UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB

      |X|   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934 For the quarterly period ended September 30,
            2006

      |_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934 For the transition period from _______ to
            _______

                        COMMISSION FILE NUMBER 000-28015

                             ALTERNATE ENERGY CORP.
        (Exact name of small business issuer as specified in its charter)


           Nevada                                            86-0884116
   (State or other jurisdiction of                       (I.R.S. Employer
    incorporation or organization)                       Identification No.)

                        3325 North Service Rd, Suite 105
                               Burlington, Ontario
                                 Canada L7N 3G2
                    (Address of principal executive offices)

                                  905.332.3110
                           (Issuer's telephone number)


      Check 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
|_|


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

      State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 128,238,905 shares as of
November 3, 2006.

      Transitional Small Business Disclosure Format (Check one): Yes |_| No |X|


<PAGE>

                             ALTERNATE ENERGY CORP.

                          (A Development Stage Company)

                         QUARTERLY REPORT ON FORM 10-QSB
                 FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2006

                                      INDEX

                                     PART I

                              FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S>                                                                              <C>
Item 1 - Consolidated Balance Sheets as of September 30, 2006(Unaudited)              F1

         Consolidated Statements of Operations for the Three and Nine Months
         Ended September 30, 2006 and 2005 (Unaudited)                                F2

         Consolidated Statements of Cash Flows for the Nine Months
         Ended September 30, 2006 and 2005 (Unaudited)                                F3

         Notes to the Unaudited Consolidated Financial Statements                F4 - F6

Item 2 - Management's Discussion and Analysis or Plan of Operation                   1-9

Item 3 - Controls and Procedures                                                       9

                           PART II - OTHER INFORMATION

          Item 1 - Legal Proceedings                                                   9

          Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds      9-10

          Item 3 - Defaults Upon Senior Securities                                    10

          Item 4 - Submission of Matters to a Vote of Security Holders                10

          Item 5 - Other Information                                                  10

          Item 6 - Exhibits and Reports on Form 8-K                                10-11
</TABLE>

--------------------------------------------------------------------------------
                                     INDEX

<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

ALTERNATE ENERGY CORP.
(A Development Stage Company)
Consolidated Balance Sheets
--------------------------------------------------------------------------------
                                                   September 30,
                                                       2006        December 31,
                                                    unaudited         2005
--------------------------------------------------------------------------------
ASSETS
   Current
      Cash                                         $    161,971    $    135,881
      Lease receivable                                   40,153              --

      Prepaid expenses and sundry assets                 32,478         182,104

      Marketable securities                             176,892          11,250
                                                   ------------    ------------
                                                        411,494         329,235
                                                   ------------    ------------
   Other

      Property and equipment, net                       227,410         301,279

      Patents and technology                                 --         218,000
                                                   ------------    ------------

                                                        227,410         519,279
                                                   ------------    ------------

                                                   ------------    ------------
                                                   $    638,904    $    848,514
                                                   ------------    ------------

LIABILITIES
   Current
      Accounts payable and accrued liabilities     $    311,596    $    134,361

      Warrant Liability                                      --         167,427

      Convertible debt                                       --         444,329

      Due to director                                   404,645         466,455
                                                   ------------    ------------

                                                        716,241       1,212,572
                                                   ------------    ------------

SHAREHOLDERS EQUITY

   Capital stock                                        130,447         110,254
   Additional paid in capital                        28,529,910      25,982,150
   Prepaid expenses paid with common stock              (60,253)             --

   Accumulated other comprehensive income              (227,441)         10,654
   (Deficit) Accumulated during development stage   (28,450,000)    (26,467,116)
                                                   ------------    ------------
                                                        (77,337)       (364,058)
                                                   ------------    ------------

                                                   ------------    ------------
                                                   $    638,904    $    848,514
                                                   ------------    ------------

{See accompanying notes to the financial statements.}



                                      F-1
<PAGE>


ALTERNATE ENERGY CORP.
(A Development Stage Company)
Consolidated Statements of Operations
Unaudited

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                        Three          Three           Nine            Nine
                                                        Months         Months          Months         Months
                                                        Ending         Ending         Ending          Ending
                                                       September      September      September       September        Inception To
                                                        30 2006        30 2005        30 2006         30 2005             Date
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>           <C>              <C>              <C>
REVENUE                                               $        --    $         --  $          --    $          --    $          --
                                                      -----------    ------------  -------------    -------------    -------------

EXPENSES
   Administrative                                          49,251          60,452        421,308          315,563        1,412,157
   Consulting fees                                        175,441         244,011      1,462,664        1,122,315       13,233,849
   Professional fees                                       43,467          48,176        252,009          226,125        1,237,406
   Research and development                                59,720              --        146,613               --          285,552
   Financing expense                                           --              --         50,386               --          559,714
   Impairment of intangible assets                        218,000              --        218,000               --        2,165,458
   Management fee                                              --              --             --               --          240,000
   Recovery of loan                                            --              --             --               --         (202,000)
   Depreciation                                            16,828          23,896         51,147           62,009          172,968
                                                      -----------    ------------  -------------    -------------    -------------
  NET (LOSS) FROM OPERATIONS                             (562,707)       (376,535)    (2,602,127)      (1,726,012)     (19,105,104)
                                                      -----------    ------------  -------------    -------------    -------------

OTHER INCOME (EXPENSES)
  Other income                                              1,836              --        464,857               --          464,857
  Gain on adjustment on derivative /
  warrant liability to fair
  value of underlying securities                               --              --        167,427               --        1,075,339

                                                      -----------    ------------  -------------    -------------    -------------
NET (LOSS) FOR THE PERIOD                             $  (560,871)   $   (376,535) $  (1,969,843)   $  (1,726,012)   $ (17,564,908)
                                                      -----------    ------------  -------------    -------------    -------------

NET (LOSS) PER SHARE                                  $     (0.00)   $      (0.00) $       (0.02)   $       (0.02)
                                                      -----------    ------------  -------------    -------------

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING                             127,458,163     106,974,398    119,918,135     106,102,170
                                                      -----------    ------------  -------------    -------------
</TABLE>

{See accompanying notes to the financial statements.}


                                      F-2
<PAGE>

ALTERNATE ENERGY CORP.
(A Development Stage Company)
Consolidated Statements of Cash Flows
Unaudited

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                                                                                         Inception
Nine months Ending September 30                                              2006           2005          To Date
--------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net (loss)                                                           $ (1,969,843)   $ (1,726,012)   $(17,564,908)
   Adjustments to reconcile net loss from operations to
     net cash used in operating activities:
        Stock based expenses                                               1,577,400         553,787      12,384,180
        Impairment of intangible assets                                      218,000              --       2,165,458
        Depreciation and amortization                                         51,147          62,009         156,140
        Accretion of principal related to convertible debt                    50,386              --         494,715
        (Gain) loss on derivatives related to warrants                      (167,427)             --      (1,075,339)
        (Gain) Loss on sale of marketable securities                          (6,099)        (33,546)        137,031
        (Gain) Loss on settlement                                           (376,909)             --        (376,909)
   Changes in operating assets and liabilities
        Increase (decrease) in deferred revenue                              (40,153)             --        (121,239)
          Decrease (increase) in prepaid expenses                            149,625          13,878         (92,732)
          Decrease (increase) in deferred consulting expense                      --         208,184              --
         Increase (decrease) accounts payable and accrued liabilities        214,820          80,774         224,262

                                                                        ------------    ------------    ------------
   Net cash (used in ) operating activities                                 (299,053)       (840,926)     (3,669,341)
                                                                        ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                                         (5,271)             --        (428,372)
   Purchase of patents and technology                                             --         (60,266)       (154,373)
   Proceeds from (investment in) marketable securities                        17,349          39,050        (147,463)

                                                                        ------------    ------------    ------------
   Net cash provided by (used in) investing activities                        12,078         (21,216)       (730,208)
                                                                        ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Issue of common shares for cash                                           174,875              --       3,456,875
   Principal received from notes payable                                          --         500,000         500,000
   Advances from directors and officers                                      138,190          47,592         604,645

                                                                        ------------    ------------    ------------
   Net cash provided by (used in) financing activities                       313,065         547,592       4,561,520
                                                                        ------------    ------------    ------------

  NET INCREASE (DECREASE) IN CASH DURING PERIOD                               26,090        (314,550)        161,971

  CASH, BEGINNING OF THE PERIOD                                              135,881         418,253              --
                                                                        ------------    ------------    ------------

  CASH, END OF THE PERIOD                                               $    161,971    $    103,703    $    161,971
                                                                        ------------    ------------    ------------

  Non-cash activities
       Common shares issued for patents and technology (net)                      --              --       1,970,000
       Issuance of common stock for note conversion                     $    494,715              --         464,715
       Issuance of common stock for satisfaction of accrued
       liabilities due to related parties                               $    200,000              --         200,000

       Issuance of common stock for prepaid expenses                    $     60,253                          60,253
---------------------------------------------------------------------   ------------    ------------    ------------
</TABLE>

{See accompanying notes to the financial statements.}


                                      F-3
<PAGE>


ALTERNATE ENERGY CORP.
(A Development Stage Company)
NOTES TO THE (UNAUDITED) CONDENSED FINANCIAL STATEMENTS
THREE MONTHS ENDED September 30, 2006

1. GENERAL

      The unaudited condensed financial statements have been prepared on the
same basis as the audited financial statements and, in the opinion of
management, include all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation for each of the periods presented and to make
the financial statements not misleading. The results of operations for interim
statements are not necessarily indicative of results to be achieved for full
fiscal years.

      As contemplated by the Securities and Exchange Commission (the "SEC")
under Rule 10-01 of Regulation S-X, the accompanying financial statements and
related footnotes have been condensed and do not contain certain information
that is included in the Company's annual financial statements and footnotes
thereto. For further information, refer to the financial statements and related
footnotes for the year ended December 31, 2005 included in the Company's Annual
Report on Form 10-KSB.

2. BACKGROUND INFORMATION

      Alternate Energy Corporation (the "Company"), formerly known as COI
Solutions, Inc., was incorporated in the State of Nevada on August 1, 1997. The
Company commenced active business operations on June 1, 2003 and is considered
to be a development stage company under SFAS 7. Since 2003, the Company has had
the objective of producing a clean, on demand hydrogen technology that would
have global, multiple market applications on both a small and large scale. The
Company's hydrogen production system leverages a non-toxic proprietary chemical
reaction that yields high quality hydrogen along with a number of globally
valuable chemical compounds. The Company's process is entirely chemical, not
requiring electrolysis or any external source of electrical power.

      In February 2004, the Company incorporated a wholly-owned subsidiary,
2040412 Ontario Inc. in the Province of Ontario, Canada. The subsidiary holds
title to certain property and equipment reflected in the Company's accounts.

3. LIQUIDITY

      During the nine months ended September 30, 2006 and 2005, the Company
incurred losses of $1,969,843 and $1,726,012, respectively and cash used in
operations was $299,053 and $840,926, respectively. The Company financed its
operations using sales of its common stock, the exercise of share purchase
warrants, vendor credit, debt financing and convertible notes.

      Management believes that the net proceeds from private placements,
including an interim equity financing on April 28, 2006, will be sufficient to
meet the Company's short term cash requirements into the first quarter of 2007.
Accordingly, the Company will continue to seek additional financing through
issuance of debt and/or equity securities.

4. MARKETABLE SECURITIES

      As of September 30, 2006, the Company holds 800,000 restricted shares of
common stock of Astris Energi Inc. and the rights to purchase 1,500,000 warrants
at $0.19 for a period of three years with an unrealized loss of $200,017. On the
Over-The Counter Bulletin Board, the reported sale price of Astris Energi's
common stock was $0.071 as of November 9, 2006.


                                      F-4
<PAGE>

5. PROPERTY AND EQUIPMENT

                                       Accumulated     September 30,
                            Cost       Amortization        2006
                         ---------     ------------    ------------

   Automobile            $  90,465      $  37,694       $  52,771
   Computer hardware        34,883         15,871          19,012
   Equipment               242,043         93,913         148,130
   Telephone                 2,402          1,382           1,020
   Office equipment          4,385          1,030           3,355
   VOIP system               1,814            181           1,633
   Software                  2,234            745           1,489
                          --------       --------        --------

                          $378,326       $150,816        $227,410
                          ========       ========        ========

6. RELATED PARTY TRANSACTIONS

      As of September 30, 2006, the Company was indebted $404,645 (as of
December 31, 2005 - $466,455) to a director, Blaine Froats, for consulting fees
totaling $133,585 and $271,060 pursuant to a non-interest bearing demand note
executed on January 1, 2006. The loan total does not represent a one-time lump
sum but rather a series of transactions between 2003 and the present.

      The Company is indebted to Marilyn Froats, spouse of Blaine Froats,
$91,896 (as of December 31, 2005 - $31,000) in consulting fees for the services
rendered during the period between July 1, 2005 to September 30, 2006.

      The Company is indebted to Don Froats, family member of Blaine Froats,
$46,491 (As of December 31, 2006 - $40,817) for liabilities paid on behalf of
the Company. The amount due is non-interest bearing, due on demand and has no
fixed repayment terms.

      During the three month period ended September 30, 2006, an amount totaling
$36,655 was paid as consulting expenses to family members who are not directors
(December 31, 2005 - $172,515).

7. CAPITAL STOCK

      The Company is authorized under its charter to issue 250,000,000 shares of
common stock, par value 0.001 per share.


         The Company issued 953,500 shares of common stock during the three
months ending September 30, 2006. The issued 953,500 shares of common stock were
to consultants for services performed for the Company totaling $86,681or $0.09
per share (weighted average price).

         At September 30, 2006 and December 31, 2005, there were 127,960,905,
and 110, 254,070 shares of common stock issued and outstanding, respectively.

8. DEFERRED CONSULTING COSTS

      The Company issued shares of its common stock to service providers and
consultants over the terms of their contracts, which range from one month to one
year. These shares have been issued at the fair market value price at date of
contract signing with the expense to be amortized over the term of the contract.

      All deferred assets are recorded at fair market value at the time of
issuance and are systematically reduced based on the terms of each agreement.
Each party providing services had either positive working references or have had
previously provided services to the Company and had performed their duties as
per their contractual terms. The following is a chart of the current deferred
consulting costs as at the period ending September 30, 2006 with accompanying
notes:


                                      F-5
<PAGE>

NAME                          PERIOD OF DEFERRAL                   # OF SHARES
----                          ------------------                   -----------

Operations (1)                Up to October 3, 2006                25,000


Administration (2)            Up to November 30, 2006              239,750


Research & Development (3)    Up to November 30, 2006              70,000

---------------------------------------------------
(1)   Shares issued to consultants involving the management, marketing, product
      development and operations of the Company.
(2)   Includes 88,000 shares issued to consultants and employees for general
      office duties, and 151,750 shares for bookkeeping and general
      administrational duties.
(3)   Shares issued to consultants and employees and deferred for lab,
      engineering, research and technical support.

9. STOCK OPTIONS AND WARRANTS

      On May 22, 2003, the Company adopted a stock option plan that is accounted
for based on SFAS No. 123 and related interpretations. The plan allows the
Company to grant options to persons employed or associated with the Company,
including without limitation, any employee, director, general partner, officer,
attorney, accountant, consultant or advisor up to an aggregate of 5,000,000
common shares.

      The options have a term of expiration to be set by the Compensation
Committee of the Board of Directors but will not exceed ten (10) years after the
grant date and the options vest immediately. The exercise price for each option
is chosen at the discretion of the Compensation Committee. On February 24, the
Company increased the number of shares to be issued under the plan to
15,000,000.

      At September 30, 2006 and December 31, 2005, there were 7,780,000 and
8,680,000 options to purchase shares of common stock, respectively. There were
no exercised, expired or issued options during the three month period.

      The total amount of warrants outstanding at September 30, 2006 was
11,157,146. There were no expired or issued warrants during the three month
period.

10. NET INCOME (LOSS) PER COMMON SHARE

      The Company computes net income (loss) per common share in accordance with
SFAS No. 128, "Earnings per Share", SEC Staff Accounting Bulletin No. 98 ("SAB
98") and Emerging Issues Task Force No. 04-8 "The Effect of Contingently
Convertible Instruments on Diluted EPS". Under the provisions of SFAS 128 and
SAB 98, basic net income (loss) per common share ("Basic EPS") is computed
dividing net income (loss) available to common stockholders by the weighted
average number of common shares outstanding. Diluted net income (loss) per
common share ("Diluted EPS") is computed by dividing net income (loss) adjusted
for interest expense and amortization of debt issuance costs associated with the
Convertible Debentures, by the weighted average number of common shares and
dilutive potential common share equivalents then outstanding. Potential common
shares consist of shares issuable upon the exercise of stock options and
convertible securities such as Convertible Debentures. The calculation of
diluted net loss per share does not include potential shares of common stock
equivalents for the years ended December 31, 2005 and 2004 respectively, as
their impact on net loss per share would be antidilutive.


                                      F-6
<PAGE>

ITEM. 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

      The following Management's Discussion and Analysis and Plan of Operation
should be read in conjunction with the financial statements, and the notes
thereto included herein.

Forward-Looking Statements

      This Quarterly Report on Form 10-QSB contains forward-looking statements.
These statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or achievements to
differ, perhaps materially, from any future results, performance or achievements
expressed or implied by forward-looking statements. Forward-looking statements
include, but are not limited to, statements about:

      o     Our product development efforts;

      o     The commercialization of our products;

      o     Anticipated operating losses and capital expenditures;

      o     Our estimates regarding our needs for additional financing;

      o     Our estimates for future revenues and profitability; and

      o     Sources of revenues and anticipated revenues, including
            contributions from corporate collaborations, license agreements and
            other collaborative efforts for the development and
            commercialization of our product candidates, and the continued
            viability and duration of those agreements and efforts.

      In some cases, you can identify forward-looking statements by terms such
as "may," "will," "should," "could," "would," "expect," "plan," "anticipate,"
"believe," "estimate," "project," "predict," "intend," "potential" and similar
expressions intended to identify forward-looking statements. These statements
reflect our current views with respect to future events and are based on
assumptions and subject to risks and uncertainties. Given these uncertainties,
you should not place undue reliance on these forward-looking statements. Any
forward-looking statements, speak only as of the date on which they are made,
and we do not undertake any obligation to update any forward-looking statement
to reflect events or circumstances after the date of this Form 10-QSB, except as
required by law.

Background

      We are a development stage company. We have not earned revenues from our
technology through September 30, 2006. We are currently developing our core
technology which is focused on production of on-demand, pure, safe hydrogen.
Hydrogen has numerous applications, such as a fuel to power internal combustion
engines and fuel cells, and in bulk form, as a process ingredient in the food,
pharmaceutical, oil refining, glass production and several other major
manufacturing industries. Our hydrogen production process is designed to
overcome three major industry obstacles: affordability, storage and safety. Our
hydrogen production system leverages a chemical process that yields fuel-cell
quality hydrogen with no known harmful by-products. Our hydrogen-maker can be
scaled according to application and designed to directly supply almost any
application on an as-needed basis, eliminating the need to store hydrogen in a
compressed state.

      Over the past three years, we have worked closely with Experchem
Laboratories of Toronto Canada, a nationally recognized, independent chemical
laboratory, to further refine our hydrogen generation process. The revised
formulation has improved hydrogen production significantly, with the added
creation of at least two valuable by-products. Since these by-products have a
much higher value to weight ratio than the hydrogen itself, Management believes
subsidization of the hydrogen's selling price via the sale of this product will
allow for this system to be more price competitive with current gasoline, diesel
and hydrogen prices.


                                     - 1 -
<PAGE>

      The first by-product was analyzed and certified by SGS Laboratories
Canada, on September 7, 2005 as USP29-grade, the highest level of purity
required for any existing use as a food-grade ingredient. This opens up
immediate global market opportunities for bulk sales of these by-products to a
long list of potential buyers in multiple markets.

      We believe our Hydrogen Production Unit can be transported safely and
could be designed for commercial small and large scale use, residential, and
could even be installed in gas stations to satisfy a potential hydrogen-platform
automotive sector. We expect that the hydrogen gas can be produced and sold
on-site while the by-product can be stored in a liquid form in tanks for
collection, processing and distribution on a regular basis. This would also
apply to larger scale production facilities such as food processors, who could
benefit greatly by hydrogen being produced on-site as a key ingredient in their
process, as well providing a potential secondary source of electricity. However,
we do not currently have any units deployed in these ways. In many cases,
hydrogen is transported to these locations daily with trucking expenditures
being a significant percentage of the overall cost of hydrogen, in some cases
upwards of 40%. On-site production of hydrogen would eliminate the entire cost
for transport to their facilities. In addition, our process produces low grade
heat which could be captured and re-engineered for use as well.

      We believe our hydrogen production technology could have immediate
application in the areas of existing hydrogen industries such as hydrogenation
of food oils and petro-chemicals, as well as emergent power uses including:
back-up and, in some cases, primary power for commercial, industrial and
military purposes; stationary and portable fuel cell power applications, in fuel
cell-driven and internal combustion engine vehicles; and residential and
commercial applications for users wishing to gain independence from the existing
electrical grid. The chemical by-products produced by our hydrogen production
process, via any one of the aforementioned hydrogen applications, are
environmentally safe, meet applicable industry standards and possess wide,
established global markets in the food products and pharmaceutical industries.

Basis of Presentation

      These consolidated financial statements present the accounts of Alternate
Energy and its wholly-owned subsidiary, 2040412 Ontario, Inc. All significant
intercompany accounts and transactions have been eliminated.

CRITICAL ACCOUNTING POLICIES, ESTIMATES AND NEW ACCOUNTING PRONOUNCEMENTS

      Management's discussion and analysis of our financial condition and plan
of operations are based upon our financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States
of America. The preparation of these financial statements requires that we make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. At each balance sheet date, management evaluates its estimates. We
base our estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances. Actual results may
differ from these estimates under different assumptions or conditions. The
estimates and critical accounting policies that are most important in fully
understanding and evaluating our financial condition and results of operations
include those listed below:

Going Concern

      The financial statements included in this report have been prepared on a
going concern basis and do not include any adjustments to the measurement and
classification of the recorded asset amounts and classification of liabilities
that might be necessary should we be unable to continue as a going concern. We
have experienced losses in the period and there is negative working capital. Our
ability to realize our assets and discharge our liabilities in the normal course
of business is dependent upon continued support. We are currently attempting to
obtain additional financing from our existing shareholders and other strategic
investors to continue operations. However, there can be no assurance that we
will obtain sufficient additional funds from these sources.

      These conditions cause substantial doubt about our ability to continue as
a going concern. A failure to continue as a going concern would require that
stated amounts of assets and liabilities be reflected on a liquidation basis
that could differ from the going concern basis.

                                     - 2 -
<PAGE>

Accounting Principles

      Our accounting and reporting policies conform to generally accepted
accounting principles and industry practice in the United States. The financial
statements are prepared in United States dollars.

Fair Value of Financial Instruments

      Our estimate's of the fair value of cash, lease receivables, marketable
securities, accounts payable and accrued liabilities, warrant liability,
convertible note and due to directors and officers approximates the carrying
value.

Deferred Consulting Costs

      We have issued shares to service providers and consultants over the terms
of their contracts which range from three months to one year. We have issued
shares at the fair market value price at date of contract signing and we
amortize the expense monthly over the term of the contract.

Marketable Securities

      Marketable securities are classified as current, are available for sale
and are stated at fair market value. The net excess of fair market value over
cost is included in Accumulated Other Comprehensive Income (Loss) on the Balance
Sheet.

Patents and Technology

      In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets,"
which was adopted in its entirety on May 22, 2003, we evaluate the carrying
value of other intangible assets annually as of December 31 and between annual
evaluations if events occur or circumstances change that would more likely than
not reduce the fair value of the reporting unit below its carrying amount. When
evaluating whether or not the asset is impaired, we compare the fair value of
the reporting unit to which the asset is assigned to its carrying amount. If the
carrying amount of a reporting unit exceeds its fair value, then the amount of
the impairment loss must be measured. The impairment loss would be calculated by
comparing the implied fair value of the reporting unit to its carrying amount.
The initial evaluation of our patents and technology, completed as of October 1,
2003 in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets,"
resulted in no provision for impairment losses being recorded. Additionally, we
performed our periodic review of intangible assets for impairment as of December
31, 2005 and identified asset impairment as a result of the review of
approximately $1,906,000.

      During the fiscal quarter ending September 30, 2006 the review and
evaluation of our intangible assets has shown an impairment of $218,000. We do
not rely on this technology as we have developed our own proprietary processes
for producing hydrogen. The changes in the carrying amount of patents and
technology for the two years ended September 30, 2006 are as follows:

Balance, December 31, 2004                                         $ 2,124,373
                                                                   -----------

Patents and Technology adjustment for impairment during the 2005    (1,906,373)
                                                                   -----------
year

Balance, December 31, 2005                                             218,000
                                                                   -----------

Patents and Technology adjustment for impairment during the year      (218,000)
                                                                   -----------

Balance, September 30, 2006                                        $         0
                                                                   -----------

                                     - 3 -
<PAGE>

      We had purchased technology during the 2004 fiscal year and had filed for
provisional patents for the same. We have reviewed this intangible asset and
have evaluated impairment in view of the fact that the technology is no longer
functional to us. Through our own extensive research and development we have
developed our own proprietary process for producing hydrogen. This process has
improved hydrogen production significantly, with the added creation of valuable
by-products. Since these by-products have a much higher value to weight ratio
than the hydrogen itself, we believe subsidization of the hydrogen's selling
price via the sale of this product will allow for this process to be more price
competitive with current gasoline, diesel and hydrogen prices.

Income Taxes

      We account for our income taxes under the liability method specified by
SFAS No. 109, "Accounting for Income Taxes". Deferred tax assets and liabilities
are determined based on the difference between the financial statement and tax
bases of assets and liabilities as measured by the effective tax rates which
will be in effect when these differences reverse.

Property and Equipment

      Property and equipment are recorded at cost less accumulated depreciation.
Depreciation of property and equipment is provided annually on a declining basis
over the estimated useful life of the asset, except for current year additions
on which 1/2 of the rates are applicable. The declining balance rates are as
follows:

         Automobile                        30% declining balance
         Computer hardware                 30% declining balance
         Computer software                100% declining balance
         Equipment                         20% declining balance
         Telephone                         30% declining balance

Comprehensive Income

      We have adopted SFAS No. 130, "Reporting Comprehensive Income," which
establishes standards for reporting and display of comprehensive income, its
components and accumulated balances. Comprehensive income is defined to include
all changes in equity except those resulting from investments by owners or
distributions to owners. Among other disclosures, SFAS No. 130 requires that all
items that are required to be recognized under the current accounting standards
as a component of comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial statements.
Comprehensive income is displayed in the statement of shareholder's equity and
in the balance sheet as a component of shareholder's equity.

Use of Estimates

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

Stock Option Plans

      On May 22, 2003, we adopted a stock option plan that is accounted for
based on SFAS No. 123, "Accounting for Stock Based Applications" its related
interpretations and then subsequently adopted SFAS No. 123R, "Share Based
Payment". The plan allows for the grant of options to persons employed or
associated with us, including without limitation, any employee, director,
general partner, officer, attorney, accountant, consultant or advisor up to an
aggregate of 5,000,000 shares of common stock. The options have a term of
expiration to be set by the Compensation Committee of the Board of Directors but
will not exceed ten years after the grant date and the options vest immediately.
The exercise price for each option is chosen at the discretion of the
Compensation Committee. On February 24, 2005, we increased the number of shares
to be issued under the plan to 15,000,000.

                                     - 4 -
<PAGE>

RESULTS OF OPERATIONS

                  FOR FISCAL QUARTER ENDED SEPTEMBER 30, 2006,
             COMPARED TO THE FISCAL QUARTER ENDED SEPTEMBER 30, 2005
REVENUES

      For the fiscal quarter ended September 30, 2006 and for the fiscal quarter
ended September 30, 2005 we had no revenues. As a development stage company we
are working diligently to progress our technology into realized revenue. We are
continuing with our exploration of our dual phase business strategy that may
allow for the realization of revenue opportunities sooner as we continues
development and refinement of our hydrogen production systems as well as our
sales and marketing strategies.

OTHER INCOME

      For the fiscal quarter ended September 30, 2006, we received $1,836 in
payments satisfying a lease agreement.

EXPENSES

      We had total expenses of $562,707 and $376,535 in the fiscal quarter ended
September 30, 2006 and September 30, 2005, respectively. Our expenses for the
fiscal quarter ended September 30, 2006 and September 30, 2005 consisted of
$49,251 and $60,452 in administrative expenses, respectively, $175,441 and
$244,011 in consulting fees, $43,467 and $48,176 in professional fees,
respectively, $59,720 and $0 for research and development, respectively,
$218,000 and $0 for impairment of intangible assets, respectively, $16,828 and
$23,896 in depreciation, respectively. During the fiscal quarter ended September
30, 2006, our expenses were 49% higher than in fiscal quarter ended September
30, 2005, mostly due to an impairment of intangible assets and an increase in
research and development.

      There was a decrease of $11,201 in administrative expenses in the fiscal
quarter ending September 30, 2006 as compared to the fiscal quarter ending
September 30, 2005. This decrease is attributed to a reduction of expenditures
to overall administrative needs over a multitude of areas, including travel and
communications requirements.

      There was a decrease in consulting fee expenses of $68,570 in the fiscal
quarter ending September 30, 2006 as compared to the fiscal quarter ending
September 30, 2005. The decrease is mainly attributed to our utilization of core
consultants with the issuance of common stock. By issuing common stock to these
core consultants as payment, the use of cash is conserved, not only by an
incentive for lowering of payments in regards to total cash fees due, but also
for the reduction of the overall potential cash flow needed to satisfy these
cash payments.

      Professional fees decreased by $4,709 in the fiscal quarter ending
September 30, 2006 as compared to the fiscal quarter ending September 30, 2005.
This decrease is attributed to a decline of legal expenses in connection with
general operational activity.

      There was an increase in research and development expenses of $59,720 in
the fiscal quarter ending September 30, 2006 as compared to the fiscal quarter
ending September 30, 2005 as we continue on our course of action with testing
and development of our hydrogen production systems as well as our valuable
byproducts.


                                     - 5 -
<PAGE>

      There was a decrease of $7,068 in depreciation expenses relative to our
fixed assets as per our scheduled depreciation table.

      Over the next 12 months, we anticipate that our expenses will not increase
substantially over our expenses in the period ending September 30, 2006, unless
additional financing is obtained. In the event significant financing is
obtained, we would expect that expenses will only increase in proportion with
the amount of funds received as a result of any such financing. We will continue
as planned in the goals set for the continued development, sales and marketing
of our hydrogen production system and sale of by-products.

NET LOSS

      We had a net loss of $560,871 in the fiscal quarter ended September 30,
2006, compared with a net loss of $376,535 in the fiscal quarter ended September
30, 2005. The increase of $184,336 in the net loss in the 2006 fiscal quarter
compared to the 2005 fiscal quarter relates primarily to the impairment of
intangible and the increase of research and development in the fiscal quarter
ended September 30, 2006 period. We believe that, for the fiscal year ending
December 31, 2006, we will continue to incur losses at the rate experienced
during the third quarter. In 2007, we believe we would only be able to slow our
losses if we can create and sustain significant revenues from our hydrogen
production system and byproducts.

LIQUIDITY AND CAPITAL RESOURCES

      Our financial statements have been prepared on a going concern basis that
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. We incurred a net loss of $560,871
and $376,535 for the quarters ended September 30, 2006 and September 30, 2005,
respectively, and have an accumulated deficit of $28,450,000 at September 30,
2006. We had $161,971 in cash on hand as of September 30, 2006. Management may
obtain additional capital principally through the sale of equity securities. The
realization of assets and satisfaction of liabilities in the normal course of
business is dependent upon our ultimately obtaining profitable operations. We
may not be successful in these activities. Should any of these events not occur,
the accompanying financial statements will be materially affected.

      We believe that the net proceeds from the convertible notes issued in
March 2005 together with cash generated from private placements, including an
interim equity financing on April 28, 2006, will be sufficient to meet our short
term cash requirements into the fourth quarter of 2006. However, these funds
will not be sufficient to meet the cash requirements for the fiscal quarter
ending March 31, 2007. Due to no cash generated from operations, we currently do
not have internally generated cash sufficient to pay all of our incurred
expenses and other liabilities. As a result, we are dependent on investor
capital and loans to meet our expenses and obligations. Although investor funds
have allowed us to meet our obligations in the recent past, there can be no
assurances that our present methods of generating cash flow will be sufficient
to meet future obligations. Historically, we have, from time to time, been able
to raise additional capital, but there can be no assurances that we will be able
to raise additional capital in this manner.

      Net cash used in operating activities was $299,053 for the nine month
period ended September 30, 2006, compared with $840,926 for the nine month
period ended September 30, 2005. The net cash used for this period resulted
mainly from consulting fees to continue the ongoing movement towards our
development, marketing and operations. The consulting fees were paid in shares
of our common stock.

      Net cash obtained from financing activities was $313,065 for the nine
month period ended September 30, 2006, compared with $547,592 for the nine month
period ended September 30, 2005. In the nine month period ended September 30,
2006, we reduced a loan from one of our directors and also received $160,000 in
proceeds from the sale of shares of common stock described below. In the six
month period ending June 30, 2006, we received $500,000 from accredited
investors and advances from Blaine Froats, one of our directors.

      Net cash provided by investing activities for the nine month period ended
September 30, 2006 was $12,078. The investing activities during the nine month
period ended September 30, 2006 were from the sale and acquisition of marketable
securities.

      On April 28, 2006, we sold 1,600,000 shares of common stock at a price of
$0.10 per share, for a total of $160,000, to certain accredited investors.


                                     - 6 -
<PAGE>

      On April 1, 2006 we entered into a lease agreement with Astris Energi,
Inc. We will lease certain equipment to Astris over a 48 month period.

      In March 2005, we entered into a convertible debenture agreement which is
described below. The initial closing for $500,000 and its conversion features
triggered the anti-dilution clause included in our private placement agreements
with certain accredited investors. As such, an additional 2,811,429 shares of
common stock will need to be issued to these investors. At June 30, 2006,
324,857 shares of common stock were issued with 2,486,572 shares remaining to be
issued.

      On March 2, 2005, we entered into a private placement with certain
institutional accredited investors whereby these investors agreed to purchase up
to $1,500,000 in Convertible Notes, with Class A Warrants to purchase a number
of shares equal to the number of shares to which the Notes are convertible, at a
price of $0.40 per share expiring in 3 years, Class B Warrants to purchase up to
three times the amount of Notes purchased at the initial closing at an exercise
price equal to 70% of the volume weighted average price for the five days
preceding the closing ($0.2875 per share) exercisable until 90 days after a
resale registration statement is declared effective, and Class C Warrants to
purchase 400,000 shares at $0.40 per share and 600,000 shares at $1.00 per
share, exercisable for 3 years from the date of the closing. The Notes were
initially convertible into shares of our common stock at 70% of the average
closing bid price for the 5 days preceding the notice to convert with an initial
ceiling of $0.35 per share and floor of $0.15 per share. Under the terms of the
Notes, the floor is no longer effective. The Notes carry an interest rate of 6%,
payable quarterly in arrears in either cash or our stock, at our discretion.

      As of June 30, 2006, we have received $500,000 in proceeds from the
investors and have issued warrants to purchase a total of 8,054,674 shares of
common stock. Of this total there were 2,563,668 Class A warrants, 5,291,005
Class B warrants and 200,000 Class C warrants issued, all of which have been
converted to shares of common stock.

      In January 2004, we entered into a private placement with institutional
and accredited investors in which we sold a total of 5,500,000 shares of common
stock at a price of $0.50 per share and warrants to purchase a total of
2,750,000 shares of common stock at an exercise price of $0.85 per share. The
warrants have a three year term. We received gross proceeds of $2,750,000 from
this transaction.

      In November 2004, we cancelled 30,000,000 shares that were returned to us
by AEC 1, Inc as part of an agreement that we divest certain non-core
technology. Under the terms of the agreement, to return certain patents and
technology to their original owner, we transferred these patents and technology
to our parent company, AEC 1, Inc. In consideration for this transfer of the
patents and technology, we received 30,000,000 of our own shares from AEC 1,
Inc. which were subsequently cancelled.

      Though these technologies possessed market potential, our final analysis
concluded that their development required an extremely high outlay of capital
and would produce only marginal profitability. Management therefore decided to
divest and focus on its hydrogen production units. On November 1, 2004, we
agreed to release these non-core technologies in order to facilitate and
reacquire 30,000,000 shares of our common stock from AEC 1, Inc.

      We held 1,000,000 shares of Astris Energi Inc. as of December 31, 2004,
which comprised an ownership interest in Astris Energi of 2.65%. These shares
were purchased for the sum of $300,000 at the value of $0.30 per share and
adjusted as per market value for that period. We sold all 1,000,000 shares of
the Astris Energi securities between September 1, 2005 and March 31, 2006,
incurring a loss on the investment, which is reflected in the consolidated
statements of cash flows.

      During the fiscal quarter ended June 30, 2006, our contract with Astris
Energi was amended and we received 800,000 restricted shares of common stock of
Astris Energi Inc, $85,000 in cash and the rights to purchase 1,500,000 warrants
at $0.19 for a period of three years. On the Over-The Counter Bulletin Board,
the last reported sale price of Astris Energi's common stock was $0.071 as of
November 9, 2006.

      While we believe that we will have sufficient cash to meet our short-term
capital requirements, we may not be able to raise sufficient funds to meet
long-term capital needs as management estimates that we will require several
million dollars towards the end of fiscal quarter ended June 30, 2007 to
continue towards the goals set forth in our business strategy as stated in our
annual report on form 10-KSB for the fiscal year ended December 31, 2005. We may
also seek alternative sources of financing, including from more conventional
sources such as bank loans and credit lines, although no assurances in this
regard can be made. Further, the availability of any future financing may not be
on terms that are satisfactory to us.

                                     - 7 -
<PAGE>

      From time to time, we may evaluate potential acquisitions involving
complementary businesses, content, products or technologies. We have no present
agreements or understanding with respect to any such acquisition. Our future
capital requirements will depend on many factors, including growth of our
business, the success of our operations, economic conditions and other factors
including the results of future operations.

PLAN OF OPERATION

Over the next twelve months we will be working on the following initiatives:

Revenue Generation

In mid October 2006, there was an executive visit from BOM-Brasil Oleo de Mamona
Ltda. to formalize a strategic relationship between our two companies. BOM is a
major worldwide supplier of castor oil and other derivative products

      The business dialogue primarily focused on the assessment, operational
costing and implementation of our pilot plant proposal, mutual evaluation of
presented Brazilian project `turnkey' financings, and solidifying a workable
business relationship between BOM and our Company. Technical discussions were
lead by our Advisory Board Chairman, Dr. Raymond Legge of the University of
Waterloo, and updated BOM on recent engineering progress, pilot plant logistics,
and introduced a new biochemical initiative to effectively capitalize on BOM's
current waste streams to produce hydrogen, ultimately to provide BOM with a
holistic hydrogen solution.

      On April 6, 2006, we received a letter of interest from BOM Brazil, a
major producer of hydrogenated castor bean oils and its derivatives in the
Americas, to supply them with its high purity, affordable and on-site hydrogen.
We are now working towards the securing of a five-year contract to supply BOM
with on-site hydrogen at an extremely competitive price to what BOM is presently
paying. This will likely save BOM considerable expenses related to its cost of
hydrogen, since it is currently trucked-in on a daily basis. We intend to design
and build a hydrogen production facility on their site in Salvador, Brazil,
which will produce a pre-determined volume of hydrogen, as mutually agreed upon
by the contract. We expect to retain all rights to the by-product.

      Contingent on the securing of a signed contract, we expect to contract a
reputable engineering firm in the designing and project management relating to
the construction of this turn-key operation. We believe that the financing of
the facility and equipment, together with the related capital requirements can
be found on a project financing basis, and therefore does not expect to be
required to provide this funding. Assuming the completion of contractual
requirements and project financing by August 1, 2007, we estimate a turn-key
plant could be completed by June 1, 2008. We would expect revenues of hydrogen
and by-product to commence thereafter.

      Other revenue opportunities are being considered to supply hydrogen and
by-products to a variety of industries and applications in traditional and
emerging markets.

Research and Development

      We expect to continue process optimization of by-product number two
continues this year with our principal technical team and Experchem Labs, while
new research has been initiated by our University of Waterloo Co-op chemical
engineering students to minimize raw material costs for both by-product
processes, as well to identify the future development of innovative, hydrogen
yielding chemical reactions.

                                     - 8 -
<PAGE>

      Over the next 12 months, we intend to continue with our business strategy
which may allow for the realization of better revenue opportunities to arise in
the future. We also intend to continue in the development and refinement of our
hydrogen production systems.

Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure

None.

ITEM 3. CONTROLS AND PROCEDURES.

Our management evaluated, with the participation of our Chief Executive Officer
and our Principal Financial Officer, the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this Quarterly
Report on Form 10-QSB. Based on this evaluation, our Chief Executive Officer and
our Principal Financial Officer have concluded that our disclosure controls and
procedures are effective to ensure that information we are required to disclose
in reports that we file or submit under the Securities Exchange Act of 1934 (i)
is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms, and (ii) is
accumulated and communicated to our management, including our Chief Executive
Officer, as appropriate to allow timely decisions regarding required disclosure.
Our disclosure controls and procedures are designed to provide reasonable
assurance that such information is accumulated and communicated to our
management. Our disclosure controls and procedures include components of our
internal control over financial reporting. Management's assessment of the
effectiveness of our internal control over financial reporting is expressed at
the level of reasonable assurance that the control system, no matter how well
designed and operated, can provide only reasonable, but not absolute, assurance
that the control system's objectives will be met. There was no change in our
internal control over financial reporting that occurred during the last fiscal
quarter that materially affected, or is reasonably likely to affect, our
internal control over financial reporting.

                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

On October 22, 2004, we filed a lawsuit against Russell Rothman in the Ontario
Superior Court of Justice, Case No. 04-CV-277760CM2. We are seeking the
rescission of our agreements with Rothman and restitution of payments we made to
him, including shares of common stock we issued to him. We had entered into an
agreement with Rothman for the purchase of certain technology related to the
production of hydrogen gas, for which he represented he owned all right and
title. On December 29, 2004 Rothman filed a countersuit against us in the
Ontario Supreme Court of Justice for breach of contract in the amount of $2
billion and is asking for punitive damages in the amount of $10 million. On
January 9, 2006, Rothman substantially amended his claim, and is now seeking $12
million for breach of contract and punitive damages in the amount of $250,000.
We continue to believe that the counterclaim has no merit and while it is too
early to determine the outcome of such allegations, we intend to vigorously
defend against Rothman's counterclaim.

We may be involved from time to time in ordinary litigation, negotiation and
settlement matters that will not have a material effect on our operations or
finances. Other than the litigation described above, we are not aware of any
pending or threatened litigation against the Company or our officers and
directors in their capacity as such that could have a material impact on our
operations or finances.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

      During the three months ended September 30, 2006, the Company issued
953,500 shares of its common stock for consulting services performed for the
Company totaling $86,681or $0.09 per share (weighted average price). The
issuances are as follows:

On June 6, 2006, we issued 50,000 common shares as consideration for prepaid
consulting by Suzanne Brydon. The shares were valued at a total of $5,500.

                                     - 9 -
<PAGE>

On June 6, 2006, we issued 50,000 common shares as consideration for prepaid
consulting by Suzanne Brydon. The shares were valued at a total of $5,500.

On June 19, 2006, we issued 100,000 common shares as consideration for prepaid
consulting by Hayward consulting. The shares were valued at a total of $10,500.

On June 20, 2006, we issued 100,000 common shares as consideration for prepaid
consulting by Hewitt Consulting. The shares were valued at a total of $10,000.

On August 3, 2006, we issued 100,000 common shares as consideration for prepaid
consulting by Develpro Inc. The shares were valued at a total of $9,000.

On August 9, 2006, we issued 50,000 common shares as consideration for prepaid
consulting by Suzanne Brydon. The shares were valued at a total of $4,750.

On August 16, 2006, we issued 100,000 common shares as consideration for prepaid
consulting by Hayward Consulting. The shares were valued at a total of $8,500.

On August 21, 2006, we issued 100,000 common shares as consideration for prepaid
consulting by Jason Holt. The shares were valued at a total of $10,000.

On August 29, 2006, we issued 23,500 common shares as consideration for prepaid
consulting by Yong Han. The shares were valued at a total of $1,998.

On August 31, 2006, we issued 100,000 common shares as consideration for prepaid
consulting by DT Consulting. The shares were valued at a total of $8,010.

On August 31, 2006, we issued 100,000 common shares as consideration for prepaid
consulting by Hayward Consulting. The shares were valued at a total of $8,010.

On August 31, 2006, we issued 100,000 common shares as consideration for prepaid
consulting by L&J Consulting. The shares were valued at a total of $8,010.

On August 31, 2006, we issued 30,000 common shares as consideration for prepaid
consulting by Hayward Consulting. The shares were valued at a total of $2,403.

      The Company issued the securities in the referenced transactions in
reliance on the exemption contained in Section 4(2) of the Securities Act of
1933, as amended. There were no underwriters or placement agents employed in
connection with the transactions described in this Item 2.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

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

None.

ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

Exhibit No. Description of Exhibit
----------- ----------------------

3.1         Articles of Incorporation, as filed August 1, 1997 (included as
            Exhibit 3.1 to the Form 10-SB12G filed November 10, 1999, and
            incorporated herein by reference).

3.2         Bylaws (included as Exhibit 3.2 to the Form 10-SB12G filed November
            10, 1999, and incorporated herein by reference).

3.3         Articles of Amendment to the Articles of Incorporation, as filed
            August 23, 1997 (included as Exhibit 3.3 to the Form 10-SB12G filed
            November 10, 1999, and incorporated herein by reference).


                                     - 10 -
<PAGE>

Exhibit No. Description of Exhibit
----------- ----------------------

3.4         Articles of Amendment to the Articles of Incorporation, as filed
            November 20, 1998 (included as Exhibit 3.4 to the Form 10-SB12G
            filed November 10, 1999, and incorporated herein by reference).

3.5         Articles of Amendment to the Articles of Incorporation, as filed May
            16, 2003 (included as Exhibit 3.5 to the Form 10-SB12G filed
            November 10, 1999, and incorporated herein by reference).

4.1         2003 Stock Benefit Plan, dated July, 1, 2003 (included as Exhibit
            4.1 to the Form S-8 filed July 23, 2003, and incorporated herein by
            reference).

4.2         Form of Class A Warrant (included as Exhibit 4 to the Form 8-K filed
            March 15, 2005, and incorporated herein by reference).

4.3         Form of Class B Warrant (included as Exhibit 4 to the Form 8-K filed
            March 15, 2005, and incorporated herein by reference).

4.4         Form of Class C Warrant (included as Exhibit 4 to the Form 8-K filed
            March 15, 2005, and incorporated herein by reference).

4.5         Subscription Agreement between the Company and various subscribers
            (included as Exhibit 10.1 to the Form SB-2/A filed September 14,
            2005, and incorporated herein by reference).

4.6         Subscription Agreement between the Company and various subscribers
            (included as Exhibit 4 to the Form 8-K filed March 15, 2005, and
            incorporated herein by reference).

10.1        Asset Purchase Agreement between the Company and AEC1, Inc.,
            formerly known as Alternate Energy Corporation, dated February 20,
            2003 (included as Exhibit 10.1 to the Form 8-K filed June 5, 2003,
            and incorporated herein by reference).

10.2        Form of Securities Purchase Agreement between the Company and
            various purchasers (included as Exhibit 10.1 to the Form 10-KSB
            filed March 16, 2004, and incorporated herein by reference).

10.3        Form of Registration Rights Agreement between the Company and
            various purchasers (included as Exhibit 10.2 to the Form 10-KSB
            filed March 16, 2004, and incorporated herein by reference).

10.4        Form of Common Stock Purchase Warrant between the Company and
            various purchasers (included as Exhibit 10.3 to the Form 10-KSB
            filed March 16, 2004, and incorporated herein by reference).

10.5        Securities Purchase Agreement between the Company and Feldman
            Weinstein, LLP (included as Exhibit 10.4 to the Form 10-KSB filed
            March 16, 2004, and incorporated herein by reference).

10.6        Form of Common Stock Purchase Warrant between the Company and
            various purchasers (included as Exhibit 10.5 to the Form 10-KSB
            filed March 16, 2004, and incorporated herein by reference).

10.7        Addendum to Securities Purchase Agreement between the Company and
            various purchasers (included as Exhibit 10.6 to the Form 10-KSB
            filed March 16, 2004, and incorporated herein by reference).

10.8        Addendum to Registration Rights Agreement between the Company and
            various purchasers (included as Exhibit 10.7 to the Form 10-KSB
            filed March 16, 2004, and incorporated herein by reference).

10.9        Letter of Engagement for Marketing Communications and Manufacturing
            Consulting Management Services between the Company and Velocity
            Product Solutions Inc., dated September 25, 2003 (included as
            Exhibit 10.8 to the Form 10-KSB filed March 16, 2004, and
            incorporated herein by reference).

10.10       Letter of Engagement for Expanded Executive Management Services
            among the Company, Corbee Dutchburn and Lyle Goodis, dated October
            30, 2003 (included as Exhibit 10.9 to the Form 10-KSB filed March
            16, 2004, and incorporated herein by reference).

10.11       Addendum to October 30, 2003 Letter of Engagement for Expanded
            Executive Management Services among the Company, Corbee Dutchburn,
            and Lyle Goodis, dated December 5, 2003 (included as Exhibit 10.10
            to the Form 10-KSB filed March 16, 2004, and incorporated herein by
            reference).

10.12       Funds Escrow Agreement between the Company and various subscribers
            (included as Exhibit 10.10 to the Form SB-2/A filed September 14,
            2005, and incorporated herein by reference).

10.13       Security Agreement between the Company and Blaine Froats, dated
            January 1, 2005 (included as Exhibit 10.12 to the Form SB/2-A filed
            January 19, 2006, and incorporated herein by reference).

14.1        Corporate Code of Ethics (included as Exhibit 14 to From 10-KSB
            filed March 16, 2004, and incorporated herein by reference).

31.1        Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
            2002.

31.2        Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
            2002.

32.1        Certification of Officers pursuant to 18 U.S.C. Section 1350, as
            adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


                                     - 11 -
<PAGE>

                                   SIGNATURES

      In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                        Alternate Energy Corp.


Date: November 14, 2006                 By: /s/ Blaine Froats
                                            -----------------

                                        Blaine Froats

                                        Chief Executive Officer



                                        Alternate Energy Corp.


Date: November 14 , 2006                By: /s/ Jack Wasserman
                                            ------------------

                                        Jack Wasserman

                                        Treasurer and Principal Accounting
                                        Officer




                                     - 12 -