CONSOL Energy, Inc., Foundation Coal Holdings, Inc.,
International Coal Group, Inc., James River Coal Company, Massey Energy Company,
Murray Energy, Inc., Patriot Coal Corporation and Peabody Energy Corp. These
coal producers are larger and have greater financial resources and larger
reserve bases than we do. We also compete directly with a number of smaller
producers in both Montana and Indiana.  As the price of domestic coal
increases, we may also begin to compete with companies that produce coal from
one or more foreign countries.





Additionally,
coal competes with other fuels such as petroleum, natural gas, hydropower and
nuclear energy for steam and electrical power generation. Over time, costs and
other factors, such as safety and environmental considerations, may affect the
overall demand for coal as a fuel.





If we are
not as successful as our competitors, our sales could decline, which could
materially harm our business, prospects, financial condition, results of
operations and cash flows.





The
characteristics of coal may make it difficult for coal users to comply with
various environmental standards, which are continually under review by
international, federal and state agencies, related to coal
combustion.   As a result, they may switch to other fuels, which
would adversely affect our sales.





Coal
contains impurities, including sulfur, mercury, chlorine and other elements or
compounds, many of which are released into the air when coal is
burned.  Stricter environmental regulations of emissions from
coal-fired electric generating plants could increase the costs of using coal
thereby reducing demand for coal as a fuel source, the volume of our coal sales
and price.   Stricter regulations could make coal a less
attractive fuel alternative in the planning and building of utility power plants
in the future.





For
example, in order to meet the federal Clean Air Act limits for sulfur dioxide
emissions from electric power plants, coal users will need to install scrubbers,
use sulfur dioxide emission allowances (some of which they may purchase), or
switch to other fuels.   Each option has
limitations.   Lower sulfur coal may be more costly to purchase
on an energy basis than higher sulfur coal depending on mining and
transportation costs.   The cost of installing scrubbers is
significant and emission allowances may become more expensive as their
availability declines.   Switching to other fuels may require
expensive modification of existing plants. The extent to which power generators
switch to alternative fuel could materially affect us if we cannot offset the
cost of sulfur removal by lowering the delivered costs of our higher sulfur
coals on an energy equivalent basis.





Proposed
reductions in emissions of mercury, sulfur dioxides, nitrogen oxides,
particulate matter or greenhouse gases may require the installation of
additional costly control technology or the implementation of other measures,
including trading of emission allowances and switching to other
fuels.   For example, in 2005 the Environmental Protection Agency
proposed separate regulations to establish mercury emission limits nationwide
and to reduce the interstate transport of fine particulate matter and ozone
through reductions in sulfur dioxides and nitrogen oxides throughout the eastern
United States.   The Environmental Protection Agency continues to
require reduction of nitrogen oxide emissions in a number of eastern states and
the District of Columbia and will require reduction of particulate matter
emissions over the next several years for areas that do not meet air quality
standards for fine particulates.   In addition, Congress and
several states may consider legislation to further control air emissions of
multiple pollutants from electric generating facilities and other large
emitters.   Any new or proposed reductions will make it more
costly to operate coal-fired plants and could make coal a less attractive fuel
alternative to the planning and building of utility power plants in the
future.




12





To
the extent that any new or proposed requirements affect our customers, this
could adversely affect our operations and results.





Proposals
to regulate greenhouse gas emissions could impact the market for our fossil
fuels, increase our costs, and reduce the value of our coal assets. Numerous
proposals have been made at the international, national, regional, and state
levels of government that are intended to limit emissions of greenhouse gas
(“GHGs”), such as carbon dioxide and methane.   Combustion of
fossil fuels, such as the coal we seek to produce, results in the creation of
carbon dioxide that is currently emitted into the atmosphere by coal end
users.   Several states have already adopted measures requiring
reduction of GHGs within state boundaries.   If comprehensive
regulations focusing on GHGs emission reductions were to be enacted by the
United States or additional individual states, it may adversely affect the use
of and demand for fossil fuels, particularly coal.  Further regulation
of GHGs could occur in the United States pursuant to treaty obligations,
regulation under the Clean Air Act, or regulation under state law.  In
2007, the U.S. Supreme Court held in Massachusetts v.  Environmental
Protection Agency, that the Environmental Protection Agency had authority to
regulate GHG's under the Clean Air Act, reversing the Environmental Protection
Agency's interpretation of the Clean Air Act.   This decision
could lead to federal regulation of GHGs under the existing Clean Air Act of
coal-fired electric generation stations, which could adversely affect demand for
our coal.





Our
mines will be subject to stringent federal and state safety regulations that may
increase our cost of doing business, and may place restrictions on our methods
of operation.   In addition, government inspectors under certain
circumstances, have the ability to order our operation to be shut down based on
safety considerations.





Stringent
health and safety standards were imposed by federal legislation when the Federal
Coal Mine Health and Safety Act of 1969 was adopted.   The
Federal Coal Mine Safety and Health Act of 1977 expanded the enforcement of
safety and health standards of the Coal Mine Health and Safety Act of 1969 and
imposed safety and health standards on all (non-coal as well as coal) mining
operations.  Regulations are comprehensive and affect numerous aspects
of mining operations, including training of mine personnel, mining procedures,
the equipment used in mine emergency procedures, mine plans and other
matters.   The various requirements mandated by law or regulation
can have a significant effect on operating costs and place restrictions on our
methods of operations.   In addition, government inspectors under
certain circumstances, have the ability to order our operation to be shut down
based on safety considerations.





Coal
mining is a dangerous industry, and lapses in our safety practices or natural
disasters beyond our control could close our coal mine for an extended period of
time, which would likely cause the failure of our operations.





Coal
mining, especially underground coal mining, is dangerous.  Great care
must be taken to assure safe, continued operations.  Past experiences
of others in the industry indicate that lapses in safety practices can result in
catastrophic collapse of a coal mining operation.  Even when best
mining practices are strictly observed, natural disasters such as an earthquake
could possibly destroy a coal mine's operations.  Any catastrophic
event at our coal mine which would close our mine for an extended period of time
likely would cause the failure of our operations.





The
marketability of natural resources will be affected by numerous factors beyond
our control, which may result in us not receiving an adequate return on invested
capital to be profitable or viable.





The
marketability of natural resources, which may be acquired or discovered by us,
will be affected by numerous factors beyond our control. These factors include
market fluctuations in coal pricing and demand, the proximity and capacity of
natural resource markets and processing equipment, governmental regulations,
land tenure, land use, regulation concerning the importing and exporting of coal
and environmental protection regulations. The exact effect of these factors
cannot be accurately predicted, but the combination of these factors may result
in us not receiving an adequate return on invested capital to be profitable or
viable.




13





Exploratory
and development drilling involves many risks and we may become liable for
pollution or other liabilities, which may have an adverse effect on our
financial position.





Mining
operations generally involve a high degree of risk. Hazards such as unusual or
unexpected geological formations, power outages, labor disruptions, blow-outs,
fire, inability to obtain suitable or adequate machinery, equipment or labor,
and other risks are involved. We may become subject to liability for pollution
or hazards against which we cannot adequately insure or which we may elect not
to insure. Incurring any such liability may have a material adverse effect on
our financial position and operations.





Any
change to government regulation/administrative practices may have a negative
impact on our ability to operate and our profitability.





The laws,
regulations, policies or current administrative practices of any government
body, organization or regulatory agency in the United States, or any other
jurisdiction, may be changed, applied or interpreted in a manner which will
fundamentally alter the ability of our company to carry on our business. The
actions, policies or regulations, or changes thereto, of any government body or
regulatory agency, or other special interest groups, may have a detrimental
effect on us. Any or all of these situations may have a negative impact on our
ability to operate and/or our profitably.





Disruption
of rail, barge, overland conveyor and other systems that may deliver our coal or
an increase in transportation costs could make our coal less
competitive.





Coal
producers depend upon rail, barge, trucking, overland conveyor and other systems
to provide access to markets.   Disruption of transportation
services because of weather-related problems, strikes, lock-outs, break-downs of
locks and dams or other events could temporarily impair our ability to supply
coal to customers and adversely affect our
profitability.   Transportation costs represent a significant
portion of the delivered cost of coal and, as a result, the cost of delivery is
a critical factor in a customer's purchasing decision.  Increases in
transportation costs could make our coal less competitive.





Terrorist
attacks and threat, escalation of military activity in response to such attacks
or acts of war may negatively affect our business, financial condition and
results of operations.





Terrorist
attacks and threats, escalation of military activity in response to such attacks
or acts of war may negatively affect our business, financial condition and
results of operations.  Our business is affected by general economic
conditions, fluctuations in consumer confidence and spending, and market
liquidity, which can decline as a result of numerous factors outside of our
control, such as terrorist attacks and acts of war.  Future terrorist
attacks against United States targets, rumors or threats of war, actual
conflicts involving the United States or its allies, or military or trade
disruptions affecting our customers may materially adversely affect our
operations.  As a result, there could be delays or losses in
transportation and deliveries of coal to our customers, decreased sales of our
coal and extension of time for payment of accounts receivable from our
customers.  Strategic targets such as energy-related assets may be at
greater risk of future terrorist attacks than other targets in the United
States.  In addition, disruption or significant increases in energy
prices could result in government-imposed price controls.  It is
possible that any, or a combination, of these occurrences could have a
materially adverse effect on our business, financial condition and results of
operations.





Risks
Relating to Our Common Stock





Some
of our former officers and directors beneficially own a substantial percentage
of our outstanding common stock, which gives them control over certain major
decisions on which our stockholders may vote, which may discourage an
acquisition of us.





Our
former Chairman of our Board of Directors, beneficially owns, approximately
23.6% of our outstanding common stock.  The interests of our former
director may differ from the interests of other stockholders, and he may, by
virtue of his ownership stake, be able to exert substantial influence or
otherwise control many corporate actions requiring stockholder approval,
including the following actions:





·
            electing
      or defeating the election of
directors;





·
            amending
      or preventing amendment of our articles of incorporation or
      bylaws;





·
            effecting
      or preventing a merger, sale of assets or other corporate transaction;
      and




14




·
            controlling
      the outcome of any other matter submitted to the stockholders for
      vote.





The stock
ownership of our former director may discourage a potential acquirer from
seeking to acquire shares of our common stock or otherwise attempting to obtain
control of us, which in turn could reduce our stock price or prevent our
stockholders from realizing a premium over our stock price.





Provisions
of our Articles of Incorporation, our Bylaws and Nevada law could delay or
prevent a change in control of us, which could adversely affect the price of our
common stock.





Our
articles of incorporation, our bylaws and Nevada law could delay, defer or
prevent a change in control of us, despite the possible benefit to our
stockholders, or otherwise adversely affect the price of our common stock and
the rights of our stockholders. For example, our Articles of Incorporation
permit our board of directors to issue one or more series of preferred stock
with rights and preferences designated by our board of directors. We are also
subject provisions of the Nevada control share laws that may limit voting rights
in shares representing a controlling interest in us.  These provisions
could also discourage proxy contests and make it more difficult for you and
other stockholders to elect directors other than the candidates nominated by our
board.





Trading
in our common shares on the OTC Bulletin Board is limited and sporadic making it
difficult for our stockholders to sell their shares or liquidate their
investments.





Our
common shares are currently listed for public trading on the OTC Bulletin
Board.  The trading price of our common shares has been subject to
wide fluctuations. Trading prices of our common shares may fluctuate in response
to a number of factors, many of which will be beyond our control. The stock
market has generally experienced extreme price and volume fluctuations that have
often been unrelated or disproportionate to the operating performance of
companies with no current business operation. There can be no assurance that
trading prices previously experienced by our common shares will be matched or
maintained. These broad market and industry factors may adversely affect the
market price of our common shares, regardless of our operating
performance.





In the
past, following periods of volatility in the market price of a company's
securities, securities class-action litigation has often been instituted. Such
litigation, if instituted, could result in substantial costs for us and a
diversion of management's attention and resources.





A
decline in the price of our common stock could affect our ability to raise
further working capital and adversely impact our operations.





A
prolonged decline in the price of our common stock could result in a reduction
in the liquidity of our common stock and a reduction in our ability to raise
capital.  Because our operations currently are, expected to be
primarily financed through the sale of equity securities, a decline in the price
of our common stock could be especially detrimental to our liquidity and our
continued operations. Any reduction in our ability to raise equity capital in
the future would force us to reallocate funds, if any are available, from other
planned uses and would have a significant negative effect on our business plans
and operations, including our ability to continue our current operations. If our
stock price declines, we may not be able to raise additional capital or generate
funds from operations sufficient to meet our obligations.





Our
common stock may be deemed a “penny stock”, which would make it more difficult
for our investors to sell their shares.





Our
common stock may be subject to the “penny stock” rules adopted under Section
15(g) of the Exchange Act. The penny stock rules apply to non-Nasdaq listed
companies whose common stock trades at less than $5.00 per share or that have
tangible net worth of less than $5,000,000 ($2,000,000 if the company has been
operating for three or more years). These rules require, among other things,
that brokers who trade penny stock to persons other than “established customers”
complete certain documentation, make suitability inquiries of investors and
provide investors with certain information concerning trading in the security,
including a risk disclosure document and quote information under certain
circumstances. Many brokers have decided not to trade penny stocks because of
the requirements of the penny stock rules and, as a result, the number of
broker-dealers willing to act as market makers in such securities is limited. If
we remain subject to the penny stock rules for any significant period, it could
have an adverse effect on the market, if any, for our securities. If our
securities are subject to the penny stock rules, investors will find it more
difficult to dispose of our securities.




15





The
Financial Industry Regulatory Authority, or FINRA, has adopted sales practice
requirements which may also limit a stockholder's ability to buy and sell our
stock.





In
addition to the “penny stock” rules described above, FINRA has adopted rules
that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer's financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low priced securities
will not be suitable for at least some customers. FINRA requirements make it
more difficult for broker-dealers to recommend that their customers buy our
common stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.





Investors
should not anticipate receiving cash dividends on our common stock.





We have
never declared or paid any cash dividends or distributions on our common stock
and intend to retain our future earnings, if any, to support operations and to
finance expansion. Therefore, we do not anticipate paying any cash dividends on
our common stock in the foreseeable future.





Sales
of a substantial number of shares of our common stock may adversely affect the
market price of our common stock or our ability to raise additional
capital.





Sales of
a substantial number of shares of our common stock in the public market, or the
perception that large sales could occur, could cause the market price of our
common stock to decline or limit our future ability to raise capital through an
offering of equity securities. The sale of substantial amounts of our common
stock in the public market could create a circumstance commonly referred to as
an “overhang” and in anticipation of which the market price of our common stock
could fall. The existence of an overhang, whether or not sales have occurred or
are occurring, also could make more difficult our ability to raise additional
financing through the sale of equity or equity-related securities in the future
at a time and price that we deem reasonable or appropriate. Our articles of
incorporation permits the issuance of up to 300,000,000 shares of common stock
and 10,000,000 shares of preferred stock. As of August 11, 2010, we had an
aggregate of 260,175,000 shares of our common stock and 10,000,000 shares of our
preferred stock authorized but unissued.  Thus, we have the ability to
issue substantial amounts of stock in the future. No prediction can be made as
to the effect, if any, that market sales of our common stock will have on the
market price for our common stock. Sales of a substantial number could adversely
affect the market price of our shares.




Item 2.Description of Properties.




Our
corporate offices are located at 30950 Rancho Viejo Rd #120, San Juan
Capistrano, California 92675 in a shared office space with Cardiff Partners, LLC
(“Cardiff”).  David Walters, our director, is a managing member, and
50% owner, of Cardiff.   We currently are not assessed any rental
charges for the use of this space.





The
premises used during the year ended April 30, 2010 were provided to us without
charge.  We have reviewed the estimated fair market value of the rent
for the space used and concluded it to be immaterial to the financial statements
individually and taken as a whole, as such, no expense for rent has been
recorded for the period shown.





Other
than the Bolzer Property, we do not currently own or lease any real
property.




16





Item 3.Legal Proceedings.





There are
no other legal proceedings are currently pending or, to our knowledge,
threatened against us that, in the opinion of our management, could reasonably
be expected to have a material adverse effect on our business or financial
condition or results of operations.




Item 4.(Removed and Reserved)




PART II




Item 5.Market for Common Equity and Related Stockholder
Matters.




Our
Common Stock is quoted on the OTC Electronic Bulletin Board under the symbol
“MMEX”. The following table indicates the quarterly high and low trading prices
for the Common Stock on the OTC Electronic Bulletin Board for the fiscal years
ending April 30, 2010 and April 30, 2009. Such inter-dealer quotations do not
necessarily represent actual transactions and do not reflect retail mark-ups,
mark-downs or commissions.




Prior
to May 28, 2009 and the effectiveness of our 5-for-1 stock split, our stock
symbol on the OTC Electronic Bulletin Board was “MGEG”.




Sales
      PricesHigh
              
              
              LowFiscal
      20081st
      Quarter
              
              
              n/a
              
              
              
              n/a2nd
      Quarter
              
              
              n/a
              
              
              
              n/a3rd
      Quarter
              
              
              n/a
              
              
              
              n/a4th
      Quarter
              
              
              n/a
              
              
              
              n/aFiscal
      20091st
      Quarter
              
              
              n/a
              
              
              
              n/a2nd
      Quarter
              
              
              n/a
              
              
              
              n/a3rd
      Quarter
              
              
              n/a
              
              
              
              n/a4th
      Quarter
              
              $
              0.81
              
              
              $
              0.40Fiscal
      20101st
      Quarter
              
              $
              1.28
              
              
              $
              0.742nd
      Quarter
              
              $
              1.58
              
              
              $
              1.193rd
      Quarter
              
              $
              1.45
              
              
              $
              0.234th
      Quarter
              
              $
              0.67
              
              
              $
              0.20




There
were 31 holders of record of our common stock as of August 10, 2010.  The last sale
price for our common stock as reported on August 10, 2010 was
$0.076.





We did
not pay dividends on our common stock for the fiscal year ended April 30, 2010
and have no plans to do so in the foreseeable future.





We do not
have an equity compensation plan.




On April
1, 2010, we issued to Wilkes Lane Capital, LLC  a warrant to purchase
8,000,000 shares of our common stock (at an exercise price of $0.28 per share)
as consideration for certain consulting services.  See Item 9B – Other
Information.  The warrant is exercisable for a period of five years
from issuance.   The warrant has the benefit of a “cashless
exercise” provision and anti-dilution protection for stock splits, stock
dividends and corporate reorganizations.   After September 1,
2010, at the request of the holder of the warrant, we are required to file and
maintain the effectiveness of a registration statement covering the resale
shares of common stock issuable upon exercise of the
warrant.   We offered and sold our securities in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act of
1933, as amended, since the issuance did not involve a public offering, the
recipient took the securities for investment and not resale and we took
appropriate measures to restrict transfer.




17




Item 6.Selected Financial Data.





Not
applicable.





Item
7.Management’s Discussion and Analysis or Plan of Operations.




“Safe
Harbor” Statement under the Private Litigation Reform Act of 1995




This
Annual Report, other than historical information, may include forward-looking
statements, including statements with respect to financial results, product
introductions, market demand, sales channels, industry trends, sufficiency of
cash resources and certain other matters. These statements are made under the
“safe harbor” provisions of the Private Securities Litigation Reform Act of 1995
and involve risks and uncertainties which could cause actual results to differ
materially from those in the forward-looking statements, including those
discussed in the section entitled “Risk Factors” in Item 1.A. and elsewhere
in this Annual Report on Form 10-K and other filings with the Securities
and Exchange Commission.




Overview





Management
Energy, Inc. plans to acquire and develop coal mining projects in the U.S. to
provide coal to both domestic and foreign markets.  We are currently
considered to be an exploration stage corporation because we are engaged in the
search for coal deposits and are not engaged in the exploitation of a coal
deposit.  We will be in the exploration stage until we discover
commercially viable coal deposits on the Bolzer Property or any other property
that we acquire, if ever. In an exploration stage company, management devotes
most of its activities to acquiring and exploring mineral
properties.





We are
developing the Bridger-Fromberg-Bear Mountain project a coal mining project in
the vicinity of Bridger in Carbon County, Montana.   The project
consists of 6,254 acres we have under lease and over 50,000 additional acres we
are seeking to lease.




Reserve
Estimates




The project is still in the development
stage and requires additional drilling and study to establish reliable reserve
estimates. Based on similar reserves in proximity and related coal seams, our
external consultants have assumed for business planning purposes a reserve size
of at least 200 million tons, a heat rate of more than 11,000 Btu, and less than
1% sulfur.  However, there is no assurance that a commercially viable
coal deposit exists on the project site.  Furthermore, there is no
assurance that we will be able to successfully develop the project or identify,
acquire or develop other coal properties that would allow us to profitably
extract and distribute coal and to emerge from the exploration
stage.





Development
Strategy




Our
current strategy is to pursue the Bridger-Fromberg-Bear Mountain project with a
development partner.  We believe the benefits of this strategy
include:




·
            Reduced
      capital requirements.  Our development partner will have
      responsibility for obtaining funding for the project.   We
      are entitled to an overriding royalty (based on sales and net profits) on
      the coal produced from the project without making any additional capital
      investment.




·
            Option
      to participate in project investment.  We have retained the
      option to participate up to 50% in any acquisition of coal properties that
      become part of the project.




18




·
            Access
      to industry and local market expertise.  Our development partner
      has over 20 years coal industry experience and has successfully developed
      and exited a coal project in
Montana.




In
October 2009, we entered into an agreement with a development partner for the
development of the Bridger-Fromberg-Bear Mountain Project.  The
agreement provides that:




·
            Subject
      to our partner achieving certain development milestones, we will sublease
      to our partner our mining lease to 6,254 acres in the
    project




·
            Our
      partner will pay to us an overriding royalty equal to 2% of the gross
      selling price of all coal produced from any property that is part of the
      Bridger-Fromberg-Bear Mountain
project.




·
            Our
      partner will pay to us an additional overriding royalty equal to 15% of
      the net profits from the mining and sale of all coal produced from any
      property that is part of the Bridger-Fromberg-Bear Mountain
      project.




·
            We
      will have a right of first refusal to acquire up to a 50% interest in any
      property that becomes part of the Bridger-Fromberg-Bear Mountain
      project.




To retain
its project rights, our development partner must meet certain milestones
relating to obtaining financing, completing a drilling program, acquiring
sufficient mining rights to constitute a viable development plan for the
project, and submitting permitting applications.




Status of Bridger-Fromberg-Bear
Mountain Project.





We began development of the
Bridger-Fromberg-Bear Mountain project in April 2009.  To date, we
have not made any significant progress in developing the project, primarily due
to the failure of our development partner to meet milestones for the project and
our own insufficient funding levels.





Our development partner has failed to
meet its development milestones for the Bridger-Fromberg-Bear Mountain project,
including milestones related to obtaining financing and acquiring additional
mining rights for the project.   We have not been in contact with
our development partner regarding the project since April 2010, and are unaware
of the status of its development efforts, if any. We have not exercised our
right to terminate the development agreement.   However, we are
evaluating alternative arrangements to pursue the project.





Due to
our insufficient funding levels, we failed to make the January 2010 scheduled
minimum annual payment of $62,541 under our lease for the Bolzer Property, which
is part of the Bridger-Fromberg-Bear Mountain project and the only mining rights
we currently hold. Although we have not received a notice of default or
termination from the lessor of the property, there is no assurance we will not
receive one in the future.





In
addition, we have identified some potential imperfections in our legal rights to
the lease for the Bolzer Property.   We have not had sufficient
financial resources to resolve these potential
imperfections.   Therefore, there is no assurance we have valid
legal rights to the lease for the Bolzer Property.





As a result of these and other factors,
there is no assurance that we will be able to successfully develop the project
or identify, acquire or develop other coal properties that would allow us to
profitably extract and distribute coal and to emerge from the exploration
stage.





As we execute our business plan in the
fiscal year ending April 30, 2011, we expect to incur a substantial amount of
operating expenses that have not been incurred or reflected in our historical
results of operations, including: mining lease expenses and expenses for
personnel, operations, and professional fees. We also expect that we will
continue to incur stock based compensation charges in future periods as we will
likely issue equity awards as a form of compensation to management and other
professional service providers.





19





Results
of Operations




Fiscal
Year Ended April 30, 2010, Compared to Fiscal Year Ended April 30,
2009





Revenues





We have
only recently entered the coal business. Accordingly, we have not generated any
revenues from continuing operations.  We do not expect to generate any
revenues until at least the second quarter of calendar year 2011.





Operating
Expenses





Operating
expenses from continuing operations totaled $3,327,161 for the fiscal year ended
April 30, 2010 compared to $1,369,375 for the comparable period in the prior
year.





The
current year operating expenses primarily consist of a non-cash stock based
compensation charge recorded of $2,640,365 for the 8,000,000 warrants issued as
a retainer under an agreement with a coal consultant firm, $62,541 of mining
lease expenses, $413,336 of consulting fees, as well as $102,280 of other
professional fees and $108,639 of other general and administrative
expenses.





The prior
year operating expenses primarily consist of a non-cash stock based compensation
charge recorded of $1,163,500 for the 1,625,000 shares of our common stock
issued as a retainer under our Support Services Agreement, with
Cardiff.  Operating expenses for the fiscal year ended April 2009 also
include $62,541 of acquisitions costs related to the Bolzer Property lease
acquisition, $66,668 of consulting fees, $51,800 of other professional fees and
$24,866 of other general and administrative expenses.





We
recently changed our principal business to the coal business, and expect to
continue to incur operating expenses to pursue our business plan.





Loss from Discontinued
Operations





On
January 14, 2009, we sold all of our assets to Joel Klandrud, our former officer
and director, pursuant to an Asset Sale Agreement.  In exchange, Mr.
Klandrud (1) surrendered to us for cancellation 4,000,000 shares of our Common
Stock, par value $0.001 per share, and (2) assumed all of our
liabilities.  We incurred losses from discontinued operations of
$59,986 for the fiscal year ended April 30, 2009.




Liquidity
and Capital Resources




The
accompanying financial statements have been prepared assuming that we will
continue as a going concern. As shown in the accompanying financial statements,
we incurred losses of $3,327,161 and $1,429,361 for the years ended April 30,
2010 and 2009, respectively and have an accumulated deficit of $4,779,809 at
April 30, 2010.  At April 30, 2010, we had cash and cash equivalents
of $58,293 and $2,389 of current assets.





We have
not yet established a source of revenues to cover our operating costs and to
allow us to continue as a going concern.  We do not expect to generate
any revenues until at least the second quarter of calendar year
2011.  In order to continue as a going concern, develop a reliable
source of revenues, and achieve a profitable level of operations, we will need,
among other things, significant additional capital
resources.  Accordingly, management’s plans to continue as a going
concern include raising additional capital through sales of common stock and
other securities.





The
business of exploring, extracting and distributing coal is capital
intensive.  Execution of our business strategywill require substantial
capital investment in the short-term and in future periods.  We
require capital for, among other purposes, identifying and acquiring additional
reserves and developing acquired reserves.




20





Our
current funding is not sufficient to continue our operations for the remainder
of the fiscal year ending April 30, 2011.  We will require additional
debt and/or equity financing to continue our operations and meet our contractual
commitments (including under the Bolzer Property lease).  We cannot
provide any assurances that additional financing will be available to us or, if
available, may not be available on acceptable terms.





Due to
our insufficient funding levels, we failed to make the January 2010 scheduled
minimum annual payment of $62,541 under our lease for Bolzer
Property.  Although, to date, we have not received a notice of default
from the lessor of the property, there is no assurance we will not receive one
in the future.





On March
8, 2010, we sold a $50,000 convertible note to an accredited investor in a
private placement transaction.  In the transaction, we received
proceeds of $35,000 and the investor also paid $15,000 of consulting expense on
our behalf. The convertible note is due and payable on December 31, 2010 with an
interest rate of 10% per annum. The note is convertible at the option of the
holder into our common stock at a fixed conversion price of $0.37, subject to
adjustment for stock splits and combinations.





If we are
unable to obtain adequate capital, we could be forced to cease or delay
development of our operations, sell assets or our business may
fail.   In each such case, the holders of our common stock would
lose all or most of their investment.  Please see “Risk Factors” for
information regarding the risks related to our financial condition.





Critical
Accounting Policies and Estimates




Our
financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles used in the United
States.  Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses.  These estimates and assumptions
are affected by management’s application of accounting policies.  We
believe that understanding the basis and nature of the estimates is critical to
an understanding of our financials.




Use of
Estimates





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





Issuance of Shares for
Non-Cash Consideration





The
Company accounts for the issuance of equity instruments to acquire goods and/or
services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more reliably
determinable.





The
Company's accounting policy for equity instruments issued to consultants and
vendors in exchange for goods and services follows the provisions of the
standards issued by the FASB.  The measurement date for the fair value
of the equity instruments issued is determined as the earlier of (i) the date at
which a commitment for performance by the consultant or vendor is reached or
(ii) the date at which the consultant or vendor's performance is
complete.  In the case of equity instruments issued to consultants,
the fair value of the equity instrument is recognized over the term of the
consulting agreement.





Stock-Based
Compensation




In
December of 2004, the FASB issued a standard which applies to transactions in
which an entity exchanges its equity instruments for goods or services and also
applies to liabilities an entity may incur for goods or services that are based
on the fair value of those equity instruments.  For any unvested
portion of previously issued and outstanding awards, compensation expense is
required to be recorded based on the previously disclosed methodology and
amounts.  Prior periods presented are not required to be
restated.  The Company adopted this standard as of January 1, 2006 and
applied the standard using the modified prospective method.  The
Company has not issued any stock options, however, the there were warrants to
purchase 8,000,000 common shares outstanding as of April 30, 2010.





21




Recently
Issued Accounting Pronouncements




In May
2009, the FASB issued SFAS No. 165, "Subsequent Events," which is included
in ASC Topic 855, Subsequent Events. ASC Topic 855 established principles
and requirements for evaluating and reporting subsequent events and
distinguishes which subsequent events should be recognized in the financial
statements versus which subsequent events should be disclosed in the financial
statements. ASC Topic 855 also requires disclosure of the date through which
subsequent events are evaluated by management. ASC Topic 855 was effective for
interim periods ending after June 15, 2009 and applies prospectively.
Because ASC Topic 855 impacts the disclosure requirements, and not the
accounting treatment for subsequent events, the adoption of ASC Topic 855 did
not impact the Company's results of operations or financial condition. See
Note 10 for disclosures regarding the Company's subsequent
events.




Effective
July 1, 2009, the Company adopted the FASB Accounting Standards
Codification ("ASC") 105-10, Generally Accepted Accounting Principles—Overall
("ASC 105-10"). ASC 105-10 establishes the FASB Accounting Standards
Codification (the "Codification") as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with U.S. GAAP. Rules
and interpretive releases of the SEC under authority of federal securities laws
are also sources of authoritative U.S. GAAP for SEC registrants. All
guidance contained in the Codification carries an equal level of authority. The
Codification superseded all existing non-SEC accounting and reporting standards.
All other non-grandfathered, non-SEC accounting literature not included in the
Codification is non-authoritative. The FASB will not issue new standards in the
form of Statements, FASB Staff Positions or Emerging Issues Task Force
Abstracts. Instead, it will issue Accounting Standards Updates ("ASUs"). The
FASB will not consider ASUs as authoritative in their own right. ASUs will serve
only to update the Codification, provide background information about the
guidance and provide the bases for conclusions on the change(s) in the
Codification. References made to FASB guidance throughout these consolidated
financials have been updated for the Codification.




In August
2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value,
which provides additional guidance on how companies should measure liabilities
at fair value under ASC 820. The ASU clarifies that the quoted price for an
identical liability should be used. However, if such information is not
available, an entity may use the quoted price of an identical liability when
traded as an asset, quoted prices for similar liabilities or similar liabilities
traded as assets, or another valuation technique (such as the market or income
approach). The ASU also indicates that the fair value of a liability is not
adjusted to reflect the impact of contractual restrictions that prevent its
transfer and indicates circumstances in which quoted prices for an identical
liability or quoted price for an identical liability traded as an asset may be
considered level 1 fair value measurements. This ASU is effective
October 1, 2009. The adoption of this ASU did not impact the Company's
results of operations or financial condition.




In
October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue
Arrangements—a consensus of the FASB Emerging Issues Task Force, which provides
amendments to the criteria for separating consideration in multiple-deliverable
arrangements. As a result of these amendments, multiple-deliverable revenue
arrangements will be separated in more circumstances than under existing
U.S. GAAP. The ASU does this by establishing a selling price hierarchy for
determining the selling price of a deliverable. The selling price used for each
deliverable will be based on vendor-specific objective evidence if available,
third-party evidence if vendor-specific objective evidence is not available, or
estimated selling price if neither vendor-specific objective evidence nor
third-party evidence is available. A vendor will be required to determine its
best estimate of selling price in a manner that is consistent with that used to
determine the price to sell the deliverable on a standalone basis. This ASU also
eliminates the residual method of allocation and will require that arrangement
consideration be allocated at the inception of the arrangement to all
deliverables using the relative selling price method, which allocates any
discount in the overall arrangement proportionally to each deliverable based on
its relative selling price. Expanded disclosures of qualitative and quantitative
information regarding application of the multiple-deliverable revenue
arrangement guidance are also required under the ASU. The ASU does not apply to
arrangements for which industry specific allocation and measurement guidance
exists, such as long-term construction contracts and software transactions. ASU
No. 2009-13 is effective beginning January 1, 2011. The Company is
currently evaluating the impact of this standard on its results of operations
and financial condition.




22




Off-Balance
Sheet Arrangements




As of
April 30, 2010, we did not have any significant off-balance sheet arrangements,
as defined in Item 303 of Regulation S-K.




Quantitative
and Qualitative Disclosures About Market Risk




We
do not have any material exposure to market risk associated with our cash and
cash equivalents. Our note payables are at a fixed rate and, thus, are not
exposed to interest rate risk.





Item 8.Financial Statements.




The
information required by this item is included on pages F-1 through
F-7.




Item 9.Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure.




Not
applicable.





Item 9A. Controls and Procedures




We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports made pursuant to the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).  is
recorded, processed, summarized and reported within the timelines specified in
the Securities and Exchange Commission’s rules and forms, and that such
information is accumulated and communicated to our management, including our
Chief Executive Officer and Principal Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure.   In
designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can only provide reasonable assurance of achieving the desired control
objectives, and in reaching a reasonable level of assurance, management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.




As
required by Rule 13a-15(b) under the Exchange Act, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Principal Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the fiscal year covered by this report. Based on the
foregoing, our Chief Executive Officer and Principal Financial Officer concluded
that our disclosure controls and procedures were effective as of the end of
period covered by this report in timely alerting them to material information
relating to Management Energy, Inc. required to be disclosed in our periodic
reports with the Securities and Exchange Commission.




23




Management’s Report on Internal
Control Over Financial Reporting




Our
Chief Executive Officer and Principal Financial Officer are responsible for
establishing and maintaining adequate internal control over financial reporting,
as such term is defined in Rule 13a-15(f) of the Exchange Act.




Internal
control over financial reporting is promulgated under the Exchange Act as a
process designed by, or under the supervision of, our Chief Executive Officer
and Principal Financial Officer and effected by our board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:




●         Pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of our assets;




●        Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles
generally accepted in the United States and that our receipts and expenditures
are being made only in accordance with authorizations of our management and
directors; and




●        Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition or disposition of our assets that could have a material effect on
the financial statements.




Readers
are cautioned that internal control over financial reporting, no matter how well
designed, has inherent limitations and may not prevent or detect misstatements.
Therefore, even effective internal control over financial reporting can only
provide reasonable assurance with respect to the financial statement preparation
and presentation.




Our
management, under the supervision and with the participation of our Chief
Executive Officer and Principal Financial Officer, has evaluated the
effectiveness of our internal controls over financial reporting as of the end of
the period covered by this report based upon the framework in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). Based on our evaluation, management concluded
that our internal control over financial reporting was effective as of April 30,
2010.




There
were no changes in our internal controls over financial reporting (as such term
is defined in Rule 13a-15(f) under the Exchange Act) that occurred during
our fiscal year ended April 30, 2010, that have materially affected, or are
reasonably likely to materially affect, our internal controls over financial
reporting. In the estimation of our senior management, none of the changes in
the composition of management have materially affected, or are reasonably likely
to materially affect, our internal controls over financial
reporting.




Item 9B.Other Information




On April
1, 2010, we entered into a consulting agreement (effective March 1, 2010) with
Wilkes Lane Capital, LLC (the “Wilkes Lane Agreement”) to provide certain
consulting services including developing an overall business strategy for our
coal business; identifying and assessing the merits of our
coal  business opportunities; and recommending and managing providers
of professional services.  Under the Wilkes Lane Agreement, we were
obligated to pay Wilkes Lane Capital a monthly fee of $50,000.  In
addition, we issued Wilkes Lane Capital a warrant to purchase 8,000,000 shares
of our common stock at an exercise price of $0.28 per
share.   The warrant is exercisable for a period of five years
from issuance.   The warrant has the benefit of a “cashless
exercise” provision and anti-dilution protection for stock splits, stock
dividends and corporate reorganizations.   After September 1,
2010, at the request of the holder of the warrant, we are required to file and
maintain the effectiveness of a registration statement covering the resale
shares of common stock issuable upon exercise of the warrant.




The
Wilkes Lane Agreement had an initial term of three months and was scheduled to
expire on May 31, 2010.   In May, 2010, Wilkes Lane terminated
the Wilkes Lane Agreement due to our failure to pay the monthly fees payable
under the agreement.   We owed Wilkes Lane Capital $150,000 in
unpaid monthly fees at the time of termination.




24




PART III




Item 10.Directors and Executive Officers of Management Energy,
Inc.




The
following table presents information with respect to our directors and executive
officers.




Name
            
            Age
            
            PositionDavid
      Walters
            
            47
            
            Chief
      Executive Officer and DirectorMatt
      Szot
            
            36
            
            Chief
      Financial Officer, Secretary and
Treasurer




Directors




DAVID
WALTERS


Mr.
Walters has served as a Director since April 2009 and as Chief Executive Officer
since August 2009.  Mr. Walters is a founder and principal of Cardiff
Partners, LLC and Monarch Bay Associates, LLC (“Monarch Bay”), and has extensive
experience in investment management, corporate growth development strategies and
capital markets. From 1992 through 2000, he was an executive vice president and
managing director in charge of capital markets for Roth Capital (formerly
Cruttenden Roth), were he managed the capital markets group and led over 100
financings (public and private), raising over $2 billion in growth capital.
Additionally, Mr. Walters oversaw a research department that covered over 100
public companies, and was responsible for the syndication, distribution and
after-market trading of the public offerings. From 1992 through 2000, he managed
the public offerings for Cruttenden Roth, which was the most prolific public
underwriter in the U.S. for deals whose post-offering market cap was less than
$100 million. Mr. Walters sat on Roth's Board of Directors from 1994 through
2000. Previously, he was a vice president for both Drexel Burnham Lambert and
Donaldson Lufkin and Jenrette in Los Angeles, and he ran a private equity
investment fund. Mr. Walters earned a B.S. in Bioengineering from the University
of California, San Diego.  Mr. Walters also serves as Chairman of the
Board of Directors and Chief Executive of Monarch Staffing, Inc. and STI Group,
Inc., and a member of the Board of Directors of Precision Aerospace Components,
Inc. and Trans-Pacific Aerospace Company, Inc.




Executive
Officers





All
officers serve until their successors are duly elected and qualified or their
earlier death, disability or removal from office.





DAVID WALTERS – SEE
ABOVE




25




MATT SZOT





Mr.
Szothas served as
our Chief Financial Officer, Secretary and Treasurer since January
2009.  Mr. Szot has significant experience in financial implementation
processes, mergers and acquisitions, financial valuation and public company SEC
reporting and compliance.  Since February 2007, Mr. Szot has served as
the Chief Financial Officer for Cardiff Partners, LLC, a strategic consulting
company which provides executive financial services to various publicly traded
and privately held companies.  Prior thereto, from 2003 to 2006, Mr.
Szot served as Chief Financial Officer and Secretary of Rip Curl, Inc., a market
leader in wetsuit and action sports apparel products.  From 1996 to
2003, Mr. Szot was a Certified Public Accountant with KPMG in the San Diego and
Chicago offices and served as an Audit Manager for various publicly traded
companies.  Mr. Szot is on the Board of Directors of Secured Federal
Funding Acquisition Corp. and also serves as Chief Financial Officer of S&W
Seed Company, Inc. and Trans-Pacific Aerospace Company, Inc..  Mr.
Szot graduated with High Honors from the University of Illinois,
Champaign-Urbana, with a Bachelor of Science degree in Accounting and
Agricultural Economics. Mr. Szot is a Certified Public Accountant in the State
of California.





To the
best of our knowledge, our officers and directors have neither been convicted in
any criminal proceedings during the past five years nor are parties to any
judicial or administrative proceeding during the last five years that resulted
in a judgment, decree or final order enjoining then from future violations of,
or prohibiting activities subject to, federal or state securities laws or a
finding of any violation of federal or state securities laws or commodities
laws.  No bankruptcy petitions have been filed by or against any
business or property of any of our directors or officers, nor has a bankruptcy
petition been filed against a partnership or business association in which these
persons were general partners or executive officers.




There are
no family relationships among the directors and executive officers of Management
Energy, Inc.





Organization
of the Board of Directors





Our board
of directors currently consists of one board member David Walters. All directors
serve until the next annual meeting of the stockholders or until their
respective successors are duly elected and qualified, or until their earlier
death or removal from office.   There have been no material
changes to the procedures by which our stockholders may recommend nominees to
our Board of Directors.





The board
of directors has determined that Mr. Walters is not “independent” as such term
is defined by the listing standards of Nasdaq and the rules of the SEC since he
is a principal of Cardiff, a provider of consulting services to us and a
principal of Monarch Bay, our placement agrent.





Board
Committees.There currently no committees of our board
of directors.  Our board of directors is expected to appoint an audit
committee, nominating committee and compensation committee, and to adopt
charters relative to each such committee.  We intend to appoint such
persons to the board of directors and committees of the board of directors as
are expected to be required to meet the corporate governance requirements
imposed by a national securities exchange, although we are not required to
comply with such requirements until we elect to seek listing on a securities
exchange.




Code of Ethics for Chief Executive
Officer and Senior Financial Officers. We intend to adopt a code of
ethics that applies to our officers, directors and employees, including our
Chief Executive Officer and Chief Financial Officer, but have not done so to
date due to our relatively small size.




Directors’ and Officers’ Liability
Insurance.We currently anticipate that we will obtain
directors’ and officers’ liability insurance insuring our directors and officers
against liability for acts or omissions in their capacities as directors or
officers, subject to certain exclusions.  Such insurance is expected
to insure us against losses which we may incur in indemnifying our officers and
directors.  In addition, we have entered into indemnification
agreements with our executive officers and directors and such persons also have
indemnification rights under applicable laws, and our articles of incorporation
and bylaws.




26




Section 16(a)
Beneficial Ownership Reporting Compliance





Due to
our status as a Section 15(d) reporting company, our executive officers,
directors, and persons who beneficially own more than 10% of a registered class
of our equity securities are not required to file with the SEC reports of
ownership and changes in ownership of our equity securities pursuant to Section
16(a) of the Securities Exchange Act of 1934.





Compensation of Directors





We do not
currently pay any cash fees to our directors, but we pay directors’ expenses in
attending board meetings. During the fiscal year ended April 30, 2010, no
director expenses were incurred.





Item
11.Executive Compensation.





The
following table describes compensation awarded, paid to or earned, for the last
fiscal year, by us to our current Chief Executive Officer, our former Chief
Executive Officer and Chief Financial Officer during our fiscal year ended April
30, 2010 and 2009.





Name
      and Principal Position
            
            Year
            
            Salary
            
            
            Bonus
            
            
            Stock
      Awards
            
            
            Option
      Awards
            
            
            Non-Equity
      Incentive Plan Compensation
            
            
            Non-Qualified
      Deferred Compensation Earnings
            
            
            All
      Other Compensation
            
            
            Total(a)
            
            (b)
            
            (c)
            
            
            (d)
            
            
            (e)
            
            
            (f)
            
            
            (g)
            
            
            (h)
            
            
            (i)
            
            
            (j)David
      Walters (2)
            
            2010
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            203,336
            
            
            $
            203,336Current
      Chief Executive
            
            2009
            
            $
            -
            
            
            $
            -
            
            
            $
            504,568
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            66,668
            
            
            $
            571,236Officer
      and DirectorJohn
      P. Baugues (3)
            
            2010
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Former
      Chief Executive
            
            2009
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Officer
      and ChairmanMatt
      Szot (4)
            
            2010
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Chief
      Financial Officer,
            
            2009
            
            $
            -
            
            
            $
            -
            
            
            $
            112,125
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            112,125Treasurer,
      and Secretary





(1)
            As
      part of our transition to the coal business, on January 14, 2009, we sold
      all of our assets to Joel Klandrud, our former officer and
      director.  As a result of this transaction, we became a “shell
      company” as defined in Section 12-b(2) of the Securities Exchange Act of
      1934, as amended.  Moreover, as part of this transaction, all of
      our officers and directors that were involved in our prior business
      resigned.  Accordingly, the table below omits information
      related to the compensation of the officers engaged in our prior business,
      as we believe this information would be misleading and not otherwise add
      to an understanding of our current business and compensation
      practices.





(2)
            Mr.
      Walters has served as a Director since April 2009 and as Chief Executive
      Officer since August 2009. Mr. Walters owns a 50% interest and is a
      managing member of Cardiff Partners, LLC.   We incurred
      $203,336 and $66,668 of expenses under the terms of a support services
      agreement in the fiscal years ended April 30, 2010 and 2009,
      respectively.





(3)
            Mr.
      Baugues became our Chief Executive Officer effective January 14, 2009 and
      resigned from the position on July 10,
2009.





(4)
            Mr.
      Szot became our Chief Financial Officer effective January 14,
      2009.




Outstanding
Equity Awards at Fiscal Year-End




As of
August 13, 2010, there were no outstanding equity awards held by any named
executive officer.




27




Employment
Agreements





As of
August 13, 2010, we were not a party to any employment agreement with any named
executive officer.




Compensation Committee Interlocks and Insider
Participation





Due to
the limited number of directors constituting our Board of Directors, the full
Board of Directors considers and participates in the compensation of our
executive officers.







Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.




The
following table sets forth certain information regarding beneficial ownership of
our common stock as of August 10, 2010:





·
              by
      each person who is known by us to beneficially own more than 5% of our
      common stock;




·
              by
      each of our executive officers and directors;
  and




·
              by
      all of our executive officers and directors as a
  group.





Name and address of
            
            Beneficial
      Ownership of Shares (2)Beneficial
      Owner (1)
            
            Number
            
            
            Percentage
      (3)Kyaw
      Myint
            
            
            5,000,000
            
            
            
            12.6
            %60
      Overlook RoadLattingtown,
      NY 11560Matt
      Massick
            
            
            3,766,667
            
            
            
            9.5
            %1637
      N WinckestenChicago,
      IL 60622Cloby
      - Tryo Resources, Inc.
            
            
            2,000,000
            
            
            
            5.0
            %3709
      Huntmaster Ct.Richmond,
      VA 23233Tydus
      Richards (4)
            
            
            9,400,000
            
            
            
            23.6
            %29377
      Rancho California Rd. #204Temecula,
      CA 92591David
      Walters
            
            
            731,250
            
            
            
            1.8
            %Matt
      Szot
            
            
            142,500
            
            
            
            *All
      officers and directors as a group
            
            
            873,750
            
            
            
            2.2
            %








*
              Represents
      less than 1%




28




(1)
            Unless
      otherwise indicated, the address of each of the named parties in this
      table is: 30950 Rancho Viejo Road, Suite 120, San Juan Capistrano, CA
      92675.




(2)
            This
      table is based upon information supplied by our officers, directors,
      principal stockholders and our transfer agent.   Unless
      otherwise indicated, this table includes shares owned by a spouse, minor
      children, and relatives sharing the same home, as well as entities owned
      or controlled by the named beneficial owner.  Unless otherwise noted,
      we believe the shares reflected in this table are owned of record and
      beneficially by the named beneficial
owner.




(3)
            Based
      on 39,825,000 shares outstanding as of August 10,
  2010.




(4)
            Includes
      9,000,000 shares of common stock owned by TRX Capital and 400,000 shares
      of common stock owned by Lotus Asset
Management.




Item 13.Certain Relationships and Related Transactions.




On
January 14, 2009, we sold all of our assets to Joel Klandrud, our former officer
and director, pursuant to that certain Asset Sale Agreement, dated January 14,
2009, in exchange for the surrender to us by Mr. Klandrud of 4,000,000 shares of
the our common stock, and the assumption by Mr. Klandrud all of the our
liabilities.





On
January 14, 2009, we entered into a Support Services Agreement with Cardiff
Partners, LLC (the “Cardiff Agreement”).  Matt Szot, our Chief
Financial Officer, Treasurer, and Secretary, is the Chief Financial Officer of
Cardiff.  David Walters, a director, owns a 50% interest and is a
managing member of Cardiff.   Pursuant to the Cardiff Agreement,
in consideration for providing certain services to us, Cardiff is entitled to a
monthly fee in the amount of $16,667.  On January 8, 2010, the Support
Services Agreement was renewed for an additional twelve months and the monthly
cash fee increased to $17,500.  The current term of the Support
Services Agreement expires January 8, 2011.  On April 2, 2009, we
entered into Amendment #1 to the Cardiff Agreement.  Pursuant to the
amendment, we agreed to issue to Messrs. Walters and Szot and another principal
of Cardiff an aggregate of 1,625,000 shares of our common stock as a retainer,
in exchange for Cardiff’s agreement to continue to provide services under the
Support Services Agreement.  We incurred $203,336 and $66,668 under
the terms of the agreement for the years ended April 30, 2010 and 2009,
respectively, which is included in consulting expenses in the accompanying
statements of operations.  As of April 30, 2010, $185,372 is
outstanding under the agreement.




On
January 14, 2009, we entered into a Placement Agency and Advisory Services
Agreement with Monarch Bay Associates, LLC.  Matt Szot, our Chief
Financial Officer, Treasurer, and Secretary, is the Chief Financial Officer of
Monarch Bay.  David Walters, our Chief Executive Officer
and  director, owns a 50% interest and is a managing member of Monarch
Bay.  Pursuant the engagement letter, we are required to (1) pay to
Monarch Bay 3% of the gross proceeds of any financing from non-Monarch Bay
sources and issue to Monarch Bay warrants to purchase that number of shares of
our common stock equal to 3% of the number of shares of common stock (including
convertible securities) issued in such financing, and (2) pay to Monarch Bay 5%
of the gross proceeds of any financing from Monarch Bay sources and issue to
Monarch Bay warrants to purchase that number of shares of our  common
stock equal to 5% of the number of shares of common stock (including convertible
securities) issued in such financing.  We did not incur any expenses
under the terms of the agreement during the year ended April 30,
2010.





On
January 9, 2009, we entered into an Acquisition Agreement (the “Acquisition
Agreement”) to acquire 100% of the ownership interests in Patoka River Coal
Company, LLC, a Delaware limited liability company (“PRCC”), Patoka River
Holdings, LLC, a Delaware limited liability company (“PRH”), and Carbon County
Holdings, LLC (PRCC, PRH and CCH are collectively referred to herein as the
“LLCs”) in exchange for our agreement to issue a total of 40,000,000 shares of
our common stock to the owners of the LLCs, John P. Baugues, Jr. (our former
Chief Executive Officer and director), the Baugues Trust, and TRX Capital, LLC,
a California limited liability controlled by Tydus Richards, the former Chairman
of our board of directors,.  At that time, PRCC held an exclusive
option to acquire two parcels of land in fee simple, which option expired on
January 26, 2009, and CCH held certain leasehold mining rights.   On
March 31, 2009, we entered into a Letter Agreement Regarding Termination of
Acquisition Agreement (the “Termination Letter”), pursuant to which the parties
agreed to terminate the Acquisition Agreement.




29





On April
13, 2009, we entered into the Contribution Agreement with Carbon County
Holdings, LLC, John P. Baugues, Jr., our former Chief Executive Officer and
director, the Baugues Trust, and Tydus Richards, the former Chairman of our
board of directors.  Pursuant to the Contribution Agreement, CCH
agreed to contribute and assign to us all of CCH’s rights and obligations under
the Bolzer Lease in exchange for the issuance to the members of CCH of the
number of shares of our Common Stock set forth opposite such member’s name
below.




Name of Member
            
            Number of SharesJohn
      P. Baugues, Jr.
            
            
            15,925,000The
      John Paul Baugues, Sr. Family Trust
            
            
            16,575,000Tydus
      Richards
            
            
            27,500,000Total
            
            
            60,000,000




On April
13, 2009, we entered into a Strategic Consulting Services Agreement with Charles
S. Leykum (our former Board Advisor).  Pursuant to the agreement, we
agreed to issue to Mr. Leykum (or Mr. Leykum’s designees) an aggregate of
2,010,500 shares of our common stock as a payment, in exchange for Mr. Leykum’s
services.  The agreement had a term of 24 months.  On July
13, 2009, we agreed to the termination of the agreement with Charles S.
Leykum.  In connection with the termination of the agreement, Mr.
Leykum and certain affiliated entities surrendered 7,010,500 shares of the
Company’s common stock for cancellation and the parties agreed to a mutual
release of all claims.





On July
16, 2009, we entered into a Consulting Services Agreement with Lotus Asset
Management, an entity controlled by Tydus Richards, the former Chairman of our
board of directors.  Under the Agreement, we will pay Lotus Asset
Management a monthly fee of $20,000 in exchange for business development
services, serve as a member of the board of advisors, corporate strategy, and
identify other potential employees including a Chief Executive Officer with
extensive coal industry experience.  The agreement expired November
16, 2010.  The Company incurred $80,000 under the terms of the
agreement for the year ended April 30, 2010, which is included in consulting
expenses in the accompanying statements of operations.  As of April
30, 2010, no amounts were outstanding under the agreement.





On July 23, 2009, we entered into a
stock purchase agreement with an accredited investor controlled by Tydus
Richards, the former Chairman of our board of directors, for the sale of 400,000
shares of our common stock at a purchase price of $1.00 per share.  In
connection with the stock purchase agreement, we agreed that we will not expend
the proceeds of the offering without the consent of the investor.  The
sale closed on July 24, 2009.





On October 8, 2009, we entered into
an agreement with Mr Baugues, for the development of coal mines in an area of
Carbon County, Montana known as the Bridger-Fromberg-Bear Mountain
project.   Under the terms of the agreement:





·
            Mr.
      Baugues (or his new entity) will pay to us an overriding royalty equal to
      2% of the gross selling price of all coal produced from any property that
      is part of the Bridger-Fromberg-Bear Mountain
  project.




·
            Mr.
      Baugues (or his new entity) will pay to us  an additional
      overriding royalty equal to 15% of the net profits from the mining and
      sale of all coal produced from any property that is part of the
      Bridger-Fromberg-Bear Mountain
project.




·
            We
      will have a right of first refusal to acquire up to a 50% interest in any
      property that becomes part of the Bridger-Fromberg-Bear Mountain
      project.




30




·
            Mr.
      Baugues surrendered to us 15,925,000 shares of our common stock for
      cancellation and caused to be surrendered 16,575,000 shares of our common
      stock held by the John T. Baugues Sr. Trust for
    cancellation.




·
            Subject
      to Mr. Baugues (or a new entity to be formed by him) achieving certain
      development milestones, we: (i) will sublease to a new entity to be formed
      by Mr. Baugues, our mining lease for the 6,250 acre Bolzer property and
      (ii) will not interfere with the development of the Bridger-Fromberg-Bear
      Mountain project by Mr. Baugues (or his new
  entity).




·
            To
      retain the Bolzer property sublease and other rights under the settlement
      agreement, Mr. Baugues (or his new entity) will be required to meet
      certain milestones (over a 15 month period) relating to obtaining
      financing, completing a drilling program, acquiring sufficient mining
      rights to constitute a viable development plan for the project, and
      submitting permitting applications.




·
            Subject
      to performance of the terms of the settlement agreement, we and Mr.
      Baugues will release each other from any claims that we may have against
      the other as of the date of the settlement
  agreement.





During the period from May 1, 2009
through April 30, 2010, Tydus Richards, the former Chairman of our board of
directors and shareholder, made payments totaling $71,700 on behalf of the
Company.  The Company reimbursed Mr. Richards $8,700 on September 3,
2009 and the remaining balance of $63,000 remains outstanding as of April 30,
2010. On May 12, 2010, the Company reimbursed an additional $39,000 of the
balance.




Item
14.Principal Accountant Fees and Services
 
 On February 26, 2009, our Board of
Directors approved the engagement of M&K CPAs, PLLC (“M&K”) to serve as
our principal independent public accountant to audit our financial statements
for the fiscal year ended April 30, 2009.  Prior to February 26, 2009,
our principal independent public accountant was John
Kinross-Kennedy.  Audit fees billed by our principal independent
public accountants for services rendered for the audit of our annual financial
statements and review of our quarterly financial statements included in Form
10-Q for the last two fiscal years are presented below.  Audit-related
fees, tax fees, and other fees for services billed by our principal independent
public accountant during each of the last two fiscal years are also presented in
the following table:
  Years
      Ended April 302010
              
              
              2009M&K
      CPAs, PLLCAudit
      Fees
              
              $
              6,500
              
              
              $
              6,700Audit-related
      fees (a)
              
              $
              -
              
              
              $
              -Tax
      fees (b)
              
              $
              -
              
              
              $
              -Registration
      Statement Fees
              
              $
              -
              
              
              $
              -All
      other fees
              
              $
              -
              
              
              $
              -John
      Kincross-KennedyAudit
      Fees
              
              $
              -
              
              
              $
              1,000Audit-related
      fees (a)
              
              $
              -
              
              
              $
              -Tax
      fees (b)
              
              $
              -
              
              
              $
              -Registration
      Statement Fees
              
              $
              -
              
              
              $
              -All
      other fees
              
              $
              -
              
              
              $
              -
  
 (a)
                Audit-related
      fees primarily include research services to validate certain accounting
      policies.
  (b)
                Tax
      fees include costs for the preparation of our corporate income tax
      return.
  Our Board of Directors established a
policy whereby the outside auditors are required to seek pre-approval on an
annual basis of all audit, audit-related, tax and other services by providing a
prior description of the services to be performed. For the year ended April 30,
2010, 100% of all audit-related services were pre-approved by the Board of
Directors, which concluded that the provision of such services by M&K was
compatible with the maintenance of that firm’s independence in the conduct of
its auditing functions.
  31




Item 15.Exhibits.




(a)1.   Financial
Statements.




The
following financial statements of Management Energy, Inc. are submitted as a
separate section of this report (See F-pages), and are incorporated by
reference in Item 7:




Report
      Of Independent Registered Public Accounting Firm
              
              
              F-1Balance
      Sheets –  April 30, 2010 and 2009
              
              
              F-2Statements
      of Operations – For the Years Ended April 30, 2010 and 2009 and for the
      period of inception, from May 19, 2005 through April 30,
    2010
              
              
              F-3Statements
      of Cash Flows - For the Years Ended April 30, 2010 and 2009 and for the
      period of inception, from May 19, 2005 through April 30,
    2010
              
              
              F-4Statement
      of Stockholders’ Equity (Deficit)  – For the Year Ended April
      30, 2010
              
              
              F-5Notes
      to Financial Statements
              
              
              F-6




32




(b)Exhibits




The
following Exhibits are filed herewith pursuant to Item 601 of
Regulation S-K or incorporated herein by reference to previous filings as
noted:





Exhibit
              No.
            
            Identification
      of Exhibit2.1
            
            Agreement
      for Sale of Assets, dated January 14, 2009, entered into between the
      registrant and Joel Klanrud. (1)2.2
            
            Contribution
      and Assignment Agreement, dated as of March 31, 2009, by and among the
      registrant, Carbon County Holdings, LLC, a Delaware limited liability
      company, John P. Baugues, Jr., The John Paul Baugues, Sr. Family Trust,
      and Tydus Richards. (2)3.1.1
            
            Articles
      of Incorporation  (3)3.1.2
            
            Certificate
      Of Amendment to the Articles of Incorporation dated February 5, 2009
      (1)3.1.3
            
            Certificate
      Of Amendment to the Articles of Incorporation dated June 22, 2009
      (4)3.2
            
            By-Laws
      *10.1.1
            
            Support
      Services Agreement, dated January 8, 2009, between Strands Management
      Company, LLC and the registrant (5)10.1.2
            
            Amendment
      No.1 to Support Services Agreement, dated April 3, 2009, between Strands
      Management Company, LLC and the registrant (2)10.2
            
            Engagement
      Letter, dated January 8, 2009, between the registrant and Monarch Bay
      Associates, LLC (5)10.3
            
            Mining
      Lease, dated as of January 16, 2009, by and between Carbon County
      Holdings, LLC, a Delaware limited liability company, on the one hand, and
      Edith L. Bolzer and Richard L. Bolzer, on the other hand
    (2)10.4.1
            
            Stock
      Purchase Agreement, dated July 23, 2009 (6)10.4.2
            
            Addendum
      to Stock Purchase Agreement (6)10.5
            
            Consulting
      Agreement, dated July 16, 2009, with Lotus Asset
    Management(7)10.6
            
            Settlement
      Agreement, dated October 8, 200, with John Baugues, Jr.
  (8)10.7*
            
            Consulting
      Agreement, dated April 1, 2010, with Wilkes Lane Capital,
    LLC10.8*
            
            Warrant
      Agreement, dated April 1, 2010 with Wilkes Lane Capital,
    LLC21.1*
            
            Subsidiaries
      of Registrant23.1*
            
            Consent
      of M&K CPAs, PLLCConsent
      of John-Kinross Kennedy31.1*
            
            Certification
      of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated
      under the Securities Exchange Act of 193431.2*
            
            Certification
      of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14
      promulgated under the Securities Exchange Act of 193432.1*
            
            Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002







*
            Filed
      herewith





(1)
            Incorporated
      herein by reference to the registrant’s Current Report on Form 8-K filed
      with the SEC on March 4, 2009.




(2)
            Incorporated
      herein by reference to the registrant’s Current Report on Form 8-K filed
      with the SEC on April 6, 2009.




(3)
            Incorporated
      herein by reference to the registrant’s Registration Statement on Form S-1
      filed with the SEC on July 29,
2008.




(4)
            Incorporated
      herein by reference to the registrant’s Current Report on Form 8-K filed
      with the SEC on May 29, 2009.




(5)
            Incorporated
      herein by reference to the registrant’s Quarterly Report on Form 10-Q, as
      filed with the SEC on March 17,
2009.




(6)
            Incorporated
      herein by reference to the registrant’s Current Report on Form 8-K filed
      with the SEC on July 28, 2009.




(7)
            Incorporated
      herein by reference to the registrant’s Annual Report on Form 10-K, as
      filed with the SEC on August 13,
2009.




(8)
            Incorporated
      herein by reference to the registrant’s Current Report on Form 8-K filed
      with the SEC on October 14, 2009.




33




SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.




Dated:
      August 13, 2010
            MANAGEMENT
      ENERGY, INC.(Registrant)By:
            /s/
      David WaltersChief
      Executive Officer(Principal
      Executive Officer)




Pursuant
to the requirements of the Securities Exchange Act of 1934, 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/
      David Walters
              
              Chief
      Executive Officer
              
              August
      13, 2010David
      Walters
              
              (Principal
      Executive Officer and Director/s/
      Matthew Szot
              
              Chief
      Financial Officer
              
              August
      13, 2010Matthew
      Szot
              
              (Principal Financial and
      Accounting Officer)




34




SUPPLEMENTAL
INFORMATION TO BE FURNISHED WITH REPORTS FILED


PURSUANT
TO SECTION 15(d) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS




1.
            No
      annual report to security holders covering the company’s fiscal year ended
      April 30, 2010, has been sent as of the date of this
    report.




2.
            No
      proxy soliciting material has been sent to the company’s security holders
      with respect to the 2009 annual meeting of security
    holders.




3.
            If
      such report or proxy material is furnished to security holders subsequent
      to the filing of this Report on Form 10-K, the company will furnish copies
      of such material to the Commission at the time it is sent to security
      holders.




35




ANNUAL
REPORT ON FORM 10-K


ITEM
7


FINANCIAL
STATEMENTS


FISCAL
YEARS ENDED APRIL 30, 2010 and 2009


MANAGEMENT
ENERGY, INC.


SAN
JUAN CAPISTRANO, CA










MANAGEMENT
ENERGY, INC.




Financial
      Statements
            
            PageReport
      of Independent Registered Public Accounting Firm
            
            
            F-1Balance
      Sheets –  April 30, 2010 and 2009
            
            
            F-2Statements
      of Operations – For the Years Ended April 30, 2010 and 2009 and the for
      the period of inception, from May 19, 2005 through April 30,
      2010
            
            
            F-3Statements
      of Cash Flows - For the Years Ended April 30, 2010 and 2009 and the for
      the period of inception, from May 19, 2005 through April 30,
      2010
            
            
            F-4Statement
      of Stockholders’ Equity (Deficit)  – For the period of
      inception, from May 19, 2005 through April 30, 2010
            
            
            F-5Notes
      to Financial Statements
            
            
            F-6




F-ii




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the
Board of Directors


Management
Energy, Inc.


San Juan
Capistrano, California





We have
audited the accompanying balance sheets of Management Energy, Inc. (the
“Company”) (an exploration stage company) as of April 30, 2010 and 2009 and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the twelve month periods then ended and the period from inception (May 19,
2005) through April 30, 2010. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.





We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit 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 audit provides a
reasonable basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Management Energy, Inc. as of April
30, 2010 and 2009 and the results of its operations and cash flows for the
period described above 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 1 to the
financial statement, the Company suffered a net loss from operations and has a
net capital deficiency, which raises substantial doubt about its ability to
continue as a going concern.  Management’s plans regarding those
matters are also described in Note 1.  The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.






/s/
M&K CPAS, PLLC





www.mkacpas.com


Houston,
Texas


August
11, 2010





F-1




MANAGEMENT
ENERGY, INC.


(An
Exploration Stage Company)


Balance
Sheets





ASSETSApril
      30,
            
            
            April
      30,2010
            
            
            2009Current
      AssetsCash
      and Cash Equivalents
            
            $
            58,293
            
            
            $
            900Prepaids
            
            
            2,389
            
            
            
            -Total
      Current Assets
            
            
            60,682
            
            
            
            900Total
      Assets
            
            $
            60,682
            
            
            $
            900





LIABILITIES
      & STOCKHOLDERS' EQUITY (DEFICIT)Current
      LiabilitiesAccounts
      Payable
            
            $
            308,023
            
            
            $
            41,295Accounts
      Payable - Related Party
            
            
            185,372
            
            
            
            66,668Accrued
      Expenses
            
            
            67,041
            
            
            
            100,917Accrued
      Interest
            
            
            726
            
            
            
            -Note
      Payable
            
            
            50,000
            
            
            
            -Due
      to Affiliate
            
            
            63,000
            
            
            
            -Total
      Current Liabilities
            
            
            488,790
            
            
            
            142,212Stockholders'
      Equity (Deficit)Common Stock, $0.001 par value, 300,000,000 shares authorized,
      39,825,000 shares issued and outstanding at April 30, 2010 and,
      71,925,000 shares issued and outstanding at April 30, 2009
            
            
            39,825
            
            
            
            71,925Additional
      paid-in capital
            
            
            4,311,876
            
            
            
            1,239,411Deficit
      accumulated in the exploration stage
            
            
            (4,779,809
            )
            
            
            (1,452,648
            )Total
      Stockholders' Equity (Deficit)
            
            
            (428,108
            )
            
            
            (141,312
            )Total
      Liabilities and Stockholders' Equity (Deficit)
            
            $
            60,682
            
            
            $
            900





See
accompanying notes to financial statements




F-2




MANAGEMENT
ENERGY INC.


(An
Exploration Stage Company)


Statements
of Operations





For
      the
              Year
      Ended
              April
      30,
            
            
            For
      the period
              of
      Inception,
              from
      May 19,
              2005
      through
              April
      30,2010
            
            
            2009
            
            
            2010Expenses:Professional
      Fees
            
            $
            102,280
            
            
            $
            51,800
            
            
            $
            154,080Consulting
            
            
            413,336
            
            
            
            66,668
            
            
            
            480,004Mining
      Lease
            
            
            62,541
            
            
            
            62,541
            
            
            
            125,082Stock
      Based Compensation
            
            
            2,640,365
            
            
            
            1,163,500
            
            
            
            3,803,865Other
      General & Administrative
            
            
            108,639
            
            
            
            24,866
            
            
            
            133,505Total
      Operating Expenses
            
            
            3,327,161
            
            
            
            1,369,375
            
            
            
            4,696,536Operating
      Loss From Continuing Operations
            
            $
            (3,327,161
            )
            
            $
            (1,369,375
            )
            
            $
            (4,696,536
            )Discontinued
      operationsGain
      (loss) from discontinued operations
            
            
            -
            
            
            
            (59,986
            )
            
            
            (83,273
            )Net
      Income (Loss)
            
            $
            (3,327,161
            )
            
            $
            (1,429,361
            )
            
            $
            (4,779,809
            )Basic
      and Dilutive Net Loss From Continuing Operations Per Share
            
            $
            (0.062
            )
            
            $
            (0.083
            )Basic
      and Dilutive Net Income From Discontinued Operations Per
    Share
            
            $
            -
            
            
            $
            (0.004
            )Weighted
      average number of shares outstanding, basic and diluted
            
            
            54,018,407
            
            
            
            16,597,321





See
accompanying notes to financial statements




F-3





MANAGEMENT
ENERGY INC.


(An
Exploration Stage Company)


Statements
of Cash flows





For
      the
              Year
      Ended
              April
      30,
            
            
            For
      the period
              of
      Inception,
              May
      19,
              2005
      to
              April
      30,2010
            
            
            2009
            
            
            2010Cash
      Flows from Operating ActivitiesNet
      loss from continuing operations
            
            $
            (3,327,161
            )
            
            $
            (1,369,375
            )
            
            $
            (4,696,536
            )Net
      loss from discontinued operations
            
            
            -
            
            
            
            (59,986
            )
            
            
            (83,273
            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      expense
            
            
            -
            
            
            
            1,179
            
            
            
            1,479Stock
      issued to acquire mining lease
            
            
            -
            
            
            
            62,541
            
            
            
            62,541Stock
      based compensation
            
            
            2,640,365
            
            
            
            1,163,500
            
            
            
            3,803,865Change
      in operating assets and liabilities:Accounts
      receivable
            
            
            -
            
            
            
            (15,118
            )
            
            
            (15,118
            )Prepaids
            
            
            (2,389
            )
            
            
            -
            
            
            
            (3,889
            )Accounts
      payable
            
            
            81,356
            
            
            
            41,295
            
            
            
            308,023Accounts
      payable - related party
            
            
            118,704
            
            
            
            66,668
            
            
            
            185,372Accrued
      expenses
            
            
            32,792
            
            
            
            34,249
            
            
            
            67,041Accrued
      interest
            
            
            726
            
            
            
            -
            
            
            
            726Net
      Cash used in Operating Activities
            
            
            (455,607
            )
            
            
            (75,047
            )
            
            
            (555,141
            )Cash
      Flows from Investing ActivitiesPurchase
      of equipment
            
            
            -
            
            
            
            -
            
            
            
            (23,564
            )Net
      Cash used in Investing Activities
            
            
            -
            
            
            
            -
            
            
            
            (23,564
            )Cash
      Flows from Financing ActivitiesProceeds
      from the sale of common stock
            
            
            400,000
            
            
            
            1,000
            
            
            
            523,998Proceeds
      from issuance of note payable
            
            
            50,000
            
            
            
            -
            
            
            
            50,000Borrowing
      from affiliate
            
            
            63,000
            
            
            
            -
            
            
            
            63,000Repayment
      of loan from officer
            
            
            -
            
            
            
            (1,750
            )
            
            
            -Net
      Cash provided by (used by) Financing Activities
            
            
            513,000
            
            
            
            (750
            )
            
            
            636,998Net
      Increase (Decrease) in Cash
            
            $
            57,393
            
            
            $
            (75,797
            )
            
            $
            58,293Cash
      at beginning of period
            
            $
            900
            
            
            $
            76,697
            
            
            $
            -Cash
      at end of period
            
            $
            58,293
            
            
            $
            900
            
            
            $
            58,293Cash
      paid forInterest
            
            $
            -
            
            
            $
            -
            
            
            $
            -Income
      Taxes
            
            $
            -
            
            
            $
            -
            
            
            $
            -Supplemental
      Disclosue of Non-Cash Disposal of Assets related to Discontinued
      Operations:Accounts
      receivable
            
            $
            -
            
            
            $
            15,118
            
            
            $
            15,118Prepaids
            
            
            -
            
            
            
            1,500
            
            
            
            1,500Property
      and Equipment
            
            
            -
            
            
            
            22,085
            
            
            
            22,085Common
      stock
            
            
            -
            
            
            
            (4,000
            )
            
            
            (4,000
            )Additional
      Paid in Capital
            
            
            -
            
            
            
            (34,703
            )
            
            
            (34,703
            )$
            -
            
            
            $
            -
            
            
            $
            -





See
accompanying notes to financial statements




F-4





MANAGEMENT
ENERGY INC.


(An
Exploration Stage Company)


Statement
of Stockholders' Equity (Deficit)




Common
      Stock
              
              
              Additional
                Paid-in
              
              
              Accumulated
      Deficit During ExplorationShares
              
              
              Amount
              
              
              Capital
              
              
              Stage
              
              
              TotalBalances
      at May 19, 2005
              
              
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Common
      stock issued for cash onJanuary
      10, 2008 at $0.002 per share
              
              
              9,000,000
              
              
              
              9,000
              
              
              
              9,000
              
              
              
              -
              
              
              
              18,000Common
      stock issued for cash onFebruary
      20, 2008 at $0.02 per share
              
              
              5,300,000
              
              
              
              5,300
              
              
              
              99,698
              
              
              
              -
              
              
              
              104,998Net
      loss for the year ended April 30, 2008
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (23,287
              )
              
              
              (23,287
              )Balances
      at April 30, 2008
              
              
              14,300,000
              
              
              $
              14,300
              
              
              $
              108,698
              
              
              $
              (23,287
              )
              
              $
              99,711Shares
      retired in the disposal of assets
              
              
              (4,000,000
              )
              
              
              (4,000
              )
              
              
              (34,703
              )
              
              
              -
              
              
              $
              (38,703
              )Common
      stock issued for cash onFebruary
      27, 2009 at $0.0002 per share
              
              
              5,000,000
              
              
              
              5,000
              
              
              
              (4,000
              )
              
              
              -
              
              
              $
              1,000Common
      Stock issued for professional serviceson
      April 15, 2009
              
              
              1,625,000
              
              
              
              1,625
              
              
              
              1,161,875
              
              
              
              -
              
              
              $
              1,163,500Common
      Stock issued in acquisition of mininglease
      on April 15, 2009
              
              
              60,000,000
              
              
              
              60,000
              
              
              
              2,541
              
              
              
              -
              
              
              $
              62,541Common
      Stock issued for professional serviceson
      April 16, 2009
              
              
              2,010,500
              
              
              
              2,010
              
              
              
              1,465,655
              
              
              
              -
              
              
              $
              1,467,665Shares
      retired due to termination ofconsulting
      agreement
              
              
              (7,010,500
              )
              
              
              (7,010
              )
              
              
              (1,460,655
              )
              
              
              -
              
              
              $
              (1,467,665
              )Net
      loss from discontinued operations for the yearended
      April 30, 2009
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (59,986
              )
              
              $
              (59,986
              )Net
      loss from continuing operations for the yearended
      April 30, 2009
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,369,375
              )
              
              $
              (1,369,375
              )Balances
      at April 30, 2009
              
              
              71,925,000
              
              
              $
              71,925
              
              
              $
              1,239,411
              
              
              $
              (1,452,648
              )
              
              $
              (141,312
              )Common
      stock issued for cash onJuly
      24, 2009 at $1.00 per share
              
              
              400,000
              
              
              
              400
              
              
              
              399,600
              
              
              
              -
              
              
              $
              400,000Shares
      retired due to settlement agreement
              
              
              (32,500,000
              )
              
              
              (32,500
              )
              
              
              32,500
              
              
              
              -
              
              
              $
              -Warrants
      issued for consulting services
              
              
              -
              
              
              
              -
              
              
              
              2,640,365
              
              
              
              -
              
              
              $
              2,640,365Net
      loss from continuing operations for the yearended
      April 30, 2010
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (3,327,161
              )
              
              $
              (3,327,161
              )Balances
      at April 30, 2010
              
              
              39,825,000
              
              
              $
              39,825
              
              
              $
              4,311,876
              
              
              $
              (4,779,809
              )
              
              $
              (428,108
              )





See
accompanying notes to financial statements




F-5





Management
Energy, Inc.


(An
Exploration Stage Company)


Notes
to Financial Statements




NOTE
1 – BACKGROUND, ORGANIZATION, AND BASIS OF PRESENTATION




Organization





The
Company was initially incorporated in the State of Nevada on May 19, 2005, as
Inkie Entertainment Group, Inc., for the purpose of engaging in the production,
distribution and marketing of filmed entertainment products.  On
January 15, 2008, the Company changed its name to Quantum Information, Inc. In
January 2009, the Company announced that it would transition out of the filmed
entertainment products business and into the coal business.





As part
of that transition, on January 14, 2009, the Company sold all of its assets to
Joel Klandrud, the Company’s former officer and director, in exchange for the
surrender to the Company by Mr. Klandrud of 4,000,000 shares of the Company’s
common stock, and the assumption by Mr. Klandrud of all of the Company’s
liabilities.  The Company also changed its name to MGMT Energy, Inc.
on February 5, 2009 and to Management Energy, Inc. on May 28, 2009 to better
reflect the Company’s business focus.  See Note 7 – Discontinued
Operations for further discussion.





On April
13, 2009, the Company entered into a Contribution and Assignment Agreement (the
“Contribution Agreement”) with Carbon County Holdings, LLC, a Delaware limited
liability company (“CCH”), John P. Baugues, Jr., the Company’s former Chief
Executive Officer and director, The John Paul Baugues, Sr. Family Trust, the
beneficiaries of which are John P. Baugues, Jr. and his children  (the
“Baugues Trust”), and Tydus Richards, the former Chairman of the Company’s board
of directors.  Pursuant to the Contribution Agreement, CCH agreed to
contribute and assign to the Company all of CCH’s rights and obligations under
that certain Mining Lease, dated on or around January 16, 2009 (the “Bolzer
Lease”), between CCH, on the one hand, and Edith L. Bolzer and Richard L.
Bolzer, as lessors, on the other hand, for the purpose of mining and removing
coal from approximately 6,254 acres located in the vicinity of Bridger in Carbon
County, Montana (the “Bolzer Property”).  In exchange for the
contribution and assignment of the Bolzer Lease, the Company agreed to issue to
each of Mr. Baugues, the Baugues Trust, and Mr. Richards, the sole members of
CCH, the number of shares of the Company’s Common Stock set forth opposite such
member’s name below.





Name of Member
            
            Number of SharesJohn
      P. Baugues, Jr.
            
            
            15,925,000The
      John Paul Baugues, Sr. Family Trust
            
            
            16,575,000Tydus
      Richards
            
            
            27,500,000Total
            
            
            60,000,000





Under the
terms of the Bolzer Lease, the Company is required to pay to the lessors (1) a
minimum annual payment in an amount equal to $62,541 in each year during the
initial ten (10) year term of the Bolzer Lease, subject to increases in future
years (the “Minimum Annual Payment”) and (2) a royalty equal to 12.5% of the
gross proceeds on all coal mined from the Bolzer Property (the
“Royalty”).  In addition, unless coal is mined from minerals owned by
the lessors, for each ton of coal mined from, stored on or transported across
the Bridger Property, the Company is required to pay a damage fee of $0.15 per
ton for such coal (the “Damage Fee”).  In the event that the Royalty
and/or the Damage Fee in any year during the term exceeds twice the Minimum
Annual Payment, the Company is not required to make the Minimum Annual Payment
for that year.





The
Bolzer Lease is effective for a 10 year term.  The Company has the
right to renew the Bolzer Lease for two additional 10 year terms upon at least
90 days written notice to the lessors prior to the expiration of the
then-current term.  After 3 years from the effective date, the Company
has the right to terminate the Bolzer Lease, on any annual anniversary, upon 90
days prior written notice to the lessors and upon payment of all damage fees,
rentals and royalties accrued through the date of termination.




F-6





On
October 8, 2009, the Company entered into an agreement with Mr. Baugues, for the
development of coal mines in an area of Carbon County, Montana known as the
Bridger-Fromberg-Bear Mountain project.  The project consists of 6,254
acres we have under lease and over 50,000 additional acres we are seeking to
lease.  Under the terms of the agreement:





·
            Mr.
      Baugues (or his new entity) will pay to the Company an overriding royalty
      equal to 2% of the gross selling price of all coal produced from any
      property that is part of the Bridger-Fromberg-Bear Mountain
      project.




·
            Mr.
      Baugues (or his new entity) will pay to the Company  an
      additional overriding royalty equal to 15% of the net profits from the
      mining and sale of all coal produced from any property that is part of the
      Bridger-Fromberg-Bear Mountain
project.




·
            The
      Company will have a right of first refusal to acquire up to a 50% interest
      in any property that becomes part of the Bridger-Fromberg-Bear Mountain
      project.




·
            Mr.
      Baugues surrendered to the Company 15,925,000 shares of the Company’s
      common stock for cancellation and caused to be surrendered 16,575,000
      shares of the Company’s common stock held by the John T. Baugues Sr. Trust
      for cancellation.




·
            Subject
      to Mr. Baugues (or a new entity to be formed by him) achieving certain
      development milestones, the Company: (i) will sublease to a new entity to
      be formed by Mr. Baugues, the Company’s mining lease for the 6,250 acre
      Bolzer Property and (ii) will not interfere with the development of the
      Bridger-Fromberg-Bear Mountain project by Mr. Baugues (or his new
      entity).




·
            To
      retain the Bolzer Property sublease and other rights under the settlement
      agreement, Mr. Baugues (or his new entity) will be required to meet
      certain milestones (over a 15 month period) relating to obtaining
      financing, completing a drilling program, acquiring sufficient mining
      rights to constitute a viable development plan for the project, and
      submitting permitting applications.




·
            Subject
      to performance of the terms of the settlement agreement, the Company and
      Mr. Baugues will release each other from any claims that they may have
      against the other as of the date of the settlement
    agreement.





Status of Bridger-Fromberg-Bear
Mountain Project.





We began
development of the Bridger-Fromberg-Bear Mountain project in April
2009.  To date, we have not made any significant progress in
developing the project, primarily due to the failure of our development partner
to meet milestones for the project and our own insufficient funding
levels.





Our
development partner has failed to meet its development milestones for the
Bridger-Fromberg-Bear Mountain project, including milestones related to
obtaining financing and acquiring additional mining rights for the
project.   We have not been in contact with our development
partner regarding the project since April 2010, and are unaware of the status of
its development efforts, if any. We have not exercised our right to terminate
the development agreement.   However, we are evaluating
alternative arrangements to pursue the project.





Due to
our insufficient funding levels, we failed to make the January 2010 scheduled
minimum annual payment of $62,541 under our lease for the Bolzer Property, which
is part of the Bridger-Fromberg-Bear Mountain project and the only mining rights
we currently hold.  Although we have not received a notice of default
or terminations from the lessor of the property, there is no assurance we will
not receive one in the future.





In
addition, we have identified some potential imperfections in our legal rights to
the lease for the Bolzer Property.   We have not had sufficient
financial resources to resolve these potential
imperfections.   Therefore, there is no assurance we have valid
legal rights to the lease for the Bolzer Property.





As a
result of these and other factors, there is no assurance that we will be able to
successfully develop the project or identify, acquire or develop other coal
properties that would allow us to profitably extract and distribute coal and to
emerge from the exploration stage.





On May
28, 2009, the Company completed a five-for-one stock split of the Company’s
common stock and an increase in the number of our authorized shares of common
stock to 300,000,000.  The share and per-share information disclosed
within this Form 10-K reflect the completion of this stock split.




F-7





Business
Overview





The
Company’s business plan is to engage in the exploration, extraction and
distribution of coal.  The Company is currently considered to be an
exploration stage company because it is engaged in the search for coal deposits
and is not engaged in the exploitation of a coal deposit.  The Company
has not engaged in the preparation of an established commercially mineable coal
deposit for extraction or in the exploitation of a coal deposit. The Company
will be in the exploration stage until it discovers commercially viable coal
deposits on the Bolzer Property or any other property that the Company acquires,
if ever. In an exploration stage company, management devotes most of its
activities to acquiring and exploring mineral properties.





The
Company currently leases the Bolzer Property for the purpose of mining,
removing, marketing and selling coal.  Further exploration will be
required before a final evaluation as to the economic feasibility of coal
extraction on the Bolzer Property can be determined.  The Company has
done preliminary estimates of the surface seams on the Bolzer Property, and
intends to perform phase 1 drilling commencing in calendar year 2011 in order to
determine whether it contains a commercially viable coal deposit.





Going
Concern





The
Company's financial statements are prepared using the accrual method of
accounting in accordance with accounting principles generally accepted in the
United States of America, and have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities in the
normal course of business.  The Company incurred a net loss of
$3,327,161 during the year ended April 30, 2010, and an accumulated deficit of
$4,779,809 since inception. The Company changed its principal business to the
coal business in early 2009, but has not yet established an ongoing source of
revenues sufficient to cover its operating costs and to allow it to continue as
a going concern.  The ability of the Company to continue as a going
concern is dependent on the Company obtaining adequate capital to fund operating
losses until it becomes profitable.  If the Company is unable to
obtain adequate capital, it could be forced to cease development of
operations.





In order
to continue as a going concern, develop a reliable source of revenues, and
achieve a profitable level of operations the Company will need, among other
things, additional capital resources.  Management’s plans to continue
as a going concern include raising additional capital through sales of common
stock and or a debt financing.  However, management cannot provide any
assurances that the Company will be successful in accomplishing any of its
plans.





The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations.  The accompanying financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Use of
Estimates





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





Cash and
equivalents




Cash and
equivalents include investments with initial maturities of three months or
less.  The Company maintains its cash balances at credit-worthy
financial institutions that are insured by the Federal Deposit Insurance
Corporation ("FDIC") up to $250,000. There were no cash equivalents at April 30,
2010 or 2009.




Concentration of Credit
Risk




Financial
instruments and related items, which potentially subject the Company to
concentrations of credit risk are cash and cash equivalents.  The
Company places its cash and temporary cash investments with credit quality
institutions.  At times, such investments may be in excess of FDIC
insurance limits.  As of April 30, 2010, there were no deposits in
excess of federally insured limits.




F-8




Fair Value of Financial
Instruments





In the
first quarter of fiscal year 2009, the Company adopted Accounting Standards
Codification subtopic 820-10, Fair Value Measurements and Disclosures ("ASC
820-10"). ASC 820-10 defines fair value, establishes a framework for measuring
fair value and enhances fair value measurement disclosure. ASC 820-10 delays,
until the first quarter of fiscal year 2009, the effective date for
ASC 820-10 for all non-financial assets and non-financial liabilities,
except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). The adoption of ASC 820-10
did not have a material impact on the Company's financial position or
operations, but does require that the Company disclose assets and liabilities
that are recognized and measured at fair value on a non-recurring basis,
presented in a three-tier fair value hierarchy, as follows:





·
              Level 1.
      Observable inputs such as quoted prices in active
  markets;
 
 ·
              Level 2.
      Inputs, other than the quoted prices in active markets, that are
      observable either directly or indirectly;
and
 
 ·
              Level 3. Unobservable inputs
      in which there is little or no market data, which require the reporting
      entity to develop its own
assumptions.
 
 The
following presents the gross value of assets that were measured and recognized
at fair value.
  ·
              Level 1:
      none
 
 ·
              Level 2:
      none
 
 ·
              Level 3:
      none




Effective
October 1, 2008, the Company adopted Accounting Standards Codification
subtopic 820-10, Fair Value Measurements and Disclosures ("ASC 820-10") and
Accounting Standards Codification subtopic 825-10, Financial Instruments
("ASC 825-10"), which permits entities to choose to measure many financial
instruments and certain other items at fair value. Neither of these statements
had an impact on the Company's financial position, results of operations or cash
flows. The carrying value of cash and cash equivalents, accounts payable and
accrued expenses, as reflected in the balance sheets, approximate fair value
because of the short-term maturity of these instruments.




Income
Taxes





The
Company accounts for income taxes under the standards issued by the
FASB.  Under those standards, deferred tax assets and liabilities are
recognized for future tax benefits or consequences attributable to temporary
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases.  Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.  A valuation allowance is provided for
significant deferred tax assets when it is more likely than not that such assets
will not be realized through future operations.





Equipment





Equipment
is recorded at cost and depreciated using straight line methods over the
estimated useful lives of the related assets.  The Company reviews the
carrying value of long-term assets to be held and used when events and
circumstances warrant such a review.  If the carrying value of a
long-lived asset is considered impaired, a loss is recognized based on the
amount by which the carrying value exceeds the fair market
value.  Fair market value is determined primarily using the
anticipated cash flows discounted at a rate commensurate with the risk
involved.  The cost of normal maintenance and repairs is charged to
operations as incurred.  Major overhaul that extends the useful life
of existing assets is capitalized.  When equipment is retired or
disposed, the costs and related accumulated depreciation are eliminated and the
resulting profit or loss is recognized in income.




F-9





Issuance of Shares for
Non-Cash Consideration





The
Company accounts for the issuance of equity instruments to acquire goods and/or
services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more reliably
determinable.





The
Company's accounting policy for equity instruments issued to consultants and
vendors in exchange for goods and services follows the provisions of the
standards issued by the FASB.  The measurement date for the fair value
of the equity instruments issued is determined as the earlier of (i) the date at
which a commitment for performance by the consultant or vendor is reached or
(ii) the date at which the consultant or vendor's performance is
complete.  In the case of equity instruments issued to consultants,
the fair value of the equity instrument is recognized over the term of the
consulting agreement.





Stock-Based
Compensation




In
December of 2004, the FASB issued a standard which applies to transactions in
which an entity exchanges its equity instruments for goods or services and also
applies to liabilities an entity may incur for goods or services that are based
on the fair value of those equity instruments.  For any unvested
portion of previously issued and outstanding awards, compensation expense is
required to be recorded based on the previously disclosed methodology and
amounts.  Prior periods presented are not required to be
restated.  The Company adopted this standard as of January 1, 2006 and
applied the standard using the modified prospective method.  The
Company has not issued any stock options, however, the there were warrants to
purchase 8,000,000 common shares outstanding as of April 30,
2010.  The warrants have an exercise price of $0.28 and 6,000,000 of
which were exercisable as of April 30, 2010.





Exploration-Stage
Company





The
Company is considered an exploration-stage company, having limited operating
revenues during the period presented, as defined by the FASB
standard.  This standard requires companies to report their
operations, shareholders’ deficit and cash flows since inception through the
date that revenues are generated from management’s intended operations, among
other things.  Management has defined inception as May 19,
2005.  Since inception, and more particularly since commencing
business in January 2008, the Company has incurred a net loss of $4,779,809.
Much of this related to consultants and professional fees, as a means to
generate working capital.  The Company’s working capital has been
generated through the sale of common stock.  Management has provided
financial data since May 19, 2005, “Inception”, in the financial
statements.




F-10





Net Loss Per
Share





The FASB
standard requires presentation of basic earnings or loss per share and diluted
earnings or loss per share.  Basic income (loss) per share (“Basic
EPS”) is computed by dividing net income (loss) available to common stockholders
by the weighted average number of common shares outstanding during the
period.  Diluted earnings per share (“Diluted EPS”) is similarly
calculated using the treasury stock method except that the denominator is
increased to reflect the potential dilution that would occur if dilutive
securities at the end of the applicable period were exercised. There were no
potential dilutive securities as of April 30, 2009.  There were
warrants to purchase 8,000,000 common shares outstanding as of April 30,
2010.





For
      the
              Year
      Ended
              April
      30,
            
            
            For
      the period
              of
      Inception,
              from
      May 19,
              2005
      through
              April
      30,2010
            
            
            2009
            
            
            2010Net
      Income (Loss)
            
            $
            (3,327,161
            )
            
            $
            (1,429,361
            )
            
            $
            (4,779,809
            )Basic
      and Dilutive Net Loss From ContinuingOperations
      Per Share
            
            $
            (0.062
            )
            
            $
            (0.083
            )Basic
      and Dilutive Net Income From DiscontinuedOperations
      Per Share
            
            $
            -
            
            
            $
            (0.004
            )Weighted
      average number of sharesoutstanding,
      basic and diluted
            
            
            54,018,407
            
            
            
            16,597,321




The
weighted average number of shares included in the calculation above are
post-split.




Recent
Accounting Pronouncements




In May
2009, the FASB issued SFAS No. 165, "Subsequent Events," which is included
in ASC Topic 855, Subsequent Events. ASC Topic 855 established principles
and requirements for evaluating and reporting subsequent events and
distinguishes which subsequent events should be recognized in the financial
statements versus which subsequent events should be disclosed in the financial
statements. ASC Topic 855 also requires disclosure of the date through which
subsequent events are evaluated by management. ASC Topic 855 was effective for
interim periods ending after June 15, 2009 and applies prospectively.
Because ASC Topic 855 impacts the disclosure requirements, and not the
accounting treatment for subsequent events, the adoption of ASC Topic 855 did
not impact the Company's results of operations or financial condition. See
Note 10 for disclosures regarding the Company's subsequent
events.




Effective
July 1, 2009, the Company adopted the FASB Accounting Standards
Codification ("ASC") 105-10, Generally Accepted Accounting Principles—Overall
("ASC 105-10"). ASC 105-10 establishes the FASB Accounting Standards
Codification (the "Codification") as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with U.S. GAAP. Rules
and interpretive releases of the SEC under authority of federal securities laws
are also sources of authoritative U.S. GAAP for SEC registrants. All
guidance contained in the Codification carries an equal level of authority. The
Codification superseded all existing non-SEC accounting and reporting standards.
All other non-grandfathered, non-SEC accounting literature not included in the
Codification is non-authoritative. The FASB will not issue new standards in the
form of Statements, FASB Staff Positions or Emerging Issues Task Force
Abstracts. Instead, it will issue Accounting Standards Updates ("ASUs"). The
FASB will not consider ASUs as authoritative in their own right. ASUs will serve
only to update the Codification, provide background information about the
guidance and provide the bases for conclusions on the change(s) in the
Codification. References made to FASB guidance throughout these consolidated
financials have been updated for the Codification.




In August
2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value,
which provides additional guidance on how companies should measure liabilities
at fair value under ASC 820. The ASU clarifies that the quoted price for an
identical liability should be used. However, if such information is not
available, an entity may use the quoted price of an identical liability when
traded as an asset, quoted prices for similar liabilities or similar liabilities
traded as assets, or another valuation technique (such as the market or income
approach). The ASU also indicates that the fair value of a liability is not
adjusted to reflect the impact of contractual restrictions that prevent its
transfer and indicates circumstances in which quoted prices for an identical
liability or quoted price for an identical liability traded as an asset may be
considered level 1 fair value measurements. This ASU is effective
October 1, 2009. The adoption of this ASU did not impact the Company's
results of operations or financial condition.




F-11




In
October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue
Arrangements—a consensus of the FASB Emerging Issues Task Force, which provides
amendments to the criteria for separating consideration in multiple-deliverable
arrangements. As a result of these amendments, multiple-deliverable revenue
arrangements will be separated in more circumstances than under existing
U.S. GAAP. The ASU does this by establishing a selling price hierarchy for
determining the selling price of a deliverable. The selling price used for each
deliverable will be based on vendor-specific objective evidence if available,
third-party evidence if vendor-specific objective evidence is not available, or
estimated selling price if neither vendor-specific objective evidence nor
third-party evidence is available. A vendor will be required to determine its
best estimate of selling price in a manner that is consistent with that used to
determine the price to sell the deliverable on a standalone basis. This ASU also
eliminates the residual method of allocation and will require that arrangement
consideration be allocated at the inception of the arrangement to all
deliverables using the relative selling price method, which allocates any
discount in the overall arrangement proportionally to each deliverable based on
its relative selling price. Expanded disclosures of qualitative and quantitative
information regarding application of the multiple-deliverable revenue
arrangement guidance are also required under the ASU. The ASU does not apply to
arrangements for which industry specific allocation and measurement guidance
exists, such as long-term construction contracts and software transactions. ASU
No. 2009-13 is effective beginning January 1, 2011. The Company is
currently evaluating the impact of this standard on its results of operations
and financial condition.




NOTE
3 – RELATED PARTY TRANSACTIONS





On
January 10, 2008 the Board authorized the issuance of common stock to two
Directors:





Joel
      Klandrud
            4,500,000
      shares at a price of $0.002 per sharePresident
      and Chief Operating OfficerDirectorSandra
      Dosdall
            4,500,000
      shares at a price of $0.002 per shareDirector





On
January 14, 2009, the Company sold all of its assets to Joel Klandrud, the
Company’s former officer and director, pursuant to an Asset Sale
Agreement.  In exchange, Mr. Klandrud (1) surrendered to the Company
for cancellation 4,000,000 shares of the Company’s Common Stock, par value
$0.001 per share, and (2) assumed all of the Company’s
liabilities.    See Note 7 – Discontinued Operations for
further discussion.





On
January 14, 2009, the Company entered into a Support Services Agreement with
Cardiff Partners, LLC (“Cardiff”).  Matt Szot, the Company’s Chief
Financial Officer, Treasurer, and Secretary, is the Chief Financial Officer of
Cardiff.  David Walters, the Company’s Chief Executive Officer and
director, owns a 50% interest and is a managing member of
Cardiff.   Under the Support Services Agreement, Cardiff will
provide the Company with financial management services, facilities and
administrative services, and other services as agreed by the
parties.  Under the Support Services Agreement, the Company will pay
to Cardiff monthly cash fees of $16,667 for the services.  On January
8, 2010, the Support Services Agreement was renewed for an additional twelve
months and the monthly cash fee increased to $17,500.  The current
term of the Support Services Agreement expires January 8, 2011.  On
April 2, 2009, the Company entered into Amendment #1 to the Cardiff
Agreement.  Pursuant to the amendment, the Company agreed to issue to
Messrs. Walters and Szot and another principal of Cardiff an aggregate of
1,625,000 shares of the Company’s common stock as a retainer, in exchange for
Cardiff agreement to continue to provide services under the Support Services
Agreement.  The Company incurred $203,336 and $66,668 under the terms
of the agreement for the year ended April 30, 2010 and 2009, respectively, which
is included in consulting expenses in the accompanying statements of
operations.  As of April 30, 2010, $185,372 is outstanding under the
agreement.




F-12




On
January 14, 2009, the Company entered into a Placement Agency and Advisory
Services Agreement with Monarch Bay Associates (“Monarch
Bay”).  Monarch Bay is a FINRA member firm.  Under the
agreement, Monarch Bay will act as the Company’s placement agent on an exclusive
basis with respect to private placements of the Company’s capital
stock.  David Walters, the Company’s Chief Executive Officer and
director, owns a 50% interest and is a managing member of Monarch
Bay.  Pursuant to the engagement letter, the Company is required to
(1) pay to Monarch Bay 3% of the gross proceeds of any financing from
non-Monarch Bay sources and issue to Monarch Bay warrants to purchase that
number of shares of our common stock equal to 3% of the number of shares of
common stock (including convertible securities) issued in such financing, and
(2) pay to Monarch Bay 5% of the gross proceeds of any financing from Monarch
Bay sources and issue to Monarch Bay warrants to purchase that number of shares
of our  common stock equal to 5% of the number of shares of common
stock (including convertible securities) issued in such
financing.  The Company did not incur any expenses under the terms of
the agreement during the years ended April 30, 2010 and 2009.





On
January 9, 2009, the Company entered into an Acquisition Agreement (the
“Acquisition Agreement”) to acquire 100% of the ownership interests in Patoka
River Coal Company, LLC, a Delaware limited liability company (“PRCC”), Patoka
River Holdings, LLC, a Delaware limited liability company (“PRH”), and Carbon
County Holdings, LLC (PRCC, PRH and CCH are collectively referred to herein as
the “LLCs”) in exchange for the Company’s agreement to issue a total of
40,000,000 shares of the Company’s common stock to the owners of the LLCs, John
P. Baugues, Jr. (the Company’s former Chief Executive Officer and director), the
Baugues Trust, and TRX Capital, LLC, a California limited liability company
controlled by Tydus Richards, the former Chairman of the Company’s board of
directors.  At that time, PRCC held an exclusive option to acquire two
parcels of land in fee simple, which option expired on January 26, 2009, and CCH
held certain leasehold mining rights.   On March 31, 2009, the Company
entered into a Letter Agreement Regarding Termination of Acquisition Agreement
(the “Termination Letter”), pursuant to which the parties agreed to terminate
the Acquisition Agreement.





On April
13, 2009, the Company entered into the Contribution Agreement with Carbon County
Holdings, LLC, John P. Baugues, Jr., the Company’s former Chief Executive
Officer and director, the Baugues Trust, and Tydus Richards, the former Chairman
of the Company’s board of directors.  Pursuant to the Contribution
Agreement, CCH agreed to contribute and assign to the Company all of CCH’s
rights and obligations under the Bolzer Lease in exchange for the issuance to
the members of CCH of the number of shares of the Company’s Common Stock set
forth opposite such member’s name below.





Name of Member
            
            Number of SharesJohn
      P. Baugues, Jr.
            
            
            15,925,000The
      John Paul Baugues, Sr. Family Trust
            
            
            16,575,000Tydus
      Richards
            
            
            27,500,000Total
            
            
            60,000,000




On April
13, 2009, the Company entered into a Strategic Consulting Services Agreement
with Charles S. Leykum (the Company’s former Board Advisor).  Pursuant
to the Consulting Agreement, the Company agreed to issue to Mr. Leykum (or Mr.
Leykum’s designees) an aggregate of 2,010,500 shares of the Company’s common
stock as a payment, in exchange for Charles S. Leykum’s agreement to provide
services under the Consulting Agreement.  The Consulting Agreement had
a term of 24 months.  The Company recorded the stock payment of
$1,467,665 as a prepaid expense on April 13, 2009 which reflected the numbers
shares issued multiplied by the closing trading price on the date of
issuance.





On July
13, 2009, the Company agreed to the termination of its Strategic Consulting
Services Agreement with Charles S. Leykum.  In connection with the
termination of the agreement, Mr. Leykum and certain affiliated entities
surrendered 7,010,500 shares of the Company’s common stock for cancellation and
the parties agreed to a mutual release of all claims.  The Company
treated the termination and cancellation of shares as a Type 1 subsequent event
because the termination provided information that led management to conclude
that the prepaid asset no longer had future economic
value.  Accordingly, the termination of the Consulting Agreement and
the related cancellation of shares were recorded as of April 30,
2009.  See Note 6 for further discussion.




F-13





Effective
July 10, 2009, John P. Baugues, Jr. resigned from the Board of Directors of the
Company and as the Company’s Chief Executive Officer.





On
October 8, 2009, the Company entered into an agreement with Mr Baugues, for the
development of coal mines in an area of Carbon County, Montana known as the
Bridger-Fromberg-Bear Mountain project.   Under the terms of the
agreement:





·
            Mr.
      Baugues (or his new entity) will pay to the Company an overriding royalty
      equal to 2% of the gross selling price of all coal produced from any
      property that is part of the Bridger-Fromberg-Bear Mountain
      project.




·
            Mr.
      Baugues (or his new entity) will pay to the Company  an
      additional overriding royalty equal to 15% of the net profits from the
      mining and sale of all coal produced from any property that is part of the
      Bridger-Fromberg-Bear Mountain
project.




·
            The
      Company will have a right of first refusal to acquire up to a 50% interest
      in any property that becomes part of the Bridger-Fromberg-Bear Mountain
      project.




·
            Mr.
      Baugues surrendered to the Company 15,925,000 shares of the Company’s
      common stock for cancellation and caused to be surrendered 16,575,000
      shares of the Company’s common stock held by the John T. Baugues Sr. Trust
      for cancellation.




·
            Subject
      to Mr. Baugues (or a new entity to be formed by him) achieving certain
      development milestones, the Company: (i) will sublease to a new entity to
      be formed by Mr. Baugues, the Company’s mining lease for the 6,250 acre
      Bolzer property and (ii) will not interfere with the development of the
      Bridger-Fromberg-Bear Mountain project by Mr. Baugues (or his new
      entity).




·
            To
      retain the Bolzer property sublease and other rights under the settlement
      agreement, Mr. Baugues (or his new entity) will be required to meet
      certain milestones (over a 15 month period) relating to obtaining
      financing, completing a drilling program, acquiring sufficient mining
      rights to constitute a viable development plan for the project, and
      submitting permitting applications.




·
            Subject
      to performance of the terms of the settlement agreement, the Company and
      Mr. Baugues will release each other from any claims that they may have
      against the other as of the date of the settlement
    agreement.




On July
23, 2009, the Company entered into a stock purchase agreement with an accredited
investor controlled by Tydus Richards, the former Chairman of our board of
directors, for the sale of 400,000 shares of its common stock at a purchase
price of $1.00 per share.  The sale closed on July 24,
2009.





On July
16, 2009, the Company entered into a Consulting Services Agreement with Lotus
Asset Management (“Lotus”) controller by Tydus Richards, the former Chairman of
our board of directors.  Pursuant to the agreement, in consideration
for providing certain services to us, Lotus was entitled to a monthly fee in the
amount of $20,000.  The agreement expired November 16,
2010.  The Company incurred $80,000 under the terms of the agreement
for the year ended April 30, 2010, which is included in consulting expenses in
the accompanying statements of operations.  As of April 30, 2010, no
amounts were outstanding under the agreement.





During
the period from May 1, 2009 through April 30, 2010, Tydus Richards, the former
Chairman of our board of directors and shareholder, made payments totaling
$71,700 on behalf of the Company.  The Company reimbursed Mr. Richards
$8,700 on September 3, 2009 and the remaining balance of $63,000 remains
outstanding as of April 30, 2010. On May 12, 2010, the Company reimbursed an
additional $39,000 of the balance.





NOTE
4 - COMMITMENTS AND CONTINGENCIES





Consulting
Agreements





The
Company has entered into consulting agreements for services to be provided to
the Company in the ordinary course of business.  These agreements call
for expense reimbursement and various payments upon performance of
services.  See Note 3 for further discussion.





Legal





There
were no legal proceedings against the Company.




F-14





Operating Leases
Commitments





Under the
terms of the Bolzer Lease, the Company is required to pay to the lessors (1) a
minimum annual payment in an amount equal to $62,541 in each year during the
initial ten (10) year term of the Bolzer Lease, subject to increases in future
years and (2) a royalty equal to 12.5% of the gross proceeds on all coal mined
from the Bridger Property.  In addition, unless coal is mined from
minerals owned by the lessors, for each ton of coal mined from, stored on or
transported across the Bolzer Property, the Company is required to pay a damage
fee of $0.15 per ton for such coal.  In the event that the Royalty
and/or the Damage Fee in any year during the term exceeds twice the Minimum
Annual Payment, the Company is not required to make the Minimum Annual Payment
for that year.





The
Bolzer Lease is effective for a 10 year term.  The Company has the
right to renew the Bolzer Lease for two additional 10 year terms upon at least
90 days written notice to the lessors prior to the expiration of the
then-current term.  After 3 years from the effective date, the Company
has the right to terminate the Bolzer Lease, on any annual anniversary, upon 90
days prior written notice to the lessors and upon payment of all damage fees,
rentals and royalties accrued through the date of termination.





The
future minimum lease payments associated with the Bolzer Lease for the fiscal
years ending April 30 are as follows:





April
      30, 2010
            
            
            62,541April
      30, 2011
            
            
            62,541April
      30, 2012
            
            
            62,541April
      30, 2013
            
            
            62,541April
      30, 2014
            
            
            62,541Thereafter
            
            
            312,705625,410





We failed
to make the January 2010 scheduled minimum annual payment of $62,541 under our
lease for Bolzer Property.  Although, to date, we have not received a
notice of default from the lessor of the property, there is no assurance we will
not receive one in the future.





NOTE
5 – ACCRUED EXPENSES





Accrued
expenses consist of the following:




April
      30,
            
            
            April
      30,2010
            
            
            2009Accrued
      Audit Fees
            
            
            4,500
            
            
            
            3,000Accrued
      Lease Expense
            
            
            62,541
            
            
            
            -Accrued
      Legal Fees
            
            
            -
            
            
            
            10,000Accrued
      Travel, Meals & Entertainment
            
            
            -
            
            
            
            21,24967,041
            
            
            
            34,249




NOTE
6 – CAPITAL STOCK TRANSACTIONS





The
Company is authorized to issue up to 300,000,000 shares of its common stock, par
value $0.001 per share.  At April 30, 2009, there were 71,925,000
shares issued and outstanding.  At April 30, 2010, there were
39,825,000 shares issued and outstanding.





On May
28, 2009, the Company completed a five-for-one stock split of the Company’s
common stock and an increase in the number of our authorized shares of common
stock from 75,000,000 to 300,000,000.




F-15





On
January 10, 2008, 9,000,000 common shares were issued for cash at $0.002 per
share, realizing $18,000.





On
February 20, 2008, 5,300,000 common shares were issued for cash at $0.02 per
share, realizing $104,998.





On
January 14, 2009, the Company sold all of its assets to Joel Klandrud, the
Company’s former officer and director, pursuant to an Asset Sale
Agreement.  In exchange, Mr. Klandrud (1) surrendered to the Company
for cancellation 4,000,000 shares of the Company’s Common Stock, par value
$0.001 per share, and (2) assumed all of the Company’s
liabilities.    See Note 7 – Discontinued Operations for
further discussion.





On
January 27, 2009, the Company entered into a stock purchase agreement (the
“Leykum SPA”) with Charles S. Leykum, pursuant to which the Company agreed to
sell to Mr. Leykum 1,250,000 shares of the Company’s Common Stock, par value
$0.001, for an aggregate price of $250.  The issuance and sale of the
shares of Common Stock to Mr. Leykum was subject to customary closing conditions
as set forth in the Leykum SPA.  This issuance was subsequent to the
January 14, 2009 change in control and is considered to be founder’s
shares.  These shares were issued on February 27, 2009.  See
Note 3.





On
January 27, 2009, the Company entered into a stock purchase agreement (the
“Master Fund SPA”) with CSL Energy Master Fund, L.P., a Cayman Islands limited
partnership (“Master Fund”), pursuant to which the Company agreed to sell to
Master Fund 525,000 shares of the Company’s common stock, par value $0.001, for
an aggregate price of $105.  The issuance and sale of the shares of
Common Stock to Master Fund was subject to customary closing conditions as set
forth in the Master Fund SPA.  This issuance was subsequent to the
January 14, 2009 change in control and is considered to be founder’s
shares.  These shares were issued on February 27, 2009.  See
Note 3.





On
January 27, 2009, the Company entered into a stock purchase agreement (the
“Energy Fund SPA”) with CSL Energy Fund, L.P., a Delaware limited partnership
(“Energy Fund”), pursuant to which the Company agreed to sell to Energy Fund
3,225,000 shares of the Company’s Common Stock, par value $0.001, for an
aggregate price of $645.  The issuance and sale of the shares of
Common Stock to Energy Fund was subject to customary closing conditions as set
forth in the Energy Fund SPA.  This issuance was subsequent to the
January 14, 2009 change in control and is considered to be founder’s
shares.  These shares were issued on February 27, 2009.  See
Note 3.





On April
2, 2009, the Company entered into that certain Amendment #1 Support Services
Agreement, with Strands Management Company, LLC, David Walters, Matt Szot, and
another principal (the “Amendment”), which Amendment amends that certain Support
Services Agreement, dated as of January 8, 2009, between the Company and
Strands.  Pursuant to the Amendment, the Company agreed to issue to
Messrs. Walters, Szot and another principal of Strands an aggregate of 1,625,000
shares of the Company’s common stock as a retainer, in exchange for Strands’
agreement to continue to provide services under the Support Services Agreement.
The shares were issued on April 15, 2009, accordingly, the Company recorded a
stock based compensation charge of $1,163,500 which is included in the statement
of operations for the year ended April 30, 2009.  See Note
3.





As
discussed in Note 1 and Note 3, on April 13, 2009, the Company entered into the
Contribution Agreement with Carbon County Holdings, LLC, John P. Baugues, Jr.,
the Company’s former Chief Executive Officer and director, the Baugues Trust,
and Tydus Richards, the former Chairman of the Company’s board of
directors.  Pursuant to the Contribution Agreement, CCH agreed to
contribute and assign to the Company all of CCH’s rights and obligations under
the Bolzer Lease in exchange for the issuance to the members of CCH of the
number of shares of the Company’s Common Stock set forth opposite such member’s
name below.





Name of Member
            
            Number of SharesJohn
      P. Baugues, Jr.
            
            
            15,925,000The
      John Paul Baugues, Sr. Family Trust
            
            
            16,575,000Tydus
      Richards
            
            
            27,500,000Total
            
            
            60,000,000





The
Company has treated the 60,000,000 shares issued pursuant to the Contribution
Agreement as founder’s shares.  The Company determined that the first
year lease payment of $62,541 was the best indicator of the cost of the
acquisition, accordingly, the issuance of the 60,000,000 founder shares were
recorded as a mining lease expense of $62,541 during the year ended April 30,
2009.




F-16





On April
13, 2009, the Company entered into a Strategic Consulting Services Agreement
with Charles S. Leykum.  Pursuant to the agreement, the Company agreed
to issue to Mr. Leykum (or Mr. Leykum’s designess) an aggregate of 2,010,500
shares of the Company’s common stock as a payment, in exchange for Charles S.
Leykum’s agreement to provide services under the agreement.  The
agreement had a term of 24 months.  The Company recorded the stock
payment of $1,467,665 as a prepaid expense on April 13, 2009 which reflected the
number of shares issued multiplied by the closing trading price on the date of
issuance.





On July
13, 2009, the Company agreed to the termination of its Strategic Consulting
Services Agreement with Charles S. Leykum.  In connection with the
termination of the agreement, Mr. Leykum and certain affiliated entities
surrendered 7,010,500 shares of the Company’s common stock for cancellation and
the parties agreed to a mutual release of all claims.  The Company
treated  the termination and cancellation of shares as a Type 1
subsequent event because the termination provided information that led
management to conclude that the prepaid asset no longer had future economic
value.  Accordingly, the termination of the agreement and the related
cancellation of shares were recorded as of April 30, 2009.





On July
23, 2009, the Company entered into a stock purchase agreement with an accredited
investor controlled by Tydus Richards, the former Chairman of our board of
directors, for the sale of 400,000 shares of its common stock at a purchase
price of $1.00 per share.  The sale closed on July 24,
2009.





On
October 8, 2009, the Company entered into an agreement with Mr.
Baugues.   Under the terms of the agreement, Mr. Baugues
surrendered to the Company 15,925,000 shares of the Company’s common stock for
cancellation and caused to be surrendered 16,575,000 shares of the Company’s
common stock held by the John T. Baugues Sr. Trust for
cancellation.





NOTE
7 – DISCONTINUED OPERATIONS





On
January 14, 2009, the Company sold all of its assets to Joel Klandrud, the
Company’s former officer and Director.  In exchange, Mr. Klandrud (1)
surrendered to the Company for cancellation 4,000,000 shares (800,000 pre-split)
of the Company’s Common Stock, par value $0.001 per share, and (2) assumed all
of the Company’s liabilities.





The
following schedule shows the assets and liabilities as of January 14,
2009:




Accounts
      receivable
            
            $
            15,118Prepaids
            
            
            1,500Property
      and Equipment
            
            
            22,085




The
Company’s loss from discontinued operations, for the years ended April 30, 2010
and 2009, totaled $0 and $59,986, respectively.  The Company’s loss
from discontinued operations since inception through April 30, 2010, totaled
$83,273.  Prior year financial statements have been restated to
present the discontinued operations.





NOTE
8 – NOTE PAYABLE





On March
8, 2010, the Company closed a note purchase agreement with an accredited
investor pursuant to which the Company sold a $50,000 convertible note in a
private placement transaction.  In the transaction, the Company
received proceeds of $35,000 and the investor also paid $15,000 of consulting
expense on behalf of the Company. The convertible note is due and payable on
December 31, 2010 with an interest rate of 10% per annum. The note is
convertible at the option of the holder into our common stock at a fixed
conversion price of $0.37, subject to adjustment for stock splits and
combinations.





NOTE
9 -  INCOME TAXES





The
Company accounts for income taxes in accordance with standards of disclosure
propounded by the FASB, and any related interpretations of those standards
sanctioned by the FASB.  Accordingly, deferred tax assets and
liabilities are determined based on differences between the financial statement
and tax bases of assets and liabilities, as well as a consideration of net
operating loss and credit carry forwards, using enacted tax rates in effect for
the period in which the differences are expected to impact taxable
income.  A valuation allowance is established, when necessary, to
reduce deferred tax assets to the amount that is more likely than not to be
realized.




F-17




No
provision for income taxes has been recorded due to the net operating loss
carryforwards totaling approximately $913,403 as of April 30, 2010 that will be
offset against future taxable income.  The available net operating
loss carry forwards of approximately $913,403 expire in various years through
2029.  No tax benefit has been reported in the financial statements
because the Company believes there is a 50% or greater chance the carry forwards
will expire unused.  There were no uncertain tax positions taken by
the Company.




Deferred
tax asset and the valuation account is as follows:





April
      30,2010
              
              
              2009Deferred
      tax asset:NOL
      Carryforward
              
              $
              310,557
              
              
              $
              77,046Valuation
      allowances
              
              
              (310,557
              )
              
              
              (77,046
              )Total
              
              $
              -
              
              
              $
              -The
      components of income tax expense are as follows:Current
      Federal Tax
              
              $
              -
              
              
              $
              -Current
      State Tax
              
              
              -
              
              
              
              -Change
      in NOL benefit
              
              
              233,511
              
              
              
              69,128Change
      in valuation allowance
              
              
              (233,511
              )
              
              
              (69,128
              )$
              -
              
              
              $
              -




NOTE
10 - SUBSEQUENT EVENTS





On May 12, 2010, the Company
reimbursed $39,000 of the balance due to Tydus Richards.  See Note 3
for further discussion.




F-18