SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

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|x                                                                                                                                               | ANNUAL REPORT PURSUANT TO SECTION
 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934    
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|For the fiscal year ended December 31, 2010                                                                                                    
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|or                                                                                                                                             
|o                                                                                                                                               | TRANSITION REPORT PURSUANT TO
 SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                                                                                                                |                                                                                          
|For the
 transition period from ______ to _____
                                                             Commission
 File Number: 000-54132
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|11
 GOOD ENERGY, INC.                                                                                                                          
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|(Exact name of Registrant as specified in its charter)                                                                                         

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|Delaware                                                 |  | 26-0299315                             
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|(State of
 jurisdiction ofincorporation or organization) |  | (I.R.S.
 EmployerIdentification Number)
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|4450 Belden
 Village Street, N.W., Suite 800                                                                                        |                | 
|Canton, OH                                                                                                                          | 44718          | 
|                                                                                                                                    |                | 
|(Address of
 principal executive offices)                                                                                           | (Zip
 Code)   
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|Registrants telephone
 number, including area code:                                                                                | (330) 492-3835
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|Securities registered pursuant
 to Section 12 (b) of the Act: None                                                                  |               
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|Securities registered
 pursuant to Section 12 (g) of the Act:
                     Common
 Stock, $.0001 Par Value                  |               
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|Indicate by check mark if
 the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
 Securities Act Yes o No x

Check
whether the Registrant is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. o

Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes x No o.

Indicate
by check mark whether the Registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive data file required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o

Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained in this form, and no disclosure will be contained,
to the best of Registrants knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-K or any
amendment to this Form 10-K x.

Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company as
defined by Rule 12b-2 of the Exchange Act: smaller reporting company x.

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

As
of April 15, 2011, the number of shares held by non-affiliates was
approximately 15,000,000 shares. As of April 15, 2011, there was no public
market for our Common stock to value the Shares held by non-affiliates. The number
of shares outstanding of the Registrants Common Stock as of April 15, 2011,
was 19,856,239.

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FORWARD-LOOKING STATEMENTS

We believe
this annual report contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are
subject to risks and uncertainties and are based on the beliefs and assumptions
of our management, based on information currently available to our management.
When we use words such as believes, expects, anticipates, intends,
plans, estimates, should, likely or similar expressions, we are making
forward-looking statements. Forward-looking statements include information
concerning our possible or assumed future results of operations set forth under
Business and/or Managements Discussion and Analysis of Financial Condition
and Results of Operations. Forward-looking statements are not guarantees of
performance. They involve risks, uncertainties and assumptions. Our future
results and stockholder values may differ materially from those expressed in
the forward-looking statements. Many of the factors that will determine these
results and values are beyond our ability to control or predict. Stockholders
are cautioned not to put undue reliance on any forward-looking statements. For
those statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. For a discussion of some of the factors that may cause
actual results to differ materially from those suggested by the forward-looking
statements, please read carefully the information under Risk Factors. In
addition to the Risk Factors and other important factors discussed elsewhere in
this annual report, you should understand that other risks and uncertainties
presented in our public announcements and SEC filings could affect our future
results and could cause results to differ materially from those suggested by
the forward-looking statements.

GLOSSARY OF TERMS

The following is a glossary of terms unique
to our industry:

Low Sulfur
Diesel #2 (LSD #2) - #2 grade diesel fuel processed to reduce Sulfur emissions.
This is a carbon based fuel, made from crude oil, and is the current standard
of diesel fuel used to power trucks, trains, and ships.

Ultra Low
Sulfur Diesel #2 (ULSD #2) - #2 grade diesel fuel processed to remove a greater
level of sulfur than the LSD #2 above. ULSD #2 is to replace LSD #2 as the
government standard sulfur level of diesel fuel used for trucking, rail, and
marine transportation. This product is currently being produced, but its use is
currently not a requirement. This fuel will be more expensive than LSD #2 and
requires additives to increase lubricity lost in the Sulfur reduction process.

Traditional #2
Diesel Fuel- either LSD #2 or ULSD #2.

Bio-fuel 
fuel derived from bio based sources. This category of fuel includes biodiesel,
ethanol and G2 Diesel.

Biodiesel  a
form of Bio-fuel produced by combining a form of feedstock oil (such as Soybean
or Palm), ethanol/methanol alcohol and catalyst. This fuel can power diesel
engines in the same manner as traditional #2 grade diesel fuel.

G2 Diesel - a
form of Bio-fuel produced by combining soybean oil, ethanol alcohol and a
catalyst. This method of bio-fuel manufacturing is based on the companys
proprietary manufacturing process as described herein.

Blended
biodiesel  a blend of biodiesel (which depending upon the context may refer to
our G2 Diesel or other competitors biodiesel) and traditional #2 grade diesel
fuel.

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B5  a blend of fuel with 5% G2 Diesel or biodiesel and 95% traditional
#2 grade diesel fuel.

B20  a blend of fuel with 20% G2 Diesel or biodiesel and 80%
traditional #2 diesel fuel.

B100  100% G2 Diesel or biodiesel.

Ethanol  alcohol type generally derived from bio-based sources such as
corn.

Methanol  Toxic Alcohol type generally derived from petroleum sources.

Catalyst  proprietary blend of materials used in the manufacturing
process.

Gel Point (Pour Point) - temperature where fuel ceases to flow properly
in fuel systems.

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PART I

Item 1. Business

Business Development

Overview

11 Good Energy, Inc. is a Delaware corporation formed on May 23, 2007
for the purposes of developing, testing, manufacturing and distributing
bio-fuel with energy related plans and pursuits to develop the
commercialization of our proprietary fuel product, G2 Diesel, as discussed
below.

In October of 2007, our company completed the purchase of an existing
biodiesel manufacturer, 11 Goods Energy, LTD, a limited liability company
(becoming our wholly owned subsidiary), formed in the State of Ohio in February
2006. Historically, our subsidiary has been a development stage company, which
prior to our acquisition in October 2007 incurred approximately $100,000 in
research activities to develop a proprietary manufacturing process to produce
bio-fuel for diesel applications.

Since October 2007, we have developed many contacts and contracts in
our business, created an experienced Management team, we have finalized the
principal development of our proprietary process and have designed, built and
currently operate a bio-fuel manufacturing facility. Our limited sales to date
have resulted from government organizations, municipalities and corporations
testing our bio-fuel product as described herein. These testing programs have
been in process throughout 2010 and management believes; once completed, will
result in greater demand for G2 Diesel. In addition, the company is in the
process of registering to all the necessary regulatory requirements for
producing and selling fuel in multiple state jurisdictions. While the Company
anticipates revenues will result by the end of 2011, we have yet to attain
profitable operations and will need additional financing in 2011 to support our
operations.

Our goal is to market and distribute, and improve as we may be able,
our G2 Diesel product first nationally and later internationally. In addition,
the company is pursuing other alternative energy technologies to complement the
bio-fuel product currently offered by the company. Energy is one of our
nations primary concerns due to a combination of health, commercial and even
national security considerations, and the concern includes development of
cleaner, cost effective, and safer fuels.

Marketing, Distribution and Testing Programs

As of March 31, 2011, we have contracts with vendors, advisors and
professionals nationally assisting us in our business, but have no long-term
contracts or backlog of orders from customers to purchase our G2 Diesel fuel or
our crude glycerin by-product described herein. The testing programs and sales
efforts conducted with potential customers have shown to be on a longer order
cycle than first anticipated; however, testing has continued to show a
significant reduction of the total consumption of fuel for the exact route or
usage. We continue to build relationships with governmental organizations and
municipalities such as schools and busing authorities, trucking fleets, marine
diesel and locomotive companies requiring diesel fuel by providing our G2
Diesel to test its performance in their fleets in comparison to traditional #2
diesel fuel.

We are currently conducting a test with a fleet of urban buses in
Mexico. This test has been underway since December 2010 and is expected to be
completed in 2011. The test compares fuel consumption of busses using our fuel,
blended 5% with diesel fuel, with the fuel consumption of busses using regular
diesel fuel available in Mexico. This program is testing a total of 5,500
gallons of G2 Diesel fuel, enough to blend 110,000 gallons at a 5% G2 Diesel
blend. As of the date of this filing, the vehicles tested have shown as much as
a 17% decrease in total fuel consumption, when using our fuel blended with diesel
fuel,

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compared to their original base line fuel consumption using regular
diesel fuel. Their results have been very positive and have the potential to
generate an order in excess of 200,000 gallons per month.

We are currently awaiting approval of our fuel variance in the state of
California. The fuel variance is required to meet California regulations to
sell motor fuel. We have spent considerable resources to meet Californias
requirements to meet this regulation and have received positive feedback from
our representatives that it should pass in 2011. We currently are licensed to
sell fuel in California; however, we must meet this regulation to sell G2
Diesel. The variance requirement has certainly delayed our ability to expand
our market presence in California and has delayed our ability to sell our fuel
in California. Its passage will allow many of our potential customers in
California to go to order and purchase G2 Diesel.

RJ Corman Railroad Company, a short rail hauler, has tested our fuel in
several of their diesel electric locomotives. RJ Corman Railroad Company has
also purchased our fuel over the past three years, but has yet to proceed to a
significant order. This test began in April 2011 and is planned to last for one
month. The test program is expected to consume 250 gallons of G2 Diesel and is
being tested at a 2% blend of our fuel with standard diesel fuel. We are
encouraged that these most recent trials will allow for a more significant
order from RJ Corman Railroad Company.

We have also conducted trials with other several metropolitan bus
systems and have found similar efficiency gains in overall fuel consumption
when blending our fuel with standard diesel fuel. We will continue to target
those markets as well.

These programs all have in common the testing of our G2 Diesel at
various percentage mixtures when blended with traditional #2 Diesel fuel for
the purpose of assessing and evaluating under actual usage conditions in buses,
car ferry services, trucks and locomotives, each of the following:

| |   |                                                   
| | - | --------------------------------------------------
| |  | power,
 performance, maintenance and engine noise;
| |  | emissions
 and exhaust smell; and                 
| |  | fuel
 economy.                                    

From the testing and usage experienced over the past three years,
management believes that our G2 Diesel provides more power, lower emissions of
pollutants and better fuel economy when blended with #2 diesel fuel when
compared to 100% traditional #2 diesel fuel. Management believes that the
current price of approximately $5.00 per gallon for G2 Diesel compared to $3.50
per gallon for #2 traditional diesel fuel; will influence our customers to
blend our G2 Diesel fuel with traditional #2 diesel fuel to find the right
balance of performance, emissions and fuel economy.

We have also paid $ 200,000 to
an independent research laboratory to test our G2 Diesel fuel to issue a report
on its findings related to tier one health effects testing. The research
laboratory completed the testing in 2010. The tests found that the harmful
health effects from the emissions of our fuel are significantly less than the
harmful heath emissions of traditional diesel fuel. These results are of
interest to the diesel electric locomotive and diesel truck fleet industries
that have had health effects regulations thrust upon the emissions from their
diesel fuel use in the United States.

Lastly, we intend to sell our crude glycerin by-products to
manufacturers of cosmetics, toiletries, pharmaceuticals and food products,
since we do not have the capability of refining the glycerin. Our ability to
sell this by-product will be limited to those manufacturers who require crude
glycerin and have the capability to refine it.

We can provide no assurances that Managements plans will be realized,
that there will be sufficient order flow of G2 Diesel fuel to support our
intended operations or that we will be able to operate profitably and/or on a
positive cash flow basis in the future. See Risk Factors.

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Facilities and Production Capacity

We maintain our corporate office at 4450 Belden Village St., Suite 800,
NW, Canton, OH 44718, and our telephone number is 330-492-FUEL. In November
2009, we completed construction of our bio-fuel manufacturing facility in
Magnolia, Ohio. The facility is currently configured to produce between 4.6
million and 6.4 million gallons of G2 Diesel per year with an ability to expand
capacity as the market for G2 Diesel fuel grows. From November 1, 2009 to
December 31, 2010, we produced approximately 175,000 gallons of G2 Diesel at
our plant. G2 Diesel, a bio fuel, is our primary product. The bio-fuel manufacturing
process also produces a crude glycerin by-product.

As demand will support, we intend to purchase and/or lease a site and
to construct a second production facility in the event that construction and
initial operational costs can be financed exclusively from proceeds received
from new equity and/or debt financing on terms satisfactory to us. In the
absence of such financing, the costs of a second production facility estimated
at $6,000,000 would exceed our cash reserves, with the actual cost of this new
facility depending upon many factors, including, without limitation, the
location and cost of the land, demolition costs of existing facilities (if any)
on the site, environmental concerns (if any) and the size of the new plant, it
being managements intention for the second plant to have an annual capacity of
at least 30 million gallons. Further, as a development stage corporation with
limited sales to date, we will need our existing cash resources to support our
intended sales efforts from our existing plant in Magnolia, Ohio as well as
other working capital needs. While Management anticipates generating meaningful
operating cash flow in 2011, we cannot provide any assurances that this will
occur. Accordingly, we must secure additional financing before proceeding with
the costs of a second production facility. We cannot assure our plans,
including establishment of the additional plant, will succeed. See Risk
Factors under Item 1A.

Description of the Traditional Biodiesel
Industry and Markets

The biodiesel industry is relatively new and unknown. In 2010, the
biodiesel industry reported that it produced an estimated 311 million gallons
of biodiesel, constituting only a fraction of the roughly 60 billion gallon per
year U.S. diesel fuel market. Due to the recent economic downturn and other
factors, many competitors plants are currently closed and many do not
currently operate at full capacity.

Biodiesel, in general, is a high-lubricity; clean-burning alternative
fuel produced from domestic, renewable resources and is primarily used in
compression ignition (diesel) engines. Biodiesel is comprised of mono-alkyl
esters of long chain fatty acids derived from vegetable oils or animal fats. A
chemical process called transesterification removes the free fatty acids from
the base oil and creates the desired esters. Transesterification is the
reaction of vegetable oil or animal fat with an alcohol, such as methanol or
ethanol, in the presence of a catalyst. Biodiesel can be used in neat (pure)
form or blended with petroleum-based diesel. Biodiesel that is in neat form is
typically designated in the marketplace as B100. The 100 indicates that the
fuel is 100% biodiesel. Biodiesel is frequently blended with petroleum-based
diesel. When biodiesel is blended, it is typically identified in the
marketplace according to the percentage of biodiesel in the blend. For example,
B20 indicates that 20% of the fuel is biodiesel and 80% is petroleum-based
diesel.

G2 Diesel compared to Traditional Biodiesel

Proprietary Manufacturing Process

Our manufacturing process uses a proprietary mixture of soybean oil,
ethanol alcohol and a secret catalyst at room temperature. Our processing
method differs from the traditional forms of producing biodiesel. Other
producers also use a form of animal or vegetable based oil and a toxic
petroleum derived methanol

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during processing, which must be removed and separated through heating
and washing before the completion of the manufacturing process. Our
manufacturing process; which does not use water to wash the fuel, eliminates
toxic wastewater production, which is a significant cost commonly associated
with conventional or traditional biodiesel production.

Competitive Advantages

Though we may face competition from larger more established providers
of biodiesel with greater resources and penetration, Management believes
competitive advantages of the companys G2 Diesel are multi-faceted. Our
proprietary manufacturing process produces a clean natural fuel that testing
has shown, reduces harmful emissions produced by diesel engines. The companys
production process is cost efficient, it produces no waste water and it does
not require natural gas, which is a costly component used by others in
manufacturing biodiesel fuel. Also, our G2 Diesel has a lower Gel Point of -9°F
versus competing biodiesel products that have a Gel Point of approximately
27-30°F. The lower Gel Point allows our G2 Diesel to be used under colder
driving conditions than other competing products which cannot be used in cold
weather months.

Pricing of G2 Diesel

Management believes that our G2 Diesel commands a pricing premium when
compared to other biodiesel products due to the competitive advantages outlined
above. The selling price per gallon is determined by the cost of soybean oil,
ethanol and catalyst. We build our pricing model based primarily on these raw
material commodity prices. We have developed our pricing model to trend with
the feedstock prices. When our feedstock prices rise or fall, the pricing model
adjusts to preserve the desired margins. Soybean Oil has historically trended
with petroleum oil. It is anticipated that our selling price would increase or
decrease in the same manner as #2 diesel fuel. We can provide no assurances
that we will be able to maintain our profit margins and increase the sales
price of our G2 Diesel at times of rising feedstock costs. See Risk Factors
under Item 1A

Blending of G2 Diesel with traditional #2
diesel fuel

G2 Diesel blends especially well with traditional #2 diesel fuel. The
viscosity of the two fuels are very similar and allow the two fuels to splash
blend, which means the fuel blends with no induced agitation. This is one
important attribute that differentiates the G2 Diesel product from the rest of
the Biodiesel industry. Many of our competitors products do not have a
viscosity similar to diesel and therefore their product does not blend well
with diesel.

We intend to sell our product as a 99  100% bio-fuel and do not plan
to blend our product with any traditional #2 diesel fuel at the companys
facilities. We are prohibited by court order from selling our G2 Diesel as an
additive until after May 22, 2011. See Risk Factors. We expect that customers
may on their own accord choose between a 2%  20% blend with traditional #2
diesel fuel, with a limit of 5% G2 Diesel blend for on road use. The customer
will be responsible for blending their traditional #2 diesel fuel with the G2
Diesel purchased from us and pumping the blended fuel to their vehicle or vessel.
This can be done by the end user and/or their current fuel distributor. Our G2
Diesel fuel will be sold as fuel in this regard and will be subject to
applicable fuel taxes.

Consistency of feedstock

We currently use soybean oil as our feedstock. We believe that the
quality control procedure for our feedstock is essential to the production of a
quality fuel. Other producers in the industry will use multiple feedstock of
differing quality, mainly to minimize their material costs. This can lead to an
inconsistent finished fuel product which performs differently with each change
of materials. The control and consistency of feedstock quality is a key
attribute to making a high quality fuel.

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The effect of cold flow on biodiesel markets

Biodiesel produced from traditional means using various feed stocks
have different cold flow properties, depending on the type of feedstock used in
its manufacture. Cold flow refers to a fuels ability to flow easily at
colder temperatures and is an important consideration in producing and blending
biodiesel for use in colder climates. The pour point or Gel Point for a fuel is
the temperature at which the flow of the fuel stops. Therefore, a lower pour
point temperature means the fuel flows better in colder temperatures. The pour
point of 100% traditional soy oil based biodiesel is approximately 27°F to
30°F. Based on recent independent testing conducted by a third party
laboratory, the pour point of 100% G2 Diesel is -9F. G2 Diesels pour point
provides a great advantage in cold climate markets.

Current Bio-diesel Markets and Competition

Biodiesel Markets

Wholesale Market / Biodiesel Marketers.The wholesale market involves selling
biodiesel directly to fuel blenders or through biodiesel marketers. Fuel
blenders purchase B100 from biodiesel production plants, mix it with petroleum
diesel fuel according to specifications, and deliver a final product to
retailers. There are few wholesale biodiesel marketers in the United States.

Retail Market. The retail market consists of biodiesel
distribution primarily through fueling stations to transport trucks and
jobbers, which buy products from manufacturers and sell them to retailers for
the purpose of supplying farmers, maritime customers and home heating oil
users. Retail level distributors include oil companies, independent station
owners, marinas and railroad operators. The biodiesel retail market is still in
its very early stages as compared to other types of fuel. The present marketing
and transportation network must expand significantly in order for us to
effectively market our biodiesel to retail users. Areas requiring expansion
include, but are not limited to:

| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | additional
 rail capacity;                                                            
| |  | additional
 storage facilities for biodiesel;                                         
| |  | increases in
 truck fleets capable of transporting biodiesel within localized markets;
| |  | expansion in
 refining and blending facilities to handle biodiesel; and               
| |  | growth in
 service stations equipped to handle biodiesel fuels.                       

Substantial
investments required for these infrastructure changes and expansions may not be
made or they may not occur on a timely basis. Any delay or failure in making
the changes to or expansion of infrastructure could hurt the demand or prices
for biodiesel, impede delivery of biodiesel, impose additional costs on or
otherwise negatively affect our proposed results of operations or financial
position.

Government/Public Sector. The government has
increased its use of biodiesel since the implementation of the Energy Policy
Act of 1992, amended in 1998, which authorized federal, state and public
agencies to use biodiesel to meet the alternative fuel vehicle requirements of
the Energy Policy Act.

We anticipate
that the Renewable Fuel Standard may increase demand for biodiesel, as it sets
a minimum usage requirement for biodiesel and other types of biomass-based
diesel. However, there can be no assurance that the Renewable Fuel Standard
will increase demand for biodiesel.

Competition from Other Fuel Sources and
Additives

If a new fuel
is developed to compete with biodiesel; it may be difficult to market our
biodiesel, which could result in the loss of some or all of our ability to operate
profitably.

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Renewable diesel is another form of diesel with which we may be
required to compete. Renewable diesel has characteristics similar to that of
petroleum-based diesel fuel and can be co-processed at traditional petroleum
refineries from vegetable oils or animal fats mixed with crude oil through a
thermal de-polymerization process. According to a February 2009 report from the
DOEs Alternative Fuels & Advanced Vehicles Data Center, renewable diesel
is close to full commercialization as manufacturers continue to modify and
expand research and development.

We currently market and sell our G2 Diesel as a fuel, which is taxed as
fuel. Commencing on or after May 22, 2011, the expiration date of a settlement
agreement and court order prohibiting us from selling our G2 Diesel as a
special additive, which is described below, we may choose to compete with
producers of other diesel additives, such as petroleum-based lubricity
additives. Some major oil companies produce these petroleum-based lubricity additives
and strongly favor their use because they may be used in lower concentrations
than biodiesel. In addition, much of the infrastructure in place is for
petroleum-based additives. As a result, petroleum-based additives may be more
cost-effective than biodiesel. Therefore, it may be difficult to market our
biodiesel as a lubricity additive and, thus, we are unlikely to enter this
market in the future.

Competition with Other Biodiesel Producers

We operate in a very competitive environment. We face competition for
capital, labor, management, feedstock (such as soy oil) and other resources.
Some of our competitors may be substantially larger than us and may have
significantly greater name recognition and financial, sales and marketing,
technical, and other resources. These competitors may also have more
established distribution channels and may be able to respond more rapidly to
new or emerging technologies and changes in customer requirements or devote
greater resources to biodiesel development, promotion and sale of their
products. In 2010, approximately 311 million gallons of biodiesel was reported
to be produced in the United States. Biodiesel plants are currently operating
throughout the United States. We expect that additional biodiesel producers will
enter the market if the demand for biodiesel increases. We also compete with
food manufacturers to obtain our supply of soy oil as feedstock.

We must compete with other biodiesel producers not just in the sale of
our bio-fuel, but also in the acquisition of soybean oil and other raw
materials. A majority of plants, and many of the largest producers, utilize
soybean oil. This may change over time as high soybean oil prices are
encouraging biodiesel producers to find ways to utilize alternative and less costly
types of feedstock.

Some of our competitors have soy-crushing facilities and are thus not
reliant upon third parties for their feedstock supply. As a result, we face a
competitive challenge from biodiesel plants owned and operated by the companies
that supply our feedstock. Such vertical integration provides certain
competitors with greater control over their feedstock supplies, thereby
providing them with a competitive advantage over plants like ours that do not
have soy-crushing capabilities, especially as prices and competition for
soybean oil and other feedstock increase.

Currently, there are other active biodiesel plants in Ohio. Because of
recent adverse economic conditions and other factors affecting the biodiesel
industry, a few plants in Ohio and many across the country have either
curtailed production or stopped production completely. Nevertheless, Management
believes that with an increase in the publics desire to use bio-fuels, the
current environment allows a new product like G2 Diesel to obtain a market
share in a struggling industry.

Primary Co-Product  Glycerin

Glycerin is the primary co-product of the biodiesel production process
and equals approximately 10% of the quantity of biodiesel produced. It is
highly stable under typical storage conditions, compatible with a wide variety
of other chemicals and comparatively non-toxic. Glycerin possesses a unique
combination of

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physical and chemical properties that are used in a large variety of
products. It is an ingredient or processing aid in cosmetics, toiletries,
personal care products, pharmaceuticals and food products. In addition, new
uses for glycerin are frequently being discovered and developed due to its
versatility. Many of these uses, however, require refined glycerin. Our plant
only produces crude glycerin and does not have the capability to refine
glycerin.

Glycerin Competition

It is estimated that every million gallons of biodiesel produced adds
approximately another one hundred thousand gallons of crude glycerin into the
market. Over the past few years, as biodiesel production has increased, the
glycerin market has become increasingly saturated. Excess glycerin production
capacity may limit our ability to market our glycerin co-product, and we may
even be forced to pay to dispose of our glycerin. Low glycerin prices may also
limit our ability to generate revenues through the sale of our by-product. This
may negatively affect the profitability of our business.

Sources and Availability of Raw Materials

Soybean Oil Costs and Supply

The cost of feedstock is the largest single component of the cost of
biodiesel production. We expect that soybean oil will continue to be our
primary feedstock unless we are able to successfully procure and process
alternative feedstock and achieve the desired performance of the fuel. As a
result, our pricing per gallon has been, and will likely continue to be,
particularly susceptible to changes in the price of soybean oil. The
twenty-year average price for soybean oil is approximately $0.23 per pound.
However, in June 2008, soybean oil reached a new high of $0.62 per pound, and
is once again approaching $0.60 per pound and are expected to remain volatile.
The March 2009 Oil Crops Outlook report prepared by the USDA states that the
February 2009 average soybean oil price was $0.29 cents per pound. The chart
below shows U.S. soybean oil prices over the past twelve years:

U.S. Soybean
Oil Prices

UPDATE ABOVE AND
BELOW IF AVAILABLE

|                |  |                | 
|--------------- |  | -------------- | 
|Marketing
 Year |  | Price
 (cents) | 
|                |  |                | 
|1997/98         |  | 25.80          | 
|1999/00         |  | 15.16          | 
|1900/01         |  | 14.15          | 
|2001/02         |  | 16.46          | 
|2002/03         |  | 22.04          | 
|2003/04         |  | 29.97          | 
|2004/05         |  | 23.01          | 
|2005/06         |  | 23.42          | 
|2006/07         |  | 31.02          | 
|2007/08         |  | 52.03          | 
|2008/09         |  | 32.16          | 
|2009/10         |  | 34.0 - 38.0(1) | 

|    |                                                                                     | 
|--- | ----------------------------------------------------------------------------------- | 
|    |                                                                                    
|(1) | Preliminary
 Price. Data provided by USDA, Oil Crops
 Outlook Report, May 12, 2010.
|    |                                                                                     | 

10

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We believe that continued increases in the price of soybean oil will
result in us increasing the selling price of G2 Diesel. G2 Diesel pricing has
historically trended with petroleum diesel fuel pricing. If crude oil should
increase by 10%, our pricing model will generate a very similar percentage
increase in G2 Diesel price, as the result of a similar percentage increase in
soybean oil. Management believes that the the benefits in fuel efficiency and
maintenance costs exceed the incremental cost increase to the customer of a 5%
blend of G2 Diesel with traditional #2 diesel fuel. We have explored the
possibility of acquiring technology for or otherwise obtaining other feedstock
for our G2 Diesel production process. However, our research thus far has
determined that the performance characteristics are best achieved through the
use of soybean oil. We expect to purchase our soybean requirements from
multiple available sources in the United States.

Ethanol and Catalyst Costs and Supply

The production of biodiesel at our plant requires ethanol and a
catalyst. We have experienced no difficulties in obtaining adequate supplies of
ethanol or our catalysts used to produce finished products. As we have in the
past, we expect to purchase our ethanol and a catalyst from multiple qualified
sources.

Patents, Trademarks and Licenses

Our proprietary products and processes are protected primarily by a
combination of trademark, patent applications and trade secret rights.

As of March 31, 2011, we have patent pending applications with the
United States Patent and Trademark Office and in Canada, each under an
application number of #12/680,526 as well as an application pending in Geneva,
Switzerland (case # PCT/US2008/054204 with an international publication
#WO/2009/042242) and applications pending in the European Patent Office
(application #08730077.8), Columbia (application # 10051.71), Ecuador
(application # sp-10-10134), India (application # 2857/Delnp 12010), Australia
(application # 2008305557), Brazil (application #PI0817449-0), Chile
(application #315-2010), China (application # 200880116324.4), Hong Kong
(application #11102335.7), Indonesia (application # W00201001360), Israel
(application #204704), Japan (application #2010-526975) and Mexico (application
#MX/a/2010/003469),

We will consider additional filings in the future as conditions permit.
We place considerable importance on appropriately protesting our technologies,
products and/or processes. Our success will depend at least in part on our
ability, and the ability of any of our licensees, to obtain and keep property
rights in our products and processes, which permit us to exclude others from
taking commercial advantage of what we consider to be our inventions, and
prevent others from using our trade secrets; if we fail to secure patents and
other intellectual property rights that cover our products and technologies, we
may be unable to derive as much financial return on commercialization of our
products as we would if such rights were obtained. The standards which the
United States Patent and Trademark Office and similar offices of other
countries utilize in deciding whether to grant patents can change, which may
result in us being unable to determine the type and extent of any future patent
claims that will be issued to us or to our licensees in the future, if any
patent claims are issued at all, and the fees associated with filing and
prosecuting patent applications may increase significantly, which might result
in us incurring higher expenses and adversely affect our intellectual property
strategy.

The commercial success of our products might also be affected by the
intellectual property rights of others. We intend to operate in a way that does
not result in willful infringement of the patent, trade secret or other
intellectual property rights of other parties. Nevertheless, there can be no
assurance that a claim of infringement will not be asserted against us or that
any such assertion will not result in a judgment or order requiring us to
obtain a license in order to make, use, or sell our products. There can be no
assurance that third parties will not assert infringement claims against us in
the future with respect to any products or processes. Any such claims or
litigation, with or without merit, could be costly and a

11

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diversion of managements attention, which could have a material
adverse effect on our business, operating results and financial condition.
Adverse determinations in such claims or litigation could harm our business,
operating results and financial condition.

There is a risk that the court will decide that we are infringing the
third partys patents and order us to stop the infringing activities. In
addition, there is a risk that a court will order us to pay the other party
damages for having infringed their patents. Moreover, there is no guarantee
that the prevailing patent owner would offer us a license so that we could
continue to engage in activities claimed by the patent, or that such a license,
if made available to us, could be acquired on commercially acceptable terms. In
addition, third parties may, in the future, assert other intellectual property
infringement claims against us with respect to our products, technologies or
other matters. See Risk Factors under Item 1A.

Should third parties file patent applications, or be issued patents,
claiming technology also claimed by us in pending applications or in issued
patents, we may be required to participate in interference proceedings in the
USPTO to determine priority of invention. An adverse outcome in an interference
proceeding could require us to cease using the technology, to license rights
from prevailing third parties, and/or to lose exclusive rights in our products
or processes. There is no guarantee that any prevailing party would offer us a
license or that such a license, if made available to us, could be acquired on
commercially acceptable terms.

We maintain confidentiality agreements with our employees, consultants,
affiliates, customers and business partners. Any confidentiality agreements
required of our employees and that we enter into with other parties may not
provide adequate protection for our future trade secrets, know-how or other
confidential information or prevent any unauthorized use or disclosure or the
unlawful development by others. If any of our confidential intellectual
property is disclosed, our business may suffer. In addition, certain of our
present and future scientific and management personnel may have been previously
employed by other companies where they conducted research in areas similar to
those that we now pursue. As a result, we could be subject to allegations of
trade-secret violations and other claims relating to the intellectual property
rights of these companies.

Government Regulations

Renewable Fuel Standard

The Energy Policy Act of 2005 created the Renewable Fuel Standard
(RFS) which required refiners to use 7.5 billion gallons of renewable fuels
by 2012. The Energy Independence and Security Act (EISA) expanded the
existing Renewable Fuel Standard to require the use of 9 billion gallons of
renewable fuel in 2008, increasing to 36 billion gallons of renewable fuel by
2022. The EISA requires that 600 million gallons of renewable fuel used in 2009
must come from advanced biofuels other than corn-based ethanol, such as ethanol
derived from cellulose, sugar or crop residue and biomass-based diesel (which
includes biodiesel and renewable diesel), increasing to 21 billion gallons in
2022. The EISA further includes a requirement that 500 million gallons of
biodiesel and biomass-based diesel fuel be blended into the national diesel
pool in 2009, gradually increasing to one billion gallons by 2012. However, in
November 2008, the Environmental Protection Agency (EPA) announced that the
RFS program in 2009 will continue to be applicable to producers and importers
of gasoline only. This means that the 500 million gallons of biomass-based
diesel required by the RFS, as amended by the EISA, does not have to be blended
into U.S. fuel supplies in 2009. This is due to the fact that the regulatory
structure of the original RFS program does not provide a mechanism for
implementing the EISA requirement for the use of 500 million gallons of
biomass-based diesel. The EPA intends to propose options and develop mechanisms
for implementing the EISA biomass-diesel requirements.

We anticipate that the Renewable Fuel Standard may increase demand for
biodiesel in the long-term, as it sets a minimum usage requirement for
biodiesel and other types of biomass-based diesel. However, there

12

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can be no assurances that demand for biodiesel will be increased by the
RFS. Accordingly, there is no assurance that additional production of biodiesel
and biomass-based diesel will not continually outstrip any additional demand
for biodiesel that might be created by this new law. Furthermore, any
additional delays in the EPAs implementation of the EISA biomass-based diesel
requirements could hinder the stimulation of additional biodiesel demand. We
also anticipate that the expanded RFS will be primarily satisfied by ethanol,
including both corn-based and other types of ethanol. The amount of corn-based
ethanol that may be used to satisfy the RFS requirements is capped at 15
million gallons starting in 2015 and, accordingly, other types of ethanol,
including cellulose-based ethanol, will likely be used to satisfy any
requirements over and above the 15 million gallon corn-based ethanol cap.

The Renewable Fuel Standard system will be enforced through a system of
registration, recordkeeping and reporting requirements for obligated parties,
renewable producers (RIN generators), as well as any party that procures or
trades Renewable Identification Numbers (RINs), either as part of their
renewable purchases or separately. Any person who violates any prohibition or
requirement of the RFS program may be subject to civil penalties for each day
of each violation. For example, under the final rule, a failure to acquire
sufficient RINs to meet a partys renewable fuels obligation would constitute a
separate day of violation for each day the violation occurred during the annual
averaging period. The enforcement provisions are necessary to ensure the RFS
program goals are not compromised by illegal conduct in the creation and
transfer of RINs. The Environmental Protection Agency has assigned equivalence
values to each type of renewable energy fuel in order to determine compliance
with the RFS. The equivalence values used ethanol as the base-line measurement
(such that one gallon of ethanol is equivalent to one credit towards RFS
compliance) and assigned biodiesel an equivalence value of 1.5 (so that for
each gallon of biodiesel used, the obligated party will receive one and
one-half gallons credit towards its RFS compliance).

Biodiesel Tax Credits

The Volumetric Ethanol Excise Tax Credit (VEETC) provides a tax credit
of $1.00 per gallon for agri-biodiesel, which is biodiesel derived solely from
virgin vegetable oils and animal fats that are blended with petroleum
biodiesel. This includes esters derived from crude vegetable oils from corn,
soybeans, sunflower seeds, cottonseeds, canola, crambo, rapeseeds, safflowers,
flaxseeds, rice bran, and mustard seeds. The VEETC also provides a tax credit
of $0.50 per gallon for non agri-biodiesel blended with petroleum diesel, which
is biodiesel made from non-virgin or recycled vegetable oil and animal fats.
The excise tax credit may be claimed in both taxable and nontaxable markets,
including exempt fleet fuel programs and off-road diesel markets. The desired
effect of the excise tax credit is to streamline the use of biodiesel and
encourage petroleum blenders to blend biodiesel as far upstream as possible,
which will allow more biodiesel to be used in the marketplace. The VEETC
expired on December 31, 2009; however, in 2011 Congress granted an extension of
the agri-biodiesel credit through December 31, 2011. Regarding this matter, we
believe there is uncertainty about whether new legislation will be passed to
extend this credit beyond 2011. See Risk Factors.

State Legislation

Several states are currently researching and considering legislation to
increase the amount of biodiesel used and produced in their states. Minnesota
is one such state to mandate biodiesel use. The legislation, which became
effective in September 2005, requires that all traditional #2 diesel fuel sold
in the state contain a minimum of 2% biodiesel. The G2 Diesel blend has nearly
the same cold flow properties as No. 2 petroleum diesel, which allows it to be
used in Minnesotas colder climate much the same as petroleum diesel throughout
the year.

Other states have enacted legislation to encourage (but not require)
biodiesel production and use. Several states provide tax incentives and grants
for biodiesel-related studies and biodiesel production, blending

13

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and use. In addition, several governors have issued executive orders
directing state agencies to use biodiesel blends to fuel their fleets.

Effect of Government Regulation

Environmental laws aimed at lowering fuel emissions may also promote
biodiesel consumption. The Clean Air Act Amendments of 1990 required the EPA to
regulate air emissions from a variety of sources. In a 2001 rule, the EPA
provided for the decrease of emissions from vehicles using on-road diesel by
requiring the reduction in the sulfur content of diesel fuel from 500 parts per
million (ppm) to a significantly lower 15 ppm commencing in June 2006, and 10
ppm by 2011. Reducing the sulfur content of petroleum-based diesel leads to a
decrease in lubricity of the fuel, which may adversely impact diesel engines.
However, biodiesel is able to supply lubricity, which makes biodiesel an
attractive blending stock to satisfy the requirements.

Furthermore, environmental regulations that may affect our company
change frequently. It is possible that the government could adopt more
stringent federal or state environmental rules or regulations which could
increase our operating costs and expenses, or might eliminate provisions such
as the Clean Air Act Amendments that may promote the use of biodiesel. The
government could also adopt federal or state environmental rules or regulations
that may have an adverse effect on the use of biodiesel. Furthermore, the
Occupational Safety and Health Administration (OSHA) governs our plant
operations. OSHA regulations may change such that the costs of the operation of
the plant may increase. Any of these regulatory factors may result in higher
costs or other materially adverse conditions affecting our operations, cash
flows and financial performance.

The EPA has issued regulations to reduce the amount of sulfur in diesel
fuel in order to improve air quality. The removal of sulfur from diesel fuel
reduces its lubricity which must be corrected with fuel additives. G2 Diesel,
as well as other biodiesel fuels on the market, has inherent lubricating
properties when blended with #2 Diesel fuel.

EMPLOYEES

As of March
31, 2011, we have 11 full-time employees.

Settlement Agreement
and Court Order

We have been advised by Clayton R. Livengood, Jr., Susan Livengood and
Aaron Harnar, the founders and former control principals of 11 Goods Energy,
LTD, that Mr. Harnar was formerly employed by Royal Lubricants & Supplies
Inc. which had a contract to sell certain lubricant and related products of
Renewable Lubricants Inc. to the exclusion of any competing products. Mr.
Harnar left the employment of Royal and joined 11 Goods Energy, LTD. Renewable
Lubricants commenced a law suit in the Court of Common Pleas, Stark County, OH,
as Plaintiff, against Defendants, namely, Royal Lubricants, 11 Goods Energy,
LTD, Mr. Clayton Livengood, Mr. Aaron Harnar and Mrs. Susan Livengood, its
former principal owners. On May 22, 2006, the parties, pursuant to an agreed
upon Judgment Entry and Court Order, settled their dispute, agreed to mutual
general releases and a permanent injunction. In accordance with the Settlement
Agreement, the Defendants agreed to the following terms:

| |   |                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Defendants shall not directly or indirectly for five years from May
 22, 2006, entry blend or manufacture bio-based or petroleum based lubricants,
 greases, fuel conditioners, additives, and cleaners (fuels and glycerin and
 glycerol are excluded);
| |   |                                                                                                                                                                                                                                                         
| |  | 11 Good shall not blend or manufacture lubricants, greases, fuel
 conditioners, additives, and cleaners using glycerin and glycerol for a
 period of two years from May 22, 2006, which time period has expired;                                        

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| |   |                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Mr. Harnar shall never for his lifetime disclose Plaintiffs formulas
 and processes for bio-based or petroleum based lubricants, greases, fuel
 conditioners, fuel and additives, and fuel cleaners to any of the other
 Defendants or any entity or person; and
| |   |                                                                                                                                                                                                                                                                  
| |  | Defendants shall not sell bio-based lubricants, greases, fuel
 conditioners, fuel additives, and fuel cleaners for two years from May 22,
 2006 (unless such products are purchased from Plaintiff), which time period
 has expired.                             

As a result of the passage of time, the aforementioned Settlement
Agreement and Court Order currently prohibits us from selling our G2 Diesel as
an additive to other fuel products. Since the company intends to sell our G2
Diesel as fuel and not as an additive to other products, Management does not believe
that the Settlement Agreement and related Court Order will affect our
operations in any material capacity. After May 22, 2011, the company may seek
to sell its G2 Diesel as an additive and to compete in this market, although it
has no present intention of doing so. See Risk Factors below.

Item 1.A Risk Factors

An investment in our Common Stock involves
major risks. Before you invest in our Common Stock, you should be aware that
there are various risks described below. You should carefully consider these
risk factors together with all of the other information included in this Form
10-K before you decide to purchase shares of our Common Stock. You should
carefully consider the following risk factors, in addition to the other
information presented in this Form 10-K, in evaluating us and our business. Any
of the following risks could harm our business and financial results and cause
the value of our securities to decline, which in turn could cause you to lose
all or part of your investment.

We have a limited
operating history, and our business may not be as successful as we envision.

We are currently in an early stage of our current business plan. We
have limited operating history with respect to the construction and operation
of biodiesel refineries for our own use. Our limited sales to date have
resulted from government organizations, municipalities and corporations testing
our bio-fuel product as described herein. In this respect, from May 23, 2007
(date of inception) through December 31, 2010, our revenues have totaled
$470,000 and our deficit accumulated during our development stage was
$16,551,567. Our limited operating history makes it difficult for potential
investors to evaluate our business. Therefore, our proposed operations are
subject to all of the risks inherent in the initial expenses, challenges,
complications and delays frequently encountered in connection with the
formation of any new business, as well as those risks that are specific to the
biodiesel industry in general. Investors should evaluate an investment in our
company in light of the problems and uncertainties frequently encountered by
companies attempting to develop markets for new products, services and
technologies. Despite best efforts, we may never overcome these obstacles to achieve
financial success.

Our business is speculative and dependent upon the implementation of
our business plan, as well as our ability to enter into agreements with third
parties for necessary financing, the provision of necessary feedstock sources,
engineering, procurement and construction services and the sale and
distribution of our biodiesel fuel on terms that will be commercially viable
for us. There can be no assurance that our efforts will be successful or result
in revenue or profit. There is no assurance that we will earn significant
revenues or that our investors will not lose their entire investment.

We have yet to
attain profitable operations and may need additional financing to support our
sales and marketing efforts.

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We have a history of losses from operations and an accumulated deficit of $16,551,567
at December 31, 2010. As of March 31, 2011, we are operating one production facility, have 11 employees, with a burn rate
of approximately $285,000 per month. While our G2 Diesel fuel and its related manufacturing process is fully developed in
each of 2009 and 2010, we paid $200,000 toward research and development activities to one vendor to find ways to improve the
cost effectiveness of the manufacturing process and the feedstock utilized therein. We also paid $200,000 toward
independent testing of our product. We incurred total research and development expenditures of $543,401 and $238,208 for the
years ended December 31, 2010 and 2009, respectively. While the Company anticipates more substantial revenues will result by
the end of 2011 as a result of the completion of product testing, our ability to achieve profitable operations may depend on
our ability to raise additional financing, on terms satisfactory to us, particularly if cash flow from operations is less
than expected by management. Further, there is no guarantee that we will ever be able to operate profitably or derive
any significant revenues from our operations.

We have a need for
substantial additional financing to build a second production facility.

Our plan of operation contemplates our locating, purchasing (or
leasing) and building a second production facility, the costs of which will vary
based upon the size of the plant, but together with initial operating capital
to run the plant, is estimated at approximately $6,000,000. The second
production facility will be built only if we are able to locate a suitable site
and obtain sufficient additional debt and/or equity financing on terms
satisfactory to us. While we have working capital (total current assets less
total current liabilities) of $850,340 at December 31, 2010, the costs of a
new production facility would exceed this amount, with the actual cost of this
new facility depending upon many factors, including, without limitation, the
location and cost of the land, demolition costs of existing facilities (if any)
on the site, environmental concerns (if any) and the size of the new plant.
Further, as a development stage corporation with limited sales to date, the
company will need its existing cash resources to support our intended sales
efforts from our existing plant in Magnolia, Ohio. Accordingly, we will require
additional financing estimated at $6,000,000 for the construction of a second
facility and to support our expanded operations. We can provide no assurances
the company will be able to obtain adequate additional financing on terms
satisfactory to us, if at all. Failure to obtain the required additional
financing will cause us to be unable to have a second production facility
necessary to meet our anticipated growth in production capacity and sales
projections, adversely affecting our ability to meet our profitability goals for
future years.

Our independent
registered public accounting firm has expressed doubt about our ability to
continue as a going concern, which may hinder our ability to obtain future
financing.

Our
consolidated financial statements as of December 31, 2010 have been prepared
under the assumption that we will continue as a going concern. Our independent
registered pubil accounting firm issued a report that was included in this
annual report which included an explanatory paragraph expressing substantial
doubt to continue as a going concern without additional capital becoming
available. Our ability to continue as a going concern ultimately is dependant
of our ability to obtain additional equity or debt financing, attain further
operating efficiencies and, ultimately, to achieve profitable operaions. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

Our products may not
be accepted by the biodiesel industry as a premium product, if at all.

The companys proprietary manufacturing process and resulting G2 Diesel
product is new to the biodiesel industry and is unproven in the industry as a
biodiesel fuel product and premium fuel product. In 2009 & 2010, we paid a
total of $200,000 for tier one health effects testing in comparison
with other fuels. As a new and unproven fuel product, the industry may not
accept our G2 Diesel fuel as a premium product, if at all.

Our sales orders are
dependent upon successful results of testing programs of our G2 Diesel
undertaken by governmental organizations and municipalities and other
companies.

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Our G2 Diesel testing programs include corporate and governmental
organizations and municipalities which have completed testing in the past three
years or will be completing in the next few months. We are also conducting a
test with a fleet of urban buses in Mexico. These programs all have in common the
testing of our G2 Diesel at various percentage mixtures when blended with
traditional #2 Diesel fuel for the purpose of assessing and evaluating under
actual usage conditions in buses, car ferry services, trucks and railroads,
each of the following:

| |   |                                                   
| | - | --------------------------------------------------
| |  | power,
 performance, maintenance and engine noise;
| |  | emissions
 and exhaust smell; and                 
| |  | fuel
 economy.                                    

Management believes that our G2 Diesel (B100) will provide more power,
lower emissions of pollutants and better fuel economy than 100% traditional #2
diesel fuel. However, the current price of about $5.00 per gallon for G2 Diesel
in comparison to $3.50 per gallon for traditional #2 diesel fuel will influence
customers of our products to blend our G2 Diesel fuel with traditional #2
diesel fuel to find the right balance of cost, performance, emissions and fuel
economy. We can provide no assurances that additional testing by our
prospective clients will be successful and result in sufficient sales orders to
support our operations.

Consistency of
feedstock is a key attribution in making a high quality fuel product.

We currently use soybean oil as our feedstock. We believe that the
quality control procedure for our feedstock is essential to the production of a
quality fuel. Other producers in the industry will use multiple feedstock of
differing quality, mainly to minimize their material costs. This can lead to an
inconsistent finished fuel product which performs differently with each change
of materials. The control and consistency of our feedstock quality is a key
attribute to making a high quality fuel product that customers will buy.

There may not be an
adequate supply of soybean oil feedstock to supply the demands of the food and
biodiesel industries, which could threaten the viability of our operations.

In the future, there may not be an adequate supply of soybean oil
feedstock to supply the demand of the food products and biodiesel industries.
In this respect, any growing season disruptions, such as drought or natural
disaster(s), could cause the availability of soybean oil to become more costly
and difficult to procure. Consequently, the price of feedstock may rise to the
point where it threatens the viability of our pricing model. If we experience a
sustained period of shortages of feedstock and high feedstock costs, such
pricing may significantly limit our ability to market our product and to
compete effectively.

We have no firm
contracts to purchase our G2 Diesel or crude glycerin by-product and we can
provide no assurances that we will be able to sell our products at or near its
stated capacity, if at all.

As of December 31, 2010, we have no significant firm long-term
contracts or backlog of orders to purchase our G2 Diesel fuel or our crude
glycerin by-product. We are currently building relationships with trucking and
bus fleets, marine diesel and rail companies requiring locomotive diesel fuel.
We can provide no assurances that there will be sufficient order flow of G2
Diesel fuel or glycerin by-product to support our intended operations or that
we will be able to operate profitably and/or on a positive cash flow basis in
the future.

Our business is not
diversified and we are dependent upon the operation of our existing plant in
Magnolia, Ohio to produce biodiesel and glycerin for sale.

17

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Our success depends largely on our ability to profitably operate our
existing biodiesel plant in Magnolia, Ohio. We do not have any other lines of
business or other sources of revenue if we are unable to operate our biodiesel
plant and manufacture biodiesel. If we are forced to continue to operate at
significantly less than capacity or cease operations at our biodiesel plant for
any reason, our ability to produce sales revenue would be adversely affected.
In such an event, our stockholders could lose some or all of their investment.

Volatility in
pricing, supply and demand could harm our ability to generate sales and
profits.

Our revenues will be greatly affected by the price at which we can sell
our biodiesel and crude glycerin by-product. These prices can be volatile as a
result of a number of factors over which we have no control. These factors
include overall supply and demand, level of government support, and the
availability and price of competing products, such as diesel fuel. Increased
production of biodiesel may lead to lower prices. Any lowering of biodiesel
prices may negatively impact our ability to generate profits. Over supply of
our crude glycerin by-product could result in us being forced to pay third
parties to dispose of our crude glycerin by-product.

Technological
advances could cause our plant to become uncompetitive or obsolete.

It is possible that technological advances in the procedures for
processing biodiesel could make the processes that we utilize at our plant less
efficient or obsolete. Our Magnolia, Ohio plant is a single-purpose facility
and has no use other than the production of biodiesel and crude glycerin. Much
of the cost of the plant is attributable to the cost of production technology
which may be impractical or impossible to update. If we are unable to adopt or
incorporate technological advances, our biodiesel production methods could be
in the future less efficient than those of our competitors. If our competitors
develop, obtain or license technology that is superior to ours or that makes
our technology obsolete, we may be required to incur significant costs to
enhance or acquire new technology so that our biodiesel production remains
competitive. Alternatively, we may be required to seek third-party licenses,
which may be unavailable and/or could result in significant expenditures. These
costs could negatively impact our financial performance by increasing our
operating costs and reducing our net income.

Intense competition
in the biodiesel industry may affect our ability to sell biodiesel at
profitable prices.

We operate in a very competitive environment. We face competition for
capital, labor, management, feedstock (such as soy oil) and other resources.
Some of our competitors may be substantially larger than us and may have
significantly greater name recognition and financial, sales and marketing,
technical, and other resources. These competitors may also have more
established distribution channels and may be able to respond more rapidly to
new or emerging technologies and changes in customer requirements or devote
greater resources to biodiesel development, promotion and sale of their
products.

Our operating
subsidiary is subject to a settlement agreement and agreed upon court order
preventing the use of our G2 Diesel products from being sold as a specific
purpose additive.

Our operating subsidiary is subject to a settlement agreement of a
previous price dispute and agreed upon court order (which includes a permanent
injunction) expiring on May 22, 2011, preventing us from selling our G2 Diesel
fuel as a fuel additive. The same agreement and related court order also
prohibits one of our employees from ever disclosing Renewable Lubricants,
Inc.s trade secrets consisting of formulas and processes for bio-based and
petroleum based lubricants, greases, fuel conditioners, fuel additives and fuel
cleaners to us or any other entity or person. We can provide no assurances that
the sale of our products, as fuel and which is taxed as fuel; will not be
determined by a court of law to be an additive or otherwise in violation of the
Court Order. Any such violation of the Court Order as determined by a court of
law could materially and adversely affect our operations.

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Competition from
other sources of fuel and diesel fuel lubricity additives may decrease the
future demand for our biodiesel.

The EPA has issued regulations to reduce the amount of sulfur in diesel
fuel in order to improve air quality. The removal of sulfur from diesel fuel
reduces its lubricity which must be corrected with fuel additives. G2 Diesel,
as well as other biodiesel fuels on the market, has inherent lubricating
properties when blended with #2 Diesel fuel. By settlement agreement of a
previous private dispute and agreed upon judgment filed in Stark County, Ohio,
our operating subsidiary agreed that our G2 Diesel fuel must be sold by us as
fuel and it may not be sold by us as a special additive until after May 22,
2011. At that time, although we have no current plans, our G2 Diesel may
compete with producers of diesel additives having similar lubricity values as
biodiesel, such as petroleum-based lubricity additives. Many major oil
companies produce these petroleum-based lubricity additives and strongly favor
their use because they may be used in lower concentrations than biodiesel. In
addition, much of the infrastructure in place is for petroleum-based additives.
As a result, petroleum-based additives may be more cost-effective than
biodiesel. Due to such competition, it may be difficult in the future to market
our biodiesel to function in lieu of petroleum-based additives, which could
adversely affect our ability to generate revenues.

Because our
activities may involve the use of hazardous materials, we may be subject to
claims relating to improper handling, storage or disposal of these materials
that could be time consuming and costly.

If we use biological and hazardous materials in a manner that causes
injury, we may be liable for damages. Our future research and development
activities may involve the controlled use of potentially harmful biological
materials as well as hazardous materials or chemicals. We cannot completely
eliminate the risk of accidental contamination or injury from the use, storage,
handling or disposal of these materials. In the event of contamination or
injury, we could be held liable for damages that result, and any liability
could exceed our resources. We are subject to federal, state and local laws and
regulations governing the use, storage, handling and disposal of these
materials and specified waste products. The cost of compliance with these laws
and regulations could be significant. Our proven practices when handling these
materials has shown to mitigate these risks.

Cold weather may
cause biodiesel to gel, which could have an adverse impact on our ability to
successfully market our biodiesel.

In colder temperatures, lower percentage biodiesel blends are
recommended to avoid fuel system plugging. This may cause the demand for
biodiesel products in northern markets to diminish during the colder months.
The tendency of biodiesel to gel in colder weather may also result in long-term
storage problems. At low temperatures, fuel may need to be stored in a heated
building or heated storage tanks, which could result in higher storage costs.

Excess production of
glycerin may cause the price of glycerin to decline, thereby adversely
affecting our ability to generate revenue from the sale of glycerin.

As biodiesel production increases, the glycerin market becomes more
saturated, resulting in significant declines in the price of glycerin. Excess
glycerin production capacity may limit our ability to market our glycerin
by-product, and even result in us paying for the disposal of glycerin, which
would negatively impact our revenues and gross profit margins.

Increased insurance
risk could negatively affect our business.

Insurance and surety companies may take actions that could negatively
affect our business, including increasing insurance premiums, requiring higher
self-insured retentions and deductibles, requiring additional collateral or
covenants on surety bonds, reducing limits, restricting coverages, imposing
exclusions, and refusing to underwrite certain risks and classes of business.
Any of these would adversely

19

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affect our ability to obtain appropriate insurance coverage at
reasonable costs which would have a material adverse effect on our proposed
business.

The loss of key management
personnel could harm the companys business and prospects.

The companys success may be dependent upon its ability to retain the
services of its key executives and founders, in particular, the services of
Frederick C. Berndt, the companys Chief Executive Officer, Gary R. Smith, the
companys Chief Operating Officer, and Daniel T. Lapp, the companys Chief
Financial Officer. The ability of the company to pursue its business strategy
effectively will also depend upon, among other factors, the successful
recruitment and retention of additional highly skilled and experienced
managerial, marketing, engineering and technical personnel. There can be no
assurance that the company will be able to retain or recruit such personnel.

Loss of or
ineligibility for favorable tax benefits for biodiesel production could hinder
our ability to operate at a profit and reduce the value of our units.

The biodiesel industry and our business are assisted by various federal
biodiesel incentives such as the subsidy biodiesel producers. These tax
incentives for the biodiesel industry may not continue, or, if they continue,
the incentives may not be at the same level. The elimination or reduction of
tax incentives to the biodiesel industry could reduce the market for biodiesel,
which could reduce profits by making it more costly or difficult to produce and
sell biodiesel.

Business expansion
poses numerous risks that could limit the companys growth and financial
prospects.

The companys management intends to aggressively expand the companys
business as capital resources permit. The company may not be successful in
managing any future growth or raising additional capital. In order to manage
this expansion and to grow in the future, the company will need to expand or
enhance management, manufacturing, research and development and sales and
marketing capabilities. The company may not be able to hire the management,
staff or other personnel required to do so. As the company grows it may not be
able to install adequate control systems in an efficient and timely manner, and
current or planned operational systems, procedures and controls may not be
adequate to support future operations or new acquisitions. Difficulties in
installing and implementing new systems, procedures and controls may
significantly burden management and internal resources.

Our operations are
subject to various regulatory schemes, including environmental regulations, and
failure to comply with such regulations could harm our business, results of
operations and financial condition.

All phases of designing, constructing and operating biodiesel
production facilities present environmental risks and hazards. We are subject
to environmental regulation implemented or imposed by a variety of federal,
state and municipal laws and regulations as well as international conventions.
Among other things, environmental legislation provides for restrictions and
prohibitions on spills and discharges, as well as emissions of various
substances produced in association with biodiesel fuel operations. Legislation
also requires that facility sites be operated, maintained, abandoned and
reclaimed in such a way that would satisfy applicable regulatory authorities.
Compliance with such legislation can require significant expenditures and a breach
may result in the imposition of fines and penalties, some of which may be
material. Environmental legislation is evolving in a manner we expect may
result in stricter standards and enforcement, larger fines, penalties and
liability, as well as potentially increased capital expenditures and operating
costs. The discharge of pollutants into the air, soil or water may give rise to
liabilities to governments and third parties, and may require us to incur costs
to remedy such discharge.

20

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Failure to comply with government regulations could subject us to civil
and criminal penalties, require us to forfeit property rights and may affect
the value of our assets or our ability to conduct our business. We may also be
required to take corrective actions, including, but not limited to, installing
additional equipment, which could require us to make substantial capital
expenditures. We could also be required to indemnify our directors, officers
and employees in connection with any expenses or liabilities that they may
incur individually in connection with regulatory action against them. These
could result in a material adverse effect on our business, financial condition
and results of operations.

The obstacles to
procurement and enforcement of our intellectual property and proprietary rights
that we have or may develop could harm our competitive position by allowing
competitors access to our proprietary technology that we may develop and to
introduce competing products. Costly litigation may be necessary to protect our
intellectual property rights. We may be subject to claims alleging the
violation of the intellectual property rights of others.

Our products and related intellectual property rely primarily on a
combination of trademark, copyright, patent and trade secret laws and other
methods to protect our proprietary rights. As of March 31, 2011, we have
pending U.S., international Patent Cooperation Treaty (PCT), Canadian, Ecuador,
Columbia, India, European Union, Australia, Brazil, Chile, China, Hong Kong,
Indonesia, Israel, Japan and Mexico, and we are considering additional filings
in the future. We place considerable importance on obtaining patent and trade
secret protection for our technologies, products and/or processes. Our success
will depend at least in part on our ability, and the ability of any of our
licensors, to obtain and keep proprietary rights in our products and processes,
which permit us to exclude others from taking commercial advantage of what we
consider to be our inventions, and prevent others from using our trade secrets;
if we fail to secure patents and other intellectual property rights that cover
our products and technologies, we may be unable to derive as much financial
return on commercialization of our products as we would if such rights were
obtained. The standards which the United States Patent and Trademark Office and
similar offices of other countries utilize in deciding whether to grant patents
can change, which may result in us being unable to determine the type and
extent of any future patent claims that will be issued to us or to our
licensors in the future, if any patent claims are issued at all, and the fees
associated with filing and prosecuting patent applications may increase
significantly, which might result in us incurring higher expenses and adversely
affect our intellectual property strategy.

The commercial success of our products might also be affected by the
intellectual property rights of others. We intend to operate in a way that does
not result in willful infringement of patent, trade secret or other
intellectual property rights of other parties. Nevertheless, there can be no
assurance that a claim of infringement will not be asserted against us or that
any such assertion will not result in a judgment or order requiring us to
obtain a license in order to make, use, or sell our products. There can be no
assurance that third parties will not assert infringement claims against us in
the future with respect to any products. Any such claims or litigation, with or
without merit, could be costly and a diversion of managements attention, which
could have a material adverse effect on our business, operating results and
financial condition. Adverse determinations in such claims or litigation could
harm our business, operating results and financial condition.

A third party may claim that we are using inventions in which it has
patent rights and may go to court to stop us from engaging in our normal
operations and activities, such as research, development and the sale of any
future products. Such lawsuits are expensive and would consume time and other
resources. There is a risk that the court will decide that we are infringing
the third partys patents and order us to stop the infringing activities. In
addition, there is a risk that a court will order us to pay the other party
damages for having infringed their patents. Moreover, there is no guarantee
that the prevailing patent owner would offer us a license so that we could
continue to engage in activities claimed by the patent, or that such a license,
if made available to us, could be acquired on commercially acceptable terms. In
addition, third parties may, in the future, assert other intellectual property
infringement claims against us with respect to our products, technologies or
other matters.

21

---



International patent
protection is particularly uncertain, and if we are involved in opposition
proceedings in foreign countries, we may have to expend substantial sums and
management resources.

Patent law outside the United States is even more uncertain than in the
United States and is currently undergoing review and revision in many
countries. Further, the laws of some foreign countries may not protect our
intellectual property rights to the same extent as United States laws. We may
participate in opposition proceedings to determine the validity of our foreign
patents or our competitors foreign patents, which could result in substantial
costs and diversion of our efforts.

22

---



We are subject to
government regulations creating burdensome costs.

Various aspects of our operations are or may become subject to federal,
state or local laws, rules and regulations, any of which may change from time
to time. Costs arising out of any regulatory developments could be
time-consuming, expensive and could divert management resources and attention
and, consequently, could adversely affect our business operations and financial
performance.

We may suffer losses
from product liability claims if our products cause harm.

Any of our products that we may sell and develop in the future could
cause adverse events and could lead to product liability lawsuits. If product
liability lawsuits are successfully brought against us, we may incur
substantial liabilities and may be required to limit commercialization of our
products. Our business exposes us to potential product liability risks, which
are inherent in the testing, manufacturing, marketing and sale of bio-fuel
products. We do have insurance policies in place to mitigate these risks. We
may not be able to avoid product liability claims. A successful product
liability claim brought against us may cause us to incur substantial
liabilities and, as a result, our business plan may fail.

Our securities have
no public market.

Our common stock are restricted securities and may not be sold and/or
transferred except pursuant to an effective registration statement or an
exemption under the Securities Act of 1933, as amended (the Securities Act)
Act and applicable state or blue sky laws. April 1, 2011, there is currently
no market for any of our common stock. In the event that no public market
develops for our common stock, then investors may have to hold on to their
investment in our securities for an indefinite period of time. There are no
current or future plans to attempt to establish a public market for the
companys outstanding warrants.

We have never
declared or paid dividends on our capital stock and we do not anticipate paying
any cash dividends in the foreseeable future.

We have never declared or paid cash dividends on our capital stock and
we do not anticipate paying any cash dividends in the foreseeable future. We
currently intend to retain future earnings, if any, to fund the development and
growth of our business. Any future determination to pay cash dividends will be
at the discretion of our board of directors and will be dependent upon our
financial condition, operating results, capital requirements, applicable
contractual restrictions and other such factors as our Board of Directors may
deem relevant.

If an established
trading market for our common stock does develop, trading prices may be
volatile.


In the event that an established trading market develops in the future,
of which there can be no assurances given, the market price of our shares of
common stock may be based on factors that may not be indicative of future
market performance. Consequently, the market price of our common stock may vary
greatly. If a market for our common stock develops, there is a significant risk
that our stock price may fluctuate dramatically in the future in response to
any of the following factors, some of which are beyond our control:


| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | variations in our quarterly operating results;                                         
| |  | announcements that our revenue or income/loss levels are below
 analysts expectations;
| |  | general economic slowdowns;                                                            
| |  | changes in market valuations of similar companies;                                     
| |  | announcements by us or our competitors of significant contracts;
 and/or               
| |  | strategic partnerships, joint ventures or capital commitments.                         

23

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Our common stock may
be considered to be a penny stock and, as such, the market for our common
stock may be further limited by certain Commission rules applicable to penny
stocks.

To the extent the price of our common stock may in the future have a
public market price below $5.00 per share or we have a net tangible assets of
$5,000,000 or less, our common shares will be subject to certain penny stock
rules promulgated by the Commission. Those rules impose certain sales practice
requirements on brokers who sell penny stock to persons other than established
customers and accredited investors (generally institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of $1,000,000).
For transactions covered by the penny stock rules, the broker must make a
special suitability determination for the purchaser and receive the purchasers
written consent to the transaction prior to the sale. Furthermore, the penny
stock rules generally require, among other things, that brokers engaged in
secondary trading of penny stocks provide customers with written disclosure
documents, monthly statements of the market value of penny stocks, disclosure
of the bid and asked prices and disclosure of the compensation to the brokerage
firm and disclosure of the sales person working for the brokerage firm. These
rules and regulations adversely affect the ability of brokers to sell our
common shares in the public market should one develop and they limit the
liquidity of our shares of common stock.

The perception of
future sales of registered securities by security holders could lead to a
decline in the price, if any, of our common stock.

Future sales of substantial amounts of our currently outstanding common
stock in the public market, or the perception that such sales could occur,
could adversely affect prevailing trading prices of our common stock and could
impair our ability to raise capital through future offerings of equity or
equity-related securities. We cannot predict what effect, if any, future sales
of our common stock, or the availability of shares for future sales, will have
on the market price of our stock.

The price of common
stock may fluctuate significantly, which could result in substantial losses for
our stockholders and subject us to litigation.

The market price, if any, of our common stock also may be adversely
impacted by broad market and industry fluctuations regardless of our operating
performance, including general economic and technology trends. The various
stock markets in general have, from time to time, experienced extreme price and
trading volume fluctuations, and the market prices of alternative energy
technology companies such as ours have been extremely volatile. In addition,
some companies that have experienced volatility in the market price of their
stock have been the subject of securities class action litigation. We may be
involved in securities class action litigation in the future. This litigation
often results in substantial costs and a diversion of managements attention
and resources.

The requirements of
being a public company may strain our resources and distract our management.

As a public company, we will be subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and
the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. These requirements
may place a strain on our systems and resources. The Exchange Act requires that
we file annual, quarterly and current reports with respect to our business and
financial condition. The Sarbanes-Oxley Act requires that we maintain effective
disclosure controls and procedures and internal controls for financial
reporting. We will be required to document and test our internal control
procedures in order to satisfy the requirements of Section 404 of the
Sarbanes-Oxley Act, which requires regular management assessments of the
effectiveness of our internal controls over financial reporting. During the
course of our testing, we may identify deficiencies which we may not be able to
remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for
compliance with the requirements of Section 404. In addition, if we fail
to achieve and maintain the adequacy of our internal controls, as such standards
are modified, supplemented or amended from time to time, we may not be able to
ensure that we can

24

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conclude on an ongoing basis that we have effective internal controls
over financial reporting in accordance with Section 404 of the
Sarbanes-Oxley Act.

In order to maintain and improve the effectiveness of our disclosure
controls and procedures and internal control over financial reporting,
significant resources and management oversight will be required. This may
divert managements attention from other business concerns, which could have a
material adverse effect on our business, financial condition, results of
operations and cash flows. In addition, we may need to hire additional
accounting and financial staff with appropriate public company experience and
technical accounting knowledge, and we cannot assure you that we will be able
to do so in a timely fashion.

Item 3. Legal Proceedings

We are currently not subject to any threatened or pending legal
proceedings. Nevertheless, we may from time-to-time become a party to various
legal proceedings arising in the ordinary course of our business.

Item 4. Reserved

25

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PART II

Item 5. Market for Common Equity and Related Stockholder Matters and
Issuer Purchases of Equity Securities.

On
September 30, 2010, the Company became a reporting company under the Securities
Exchange Act of 1934. Subsequent to that date, a member of Financial Industry
Regulatory Authority, Inc. (FINRA) filed a Form 211 to have our securities
listed for trading on the OTC Bulletin Board. A symbol of ELVN has been
assigned to our Common Stock; however, trading has not commenced on the OTC
Bulletin Board as of the filing date of this Form 10-K. No market information
is being provided since our Common Stock had no public market during the past
two fiscal years.

As of March
31, 2011, there were 344 stockholders of record for our common stock. The
Companys transfer agent for the Common Stock is Continental Stock Transfer
& Trust Company, 17 Battery Place, 8th Floor, New York, NY 10004.

Dividend Policy

To date,
the Company has not declared or paid any dividends on its Common Stock. The
payment by the Company of dividends, if any, is within the discretion of the
Board of Directors and will depend on the Companys earnings, if any, its
capital requirements and financial condition, as well as other relevant
factors. The Board of Directors does not intend to declare any dividends in the
foreseeable future, but instead intends to retain earnings, if any, for use in the
Companys business operations.

Recent Sales of Unregistered Securities

Since May
23, 2007 (date of inception) through December 31, 2010, we had limited private
sales of our securities, summarized as follows:

|              |  |                    |  |                        |  |                                                                                                                                                    |  |                                           |  |                                                                                                                                                                                                                        
|------------- |  | ------------------ |  | ---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Date of
 Sale |  | Title of
 Security |  | Number Sold            |  | Consideration
 Received and
 Description of
 Underwriting or
 Other Discounts to
 Market Price or
 Convertible
 Security,
 Afforded to
 Purchasers |  | Exemption from
 Registration
 Claimed (3) |  | If Option,
 Warrant or
 Convertible
 Security, terms of
 exercise or
 conversion                                                                                                                                       
|              |  |                    |  |                        |  |                                                                                                                                                    |  |                                           |  |                                                                                                                                                                                                                        
|May 2007      |  | Common stock       |  | 10,000,000
 Shares     |  | $1,000; no
 commissions paid.                                                                                                                      |  | Section
 4(2)(1)                          |  | Not
 applicable.                                                                                                                                                                                                       
|              |  |                    |  |                        |  |                                                                                                                                                    |  |                                           |  |                                                                                                                                                                                                                        
|May 2007      |  | Preferred
 Stock   |  | 11,000,000             |  | $1,000; no
 Commissions paid.                                                                                                                      |  | Section
 4(2)(2)                          |  | Not applicable.                                                                                                                                                                                                        
|              |  |                    |  |                        |  |                                                                                                                                                    |  |                                           |  |                                                                                                                                                                                                                        
|2007 - 2009   |  | Debentures         |  | $7,930,000
 debentures |  | $643,700 of
 finders fees and commissions paid.                                                                                                   |  | Rule 506 (4)                              |  | Notes are
 convertible at $2.55 per share. Each note holder also received one warrant
 exercisable at $2.55 per share and expiring June 30, 2012 for each common
 share issued or issuable upon conversion of the note.

26

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|               |  |                            |  |                                          |  |                                                                  |  |                     |  |                                                                
|-------------- |  | -------------------------- |  | ---------------------------------------- |  | ---------------------------------------------------------------- |  | ------------------- |  | ---------------------------------------------------------------
|2009 and
 2010 |  | Common stock
 and warrants |  | 3,977,333
 shares and 1,988,667 warrants |  | $11,932,000;
 $1,193,200 commission paid.                        |  | Rule 506 (4)        |  | Warrants exercisable
 at $4.50 per share through June 30, 2012 
|               |  |                            |  |                                          |  |                                                                  |  |                     |  |                                                                
|2009 and
 2010 |  | Common stock
 and warrants |  | 2,548,513
 shares; 3,228,523 warrants    |  | Conversion
 of debt totaling $6,498,709; no commissions paid.    |  | Section
 3(a)(9)(5) |  | Warrants
 exercisable at $2.55 per share through June 30, 2012.
|               |  |                            |  |                                          |  |                                                                  |  |                     |  |                                                                
|April 2010     |  | Placement
 Agent Warrants  |  | 686,239
 warrants                        |  | Services
 rendered in conjunction with the sale of stock. (6)(8) |  | Section 4(2)        |  | Five year
 Warrants exercisable from $2.55 to $4.50 per share. 
|               |  |                            |  |                                          |  |                                                                  |  |                     |  |                                                                
|2009           |  | Common stock
 options      |  | 500,000
 options                         |  | Services
 rendered, valued at $200,205; no commissions paid. (7) |  | Section 4(2)        |  | Three year
 options exercisable at $3.00 per share.            

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(1) | Securities
 sold to sophisticated investors, including our Chief Executive Officer and
 director (9,050,000 shares), other directors (400,000 shares), legal counsel
 (50,000 shares) and consultants/employees (500,000 shares).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(2) | Securities
 sold solely to Frederick C. Berndt, our Chief Executive Officer, founder and
 a director of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(3) | Each of the
 certificates issued or to be issued representing the securities in the
 transactions listed above bears or will bear a restrictive legend permitting
 the transfer thereof only in compliance with applicable securities laws. The
 recipients of securities in each of the transactions listed above represented
 to us or will be required to represent to us their intention to acquire the
 securities for investment only and not with a view to or for sale in
 connection with any distribution thereof. All recipients had or have adequate
 access, through their employment or other relationship with our company, the
 selling agent and/or through other access to information provided by our
 company, to information about our company.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(4) | Sales were
 to accredited investors as defined under Rule 501. A Form D was filed with
 the SEC within 15 days of the first sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(5) | Existing
 securities holders (i.e. debenture holders who were accredited investors)
 converted their debt into common stock and warrants without any commissions
 or other remuneration being paid or given directly or indirectly for
 soliciting such exchange.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(6) | Sophisticated
 persons received warrants in connection with certain fund raising events.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(7) | These
 options were issued to directors of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(8) | Stock issuance cost
 was debited and credited to Additional Paid in Capital for the value of the
 agency warrants, resulted in no net impact on the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

27

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Recent Purchases of Securities

From May 23, 2007 (date of inception) through December 31, 2010, there
have been 955,322 shares repurchased pursuant to transactions described under
Certain Transactions and in the table below.

|          |  |                               |         |                               |   |                                                             |  |                                                                             |         |  |  |    |  
|--------- |  | ----------------------------- | ------- | ----------------------------- | - | ----------------------------------------------------------- |  | --------------------------------------------------------------------------- | ------- |  |  | -- | -
|Date      |  | Total #
 of shares
 purchased |         | Average price
 paid per share |   | Total shares
 purchased as
 part ofpublicly
 announcedplans |  | Maximumnumber
 or dollar amount
 that may yet be
 purchased underthe
 plans |        
|          |  |                               |         |                               |   |                                                             |  |                                                                             |        
|Oct. 2009 |  |                               | 450,000 |                               | $ | 1.00                                                        |  |                                                                             | 450,000 |  |  | (1 | )
|Dec. 2009 |  |                               | 425,000 |                               |   | 2.00                                                        |  |                                                                             | 425,000 |  |  | (1 | )
|Feb. 2010 |  |                               | 50,000  |                               |   | 2.45                                                        |  |                                                                             | 50,000  |  |  | (1 | )
|Aug. 2010 |  |                               | 30,322  |                               |   | 2.48                                                        |  |                                                                             | 30,322  |  |  | (1 | )

|                                                                                                                         | 
|------------------------------------------------------------------------------------------------------------------------ | 
|                                                                                                                         | 
|(1) At the
 time of each transaction, the company did not plan to repurchase any
 additional shares of our common stock.

Item 6. Selected Financial Data

Not
applicable.

Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations

The
following discussion should be read in conjunction with our financial
statements and the notes thereto appearing elsewhere in this Form 10-K. All statements
contained herein that are not historical facts, including, but not limited to,
statements regarding anticipated future capital requirements, our future plan
of operations, our ability to obtain debt, equity or other financing, and our
ability to generate cash from operations, are based on current expectations.
These statements are forward-looking in nature and involve a number of risks
and uncertainties that may cause our actual results in future periods to differ
materially from forecasted results.

Forward-Looking Statements

The Private
Securities Litigation Reform Act of 1995 (the Act) provides a safe harbor for
forward-looking statements made by or on behalf of our Company. Our Company and
its representatives may from time to time make written or verbal
forward-looking statements, including statements contained in this report and
other Company filings with the Securities and Exchange Commission and in our
reports to stockholders. Statements that relate to other than strictly
historical facts, such as statements about the Companys plans and strategies
and expectations for future financial performance are forward-looking
statements within the meaning of the Act. Generally, the words believe,
expect, intend, estimate, anticipate, will and other similar
expressions identify forward-looking statements. The forward-looking statements
are and will be based on managements then current views and assumptions
regarding future events and operating performance, and speak only as of their dates.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. See Risk Factors for a discussion of events and
circumstances that could affect our financial performance or cause actual
results to differ materially from estimates contained in or underlying our
forward-looking statements.

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Overview

11 Good Energy, Inc. is a Delaware corporation formed on May 23, 2007
for the purposes of developing, testing, manufacturing and distributing
bio-fuel with energy related plans and pursuits relying on the
commercialization of our proprietary fuel product, G2 Diesel, as discussed
herein.

On October 23, 2007, we completed the purchase of an existing biodiesel
manufacturer, 11 Goods Energy, LTD, a limited liability company (becoming our
subsidiary), formed in the State of Ohio in February 2006. Historically, our
subsidiary has been a development stage company, which has primarily engaged in
research activities to develop a proprietary manufacturing process to produce
bio-fuel for diesel applications.

In early 2008, we began construction of our current manufacturing
facility at the location of our operating subsidiary in Magnolia, Ohio
(Magnolia Plant). The enacting of new fire suppression regulations required us
to invest over $1,500,000 in additional infrastructure not anticipated in the
original capital expenditure budget. In addition, we ceased plant construction
and operations from November 2008 to October 2009 in order to secure the
financing and make the necessary changes to the fire suppression system and
design of the Magnolia Plant. This plant opened in November 2009 and is capable
of producing between 4,600,000 and 6,400,000 gallons of G2 Diesel fuel. Since
opening the plant, we have produced 175,000 gallons of G2 Diesel fuel.

Acquisition of 11 Goods Energy, LTD

As a result of the purchase of 11 Goods Energy, LTD all of the assets,
liabilities and proprietary technology of 11 Goods were transferred to us by
the former partners of 11 Goods in exchange for cash of $611,900,
$111,230 in assumed liabilities and 4,285,714 shares of common stock of the
company valued at $429. The assets and liabilities of 11 Goods were recorded
at fair market value at the time of acquisition. 11 Goods is our sole
subsidiary and operations and the management of 11 Goods and us are the same.
The consolidated financial statements include the accounts of us and our
wholly-owned subsidiary and all intercompany balances and transactions have
been eliminated.

The Company accounts for acquisitions in accordance with the provisions
of ASC 805-10. The Company assigns to all identifiable assets acquired a
portion of the cost of the acquired company equal to the estimated fair value
of such assets at the date of acquisition. The Company records the excess of
the cost of the acquired company over the sum of the amounts assigned to
identifiable assets acquired as goodwill. Management determined the fair values
assigned to inventory based upon selling prices less cost of disposal and the
Companys profit allowance and the case of work in process less cost to
complete. The Fair value of plant and equipment are based on current
replacement costs. The Company does not amortize goodwill. The Company recorded
goodwill in the amount of $639,504 as a result of the acquisition of 11 Goods
Energy LTD during the year ended December 31, 2007. The Company accounts for
and reports acquired goodwill under Accounting Standards Codification subtopic
350-10, Intangibles-Goodwill and Other (ASC 350-10). In accordance with ASC
350-10, the Company tests its intangible assets for impairment on an annual
basis or more often if events and circumstances warrant. Any write-downs will
be included in results from operations.

Development Stage Company - Product
Development

We are currently in the development stage of our current business plan.
We have limited operating history with respect to the construction and
operation of biodiesel refineries for our own use. In this respect, from May
23, 2007 (date of inception) through December 31, 2010, our revenues have
totaled $470,000 and our deficit accumulated during our development stage was
16,551,567. Further, our operating subsidiary incurred from February 2006
through October 2007, costs of approximately $100,000 in the development of our
subsidiarys proprietary manufacturing process and G2 Diesel product which are
not reflected in

29

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our accumulated deficit since their costs were incurred prior to the
acquisition date of our subsidiary. These costs were primarily comprised of
feedstock materials, labor and facilities costs. Since the acquisition, we have
further developed our process and product through testing and trials and have
expended money on labor, consulting, facilities and media productions in order
to further our product development. As of the filing date of this Form 10-K,
the development of the fuels functionality is complete, although we continue
to incur research and development costs to develop new feedstock alternatives
and to improve materials procurement and fuel manufacturing techniques.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of financial statements requires management to make estimates
and disclosures on the date of the financial statements. On an on-going basis,
we evaluate our estimates including, but not limited to, those related to
revenue recognition. We use authoritative pronouncements, historical experience
and other assumptions as the basis for making judgments. Actual results could
differ from those estimates. We believe that the following critical accounting
policies affect our more significant judgments and estimates in the preparation
of our financial statements.

Revenue Recognition.
We recognize revenue from product sales in accordance with ASC 605 Revenue
Recognition. Four basic criteria must be met before revenue can be recognized:
(1) persuasive evidence of an arrangement exists (through written sales
documentation); (2) delivery has occurred (through delivery into customers
tanks and acceptance); (3) the selling price is fixed and determinable; and (4)
collectability is reasonably assured. For criteria (1) we generate a sales
order and a shipping document defining number of gallons of fuel ordered,
delivery and payment terms based on standing customer data and the customers
purchase order. For criteria (2) we ensure delivery has occurred by documented
delivery terms defining where the customer accepts the fuel delivery. Fuel
stored off-site by the company remains as inventory until the customer receives
the fuel from the offsite storage facility. For criteria (3) management
determines the selling price based on feedstock costs and our desired margin
level. Our selling price fluctuates as feedstock prices increase or decrease,
primary the cost of soybean oil. Currently, management determines our selling
price on a weekly basis. For criteria (4) we establish creditworthiness of the
customer based on a review of established credit limits and current financial
health of the entity placing the fuel order. Provisions for estimated returns
and allowances, and other adjustments are provided for in the same period the
related sales are recorded, although we have not experienced any such items to
date and do not expect any significant provisions in the future. We have no
discount, rebate or warranty programs. Payments received in advance are
deferred until revenue recognition is appropriate. We have no post-delivery
obligations related to our products.

Inventory Valuation.
We are required to make judgments based on historical experience and future
expectations, as to the realizability of our inventory. We make these
assessments based on the following factors: (a) existing orders and usage, (b)
age of the inventory, and (c) historical experience.

Property and Equipment.
We are required to make judgments based on historical experience and future
expectations, as to the realizability of our property and equipment. We made
these assessments based on the following factors: (a) the estimated useful
lives of such assets, (b) technological changes in our industry, and (c) the
changing needs of our customers.

Fair Value of Intangible Assets.
We have adopted Statement of Accounting Standards Codification subtopic 805-10
(ASC 805-10). ASC 805-10 requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Events relating to
recoverability may include significant unfavorable changes in business
conditions, recurring losses, or a forecasted inability to achieve break-even
operating results over an extended period.

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We evaluate the recoverability of long-lived assets based upon
forecasted undiscounted cash flows. Should impairment in value be indicated,
the carrying value of intangible assets will be adjusted, based on estimates of
future discounted cash flows resulting from the use and ultimate disposition of
the asset. ASC 805-10 also requires assets to be disposed of be reported at the
lower of the carrying amount or the fair value less costs to sell.

Stock-Based Compensation

We account for our stock based compensation under ASC 718 Compensation
 Stock Compensation using the fair value based method. Under this method,
compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period, which is usually the vesting period.
This guidance establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods or services. It also
addresses transactions in which an entity incurs liabilities in exchange for
goods or services that are based on the fair value of the entitys equity
instruments or that may be settled by the issuance of those equity instruments.

There were no employee stock options and employee stock purchases
granted to employees and directors during the period from May 23, 2007 (date of
inception) through December 31, 2008. On July 22, 2009, the company granted
500,000 stock options to outside directors at an exercise price of $3.00 per
share. We recorded the fair value of $200,205 as compensation expense for the
year ended December 31, 2009, as a result of this transaction. These options
are for a period of three years and are fully vested. There were no unvested
options outstanding as of the date of adoption of FASB ASC Topic 718.

We use the fair value method for equity instruments granted to
non-employees (if any) and will use the Black-Scholes model for measuring the
fair value of options, if issued. The stock based fair value compensation is
determined as of the date of the grant or the date at which the performance of
the services is completed (measurement date) and is recognized over the vesting
periods.

Results of Operations

The company is considered to be in the development stage in accordance
with the FASB ASC Topic 915  Development Stage Enterprises. Since its
inception, the company has devoted substantially all of its time to raising
capital, obtaining financing, research and development activities and obtaining
many governmental organizations, municipalities and corporations to test our G2
Diesel and its performance as a blend with traditional #2 diesel fuel.

The following table sets forth certain selected condensed consolidated
statement of operations data for the periods indicated:

|                                     |  |                          |           |   |  |      |   |   |           |  |  |      |  
|------------------------------------ |  | ------------------------ | --------- | - |  | ---- | - | - | --------- |  |  | ---- | -
|                                     |  | Years ended December 31, |          
|                                     |  |                          |          
|                                     |  | 2010                     |           | % |  | 2009 |   | % |          
|                                     |  |                          |           |   |  |      |   |   |          
|                                    
|Revenue                              |  | $                        | 292,066   |   |  | 100  | % | $ | 84,218    |  |  | 100  | %
|Cost of
 goods sold                  |  |                          | 747,783   |   |  | >100 | % |   | 70,162    |  |  | 83   | %
|                                     |  |                          |           |   |  |      |   |   |           |  |  |      |  
|                                     |  |                          |           |   |  |      |   |   |           |  |  |      |  
|Gross profit                         |  |                          | (455,717  | ) |  | >100 | % |   | 14,056    |  |  | 17   | %
|                                     |  |                          |           |   |  |      |   |   |           |  |  |      |  
|Operating expenses:                  |  |                          |           |   |  |      |   |   |           |  |  |      |  
|Selling,
 general and administrative |  |                          | 6,054,480 |   |  | >100 | % |   | 3,580,932 |  |  | >100 | %
|Research and
 development            |  |                          | 543,401   |   |  | >100 | % |   | 238,208   |  |  | >100 | %
|Depreciation
 and amortization       |  |                          | 126,052   |   |  | 43   | % |   | 64,744    |  |  |      |  
|                                     |  |                          |           |   |  |      |   |   |           |  |  |      |  
|                                     |  |                          |           |   |  |      |   |   |           |  |  |      |  
|Total
 operating expenses:           |  |                          | 6,723,933 |   |  |      |   |   | 3,883,884 |  |  |      |  
|                                     |  |                          |           |   |  |      |   |   |           |  |  |      |  

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|                          |  |   |            |   |  |      |   |   |            |   |  |      |  
|------------------------- |  | - | ---------- | - |  | ---- | - | - | ---------- | - |  | ---- | -
|Net loss
 from operations |  |   | (7,179,690 | ) |  |      |   |   | (3,869,828 | ) |  |      |  
|                          |  |   |            |   |  |      |   |   |            |   |  |      |  
|Other
 income/expense:    |  |   |            |   |  |      |   |   |            |   |  |      |  
|Interest,
 net            |  |   | (6,932     | ) |  | 2    | % |   | (2,789,030 | ) |  | >100 | %
|Other income              |  |   | 20,957     |   |  | 7    | % |   | 109,049    |   |  | >100 | %
|                          |  |   |            |   |  |      |   |   |            |   |  |      |  
|                          |  |   |            |   |  |      |   |   |            |   |  |      |  
|Net loss                  |  | $ | (7,165,625 | ) |  | >100 | % | $ | (6,549,809 | ) |  | >100 | %
|                          |  |   |            |   |  |      |   |   |            |   |  |      |  

Year Ended December 31, 2010 Compared to the
Year Ended December 31, 2009

The increase in revenues in 2010 of $207,848, or 247%, is primarily due
to the increased number of companies, organizations and municipalities testing
our product.. Many of these testing programs were completed in the last three
fiscal years, while often testing is continuing. Management believes that the
results of these testing programs have resulted and will continue to result in
increased demand and sales orders for our G2 Diesel at premium prices which as
of December 31, 2010 is approximately $5.00 per gallon compared to traditional
#2 diesel fuel currently priced at approximately $3.50 per gallon.

Cost of goods sold was $747,783 and $70,162 for 2010 and 2009,
respectively, or 256% of revenues for the year ended 2010 and 83% of revenues
for the year ended 2009. Costs of goods sold primarily consist of the
procurement and transportation of soybean oil, ethanol and other raw materials
used in the manufacture of G2 Diesel; including payroll costs associated with
labor, depreciation of manufacturing equipment, manufacturing facilities
expense, insurance costs and other operating costs directly related to
production. The increase in cost of goods sold as a percentage of sales for
2010 is primarily due to the companys increase in manufacturing depreciation
from the Manufacturing facility being operational the entire year in comparison
to only one month in 2009. Manufacturing depreciation was $275,277 in 2010 all
of which was recorded as Cost of Goods Sold. Also, due to the testing programs
extending to 2010 and 2011 and the discounted pricing for test fuel, margins
have remained slight in 2010. We expect margins to improve once we have sales
contracts in place after the testing programs are complete.

Gross loss was $(455,717) in 2010 as compared to a gross profit of
$14,056 in 2009. Gross loss as a percentage of revenues was 156% and gross
profit as a percentage of revenues was 17% for the years ended December 31,
2010 and 2009, respectively. Over the past three years and continuing in 2010
gross margins have continued to be a small percentage of total revenues. In
addition; gross margin percentages will vary from period to period depending
upon the extent of fuel testing with potential customers and the pricing
offered by the company. Also, we experienced an increase in Manufacturing
Depreciation of approximately $250,000 recorded as Cost of Goods Sold for 2010 when compared
to 2009. The gross margin for 2010 and 2009 is not necessarily indicative of
the margins that may be realized in future periods.

Research and development costs increased to $543,401 in 2010 as a
result of the testing and product development programs compared to $238,208 in
2009. During 2010, we completed the Southwest Research Institutes testing,
which began in 2009 and tested the health effects of our fuels emissions. We
recorded $200,000 in R&D expenses relating to the Southwest Research test
compared to $0 in 2009. We also recorded $200,000 in R&D expense for
payments made to Kai Bio Energy compared to $50,000 recorded to R&D expense
in the previous year. Lastly, in 2010, we recorded R&D expense totaling
$115,397 to Chosen Acres, LLC compared to $0 in the previous year. In 2009, we
recorded $185,000 to R&D expense, which was reclassified from Cost of Goods
Sold, due to the development of the new plant and our unique manufacturing
process for this particular scale. In 2010, the plant was operational and
required no additional development of functionality and we had no such
reclassification in 2010.

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Depreciation and amortization increased by $61,308 or 95% in 2010 when
compared to the same period of 2009. The increase is primarily due to the
capitalization of $2.5 million to Leasehold Improvements and Manufacturing
Equipment, which began depreciating in mid November 2009.

Selling, general, and administrative expenses (i.e. operating expenses)
for 2010 were $6,054,480 as compared to $3,580,932 for the comparable period of
the prior year. Such costs include, among others, payroll and related expenses,
insurance costs and occupancy costs. The change in operating expenses of
$2,473,548 in 2010 is primarily due to the following: (i) 2010 payments of
common stock to consultants and employees from the Companys CEO and a founding
shareholder, which was treated for accounting purposes as operating expenses
and donated capital totaling $1,212,693 when compared to the same charges of
$831,205 in 2009, (ii) increases in consulting fees totaling $572,866 and (iii)
additional provider fees such as advisory, legal and accounting aggregating
$291,066, (iv) additional payroll and bonus related expenses totaling $270,027,
(v) increases in promotional and marketing expense of $473,236 and (vi)
increases in facility cost and insurances of $225,248.

Interest expense, net was $6,932 in 2010 as compared to $2,789,039 in
2009 or a net decrease of $2,782,107. Between August 2009 and March 2010, the
company had raised $11,932,000 through the sale of its Common Stock at a price
of $3.00 per share, for a total of 3,977,333 shares, resulting in net proceeds
to us of $10,353,069. In 2010, the company converted $6,498,709 of Convertible
notes payable to Common Stock to be issued at a price of $2.55 per share, or
2,548,513 shares to be issued and warrants to purchase 3,228,523 shares of
Common Stock and the entire remaining balance of convertible notes was
redeemed, with principal and accrued interest paid to each redeeming note
holder. The decrease in interest expense is primarily attributable to the
foregoing events.

Net loss was $(7,165,625) in 2010 compared to $(6,549,809) in 2009.
Basic and fully diluted net loss per share for 2010 and 2009 was $(.39) and
$(.46), respectively. Basic and fully diluted weighted average shares
outstanding for 2010 and 2009 were 18,351,350 and 14,291,248, respectively.

As of December 31, 2010, we have contracts with vendors, advisors and
professionals nationally assisting us in our business, but have no firm
contracts or backlog of orders from customers to purchase our G2 Diesel fuel or
our crude glycerin by-product described herein. Through our past and current
testing programs, we are building relationships with trucking fleets, marine
diesel and rail companies requiring locomotive diesel fuel. The companys sales
and marketing focus consists of building lasting relationships with major
transportation companies to provide large quantities of G2 Diesel.

We are currently conducting a test with a fleet of urban buses in
Mexico. The test has been underway since December 2010 and is expected to be
completed in 2011. The test compares fuel consumption of busses using our fuel,
blended 5% with diesel fuel, with the fuel consumption of busses using regular
diesel fuel available in Mexico. A total of 5,500 gallons or G2 Diesel fuel
will have been used upon completion of the program, enough to blend 110,000
gallons at a 5% G2 Diesel blend. As of the date of this filing, the vehicles
tested have shown as much as a 17% decrease in total fuel consumption, when
using our fuel blended with diesel fuel, compared to their original base line
fuel consumption using regular diesel fuel. Their reaction has been very
positive and has the potential to generate an order in excess of 200,000
gallons per month.

We are currently awaiting approval of our fuel variance in the state of
California. The fuel variance is required to meet California regulations to
sell motor fuel. We have spent considerable resources to meet Californias
requirements to meet this regulation and have received positive feedback from
our representatives that it should pass in 2011. We currently are licensed to
sell fuel in California; however, we must meet this regulation to sell G2
Diesel. The variance requirement has certainly delayed our ability to expand
our market presence in California and has delayed our ability to sell our fuel
in California. Its passage will allow many of our potential customers in
California to go to order and purchase G2 Diesel at a large scale.

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RJ Corman Railroad Company, a short rail hauler, has tested our fuel in
several of their diesel electric locomotives. RJ Corman Railroad Company has
also purchased our fuel over the past three years, but has yet to proceed to a
significant order. This test began in April 2011 and is planned to last for one
month. The test program is expected to consume 250 gallons of G2 Diesel and is
being tested at a 2% belnd of our fuel with standard diesel fuel. We are
encouraged that these most recent trials will allow for a more significant
order from the RJ Corman Railroad Company.

We expect order flow to occur once these companies complete their
testing programs, which has proven to be part of the process to reach a
contract. We can provide no assurances that Managements plans will be
realized, that there will be sufficient order flow of G2 Diesel fuel to support
our intended operations or that we will be able to operate profitably and/or on
a positive cash flow basis in the future.

We will attempt to sell our crude glycerin by-products to manufacturers
of cosmetics, toiletries, pharmaceuticals and food products, since we do not
have the capability of refining the glycerin. Our ability to sell this
by-product will be limited to those manufacturers who require crude glycerin
and have the capability to refine it. We can provide no assurances that we will
be successful in selling our crude glycerin by-product; among other reasons,
our major focus will be the sale of our G2 Diesel. See Risk Factors.

Liquidity and Capital Resources

The company had cash and cash equivalents of $29,879
    at December 31, 2010. Net cash was used in operating activities of $5,235,978
    for the year ended December 31, 2010. Cash used in operations was primarily
    attributable to the net loss for the period of $7,165,625; an increase in
    inventory of $350,260, and partially offset by depreciation and amortization
    of $401,329, compensation of services by a related party of $1,493,840, decrease
    in other assets of $243,697, and increase in accrued expense of $166,448.
    Net cash used in investing activities of $118,719 for the year ended December
    31, 2010, included purchase of property, plant and equipment of $149,073
    and the purchase of Securities available for sale of $254,369 and proceeds
    from the sale of securities available for sale of $342,995, and acquisition
    of patent in the amount of $58,272. Net cash provided by financing activities
    of $514,827, for the year ended December 31, 2010, included proceeds from
    the sale of Common Stock of $805,846, partially offset by the purchase of
    treasure stock and due from related party of $251,091, payments of related
    party note payable of $25,000 and payments of convertible notes of $15,000.

From May 23, 2007 (date of inception) through December 31, 2009, the
company raised $7,930,000 by issuing notes payable convertible into Common
Stock, bearing 8% interest per annum. These Notes (including principal and
accrued interest thereon) became convertible at a price of $2.55 per share (the
Conversion Price) based upon a 15% discount to the companys equity raise
which was completed at an offering price of $3.00 per share between August 2009
and March 2010. In addition to the number of conversion shares to be delivered
to each Holder of this Note, upon conversion of the Principal Amount and
accrued interest thereon, the company also delivered Unclassified Warrants
expiring June 30, 2012 to purchase a number of shares of Common Stock equal to
the number of Conversion Shares. As of December 31, 2010, December 31, 2009 and
2008, the company had outstanding $0, $35,000 and $2,642,721 respectively, of these
convertible notes.

The company had cash and cash equivalents of $4,869,749 at December 31,
2009. Cash used in operations for the year ended December 31, 2009 was
$4,217,150; this would primarily be used to fund the aforementioned losses of
the company of $6,549,809. Cash used in investing activities was $2,791,868,
which included the purchase of property and equipment for $1,971,697, the
purchase of securities held for sale for $1,028,123, also included are proceeds
from the sale of securities available for sale of $204,752. Cash provided by
financing activities was $11,878,767 and consisted of proceeds of $4,855,000
from the private placement of Convertible Debentures, the purchase of treasury
stock for

34

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$450,000 and $9,447,223 in proceeds from common stock subscription, net
of repayments of convertible notes of $1,695,000 and loans to related party of
$278,456.

In 2010, the company converted $6,498,709 of Convertible notes payable
to Common Stock to be issued at a price of $2.55 per share, or 2,548,513 shares
to be issued and warrants to purchase 3,228,523 shares of Common Stock and the
entire remaining balance of convertible notes was redeemed, with principal and
accrued interest paid to each redeeming note holder.

Between August 2009 and March 2010, the company had raised $11,932,000
through the sale of its Common Stock at a price of $3.00 per share, for a total
of 3,977,333 shares, resulting in net proceeds to us of $10,253,069.

We have a history of losses from operations and
    an accumulated deficit of $16,537,228 at December 31, 2010. As of March 31,
    2011, we are operating one production facility with 11 employees, with a
    burn rate of approximately $285,000 per month While our G2 Diesel fuel and
    its related manufacturing process is fully developed in each of 2009 and
    2010, we paid $200,000 toward research and development activities to a vendor
    to find ways to improve the cost effectiveness of the manufacturing process
    and the feedstock utilized therein. We also paid $200,000 toward independent
    testing of our product. Total research and development expenditure was $543,401
    and $238,208 for the years ended December 31, 2010 and 2009, respectively.
    While the Company anticipates more substantial revenues will result by the
    end of 2011 as a result of the completion of product testing, our ability
    to achieve profitable operations may depend on our ability to raise additional
    financing, on terms satisfactory to us, particularly if cash flow from operations
    is less than expected by management. Further, there is no guarantee that
    we will ever be able to operate profitably or derive any significant revenues
    from our operations. See Risk
    Factors under Item
    1A.

We anticipate that our future liquidity requirements will arise from
the need to finance our accounts receivable and inventories, and from the need
to fund our current obligations and capital expenditures. The primary sources
of funding for our current operations will be cash on hand, cash generated from
operations, and, if needed, raising additional capital either from the sale of
equity and/or debt securities. We are attempting to raise up to $10,000,000 in
a private placement offering. We can provide no assurances that additional
financing will be completed on terms satisfactory to us, if at all. See Risk
Factors.

Our future plans include purchasing and/or leasing a site for the
purpose of constructing a second production facility with an estimated annual
output capacity of 30,000,000 gallons of G2 Diesel. To date, we have completed
engineering and construction plans for such a facility and have made inquiries
into potential sites in the State of Ohio for such a facility. However, detailed
milestones of these plans and the specific steps needed to accomplish each
milestone do not currently exist. Management estimates that once a site is
secured, that construction permitting and all the other steps necessary to have
such a site constructed and operational would take approximately one year to
complete. Management has adopted a board resolution that no further material
costs will be expended on a potential second production facility until the
construction and operational costs of such a facility, which are estimated at
approximately $6,000,000, are first secured so that our plans for a new
production facility will not be a burden to our current liquidity and capital
resource needs.

The actual costs of this new facility will depend upon many factors,
including, without limitation, the location and cost of the land, demolition
costs of existing facilities (if any) on the site, environmental concerns (if
any) and the size of the new plant. We can provide no assurances that the
company will be able to obtain adequate financing for its second production
facility on terms satisfactory to us, if at all. See Risk Factors.

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Recent Accounting Developments

In July 2010, the FASB issued Accounting Standards Update 2010-20 which
amend Receivables (Topic 310). ASU 2010-20 is intended to provide additional
information to assist financial statement users in assessing an entitys risk
exposures and evaluating the adequacy of its allowance for credit losses. The
disclosures as of the end of a reporting period are effective for interim and
annual reporting periods ending on or after December 15, 2010. The disclosures
about activity that occurs during a reporting period are effective for interim
and annual reporting periods beginning on or after December 15, 2010. The
amendments in ASU 2010-20 encourage, but do not require, comparative
disclosures for earlier reporting periods that ended before initial adoption.
However, an entity should provide comparative disclosures for those reporting
periods ending after initial adoption. The adoption of ASU 2010-20 did not have
a significant impact on the Companys financial statements.

On December 21, 2010, the FASB issued Accounting Standards Update
(ASU) 2010-29, which impacts any public entity that enters into business
combinations that are material on an individual or aggregate basis. The
guidance specifies that if a public entity presents comparative financial
statements, the entity should disclose revenues and earnings of the combined
entity as though the business combination(s) that occurred during the year had
occurred at the beginning of the prior annual period when preparing the pro
forma financial information for both the current and prior reporting periods.
The guidance also requires that pro forma disclosures be accompanied by a
narrative description regarding the nature and amount of material, nonrecurring
pro forma adjustments directly attributable to the business combination
included in reported pro forma revenues and earnings. This guidance is
effective for business combinations consummated in periods beginning after
December 15, 2010. We do not believe the adoption of this guidance will
have a material impact on our Consolidated Financial Statements.

There were various other updates recently issued, most of which
represented technical corrections to the accounting literature or application
to specific industries and are not expected to a have a material impact on the
Companys consolidated financial position, results of operations or cash flows.

Item 7A. Quantitative and Qualitative Disclosures About Market Risks.

Market risk is the risk of loss
arising from adverse changes in market rates and prices, such as interest
rates, foreign currency exchange rates and commodity prices. Our primary
exposures are the interest rate risk associated with our short term money
market investments and market risk associated with equity investments available
for sale. These are highly liquid investments on an exchange with a readily
available market. The Company does not invest in derivative financial
instruments, interest rate swaps or other investments that alter interest rate
exposure. The Company does not have any credit facilities with variable
interest rates.

Item 8. Financial Statements

The report
of the Independent Registered Public Accounting Firm, Financial Statements and
Schedules are set forth beginning on page F-1 of this Annual Report on Form
10-K following this page.

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

None.

Item 9.A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures
    that are designed to ensure material information required to be disclosed
    in our periodic reports filed under the Securities Exchange Act of 1934,
    as amended, or "1934 Act," is recorded, processed, summarized,
    and reported within the time periods specified in the SEC's rules and forms
    and to help ensure such information is accumulated and communicated to our
    Management, including our Chief Executive Officer and Chief Financial Officer,
    as appropriate, to allow timely decisions regarding required disclosure.
    For the year ended December 31, 2010, we carried out an evaluation, under
    the supervision and with the participation of our Management, including the
    Chief Executive Officer and Chief Financial Officer, of the effectiveness
    of the design and operation of our disclosure controls and procedures, as
    defined in Rule 13(a)-15(e) under the 1934 Act. Based on this evaluation,
    because of the Company's limited resources and limited number of employees,
    Management concluded that our disclosure controls and procedures were ineffective
    based on certain respects, as of December 31, 2010.

Management's Report on Internal Control over
        Financial Reporting

Our Management is responsible for establishing
    and maintaining adequate internal control over financial reporting. The Company's
    internal control over financial reporting is designed to provide reasonable
    assurances regarding the reliability of financial reporting and the preparation
    of the financial statements of the Company in accordance with U.S. generally
    accepted accounting principles, or GAAP. Because of its inherent limitations,
    internal control over financial reporting may not prevent or detect misstatements.
    Also, projections of any evaluation of effectiveness to future periods are
    subject to the risk that controls may become inadequate because of changes
    in conditions, or that the degree or compliance with the policies or procedures
    may deteriorate.

With the participation of our Chief Executive Officer
    and Chief Financial Officer, our management conducted an evaluation of the
    effectiveness of our internal control over financial reporting as of December
    31, 2010 based on the framework in Internal Control - Integrated Framework
    issued by the Committee of Sponsoring Organizations of the Treadway Commission
    ("COSO"). Based on our evaluation and the material weaknesses described
    below, Management concluded that the Company did not maintain effective internal
    control over financial reporting as of December 31, 2010 based on the COSO
    framework criteria. Management has identified control deficiencies regarding
    the lack of segregation of duties and the need for a stronger internal control
    environment. Management of the Company believes that these material weaknesses
    are due to the small size of the Company's accounting staff. The small size
    of the Company's accounting staff may prevent adequate controls in the future,
    such as segregation of duties, due to the cost/benefit of such remediation.

To mitigate the current limited resources and limited
    employees, we rely heavily on direct management oversight of transactions,
    along with the use of legal and outsourced accounting professionals. As we
    grow, we expect to increase our number of employees, which, we believe,  will
    enable us to implement adequate segregation of duties within the internal
    control framework.

In light of this material weakness, we performed additional analyses
    and procedures in order to conclude that our consolidate financial statements
    for the year ended December 31, 2010 included in this Annual Report on Form
    10-K were fairly stated in accordance with US GAAP. Accordingly, Management
    believes that, despite our material weaknesses, our consolidated financial
    statements for the year ended December 31, 2010 are fairly stated, in all
    material respects, in accordance with GAAP.

This annual report does not include an attestation
    report of our registered public accounting firm regarding internal control
    over financial reporting. Management's report was not subject to attestation
    by our registered public accounting firm pursuant to temporary rules of the
    Securities and Exchange Commission that permit us to provide only Management's
    report in this Annual Report on Form 10-K.

Changes in Internal Controls

During the fiscal quarter ended December 31, 2010,
    there have been no changes to our internal control over financial reporting
    that have materially affected or are reasonably likely to materially affect
    our internal controls over financial reporting.

36

---



11 GOOD ENERGY, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                                                                 |  |         
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|                                                                                                                                                                 |  | Page    
|                                                                                                                                                                 |  |         
|Report of Independent Registered Public
 Accounting Firm                                                                                                         |  | F-2     
|                                                                                                                                                                 |  |         
|Consolidated Balance Sheets as of December
 31, 2010 and 2009                                                                                                    |  | F-3     
|                                                                                                                                                                 |  |         
|Consolidated Statements of Operations for
 the years ended December 31, 2010 and 2009 and from the period May 23, 2007
 (date of inception) to December 31, 2010 |  | F-4     
|                                                                                                                                                                 |  |         
|Consolidated Statement of Stockholders
 Equity for the period from May 23, 2007 (date of inception) to December 31,
 2010                                       |  | F-5     
|                                                                                                                                                                 |  |         
|Consolidated Statements of Cash Flows for
 the years ended December 31, 2010 and 2009 and from the period May 23, 2007
 (date of inception) to December 31, 2010 |  | F-8     
|                                                                                                                                                                 |  |         
|Notes to Consolidated Financial Statements                                                                                                                       |  | F-9-F-31

F-1

---



Report of
Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of 11 Good Energy, Inc.

We have audited the accompanying consolidated balance
    sheets of 11 Good Energy, Inc. and Subsidiary (the Company),
    a development stage company as of December 31, 2010 and 2009 and the related
    consolidated statements of operations, changes in stockholders equity
    and cash flows for each of the years for the two year period ended December
    31, 2010 and for the period from May 23, 2007 (date of inception) to December
    31, 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 the standards of the Public
Company Accounting Oversight Board (United States of America). 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, 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 consolidated financial statements referred to the
above present fairly, in all material respects, the financial position of 11
Good Energy, Inc. and Subsidiary as of December 31, 2010 and 2009, and the
consolidated results of operations, stockholders equity and cash flows for
each of the years in the twoyear period ended December 31, 2010 and for the
period from May 23, 2007 (date of inception) to December 31, 2010 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 shown in the consolidated
financial statements, the Company has incurred net losses since its inception.
This raises substantial doubt about the Companys ability to continue as a
going concern. Managements plans in regard to this matter are described in
Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

As discussed in Note 3 to the consolidated financial statements, the
Company restated the balance sheet as of December 31, 2009 and the related
consolidated statements of operations, cash flows and stockholders equity for
the year then ended.

|                    |             
|------------------- | ------------
|                    | /s/ RBSM LLP
|New York,
 New York |             
|April 15, 2011      |             

F-2

---



11 GOOD ENERGY, INC.
AND SUBSIDIARY
(a development stage company)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2010 AND 2009

|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ----------- | ---------- | - | ---------- | -
|                                                                                                                                                                                                                                                                                                             |  | 2010 |             | 2009       |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |  
|                                                                                                                                                                                                                                                                                                             |  |      |             | (restated) |  
|ASSETS                                                                                                                                                                                                                                                                                                       |  |      |             |            |   |            |  
|Current assets:                                                                                                                                                                                                                                                                                              |  |      |             |            |   |            |  
|Cash                                                                                                                                                                                                                                                                                                         |  | $    | 29,879      |            | $ | 4,869,749  |  
|Inventory                                                                                                                                                                                                                                                                                                    |  |      | 624,739     |            |   | 274,479    |  
|Accounts receivable, net                                                                                                                                                                                                                                                                                     |  |      | 51,801      |            |   | 47,351     |  
|Available for sale securities                                                                                                                                                                                                                                                                                |  |      | 576,990     |            |   |           |  
|Other current assets                                                                                                                                                                                                                                                                                         |  |      | 24,974      |            |   | 268,671    |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|Total current assets                                                                                                                                                                                                                                                                                         |  |      | 1,308,383   |            |   | 5,460,250  |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|Property, plant and equipment, net                                                                                                                                                                                                                                                                           |  |      | 2,562,675   |            |   | 2,814,931  |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|Other assets:                                                                                                                                                                                                                                                                                                |  |      |             |            |   |            |  
|Patients                                                                                                                                                                                                                                                                                                     |  |      | 58,272      |            |   |           |  
|Available for sale securities                                                                                                                                                                                                                                                                                |  |      |            |            |   | 980,724    |  
|Goodwill                                                                                                                                                                                                                                                                                                     |  |      | 639,504     |            |   | 639,504    |  
|Deposits                                                                                                                                                                                                                                                                                                     |  |      | 2,163       |            |   | 2,163      |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|Total other assets:                                                                                                                                                                                                                                                                                          |  |      | 699,939     |            |   | 1,622,391  |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|Total assets                                                                                                                                                                                                                                                                                                 |  | $    | 4,570,997   |            | $ | 9,897,572  |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|LIABILITIES
 AND STOCKHOLDERS EQUITY                                                                                                                                                                                                                                                                        |  |      |             |            |   |            |  
|Current liabilities:                                                                                                                                                                                                                                                                                         |  |      |             |            |   |            |  
|Accounts payable and accrued liabilities                                                                                                                                                                                                                                                                     |  | $    | 458,043     |            | $ | 292,565    |  
|Notes payable, related party                                                                                                                                                                                                                                                                                 |  |      |            |            |   | 25,000     |  
|Convertible notes payable, net of discount                                                                                                                                                                                                                                                                   |  |      |            |            |   | 35,000     |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|Total current liabilities                                                                                                                                                                                                                                                                                    |  |      | 458,043     |            |   | 352,565    |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|Commitments and contingencies                                                                                                                                                                                                                                                                                |  |      |             |            |   |            |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|Stockholders equity:                                                                                                                                                                                                                                                                                        |  |      |             |            |   |            |  
|Series A Preferred stock, $0.0001 par
 value; 11,000,000 shares authorized, issued and outstanding at December 31,
 2010 and 2009                                                                                                                                                                            |  |      | 1,100       |            |   | 1,100      |  
|Common stock, $0.0001 par value; 65,000,000
 and 38,000,000 shares authorized as of December 31, 2010 and 2009,
 respectively; 20,811,561 and 15,055,74 issued as of December 31, 2010 and
 2009, respectively; 19,856,239 and 14,180,714 shares outstanding as of
 December 31, 2010 and 2009, respectively |  |      | 2,081       |            |   | 1,506      |  
|Common stock subscribed-convertible note                                                                                                                                                                                                                                                                     |  |      |            |            |   | 6,477,739  |  
|Common stock subscribed                                                                                                                                                                                                                                                                                      |  |      |            |            |   | 7,137,223  |  
|Additional paid in capital                                                                                                                                                                                                                                                                                   |  |      | 22,498,920  |            |   | 6,563,877  |  
|Due from related party                                                                                                                                                                                                                                                                                       |  |      | (53,519     | )          |   |           |  
|Deficit accumulated during development
 stage                                                                                                                                                                                                                                                                |  |      | (16,551,567 | )          |   | (9,385,942 | )
|Accumulated other comprehensive income                                                                                                                                                                                                                                                                       |  |      | (286,561    | )          |   | 49,504     |  
|Treasury stock, 955,322 and 875,000 shares
 as of December 31, 2010 and 2009, respectively                                                                                                                                                                                                                   |  |      | (1,497,500  | )          |   | (1,300,000 | )
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|Total stockholders equity                                                                                                                                                                                                                                                                                   |  |      | 4,112,954   |            |   | 9,545,007  |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|Total liabilities and stockholders equity                                                                                                                                                                                                                                                                   |  | $    | 4,570,997   |            | $ | 9,897,572  |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  
|                                                                                                                                                                                                                                                                                                             |  |      |             |            |   |            |  

See the accompanying notes to
these consolidated financial statements

F-3

---



11 GOOD
ENERGY, INC. AND SUBSIDIARY
(a development stage company)CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|------------------------------------------------------------------------ |  | ----------------------- | ---------- | ---------------------------------------------- | - | ----------------- | - | - | ----------- | -
|                                                                         |  | Year ended December 31, |            | From May 23, 2007
 (date of inception) through |  
|                                                                         |  | 2010                    |            | 2009                                           |   | December 31, 2010 |  
|                                                                         |  |                         |            |                                                |   |                   |  
|                                                                         |  |                         |            | (restated)                                     |   |                   |  
|                                                                         |  |                         |            |                                                |   |                   |  
|REVENUE:                                                                 |  |                         |            |                                                |   |                   |  
|Sales                                                                    |  | $                       | 292,066    |                                                | $ | 84,218            |   | $ | 470,000     |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|Cost of sales                                                            |  |                         | 747,783    |                                                |   | 70,162            |   |   | 907,563     |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|Gross (loss) profit                                                      |  |                         | (455,717   | )                                              |   | 14,056            |   |   | (437,563    | )
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|OPERATING EXPENSES:                                                      |  |                         |            |                                                |   |                   |   |   |             |  
|General, selling and administrative
 expenses                            |  |                         | 6,054,480  |                                                |   | 3,580,932         |   |   | 11,397,217  |  
|Research and development                                                 |  |                         | 543,401    |                                                |   | 238,208           |   |   | 811,982     |  
|Depreciation and amortization                                            |  |                         | 126,052    |                                                |   | 64,744            |   |   | 240,212     |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|Total operating expenses                                                 |  |                         | 6,723,933  |                                                |   | 3,883,884         |   |   | 12,449,412  |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|NET (LOSS) FROM OPERATIONS                                               |  |                         | (7,179,650 | )                                              |   | (3,869,828        | ) |   | (12,886,975 | )
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|Other income/(expense):                                                  |  |                         |            |                                                |   |                   |   |   |             |  
|Interest income                                                          |  |                         | 145        |                                                |   | 27,324            |   |   | 55,384      |  
|Interest expense                                                         |  |                         | (7,077     | )                                              |   | (2,816,354        | ) |   | (3,849,982  | )
|Realized gain on sale of securities                                      |  |                         | 20,957     |                                                |   | 107,849           |   |   | 128,806     |  
|Gain on sale of property, plant and
 equipment                           |  |                         |           |                                                |   | 1,200             |   |   | 1,200       |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|Total other income (expense)                                             |  |                         | 14,025     |                                                |   | (2,679,981        | ) |   | (3,664,592  | )
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|Net loss before provision for income
 taxes                              |  |                         | (7,165,625 | )                                              |   | (6,549,809        | ) |   | (16,551,567 | )
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|Provision for income taxes                                               |  |                         |           |                                                |   |                  |   |   |            |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|NET LOSS ATTRIBUTABLE TO COMMON
 SHAREHOLDERS                            |  | $                       | (7,165,625 | )                                              | $ | (6,549,809        | ) | $ | (16,551,567 | )
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|Net loss per common share (basic and
 fully diluted)                     |  | $                       | (0.39      | )                                              | $ | (0.46             | ) | $ | (1.11       | )
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|Weighted average number of shares
 outstanding (basic and fully diluted) |  |                         | 18,351,350 |                                                |   | 14,291,248        |   |   | 14,905,413  |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|Comprehensive loss:                                                      |  |                         |            |                                                |   |                   |   |   |             |  
|Net loss                                                                 |  | $                       | (7,165,625 | )                                              | $ | (6,549,809        | ) | $ | (16,551,567 | )
|Unrealized (loss) gain on securities
 available for sale                 |  |                         | (336,065   | )                                              |   | 49,504            |   |   | (286,561    | )
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  
|Comprehensive loss                                                       |  | $                       | (7,501,690 | )                                              | $ | (6,500,305        | ) | $ | (16,838,128 | )
|                                                                         |  |                         |            |                                                |   |                   |   |   |             |  

See accompanying notes to these consolidated
financial statements

F-4

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
FROM MAY 23, 2007 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010


|                                                                             |  |            |  |        |       |                                              |            |                           |   |       |  |                 |  |       |   |        |   |   |  |   |   |  |                              |           |                         |   |          |   |   |                                |  |   |   |  |                                                    |            |   |   |            |  
|---------------------------------------------------------------------------- |  | ---------- |  | ------ | ----- | -------------------------------------------- | ---------- | ------------------------- | - | ----- |  | --------------- |  | ----- | - | ------ | - | - |  | - | - |  | ---------------------------- | --------- | ----------------------- | - | -------- | - | - | ------------------------------ |  | - | - |  | -------------------------------------------------- | ---------- | - | - | ---------- | -
|                                                                             |  |            |  |        |       |                                              |            |                           |   |       |  |                 |  |       |   |        |   |   |  |   |   |  |                              |           |                         |   |          |   |   |                                |  |   |   |  | Accumulated
 
 Deficit during
 Development 
 Stage |            |   |   |           
|                                                                             |  |            |  |        |       |                                              |            |                           |   |       |  |                 |  |       |   |        |   |   |  |   |   |  | Additional
 Paid in
 Capital |           | Due from
 Related party |   |          |   |   | Other
 
 Comprehensive
 Income |  |   |   |  |                                                   
|                                                                             |  | Preferred  |  | Common |       | Common
 stock
 subscribed
 Convertible Notes |            | Common
 stock
 Subscribed |   |       |  | Treasury
 Stock |  |       |   |        |   |  
|                                                                             |  | Stock      |  | Amount |       | Stock                                        |            | Amount                    |   | Stock |  | Amount          |  | Stock |   | Amount |   |   |  |   |   |  | Total                        |          
|                                                                             |  |            |  |        |       |                                              |            |                           |   |       |  |                 |  |       |   |        |   |   |  |   |   |  |                              |           |                         |   |          |   |  
|May 23, 2007, date of inception                                              |  | 11,000,000 |  | $      | 1,100 |                                              | 9,700,000  |                           | $ | 970   |  |                |  | $     |  |        | $ |  |  | $ |  |  | $                            |          |                         | $ |         |   | $ |                               |  | $ |  |  | $                                                  |           |   | $ | 2,070      |  
|Common stock issued for services to be rendered                              |  |           |  |        |      |                                              | 300,000    |                           |   | 30    |  |                |  |       |  |        |   |  |  |   |  |  |                              | 155,970   |                         |   |         |   |   |                               |  |   |  |  |                                                    |           |   |   | 156,000    |  
|Common stock issued to acquire 11 Goods Energy LTD                          |  |           |  |        |      |                                              | 4,285,714  |                           |   | 429   |  |                |  |       |  |        |   |  |  |   |  |  |                              |          |                         |   |         |   |   |                               |  |   |  |  |                                                    |           |   |   | 420        |  
|Beneficial conversion feature relating to the issuance of convertible
 notes |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |  |        |   |  |  |   |  |  |                              | 639,719   |                         |   |         |   |   |                               |  |   |  |  |                                                    |           |   |   | 639,710    |  
|Increase in due from related party                                           |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |  |        |   |  |  |   |  |  |                              |          |                         |   | (211,034 | ) |   |                               |  |   |  |  |                                                    |           |   |   | (211,034   | )
|Net loss                                                                     |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |  |        |   |  |  |   |  |  |                              |          |                         |   |         |   |   |                               |  |   |  |  |                                                    | (771,405   | ) |   | (771,405   | )
|                                                                             |  |            |  |        |       |                                              |            |                           |   |       |  |                 |  |       |   |        |   |   |  |   |   |  |                              |           |                         |   |          |   |   |                                |  |   |   |  |                                                    |            |   |   |            |  
|Balance, December 31, 2007                                                   |  | 11,000,000 |  |        | 1,100 |                                              | 14,285,714 |                           |   | 1,429 |  |                |  |       |  |        |   |  |  |   |  |  |                              | 795,689   |                         |   | (211,034 | ) |   |                               |  |   |  |  |                                                    | (771,405   | ) |   | (184,221   | )
|Beneficial conversion feature relating to the issuance of convertible
 notes |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |  |        |   |  |  |   |  |  |                              | 613,254   |                         |   |         |   |   |                               |  |   |  |  |                                                    |           |   |   | 613,254    |  
|Increase in due from related party                                           |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |  |        |   |  |  |   |  |  |                              |          |                         |   | (297,654 | ) |   |                               |  |   |  |  |                                                    |           |   |   | (297,654   | )
|Net loss                                                                     |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |  |        |   |  |  |   |  |  |                              |          |                         |   |         |   |   |                               |  |   |  |  |                                                    | (2,064,728 | ) |   | (2,064,728 | )
|                                                                             |  |            |  |        |       |                                              |            |                           |   |       |  |                 |  |       |   |        |   |   |  |   |   |  |                              |           |                         |   |          |   |   |                                |  |   |   |  |                                                    |            |   |   |            |  
|Balance, December 31, 2008                                                   |  | 11,000,000 |  | $      | 1,100 |                                              | 14,285,714 |                           | $ | 1,429 |  |                |  | $     |  |        | $ |  |  | $ |  |  | $                            | 1,408,943 |                         | $ | (508,688 | ) | $ |                               |  | $ |  |  | $                                                  | (2,836,133 | ) | $ | (1,933,349 | )

See the accompanying notes to these consolidated financial statements

F-5

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
FROM MAY 23, 2007 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010


|                                                                                                   |  |            |  |        |       |                                              |            |                           |   |       |  |                 |  |       |           |        |   |           |  |   |           |  |                              |           |                         |   |          |   |   |                                |   |   |        |  |                                                    |            |   |   |            |  
|-------------------------------------------------------------------------------------------------- |  | ---------- |  | ------ | ----- | -------------------------------------------- | ---------- | ------------------------- | - | ----- |  | --------------- |  | ----- | --------- | ------ | - | --------- |  | - | --------- |  | ---------------------------- | --------- | ----------------------- | - | -------- | - | - | ------------------------------ | - | - | ------ |  | -------------------------------------------------- | ---------- | - | - | ---------- | -
|                                                                                                   |  |            |  |        |       |                                              |            |                           |   |       |  |                 |  |       |           |        |   |           |  |   |           |  |                              |           |                         |   |          |   |   |                                |   |   |        |  | Accumulated
 
 Deficit during
 Development 
 Stage |            |   |   |           
|                                                                                                   |  |            |  |        |       |                                              |            |                           |   |       |  |                 |  |       |           |        |   |           |  |   |           |  | Additional
 Paid in
 Capital |           | Due from
 Related party |   |          |   |   | Other
 
 Comprehensive
 Income |   |   |        |  |                                                   
|                                                                                                   |  | Preferred  |  | Common |       | Common
 stock
 subscribed
 Convertible Notes |            | Common
 stock
 Subscribed |   |       |  | Treasury
 Stock |  |       |           |        |   |          
|                                                                                                   |  | Stock      |  | Amount |       | Stock                                        |            | Amount                    |   | Stock |  | Amount          |  | Stock |           | Amount |   |           |  |   |           |  | Total                        |          
|                                                                                                   |  |            |  |        |       |                                              |            |                           |   |       |  |                 |  |       |           |        |   |           |  |   |           |  |                              |           |                         |   |          |   |  
|Balance, January 1, 2009                                                                           |  | 11,000,000 |  | $      | 1,100 |                                              | 14,285,714 |                           | $ | 1,429 |  |                |  | $     |          |        | $ |          |  | $ |          |  | $                            | 1,408,943 |                         | $ | (508,688 | ) | $ |                               |   | $ |       |  | $                                                  | (2,836,133 | ) | $ | (1,933,349 | )
|Beneficial conversion feature relating to the issuance of convertible
 notes                       |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |          |        |   |          |  |   |          |  |                              | 2,054,806 |                         |   |         |   |   |                               |   |   |       |  |                                                    |           |   |   | 2,054,806  |  
|Common stock to be issued in exchange for convertible notes and
 accrued interest                  |  |           |  |        |      |                                              |           |                           |   |      |  | 2,540,290       |  |       | 6,477,739 |        |   |          |  |   |          |  |                              |          |                         |   |         |   |   |                               |   |   |       |  |                                                    |           |   |   | 6,477,739  |  
|Compensation of services by a related party                                                        |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |          |        |   |          |  |   |          |  |                              | 531,000   |                         |   |         |   |   |                               |   |   |       |  |                                                    |           |   |   | 531,000    |  
|Compensation of services by a consultant                                                           |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |          |        |   |          |  |   |          |  |                              | 59,000    |                         |   |         |   |   |                               |   |   |       |  |                                                    |           |   |   | 59,000     |  
|Sale of common stock                                                                               |  |           |  |        |      |                                              | 770,000    |                           |   | 77    |  |                |  |       |          |        |   | 2,931,333 |  |   | 7,137,223 |  |                              | 2,309,923 |                         |   |         |   |   |                               |   |   |       |  |                                                    |           |   |   | 9,447,223  |  
|Fair value of options granted to directors                                                         |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |          |        |   |          |  |   |          |  |                              | 200,205   |                         |   |         |   |   |                               |   |   |       |  |                                                    |           |   |   | 200,205    |  
|Increase in due from related party                                                                 |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |          |        |   |          |  |   |          |  |                              |          |                         |   | (278,456 | ) |   |                               |   |   |       |  |                                                    |           |   |   | (278,456   | )
|Common stock re-acquired for cash                                                                  |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |          |        |   |          |  |   |          |  |                              |          |                         |   |         |   |   | (450,000                       | ) |   |       |  |                                                    |           |   |   | (450,000   | )
|Common stock re-acquired for receivable due from related party and
 issuance of related party note |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |          |        |   |          |  |   |          |  |                              |          |                         |   | 787,144  |   |   | (850,000                       | ) |   |       |  |                                                    |           |   |   | (62,856    | )
|Unrealized gain on securities available for sale                                                   |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |          |        |   |          |  |   |          |  |                              |          |                         |   |         |   |   |                               |   |   | 49,504 |  |                                                    |           |   |   | 49,504     |  
|Net loss                                                                                           |  |           |  |        |      |                                              |           |                           |   |      |  |                |  |       |          |        |   |          |  |   |          |  |                              |          |                         |   |         |   |   |                               |   |   |       |  |                                                    | (6,549,809 | ) |   | (6,549,809 | )
|                                                                                                   |  |            |  |        |       |                                              |            |                           |   |       |  |                 |  |       |           |        |   |           |  |   |           |  |                              |           |                         |   |          |   |   |                                |   |   |        |  |                                                    |            |   |   |            |  
|Balance, December 31, 2009 (Restated)                                                              |  | 11,000,000 |  | $      | 1,100 |                                              | 15,055,714 |                           | $ | 1,506 |  | 2,540,290       |  | $     | 6,477,739 |        | $ | 2,931,333 |  | $ | 7,137,223 |  | $                            | 6,563,877 |                         | $ |         |   | $ | (1,300,000                     | ) | $ | 49,504 |  | $                                                  | (9,385,942 | ) | $ | 9,545,007  |  

See the accompanying notes to these consolidated financial statements

F-6

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
FROM MAY 23, 2007 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2010


|                                                                                  |  |            |  |        |       |                                              |            |                           |   |       |  |                 |   |       |            |        |  |            |   |   |            |   |                              |            |                        |   |         |   |   |                              |   |   |          |   |                                                 |             |   |   |            |  
|--------------------------------------------------------------------------------- |  | ---------- |  | ------ | ----- | -------------------------------------------- | ---------- | ------------------------- | - | ----- |  | --------------- | - | ----- | ---------- | ------ |  | ---------- | - | - | ---------- | - | ---------------------------- | ---------- | ---------------------- | - | ------- | - | - | ---------------------------- | - | - | -------- | - | ----------------------------------------------- | ----------- | - | - | ---------- | -
|                                                                                  |  |            |  |        |       |                                              |            |                           |   |       |  |                 |   |       |            |        |  |            |   |   |            |   |                              |            |                        |   |         |   |   |                              |   |   |          |   | Accumulated
 Deficit during
 Development
 Stage |             |   |   |           
|                                                                                  |  |            |  |        |       |                                              |            |                           |   |       |  |                 |   |       |            |        |  |            |   |   |            |   | Additional
 Paid in
 Capital |            | Due from
 Relatedparty |   |         |   |   | Other
 Comprehensive
 Income |   |   |          |   |                                                
|                                                                                  |  | Preferred  |  | Common |       | Common
 stock
 subscribed
 Convertible Notes |            | Common
 stock
 Subscribed |   |       |  | Treasury
 Stock |   |       |            |        |  |           
|                                                                                  |  | Stock      |  | Amount |       | Stock                                        |            | Amount                    |   | Stock |  | Amount          |   | Stock |            | Amount |  |            |   |   |            |   | Total                        |           
|                                                                                  |  |            |  |        |       |                                              |            |                           |   |       |  |                 |   |       |            |        |  |            |   |   |            |   |                              |            |                        |   |         |   |  
|Balance, January 1, 2010                                                          |  | 11,000,000 |  | $      | 1,100 |                                              | 15,055,714 |                           | $ | 1,506 |  | 2,540,290       |   | $     | 6,477,739  |        |  | 2,931,333  |   | $ | 7,137,223  |   | $                            | 6,563,877  |                        | $ |        |   | $ | (1,300,000                   | ) | $ | 49,504   |   | $                                               | (9,385,942  | ) | $ | 9,545,007  |  
|Common stock to be issued in exchange for convertible notes and
 accrued interest |  |           |  |        |      |                                              |           |                           |   |      |  | 8,223           |   |       | 20,970     |        |  |           |   |   |           |   |                              |           |                        |   |        |   |   |                             |   |   |         |   |                                                 |            |   |   | 20,970     |  
|Sale of common stock                                                              |  |           |  |        |      |                                              |           |                           |   |      |  |                |   |       |           |        |  | 276,000    |   |   | 805,846    |   |                              |            |                        |   |         |   |   |                              |   |   |          |   |                                                 |             |   |   | 805,846    |  
|Contribution of services by a related party                                       |  |           |  |        |      |                                              |           |                           |   |      |  |                |   |       |           |        |  |           |   |   |           |   |                              | 1,493,840  |                        |   |        |   |   |                             |   |   |         |   |                                                 |            |   |   | 1,493,840  |  
|Common stock reacquired                                                           |  |           |  |        |      |                                              |           |                           |   |      |  |                |   |       |           |        |  |           |   |   |           |   |                              |           |                        |   |        |   |   | (197,500                     | ) |   |         |   |                                                 |            |   |   | (197,500   | )
|Due from related party                                                            |  |           |  |        |      |                                              |           |                           |   |      |  |                |   |       |           |        |  |           |   |   |           |   |                              |           |                        |   | (53,519 | ) |   |                             |   |   |         |   |                                                 |            |   |   | (53,519    | )
|Unrealized loss on securities available for sale                                  |  |           |  |        |      |                                              |           |                           |   |      |  |                |   |       |           |        |  |           |   |   |           |   |                              |           |                        |   |        |   |   |                             |   |   | (336,065 | ) |                                                 |            |   |   | (336,065   | )
|Common stock issued in settlement of common stock subscriptions                   |  |           |  |        |      |                                              | 5,755,847  |                           |   | 575   |  | (2,548,513      | ) |       | (6,498,709 | )      |  | (3,207,333 | ) |   | (7,943,069 | ) |                              | 14,441,203 |                        |   |        |   |   |                             |   |   |         |   |                                                 |            |   |   |           |  
|Net loss                                                                          |  |           |  |        |      |                                              |           |                           |   |      |  |                |   |       |           |        |  |           |   |   |           |   |                              |           |                        |   |        |   |   |                             |   |   |         |   |                                                 | (7,165,625  | ) |   | (7,165,625 | )
|                                                                                  |  |            |  |        |       |                                              |            |                           |   |       |  |                 |   |       |            |        |  |            |   |   |            |   |                              |            |                        |   |         |   |   |                              |   |   |          |   |                                                 |             |   |   |            |  
|Balance, December 31, 2010                                                        |  | 11,000,000 |  | $      | 1,100 |                                              | 20,811,561 |                           | $ | 2,081 |  |                |   | $     |           |        |  |           |   | $ |           |   | $                            | 22,498,920 |                        | $ | (53,519 | ) | $ | (1,497,500                   | ) | $ | (286,561 | ) | $                                               | (16,551,567 | ) | $ | 4,112,954  |  
|                                                                                  |  |            |  |        |       |                                              |            |                           |   |       |  |                 |   |       |            |        |  |            |   |   |            |   |                              |            |                        |   |         |   |   |                              |   |   |          |   |                                                 |             |   |   |            |  

See the accompanying notes to these consolidated financial statements

F-7

---



|                                     
|-------------------------------------
|11 GOOD ENERGY, INC. AND SUBSIDIARY  
|(a development stage company)        
|CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                            |  |                         |            |                                                                   |            |            |   |   |             |  
|------------------------------------------------------------------------------------------- |  | ----------------------- | ---------- | ----------------------------------------------------------------- | ---------- | ---------- | - | - | ----------- | -
|                                                                                            |  | Year ended December 31, |            | From May 23, 2007
 (date of inception) through
 December 31, 2010 |           
|                                                                                            |  | 2010                    |            | 2009                                                              |            |           
|                                                                                            |  |                         |            |                                                                   |            |            |   |   |             |  
|                                                                                            |  |                         |            |                                                                   | (restated) |            |   |   |            
|Cash flows from operating activities:                                                       |  |                         |            |                                                                   |            |            |   |   |             |  
|Net loss for the period                                                                     |  | $                       | (7,165,625 | )                                                                 | $          | (6,549,809 | ) | $ | (16,551,567 | )
|Adjustments to reconcile net loss to net
 cash used in operating activities:                |  |                         |            |                                                                   |            |            |   |   |             |  
|Depreciation and amortization                                                               |  |                         | 401,329    |                                                                   |            | 94,010     |   |   | 545,338     |  
|Amortization of debt discount                                                               |  |                         |           |                                                                   |            | 2,512,084  |   |   | 3,307,777   |  
|Stock Compensation of services by a related party                                           |  |                         | 1,493,840  |                                                                   |            | 531,000    |   |   | 2,024,840   |  
|Compensation of services to consultant                                                      |  |                         |           |                                                                   |            | 59,000     |   |   | 59,000      |  
|Fair value of options issued for services                                                   |  |                         |           |                                                                   |            | 200,205    |   |   | 200,205     |  
|Gain on sale of property and equipment                                                      |  |                         |           |                                                                   |            | (1,200     | ) |   | (1,200      | )
|Realized gain on sale of securities
 available for sale                                     |  |                         | (20,957    | )                                                                 |            | (107,849   | ) |   | (128,806    | )
|Changes in operating assets and
 liabilities:                                               |  |                         |            |                                                                   |            |            |   |   |             |  
|Inventory                                                                                   |  |                         | (350,260   | )                                                                 |            | (263,148   | ) |   | (598,503    | )
|Accounts receivable                                                                         |  |                         | (4,450     | )                                                                 |            | (47,351    | ) |   | (51,801     | )
|Other current assets                                                                        |  |                         | 243,697    |                                                                   |            | (225,493   | ) |   | 133,036     |  
|Accounts payable and accrued liabilities                                                    |  |                         | 166,448    |                                                                   |            | (418,599   | ) |   | 498,075     |  
|                                                                                            |  |                         |            |                                                                   |            |            |   |   |             |  
|Net cash (used in) operating activities                                                     |  |                         | (5,235,978 | )                                                                 |            | (4,217,150 | ) |   | (10,563,606 | )
|                                                                                            |  |                         |            |                                                                   |            |            |   |   |             |  
|Cash flows from investing activities:                                                       |  |                         |            |                                                                   |            |            |   |   |             |  
|Acquisition, net of cash acquired                                                           |  |                         |           |                                                                   |            |           |   |   | (588,952    | )
|Proceeds from sale of property and
 equipment                                               |  |                         |           |                                                                   |            | 3,200      |   |   | 3,200       |  
|Purchase of property, plant and equipment                                                   |  |                         | (149,073   | )                                                                 |            | (1,971,697 | ) |   | (3,039,723  | )
|Payments for acquisition of patent                                                          |  |                         | (58,272    | )                                                                 |            |           |   |   | (58,272     | )
|Proceeds from sale of securities available
 for sale                                        |  |                         | 342,995    |                                                                   |            | 204,752    |   |   | 547,747     |  
|Purchase of securities available for sale                                                   |  |                         | (254,369   | )                                                                 |            | (1,028,123 | ) |   | (1,282,492  | )
|                                                                                            |  |                         |            |                                                                   |            |            |   |   |             |  
|Net cash (used in) investing activities                                                     |  |                         | (118,719   | )                                                                 |            | (2,791,868 | ) |   | (4,418,492  | )
|                                                                                            |  |                         |            |                                                                   |            |            |   |   |             |  
|Cash flows from financing activities:                                                       |  |                         |            |                                                                   |            |            |   |   |             |  
|Proceeds from sale of shares to founders                                                    |  |                         |           |                                                                   |            |           |   |   | 2,070       |  
|Payment to shareholders                                                                     |  |                         | (53,519    | )                                                                 |            | (278,456   | ) |   | (840,663    | )
|Proceeds from common stock subscription                                                     |  |                         | 805,846    |                                                                   |            | 9,447,223  |   |   | 10,253,069  |  
|Proceeds from issuance of convertible notes                                                 |  |                         |           |                                                                   |            | 4,855,000  |   |   | 8,039,323   |  
|Proceeds from related party note payable                                                    |  |                         |           |                                                                   |            |           |   |   | 25,000      |  
|Purchase of treasury stock                                                                  |  |                         | (197,500   | )                                                                 |            | (450,000   | ) |   | (647,500    | )
|Payments of related party note payable                                                      |  |                         | (25,000    | )                                                                 |            |           |   |   | (25,000     | )
|Payments of notes payable                                                                   |  |                         |           |                                                                   |            |           |   |   | (84,322     | )
|Payments of convertible notes                                                               |  |                         | (15,000    | )                                                                 |            | (1,695,000 | ) |   | (1,710,000  | )
|                                                                                            |  |                         |            |                                                                   |            |            |   |   |             |  
|Net cash provided by financing activities                                                   |  |                         | 514,827    |                                                                   |            | 11,878,767 |   |   | 15,011,977  |  
|                                                                                            |  |                         |            |                                                                   |            |            |   |   |             |  
|Net increase (decrease) in cash and cash
 equivalents                                       |  |                         | (4,839,870 | )                                                                 |            | 4,869,749  |   |   | 29,879      |  
|Cash and cash equivalents at beginning of
 period                                           |  |                         | 4,869,749  |                                                                   |            |           |   |   |            |  
|                                                                                            |  |                         |            |                                                                   |            |            |   |   |             |  
|                                                                                            |  |                         |            |                                                                   |            |            |   |   |             |  
|Cash and cash equivalents at end of period                                                  |  | $                       | 29,879     |                                                                   | $          | 4,869,749  |   | $ | 29,879      |  
|                                                                                            |  |                         |            |                                                                   |            |            |   |   |             |  
|                                                                                            |  |                         |            |                                                                   |            |            |   |   |             |  
|Supplemental disclosures of cash flow
 information:                                         |  |                         |            |                                                                   |            |            |   |   |             |  
|Taxes paid                                                                                  |  | $                       |           |                                                                   | $          |           |   | $ |            |  
|Interest paid                                                                               |  | $                       |           |                                                                   | $          | 227,109    |   | $ |            |  
|Non cash financing activities:                                                              |  |                         |            |                                                                   |            |            |   |   |             |  
|Common stock issued to acquire 11 Goods
 Energy, LTD                                       |  | $                       |           |                                                                   | $          |           |   | $ | 429         |  
|Common stock issued in exchange for
 convertible note and accrued interest                  |  | $                       | 20,970     |                                                                   | $          | 6,477,739  |   | $ | 6,498,709   |  
|Issuance of
     common stock subscribed for conversion of convertible notes                |  | $                       | 6,498,709  |                                                                   | $          |           |   | $ | 6,498,709   |  
|Treasury stock received in exchange for
 related party note receivable and accrued interest |  | $                       |           |                                                                   | $          | 787,144    |   | $ | 787,144     |  

See the accompanying notes to these consolidated financial statements

F-8

---



11 GOOD ENERGY, INC. AND SUBSIDIARY(a
development stage company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31,
2010 AND 2009

NOTE 1  SIGNIFICANT ACCOUNTING POLICIES

A
summary of the significant accounting policies applied in the presentation of
the accompanying financial statements follows:

Basis
and business presentation

11
Good Energy, Inc. (the Company) was incorporated under the laws of the State
of Delaware on May 23, 2007. The Company is in the development stage, as
defined by Accounting Standards Codification subtopic 915-10, Development Stage
Entities (ASC 915-10) and is developing alternative fuel sources,
particularly the manufacture and distribution of Bio-fuel products for diesel
engine applications. To date, the Company has generated minimal sales revenues,
has incurred expenses and has sustained losses. Consequently, its operations
are subject to all the risks inherent in the establishment of a new business
enterprise. For the period from inception through December 31, 2010, the
Company has accumulated a deficit through its development stage of $16,551,567.

The
consolidated financial statements include the accounts of the Company,
and its wholly-owned subsidiary 11 Goods Energy, LTD (11 Goods). All
significant intercompany balances and transactions have been eliminated in
consolidation.

Acquisition
of 11 Goods Energy, LTD

On
October 23, 2007 the Company acquired all outstanding membership interests of
11 Goods Energy, LTD (11 Goods) for a purchase price of $723,559. The
Company acquired all the assets and assumed all liabilities of 11 Goods. There
were no contingent payments, options or commitments associated with the
acquisition. A summary of consideration is as follows:

|                                                                |  |   |         | 
|--------------------------------------------------------------- |  | - | ------- | 
|Cash (including $111,900
 of liabilities paid prior to closing) |  | $ | 611,900 | 
|4,285,714 shares of the
 Companys common stock at par value    |  |   | 429     | 
|Liabilities assumed                                             |  |   | 111,230 | 
|                                                                |  |   |         | 
|                                                                |  |   |         | 
|Total purchase price                                            |  | $ | 723,559 | 
|                                                                |  |   |         | 

11
Goods was an existing biodiesel manufacturer formed in the State of Ohio in
February 2006. Historically, 11 Goods has been in development stage primarily
engaged in research activities to develop a proprietary manufacturing process
to produce bio-fuel for diesel applications.

F-9

---



11 GOOD ENERGY, INC. AND SUBSIDIARY(a
development stage company)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31,
2010 AND 2009

NOTE 1  SIGNIFICANT ACCOUNTING POLICIES (continued)

The allocation of the
purchase price is as follows:

|                                                  |  |   |          |  
|------------------------------------------------- |  | - | -------- | -
|Cash                                              |  | $ | 22,948   |  
|Accounts receivable                               |  |   | 4,173    |  
|Inventory                                         |  |   | 26,236   |  
|Property, plant and
 equipment                    |  |   | 30,698   |  
|Goodwill                                          |  |   | 639,504  |  
|                                                  |  |   |          |  
|                                                  |  |   |          |  
|                                                  |  |   |          |  
|Assets acquired                                   |  | $ | 723,559  |  
|Less cash acquired                                |  |   | (22,948  | )
|                                                  |  |   |          |  
|Acquisition, net of cash
 acquired                |  | $ | 700,611  |  
|Less liabilities assumed
 and common stock issued |  |   | (111,659 | )
|                                                  |  |   |          |  
|Cash paid net of cash
 acquired                   |  | $ | 588,952  |  
|                                                  |  |   |          |  

The
Company accounts for acquisitions in accordance with the provisions of ASC
805-10. The Company assigns to all identifiable assets acquired, a portion of
the cost of the acquired company equal to the estimated fair value of such
assets at the date of acquisition. The Company records the excess of the cost
of the acquired company over the sum of the amounts assigned to identifiable
assets acquired as goodwill.

Management
determined the fair values assigned to inventory based upon selling prices less
cost of disposal and the Companys profit allowance and the case of work in
process less cost to complete. The Fair value of plant and equipment are based
on current replacement costs.

The
Company does not amortize goodwill. The Company recorded goodwill in the amount
of $639,504 as a result of the acquisition of 11 Goods Energy LTD during the
year ended December 31, 2007.

The
Company accounts for and reports acquired goodwill under Accounting Standards
Codification subtopic 350-10, Intangibles-Goodwill and Other (ASC 350-10). In
accordance with ASC 350-10, the Company tests its intangible assets for
impairment on an annual or more often if events and circumstances warrant. Any
write-downs will be included in results from operations.

During
the years ended December 31, 2010 and 2009, the Company management performed an
evaluation of its goodwill for purposes of determining the implied fair value
of the assets at the end of each respective year. The test indicated that the
recorded remaining book value of its goodwill did not exceed its fair value for
the years ended December 31, 2010 and 2009. Considerable management judgment is
necessary to estimate the fair value. Accordingly, actual results could vary
significantly from managements estimates.

Unaudited
proforma information for the acquisition of 11 Goods has not been presented as
the acquisition is not significant to the results of operations for the period
from May 23, 2007 (date of inception) through December 30, 2010.

F-10

---



11 GOOD ENERGY, INC. AND SUBSIDIARY(a
development stage company)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31,
2010 AND 2009

NOTE 1  SIGNIFICANT ACCOUNTING POLICIES (continued)

Estimates

The
preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosure. Accordingly, actual
results could differ from those estimates. Such estimates include managements
assessments of useful lives of assets and related depreciation and amortization
methods applied.

Revenue
Recognition

We
recognize revenue from product sales in accordance with ASC 605 Revenue
Recognition. Four basic criteria must be met before revenue can be recognized:
(1) persuasive evidence of an arrangement exists (through written sales
documentation); (2) delivery has occurred (through delivery into customers
tanks and acceptance); (3) the selling price is fixed and determinable; and (4)
collectability is reasonably assured. For criteria (1) we generate a sales
order and a shipping document defining number of gallons of fuel ordered, delivery
and payment terms based on standing customer data and the customers purchase
order. For criteria (2) we ensure delivery has occurred by documented delivery
terms defining where the customer accepts the fuel delivery. Fuel stored off
site by the company remains as inventory until the customer receives the fuel
from the offsite storage facility. For criteria (3) management determines the
selling price based on feedstock costs and our desired margin level. Our
selling price fluctuates as feedstock prices increase or decrease, primary the
cost of soybean oil. Currently, management determines our selling price on a
weekly basis. For criteria (4) we establish creditworthiness of the customer
based on a review of established credit limits and current financial health of
the entity placing the fuel order. Provisions for estimated returns and
allowances, and other adjustments are provided for in the same period the
related sales are recorded, although we have not experienced any such items to
date and do not expect any significant provisions in the future. We have no
discount, rebate or warranty programs. Payments received in advance are
deferred until revenue recognition is appropriate. We have no post-delivery
obligations related to our products.

Cash
and Cash Equivalents

For
purposes of the Statements of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity date of three months or less
to be cash equivalents.

Fair
Values

In
the first quarter of fiscal year 2008, 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. Refer to Footnote 14 for further discussion regarding
fair valuation.

F-11

---



11 GOOD ENERGY, INC. AND SUBSIDIARY(a
development stage company)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31,
2010 AND 2009

NOTE 1  SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts
Receivable

The
Company assesses the realization of its receivables by performing ongoing
credit evaluations of its customers financial condition. Through these
evaluations, the Company may become aware of a situation where a customer may
not be able to meet its financial obligations due to deterioration of its
financial viability, credit ratings or bankruptcy. The Companys reserve
requirements are based on the best facts available to the Company and are
reevaluated and adjusted as additional information is received. The Companys
reserves are also based on amounts determined by using percentages applied to certain
aged receivable categories. These percentages are determined by a variety of
factors including, but not limited to, current economic trends, historical
payment and bad debt write-off experience. Allowance for doubtful accounts for
accounts receivable was $-0- as of December 31, 2010 and 2009.

Available
for Sale Securities

Available-for-sale
securities are recorded at fair value with the net unrealized gains and losses
(that are deemed to be temporary) reported, net of tax, as a component of other
comprehensive income. Realized gains and losses and charges for
other-than-temporary impairments are included in determining net income, with
related purchase costs based on the first-in, first-out method.

Segment
information

Accounting
Standards Codification subtopic Segment Reporting 280-10 (ASC 280-10) which
establishes standards for reporting information regarding operating segments in
annual financial statements and requires selected information for those
segments to be presented in interim financial reports issued to stockholders.
ASC 280-10 also establishes standards for related disclosures about products
and services and geographic areas. Operating segments are identified as
components of an enterprise about which separate discrete financial information
is available for evaluation by the chief operating decision maker, or
decision-making group, in making decisions how to allocate resources and assess
performance. The Company applies the management approach to the identification
of our one reportable operating segment as provided in accordance with ASC
280-10. The information disclosed herein materially represents all of the
financial information related to the Companys principal operating segment.

Research
and Development

The
Company accounts for research and development costs in accordance with
Accounting Standards Codification subtopic 730-10, Research and Development
(ASC 730-10). Under ASC 730-10, all research and development cost must be
charged to expense as incurred. Accordingly, internal research and developments
cost is expensed as incurred.

The
Company incurred expenditures of $543,401, $238,208 and $811,982 on research
and product development for the years ended December 31, 2010, 2009 and from
May 23, 2007 (date of inception) through December 31, 2010, respectively.

F-12

---



11 GOOD ENERGY, INC. AND SUBSIDIARY(a
development stage company)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31,
2010 AND 2009

NOTE 1  SIGNIFICANT ACCOUNTING POLICIES (continued)

Property
and Equipment

Property
and equipment are stated at cost. When retired or otherwise disposed, the
related carrying value and accumulated depreciation are removed from the
respective accounts and the net difference less any amount realized from
disposition, is reflected in earnings. For financial statement purposes,
property and equipment are recorded at cost and depreciated using the
straight-line method over their estimated useful lives of 3 to 10 years.

Patents

Patents
are capitalized at incurred costs and are amortized ratably over the lesser of
their economic or legal life. The patents are currently in development stage
not subject to current period amortization.

Long-Lived
Assets

The
Company has adopted Accounting Standards Codification subtopic 360-10,
Property, Plant and Equipment (ASC 360-10). ASC 360-10 requires that
long-lived assets and certain identifiable intangibles held and used by the
Company be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Events
relating to recoverability may include significant unfavorable changes in
business conditions, recurring losses, or a forecasted inability to achieve
break-even operating results over an extended period. The Company evaluates the
recoverability of long-lived assets based upon forecasted undiscounted cash
flows. Should impairment in value be indicated, the carrying value of
intangible assets will be adjusted, based on estimates of future discounted
cash flows resulting from the use and ultimate disposition of the asset. ASC
360-10 also requires assets to be disposed of be reported at the lower of the
carrying amount or the fair value less costs to sell.

Income
Taxes

The
Company has adopted Accounting Standards Codification subtopic 740-10, Income
Taxes (ASC 740-10) which requires the recognition of deferred tax liabilities
and assets for the expected future tax consequences of events that have been
included in the financial statement or tax returns. Under this method, deferred
tax liabilities and assets are determined based on the difference between
financial statements and tax basis of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
Temporary differences between taxable income reported for financial reporting
purposes and income tax purposes include, but not limited to, accounting for
intangibles, debt discounts associated with convertible debt, equity based
compensation and depreciation and amortization.

Comprehensive
income

The
Company adopted Accounting Standards Codification subtopic 220-10,
Comprehensive Income (ASC 220-10) which establishes standards for the
reporting and displaying of comprehensive income and its components.
Comprehensive income is defined as the change in equity of a business during a
period from transactions and other events and circumstances from non-owners
sources. It includes all changes in equity during a period except those
resulting from investments by owners and distributions to owners. ASC 220-10
requires other comprehensive income (loss) to include foreign currency
translation adjustments and unrealized gains and losses on available for sale
securities.

F-13

---



11 GOOD ENERGY, INC. AND SUBSIDIARY(a
development stage company)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31,
2010 AND 2009

NOTE 1  SIGNIFICANT ACCOUNTING POLICIES (continued)

Loss
per share

The
Company has adopted Accounting Standards Codification subtopic 260-10, Earnings
Per Share (ASC 260-10) specifying the computation, presentation and
disclosure requirements of earnings (loss) per share information. Basic loss
per share has been calculated based upon the weighted average number of common
shares outstanding. As of December 31, 2010 and 2009, common equivalent shares
of 6,404,029 and 3,729,123, respectively, are excluded from the computation of
the diluted loss per share as their effect would be anti-dilutive.

Intangible
assets

The
Company accounts for acquisitions in accordance with the provisions of ASC
805-10. The Company assigns to all identifiable assets acquired (including
identifiable intangible assets), and to all identifiable liabilities assumed, a
portion of the cost of the acquired company equal to the estimated fair value
of such assets and liabilities at the date of acquisition. The Company records
the excess of the cost of the acquired company over the sum of the amounts
assigned to identifiable assets acquired less liabilities assumed, if any, as
goodwill.

As
a result of the acquisition 11 Goods Energy LTD on October 23, 2007, the
Company acquired goodwill in the aggregate amount of $639,504.

During
the years ended December 31, 2010 and 2009, the Company management performed an
evaluation of its goodwill for purposes of determining the implied fair value
of the assets at the end of each respective year. The test indicated that the
recorded remaining book value of its goodwill did not exceed its fair value for
the years ended December 31, 2010 and 2009. Considerable management judgment is
necessary to estimate the fair value. Accordingly, actual results could vary
significantly from managements estimates.

Concentrations
of credit risk

Financial
instruments and related items, which potentially subject the Company to
concentrations of credit risk, consist primarily of cash, cash equivalents and
trade receivables. The Company places its cash and temporary cash investments
with high credit quality institutions. At times, such investments may be in
excess of the FDIC insurance limit.

During the year ended December 31, 2010, the Company
    had sales to two customers that represented approximately 46% and 27% (respectively)
    of consolidated revenue. Accounts receivable due from these customers amounted
    to $37,992 or 73% of the consolidated accounts receivable.

During the year ended December 31, 2009, the Company
    had sales to one customer that represented approximately 56% of consolidated
    revenue. Accounts receivable due from this customer amounted to $30,743 or
    65% of the consolidated accounts receivable.

During the year ended December 31, 2010, the Company purchased approximately 57%, 26% and 10% of consolidated cost of sales of its product, respectively, from its three largest vendors. The loss of any of these vendors could have a material adverse impact on the operations of the Company.

During the year ended December 31, 2009, the Company purchased approximately 44%, 20% and 17% of consolidated cost of sales of its product, respectively, from its three largest vendors. The loss of any of these vendors could have a material adverse impact on the operations of the Company.

Dependency
on key management

The
future success or failure of the Company is dependent primarily upon the
continued services of its key executives and founder, in particular, the
services of efforts Frederick C. Berndt, Chief Executive Officer, Gary R.
Smith, the companys Chief Operating Officer, and Daniel T. Lapp, the companys
Chief Financial Officer. The ability of the company to pursue its business
strategy effectively will also depend upon, among other factors, the successful
recruitment and retention of additional highly skilled and experienced
managerial, marketing, engineering and technical personnel. There can be no
assurance that the company will be able to retain or recruit such personnel.

F-14

---



11 GOOD ENERGY, INC. AND SUBSIDIARY(a
development stage company)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31,
2009 AND 2008

NOTE 1  SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock
based compensation

The
Company follows Accounting Standards Codification subtopic 718-10, Compensation
(ASC 718-10) which requires all share-based payments to employees, including
grants of employee stock options, to be recognized in the income statement
based on their fair values. Pro-forma disclosure is no longer an alternative.
This statement does not change the accounting guidance for share based payment
transactions with parties other than employees provided in ASC 505-50. On July
22, 2009, the Company granted 500,000 fully vested options to directors to
purchase shares of the Companys common stock at $3.00 per share over three
years. The fair value of $200,205 was charged to operations for the year ended
December 31, 2009.

Recent
accounting pronouncements

In
July 2010, the FASB issued Accounting Standards Update 2010-20 which amend
Receivables (Topic 310). ASU 2010-20 is intended to provide additional
information to assist financial statement users in assessing an entitys risk
exposures and evaluating the adequacy of its allowance for credit losses. The
disclosures as of the end of a reporting period are effective for interim and
annual reporting periods ending on or after December 15, 2010. The disclosures
about activity that occurs during a reporting period are effective for interim
and annual reporting periods beginning on or after December 15, 2010. The
amendments in ASU 2010-20 encourage, but do not require, comparative
disclosures for earlier reporting periods that ended before initial adoption.
However, an entity should provide comparative disclosures for those reporting
periods ending after initial adoption. The adoption of ASU 2010-20 did not have
a significant impact on the Companys financial statements.

On
December 21, 2010, the FASB issued Accounting Standards Update (ASU)
2010-29, which impacts any public entity that enters into business combinations
that are material on an individual or aggregate basis. The guidance specifies
that if a public entity presents comparative financial statements, the entity
should disclose revenues and earnings of the combined entity as though the
business combination(s) that occurred during the year had occurred at the
beginning of the prior annual period when preparing the pro forma financial
information for both the current and prior reporting periods. The guidance also
requires that pro forma disclosures be accompanied by a narrative description
regarding the nature and amount of material, nonrecurring pro forma adjustments
directly attributable to the business combination included in reported pro
forma revenues and earnings. This guidance is effective for business
combinations consummated in periods beginning after December 15, 2010. We
do not believe the adoption of this guidance will have a material impact on our
Consolidated Financial Statements.

There
were various other updates recently issued, most of which represented technical
corrections to the accounting literature or application to specific industries
and are not expected to a have a material impact on the Companys consolidated
financial position, results of operations or cash flows.

F-15

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 2  GOING CONCERN MATTERS

The accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in the
accompanying consolidated financial statements during year ended December 31,
2010, the Company incurred net losses attributable to common shareholders of
$7,165,625 and used $6,549,809 in cash for operating
activities during year ended December 31, 2010. These factors among others
may indicate that the Company will be unable to continue as a going concern for
a reasonable period of time.

The Companys existence is dependent upon managements ability to
develop profitable operations and to obtain additional funding sources. There
can be no assurance that the Companys financing efforts will result in
profitable operations or the resolution of the Companys liquidity problems.
The accompanying statements do not include any adjustments that might result
should the Company be unable to continue as a going concern.

NOTE 3  RESTATEMENT

The Company restated the financial statements for the years ended
December 31, 2009 and from May 23, 2007 (date of inception) through December
31, 2009 to correct the determined fair values allocated to the non-monetary
assets acquired with the purchase of 11 Good Energy LTD and the related amortization.

The following table summarizes the effects of these adjustments on the
Companys consolidated balance sheet as of December 31, 2009:

Consolidated Balance Sheet
December 31, 2009

|                                              |  |                          |            |            |   |           |  |            |   |  |   |            |  
|--------------------------------------------- |  | ------------------------ | ---------- | ---------- | - | --------- |  | ---------- | - |  | - | ---------- | -
|                                              |  | As
 Previously
 Reported |            | Adjustment |   | Reference |  | AsRestated |  
|                                              |  |                          |            |            |   |           |  |            |  
|                                              |  |                          |            |            |   |           |  |            |   |  |   |            |  
|Current
 assets                               |  | $                        | 5,462,413  |            | $ |           |  |            |   |  | $ | 5,462,413  |  
|Property,
 plant and equipment                |  |                          | 2,794,652  |            |   | 20,279    |  |            | 1 |  |   | 2,814,931  |  
|Available
 for sale securities                |  |                          | 980,724    |            |   |           |  |            |   |  |   | 980,724    |  
|Intangible
 assets, net                       |  |                          | 478,212    |            |   | 161,292   |  |            | 2 |  |   | 639,504    |  
|                                              |  |                          |            |            |   |           |  |            |   |  |   |            |  
|Total assets:                                 |  |                          | 9,716,001  |            |   | 181,571   |  |            |   |  |   | 9,897,572  |  
|                                              |  |                          |            |            |   |           |  |            |   |  |   |            |  
|Current
 liabilities                          |  |                          | 352,565    |            |   |           |  |            |   |  |   | 352,565    |  
|                                              |  |                          |            |            |   |           |  |            |   |  |   |            |  
|Stockholders
 equity:                        |  |                          |            |            |   |           |  |            |   |  |   |            |  
|Preferred
 stock                              |  |                          | 1,100      |            |   |           |  |            |   |  |   | 1,100      |  
|Common stock                                  |  |                          | 1,506      |            |   |           |  |            |   |  |   | 1,506      |  
|Common stock
 subscribed-convertible note     |  |                          | 6,477,739  |            |   |           |  |            |   |  |   | 6,477,739  |  
|Common stock
 subscribed                      |  |                          | 7,137,223  |            |   |           |  |            |   |  |   | 7,137,223  |  
|Additional
 paid in capital                   |  |                          | 6,563,877  |            |   |           |  |            |   |  |   | 6,563,877  |  
|Deficit
 accumulated during development stage |  |                          | (9,567,513 | )          |   | 181,571   |  |            | 3 |  |   | (9,385,942 | )
|Accumulated
 other comprehensive income       |  |                          | 49,504     |            |   |           |  |            |   |  |   | 49,504     |  
|Treasury
 stock                               |  |                          | (1,300,000 | )          |   |           |  |            |   |  |   | (1,300,000 | )
|                                              |  |                          |            |            |   |           |  |            |   |  |   |            |  
|Total stockholders equity                    |  |                          | 9,363,436  |            |   | 181,571   |  |            |   |  |   | 9,545,007  |  
|                                              |  |                          |            |            |   |           |  |            |   |  |   |            |  
|Total
 liabilities and stockholders equity   |  | $                        | 9,716,001  |            | $ | 181,571   |  |            |   |  | $ | 9,897,572  |  
|                                              |  |                          |            |            |   |           |  |            |   |  |   |            |  

F-16

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 3  RESTATEMENT (continued)

| |   |                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1 | Correction in recording acquired property, plant and equipment at
 fair value with acquisition of 11 Goods Energy, LTD, net of depreciation
 correction
| | 2 | Reduction in the recorded fair value assigned to the fair value of
 the identified intangible assets to $0 and recording goodwill of $639,504           
| | 3 | Corresponding correction of the amortization and depreciation due to
 determined fair value change                                                      

Consolidated Statement of Operations
Year ended December 31, 2009

|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|------------------------------------ |  | ------------------------ | ---------- | ---------- | - | --------- | - | ------------ | ----- |  | - | ---------- | -
|                                     |  | As
 Previously
 Reported |            | Adjustment |   | Reference |   | As
 Restated |      
|                                     |  |                          |            |            |   |           |   |              |      
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Sales                                |  | $                        | 84,218     |            | $ |           |   |              |       |  | $ | 84,218     |  
|Cost of
 sales                       |  |                          | 72,707     |            |   | (2,545    | ) |              | 1     |  |   | 70,162     |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Gross profit                         |  |                          | 11,511     |            |   | 2,545     |   |              |       |  |   | 14,056     |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Operating
 expenses:                 |  |                          |            |            |   |           |   |              |       |  |   |            |  
|General,
 selling and administrative |  |                          | 3,580,934  |            |   | (2        | ) |              | 3     |  |   | 3,580,932  |  
|Research and
 development            |  |                          | 238,208    |            |   |           |   |              |       |  |   | 238,208    |  
|Depreciation
 and amortization       |  |                          | 146,816    |            |   | (82,072   | ) |              | 1,2   |  |   | 64,744     |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Total operating expenses             |  |                          | 3,965,958  |            |   | (82,074   | ) |              |       |  |   | 3,883,884  |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Other income
 (expense) unchanged    |  |                          | (2,679,980 | )          |   | (1        | ) |              | 3     |  |   | (2,679,981 | )
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Income taxes                         |  |                          |           |            |   |           |   |              |       |  |   |           |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Net loss                             |  |                          | (6,634,427 | )          |   | 84,618    |   |              | 1,2,3 |  |   | (6,549,809 | )
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Net loss per
 common share           |  |                          | (0.46      | )          |   | 0.00      |   |              |       |  |   | (0.46      | )

| |    |                                                                                                                                                   
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | Correct allocation of cost of sales depreciation for change in
 recording fair value of property, plant and equipment at the date of
 acquisition.
| | 2. | Correct amortization of intangible assets recorded as a result of
 determining $0 value assigned to intangible assets at the date of
 acquisition.
| | 3. | Minor error correction due to rounding.                                                                                                           

F-17

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 3  RESTATEMENT (continued)

Consolidated Statement of Operations
From May 23, 2007 (date of inception through December 31, 2009

|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|------------------------------------ |  | ------------------------ | ---------- | ---------- | - | --------- | - | ------------ | ----- |  | - | ---------- | -
|                                     |  | As
 Previously
 Reported |            | Adjustment |   | Reference |   | As
 Restated |      
|                                     |  |                          |            |            |   |           |   |              |      
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Sales                                |  | $                        | 177,934    |            | $ |           |   |              |       |  | $ | 177,934    |  
|Cost of
 sales                       |  |                          | 161,902    |            |   | (2,122    | ) |              | 1     |  |   | 159,780    |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Gross profit                         |  |                          | 16,032     |            |   | 2,122     |   |              |       |  |   | 18,154     |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Operating
 expenses:                 |  |                          |            |            |   |           |   |              |       |  |   |            |  
|General,
 selling and administrative |  |                          | 5,341,396  |            |   | 1,342     |   |              | 2     |  |   | 5,342,738  |  
|Research and
 development            |  |                          | 268,581    |            |   |           |   |              |       |  |   | 268,581    |  
|Depreciation
 and amortization       |  |                          | 294,951    |            |   | (180,791  | ) |              | 2     |  |   | 114,160    |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Total operating expenses             |  |                          | 5,904,928  |            |   | (179,449  | ) |              |       |  |   | 5,725,479  |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Other income
 (expense)              |  |                          | (3,678,616 | )          |   | (1        | ) |              | 3     |  |   | (3,678,617 | )
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Income taxes                         |  |                          |           |            |   |           |   |              |       |  |   |           |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Net loss                             |  |                          | (9,567,512 | )          |   | 181,570   |   |              | 1,2,3 |  |   | (9,385,942 | )
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|                                     |  |                          |            |            |   |           |   |              |       |  |   |            |  
|Net loss per
 common share           |  |                          | (0.70      | )          |   | 0.01      |   |              |       |  |   | (0.69      | )

| |    |                                                                                                                                                                                                           
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | Correct
 allocation of cost of sales depreciation                                                                                                                                                         
| | 2. | Correct
 amortization of intangible assets recorded as a result of determining $0
 value assigned at the date of acquisition, including reclassification of
 general, selling and administrative expenses.
| | 3. | Minor error
 correction due to rounding.                                                                                                                                                                  

F-18

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 3  RESTATEMENT (continued)

Consolidated Statement of Cash Flows
For the year ended December 31, 2009

|                                                                   |  |                          |            |            |   |           |   |              |   |  |   |            |  
|------------------------------------------------------------------ |  | ------------------------ | ---------- | ---------- | - | --------- | - | ------------ | - |  | - | ---------- | -
|                                                                   |  | As
 Previously
 Reported |            | Adjustment |   | Reference |   | As
 Restated |  
|                                                                   |  |                          |            |            |   |           |   |              |  
|                                                                   |  |                          |            |            |   |           |   |              |   |  |   |            |  
|Cash flows from operating activities:                              |  |                          |            |            |   |           |   |              |   |  |   |            |  
|Net loss                                                           |  | $                        | (6,634,427 | )          | $ | 84,618    |   |              | 1 |  | $ | (6,549,809 | )
|Adjustments to reconcile net loss to net
 cash used in operations: |  |                          |            |            |   |           |   |              |   |  |   |            |  
|Depreciation and amortization                                      |  |                          | 178,628    |            |   | (84,618   | ) |              | 1 |  |   | 94,010     |  
|Other operating activities (unchanged)                             |  |                          | 2,212,849  |            |   | 25,800    |   |              | 2 |  |   | 2,238,649  |  
|                                                                   |  |                          |            |            |   |           |   |              |   |  |   |            |  
|                                                                   |  |                          |            |            |   |           |   |              |   |  |   |            |  
|Net cash used in operating activities                              |  |                          | (4,242,950 | )          |   | 25,800    |   |              |   |  |   | (4,217,150 | )
|                                                                   |  |                          |            |            |   |           |   |              |   |  |   |            |  
|Net cash used in investing activities
 (unchanged)                 |  |                          | (2,791,868 | )          |   |           |   |              |   |  |   | (2,791,868 | )
|                                                                   |  |                          |            |            |   |           |   |              |   |  |   |            |  
|Net cash provided in financing activities
 (unchanged)             |  |                          | 11,904,567 |            |   | (25,800   | ) |              | 2 |  |   | 11,878,767 |  
|                                                                   |  |                          |            |            |   |           |   |              |   |  |   |            |  
|Net increase in cash                                               |  |                          | 4,869,749  |            |   |           |   |              |   |  |   | 4,869,749  |  
|Cash and cash equivalents, beginning of
 period                    |  |                          |           |            |   |           |   |              |   |  |   |           |  
|                                                                   |  |                          |            |            |   |           |   |              |   |  |   |            |  
|Cash and cash equivalents, end of period                           |  |                          | 4,869,749  |            |   |           |   |              |   |  |   | 4,869,749  |  
|                                                                   |  |                          |            |            |   |           |   |              |   |  |   |            |  

| |   |                                                                           
| | - | --------------------------------------------------------------------------
| | 1 | Correction
 of amortization and depreciation due to change in fair values.
| | 2 | To correct
 net proceeds from sale of stock for accrual of broker fees.   

F-19

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 3  RESTATEMENT (continued)

Consolidated Statement of Cash Flows
From May 23, 2007 (date of inception) through December 31, 2009

|                                                                   |  |                          |            |            |   |           |   |              |     |  |   |            |  
|------------------------------------------------------------------ |  | ------------------------ | ---------- | ---------- | - | --------- | - | ------------ | --- |  | - | ---------- | -
|                                                                   |  | As
 Previously
 Reported |            | Adjustment |   | Reference |   | As
 Restated |    
|                                                                   |  |                          |            |            |   |           |   |              |    
|                                                                   |  |                          |            |            |   |           |   |              |     |  |   |            |  
|Cash flows from operating activities:                              |  |                          |            |            |   |           |   |              |     |  |   |            |  
|Net loss                                                           |  | $                        | (9,567,512 | )          | $ | 181,570   |   |              | 1,2 |  | $ | (9,385,942 | )
|Adjustments to reconcile net loss to net
 cash used in operations: |  |                          |            |            |   |           |   |              |     |  |   |            |  
|Depreciation and amortization                                      |  |                          | 326,923    |            |   | (182,914  | ) |              | 1   |  |   | 144,009    |  
|Other operating activities                                         |  |                          | 3,574,476  |            |   | 339,829   |   |              | 2,3 |  |   | 3,914,305  |  
|                                                                   |  |                          |            |            |   |           |   |              |     |  |   |            |  
|                                                                   |  |                          |            |            |   |           |   |              |     |  |   |            |  
|Net cash used in operating activities                              |  |                          | (5,666,113 | )          |   | 338,485   |   |              |     |  |   | (5,327,628 | )
|                                                                   |  |                          |            |            |   |           |   |              |     |  |   |            |  
|Net cash used in investing activities                              |  |                          | (3,902,765 | )          |   | (397,008  | ) |              | 2   |  |   | (4,299,773 | )
|                                                                   |  |                          |            |            |   |           |   |              |     |  |   |            |  
|Net cash provided in financing activities                          |  |                          | 14,438,627 |            |   | 58,523    |   |              | 2,3 |  |   | 14,497,150 |  
|                                                                   |  |                          |            |            |   |           |   |              |     |  |   |            |  
|Net increase in cash                                               |  |                          | 4,869,749  |            |   |           |   |              |     |  |   | 4,869,749  |  
|Cash and cash equivalents, beginning of
 period                    |  |                          |           |            |   |           |   |              |     |  |   |           |  
|                                                                   |  |                          |            |            |   |           |   |              |     |  |   |            |  
|Cash and cash equivalents, end of period                           |  |                          | 4,869,749  |            |   |           |   |              |     |  |   | 4,869,749  |  
|                                                                   |  |                          |            |            |   |           |   |              |     |  |   |            |  

| |    |                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------
| | 1. | Correction of amortization and depreciation due to change in fair
 values                                      
| | 2. | Correction of errors in recording acquisition accounting of 11 Goods
 Energy LTD and financing costs incurred.
| | 3. | To correct net proceeds from sale of stock for accrual of broker
 fees.                                        

NOTE 4 - INVENTORIES

Inventory is stated at the lower of cost or market. The cost is
determined using the first-in first-out method. Costs of finished goods
inventory include costs associated with the procurement and transportation of
Soybean oil and other raw materials used in the manufacture of G2 Diesel. Costs
of inventories are reduced by applicable government excise tax rebates.

As of December
31, 2010 and 2009, inventories consisted of the following:

|               |  |      |         |      |   |         | 
|-------------- |  | ---- | ------- | ---- | - | ------- | 
|               |  | 2010 |         | 2009 |  
|               |  |      |         |      |  
|Raw
 materials |  | $    | 351,874 |      | $ | 174,152 | 
|Finished
 fuel |  |      | 272,865 |      |   | 100,327 | 
|               |  |      |         |      |   |         | 
|Total          |  | $    | 624,739 |      | $ | 274,479 | 
|               |  |      |         |      |   |         | 

F-20

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 5  OTHER CURRENT ASSETS

Other assets
as of December 31, 2010 and 2009 are comprised of the following:

|                              |  |      |        |      |   |         | 
|----------------------------- |  | ---- | ------ | ---- | - | ------- | 
|                              |  | 2010 |        | 2009 |  
|                              |  |      |        |      |  
|Prepaid
 inventory            |  | $    |       |      | $ | 110,000 | 
|Prepaid
 fuel/product testing |  |      | 19,637 |      |   | 99,925  | 
|Prepaid
 consulting           |  |      |       |      |   | 45,000  | 
|Prepaid
 other                |  |      | 5,337  |      |   | 9,568   | 
|Accounts
 receivable, other   |  |      |       |      |   | 4,178   | 
|                              |  |      |        |      |   |         | 
|Total                         |  | $    | 24,974 |      | $ | 268,671 | 
|                              |  |      |        |      |   |         | 

NOTE 6  PROPERTY, PLANT AND EQUIPMENT

The Companys
property, plant and equipment at December 31, 2010 and 2009 consist of the
following:

|                                 |  |      |           |      |   |           | 
|-------------------------------- |  | ---- | --------- | ---- | - | --------- | 
|                                 |  | 2010 |           | 2009 |  
|                                 |  |      |           |      |  
|Leasehold
 improvements          |  | $    | 345,381   |      | $ | 312,927   | 
|Factory
 equipment               |  |      | 2,381,478 |      |   | 2,325,754 | 
|Furniture
 and fixtures          |  |      | 21,709    |      |   | 21,709    | 
|Office
 equipment                |  |      | 20,545    |      |   | 20,545    | 
|Vehicles                         |  |      | 131,225   |      |   | 91,642    | 
|Computer
 equipment and software |  |      | 148,300   |      |   | 138,243   | 
|Web design                       |  |      | 51,505    |      |   | 40,250    | 
|                                 |  |      |           |      |   |           | 
|Total                            |  |      | 3,100,143 |      |   | 2,951,070 | 
|Less
 accumulated depreciation   |  |      | 537,468   |      |   | 136,139   | 
|                                 |  |      |           |      |   |           | 
|Net                              |  | $    | 2,562,675 |      | $ | 2,814,931 | 
|                                 |  |      |           |      |   |           | 

Property and equipment are recorded on the basis of cost. For financial
statement purposes, property, plant and equipment are depreciated using the
straight-line method over their estimated useful lives.

Expenditures for repair and maintenance which do not materially extend
the useful lives of property and equipment are charged to operations. When
property or equipment is sold or otherwise disposed of, the cost and related
accumulated depreciation are removed from the respective accounts with the
resulting gain or loss reflected in operations. Management periodically reviews
the carrying value of its property and equipment for impairment.

Depreciation expense was $401,329 and $94,010 for the year ended
December 31, 2010 and 2009, respectively, of which $275,277 and $29,267 was
included as part of cost of sales for the year ended December 31, 2010 and
2009, respectively.

F-21

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 7  AVAILABLE-FOR-SALE SECURITIES

Cost and fair value of marketable equity securities at December 31,
2010 and 2009 are as follows:

|                                                                           |  |      |          |      |   |         | 
|-------------------------------------------------------------------------- |  | ---- | -------- | ---- | - | ------- | 
|                                                                           |  | 2010 |          | 2009 |  
|                                                                           |  |      |          |      |  
|Available
 for sale securities:                                            |  |      |          |      |   |         | 
|Equity
 securities:                                                        |  |      |          |      |   |         | 
|Fair value                                                                 |  | $    | 576,990  |      | $ | 980,724 | 
|Total
 unrealized (losses) gains in accumulated other comprehensive income |  | $    | (286,561 | )    |   | 49,504  | 

During the years ended December 31, 2010 and 2009, the Company realized
an aggregate realized gains of $20,957 and $107,849 with the sales of
marketable securities, respectively. Unrealized gains (losses) are accounted
for as other comprehensive income (loss). Subsequent to December 31, 2010, the
Company sold all available for sale securities, therefore the fair value as of
December 31, 2010 was classified as current assets.

NOTE 8  NOTE PAYABLE, RELATED PARTY

Note payable, related party, in the amount of $25,000, is due to
shareholder and officer and is comprised of a non interest bearing demand note.
The note was issued in exchange for acquisition of treasury shares and was
repaid in full during the year ended December 31, 2010.

NOTE 9  CONVERTIBLE NOTES PAYABLE

Since inception, the Company issued an aggregate of $7,930,000
unsecured convertible notes payable due June 30, 2009 bearing interest at 8%
per annum.

The convertible notes payable (which include principal and accrued
interest thereon) are convertible at a price (the Conversion Price) based
upon a 15% discount to the next established equity offering price per share
(the Conversion Shares).

In accordance with Accounting Standards Codification subtopic 470-20,
Debt-Debt With Conversion and Other Options (ASC 470-20), the Company
recognized an embedded beneficial conversion feature present in the notes. The
Company allocated a portion of the proceeds equal to the intrinsic value of
that feature to additional paid-in capital. The Company recognized and measured
an aggregate of $2,353,595 of the proceeds, which is equal to the intrinsic
value of the embedded beneficial conversion feature, to additional paid-in
capital and a discount against the notes. The debt discount attributed to the
beneficial conversion feature was amortized over the notes maturity period
(till June 30, 2009) as interest expense.

F-22

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 9  CONVERTIBLE NOTES PAYABLE
(continued)

In connection with the issuance of the notes, the Company issued a
commitment to issue detachable warrants granting the holders the right to
acquire an aggregate of 3,228,523 shares of the Companys common stock at $2.55
per share. The warrants expire on June 30, 2012. In accordance with ASC 470-20,
the Company recognized the value attributable to the warrants in the amount of
$954,184 to additional paid in capital and a discount against the notes. The
Company valued the warrant commitment in accordance with ASC 470-20 using the
Black-Scholes pricing model and the following assumptions: contractual terms of
3 to 5 years, an average risk free interest rate of 1.30% to 4.22%, a dividend
yield of 0%, and volatility of 110.19% to 162.99%. The debt discount attributed
to the value of the warrant commitment issued was amortized over the notes
maturity period (till June 30, 2009) as interest expense.

Amortization of $-0- and $2,512,085 was recorded for the years ended
December 31, 2010 and 2009, respectively.

During the period from issuance through December 31, 2010, the Company
paid $1,710,000 in settlement of certain convertible notes. No gain or loss was
recorded in the settlement of the notes.

During the year ended December 31, 2010, the Company issued an
aggregate of 2,548,513 shares of its common stock subscribed for convertible
notes. The common stock subscribed for convertible notes was in settlement of
$6,498,709 convertible notes payable and accrued interest. The value of the
common shares issued did not materially differ from the face value of the
convertible notes and accrued interest.

NOTE 10  CAPITAL STOCK

Preferred stock

On June 22, 2007, the Board of Directors designated 11,000,000 shares
as Series A preferred stock (Series A Preferred Stock), with a par value of
$0.0001 per share. The preferred stock is not entitled to any preference upon
liquidation, dividend rights and has no conversion rights into the Companys
common stock. The Series A Preferred Stock is entitled to one vote equivalent
to one share of common stock on the record date for the vote or consent of
shareholders, and with respect to such vote, each holder of Series A Preferred
Stock shall have full voting rights and powers equal to the voting rights and
powers of the holders of the Companys common stock.

On June 22, 2007, the Company issued at par value an aggregate of
11,000,000 shares of preferred stock to founders for activities prior to the
formation of the Company and relating to its incorporation.

Common stock

In March 2010, the Board approved and the stockholders ratified an
increase in the number of authorized common shares to 65,000,000. To reflect
this change, a certificate of amendment to the companys certificate of
incorporation was filed with the Secretary of state of the state of Delaware on
March 22, 2010.

On May 23, 2007, the Company issued at par value an aggregate of
9,700,000 shares of common stock to founders for activities prior to the
formation of the Company and relating to its incorporation.

F-23

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 10  CAPITAL STOCK

On June 27, 2007, the Company issued an aggregate of 300,000 shares of
common stock in exchange for future services. The fair value of the common
stock was determined based upon the quoted market price on the date of issuance of the shares.
Management assumes all responsibility for the amounts recorded as a result of
the consulting services performed.

On October 23, 2007, the Company issued an aggregate of 4,285,714
shares of its common stock in connection with the acquisition of 11 Goods.

As of December 31, 2010, the Company has received net proceeds of
$10,253,069, through the subscription for the sale of units of common stock or
warrants consisting of 3,977,333 shares of common stock and 1,988,667 warrants.
All common shares subscribed were issued as of the year ended December 31,
2010.

NOTE 11  OPTIONS AND WARRANTS

Employee options:

The following
table summarizes options outstanding and the related prices for the shares of
the Companys common stock issued to employees at December 31, 2010:

|                 |      |                     |                     |                                                       |      |                                    |   |                     |  |                                    |         |  |   |      | 
|---------------- | ---- | ------------------- | ------------------- | ----------------------------------------------------- | ---- | ---------------------------------- | - | ------------------- |  | ---------------------------------- | ------- |  | - | ---- | 
|                 |      |                     | Options Outstanding |                                                       |      |                                    |   | Options Exercisable | 
|Exercise
 Prices |      | Number
 Outstanding |                     | Weighted Average
 Remaining
 Contractual Life (Years) |      | Weighted
 Average
 Exercise
 Price |   | Number
 Exercisable |  | Weighted
 Average
 Exercise
 Price |        
|                 |      |                     |                     |                                                       |      |                                    |   |                     |  |                                    |        
|$                | 3.00 |                     | 500,000             |                                                       | 1.55 |                                    | $ | 3.00                |  |                                    | 500,000 |  | $ | 3.00 | 

Transactions involving stock options issued to non employees are
summarized as follows:

|                                   |  |                  |  |                                     |      | 
|---------------------------------- |  | ---------------- |  | ----------------------------------- | ---- | 
|                                   |  | Number of Shares |  | Weighted
 Average
 Price
 Per Share |     
|                                   |  |                  |  |                                     |     
|Outstanding
 at December 31, 2008: |  |                 |  | $                                   |     | 
|Granted                            |  | 500,000          |  |                                     | 3.00 | 
|Exercised                          |  |                 |  |                                     |     | 
|Canceled or
 expired               |  |                 |  |                                     |     | 
|                                   |  |                  |  |                                     |      | 
|Outstanding
 at December 31, 2009: |  | 500,000          |  |                                     | 3.00 | 
|Granted                            |  |                 |  |                                     |     | 
|Exercised                          |  |                 |  |                                     |     | 
|Canceled or
 expired               |  |                 |  |                                     |     | 
|                                   |  |                  |  |                                     |      | 
|Outstanding
 at December 31, 2010: |  | 500,000          |  | $                                   | 3.00 | 
|                                   |  |                  |  |                                     |      | 

On July 22, 2009, the Company granted an aggregate of 500,000 fully
vested employee stock options to directors in connection with services rendered
at the exercise price of $3.00 over three years.

F-24

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 11  OPTIONS AND WARRANTS (continued)

The fair values of the vesting non employee options were determined
using the Black Scholes option pricing model with the following assumptions:

|                      |  |  |         |  
|--------------------- |  |  | ------- | -
|Dividend
 yield:      |  |  | -0-     | %
|Volatility            |  |  | 161.79  | %
|Risk free
 rate:      |  |  | 1.50    | %
|Expected
 option life |  |  | 3 years |  

The fair value of $200,205 was charged to operations during the year
ended December 31, 2009.

Warrants



The following table summarizes in warrants
outstanding and the related prices for the shares of the Company’s common stock issued to employees at December 31, 2010:



|                        |      | Warrants Outstanding       |  |                                                                             |  | Warrants Exercisable                                    |     
|----------------------- | ---- | -------------------------- |  | --------------------------------------------------------------------------- |  | ------------------------------------------------------- | ----
|Exercise
        Prices |      | Number
        Outstanding |  | Weighted Average
        Remaining
        Contractual Life
        (Years) |  | Weighted
        Average
        Exercise
        Price |     
|$                       | 2.55 |                            |  | 3,519,830                                                                   |  |                                                         | 1.73
|                        | 4.50 |                            |  | 2,383,599                                                                   |  |                                                         | 1.96
|                        |      |                            |  | 5,903,429                                                                   |  |                                                         | 1.82





Transactions involving warrants issued are summarized as follows:



|                                  | Number of
        Shares |  | Weighted
        Average
        Price
        Per Share |     
|--------------------------------- | ------------------------ |  | -------------------------------------------------------- | ----
|Outstanding at December 31, 2008: | —                        |  | $                                                        | —   
|Issued                            | 3,228,523                |  |                                                          | 2.55
|Exercised                         | —                        |  |                                                          | —   
|Canceled or expired               | —                        |  |                                                          | —   
|Outstanding at December 31, 2009: | 3,228,523                |  |                                                          | 2.55
|Issued                            | 2,674,906                |  |                                                          | 4.29
|Exercised                         | —                        |  |                                                          | —   
|Canceled or expired               | —                        |  |                                                          | —   
|Outstanding at December 31, 2010: | 5,903,429                |  | $                                                        | 3.34



In connection with the sale of the common stock,
the Company issued an aggregate of 2,674,906 warrants to shareholders and placement agent to purchase the Company 's common stock from $2.55 to $4.50 per share expiring
from June 2012 to April 2015.





F-25

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

In connection with the issuance of convertible
    notes (see Note 9 above), the Company issued detachable warrants during the
    year ended December 31, 2009 granting the holders the right to acquire an
    aggregate of 3,228,523 shares of the Companys common stock at $2.55
    per share. The warrants expire on June 30, 2012. The Company valued the warrant
    commitment in accordance with ASC 470-20 using the Black-Scholes pricing
    model and the following assumptions: contractual terms of 3 to 5 years, an
    average risk free interest rate of 1.30% to 4.95%, a dividend yield of 0%,
    and volatility of 105.07% to 162.99%. The debt discount attributed to the
    value of the warrant commitment issued is amortized over the notes maturity
    period (till June 30, 2009) as interest expense.

NOTE 12  COMMITMENTS AND CONTINGENCIES

Employment and consulting contracts

The Company entered into employment agreements with certain officers
and employees of the Company each for a term ranging from 12 to 36 months.
Total annual base salaries under these agreements are $551,000.

In the event certain employment agreements are terminated other than
for cause, the company shall pay a lump sum on the date of termination,
severance compensation to the executive in an amount equal to the sum of
executives salary and bonus paid in the prior fiscal year. In the event the
employment contract expires and the executive is not rehired in the same
position under the terms and conditions of a new executive employment agreement
mutually acceptable to the parties or in the event executive dies or becomes
disabled, the company shall pay in lump sum on the date of termination
severance compensation in an amount equal to the sum of executives salary and
bonus paid in the prior fiscal year. In addition, executive (except in the case
of his death) shall be entitled to continue health benefits for a period of 18
months or until the executive is employed full time with another employer.

The Company had entered into consulting agreements with individuals
responsible for creating political liaisons, government agency and investor
relations. The agreements are generally for a term of one year or less from
inception and renewable unless either the Company or the consultant terminates
such agreement by written notice. The Company incurred $1,643,161 and $750,996
in fees to these individuals for the years ended December 31, 2010 and 2009,
respectively, in a consulting role.

As of December 31, 2010, all commitments for business consulting
services has expired and are on a month to month basis.

Lease contracts

The Company leases its office space and warehouse facility for $4,501
per month through August 31, 2011. The Company has determined not to record
deferred rent in order to recognize rent expense over the term of the lease on
a straight line basis, as the amount has been determined to be immaterial to
the overall consolidated financial statements. Rent expense for the twelve
months ended December 31, 2010 and 2009 was $62,917 and $35,376, respectively.
The renegotiated lease payments are reflected in the table below.

The Company also leases rail cars for storing and shipping finished
fuel. The lease term for each rail car expires periodically in 2012.

F-26

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 12  COMMITMENTS AND CONTINGENCIES
(continued)

Future minimum lease payments are as follows for the year ending
December 31:

|                         |  |   |         | 
|------------------------ |  | - | ------- | 
|Year ended
 December 31, |  |   |         | 
|2011                     |  |   | 98,212  | 
|2012                     |  |   | 42,762  | 
|                         |  |   |         | 
|Total                    |  | $ | 140,974 | 
|                         |  |   |         | 

Settlement Agreement

Pursuant to a settlement agreement we entered into with the
founders and former control principals of 11 Goods Energy, LTD and Renewable Lubricants Inc,
we agreed not directly or indirectly for five years from May 22, 2006, entry blend or manufacture
bio-based or petroleum based lubricants, greases, fuel conditioners, additives, and cleaners
(fuels and glycerin and glycerol are excluded). We currently market and sell our G2 Diesel
as a fuel, which is taxed as fuel. Commencing on or after May 22, 2011, the expiration date
of a settlement agreement, we may choose to compete with producers of other diesel additives,
such as petroleum-based lubricity additives.

Litigation

From time to time, we may become involved in various lawsuits and legal
proceedings which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm our business. We are
currently not aware of any such legal proceedings that we believe will have,
individually or in the aggregate, a material adverse affect on our business,
financial condition or operating results.

NOTE 13  RELATED PARTY TRANSACTIONS

Due from related party

Pursuant to his employment agreement, Frederick C. Berndt entered into
a revolving note agreement with the Company beginning on November 11, 2007. The
Company initiated the note arrangement to allow Mr. Berndt to assist the Company,
primarily in the early stages of development, personally with operating capital
as required. In addition, the Company initiated the note to allow the Company
to assist Mr. Berndt with cash advances used for costs incurred during the
process of improving the Companys marketing, political and regulatory
exposure. The cash advances exceeded the amounts of reimbursable costs
resulting in amounts Mr. Berndt owed back to the Company. Mr. Berndt has agreed
to reimburse the Company for the excess costs of these promotions. These costs
consisted primarily of travel and sponsorship costs. The Company charges 5%
interest per annum calculated on the last day of the year based on a average of
the quarterly balance of the note. The balance of the note including interest
of $27,915 becomes due on December 31, 2009, with a term of 30 days to settle
the note payable.

On December 15, 2009, the Company accepted 425,000
    shares of the Companys common stock held by Mr. Berndt in full settlement
    of the outstanding note receivable and related accrued interest for $787,144
    and recorded an accrued liability due to Mr. Berndt for $62,856. The fair
    value of the shares issued was determined based on the recent sale of the
    Companys
    common stock. The amount due Mr. Berndt was repaid in full subsequent to the year ended December 31, 2009.

In November 2010, the Company advanced $53,519
    to acquire the Companys
common stock (treasury stock). As of December 31, 2010, the common stock has
not been received and accordingly was accounted for as due from related party
    and included in the stockholders equity.

Consistent with ASC 505-10-45 (Equity-Other Presentation), the amount
recorded on the balance sheet is presented as a deduction from stockholders
equity (deficit). This is also consistent with Rule 5-02.30 of Regulation S-X
of the Code of Federal Regulations.

F-27

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 13  RELATED PARTY TRANSACTIONS

Facilities

Since April 1, 2008, the Company has occupied warehouse space provided
by one of the Companys founders. The Company agreed to pay a total of $1 per
month for the space. The Company records this fee as rent expense when
incurred. During this time period, the Company constructed a leasehold
improvement to the leased warehouse space for the purpose of locating our
bio-fuel manufacturing facility.

Donated Capital

During the years ended December 31, 2010, the Companys Chief Executive
Officer transferred an aggregate of 736,000 personally owned shares of the
Companys common stock for services rendered to the Company by employees and
outside consultants. The fair value of $1,493,840 was charged to operations
with an offset to additional paid in capital.

During the years ended December 31, 2009; the Companys Chief Executive
Officer transferred 100,000 personally owned shares of the Companys common
stock for services rendered to the Company by an outside consultant and 900,000
shares to members of the board of directors. The fair value of $531,000 was
charged to operations with an offset to additional paid in capital.

NOTE 14  FAIR VALUE

ASC 825-10 defines fair value as the price that would be received from
selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair
value measurements for assets and liabilities required or permitted to be
recorded at fair value, the Company considers the principal or most
advantageous market in which it would transact and considers assumptions that
market participants would use when pricing the asset or liability, such as
inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10
establishes a fair value hierarchy that requires an entity to maximize the use
of observable inputs and minimize the use of unobservable inputs when measuring
fair value. ASC 825-10 establishes three levels of inputs that may be used to
measure fair value:

Level 1 - Quoted prices in active markets for identical assets or
liabilities.

Level 2 - Observable inputs other than Level 1 prices such as quoted
prices for similar assets or liabilities; quoted prices in markets with
insufficient volume or infrequent transactions (less active markets); or
model-derived valuations in which all significant inputs are observable or can
be derived principally from or corroborated by observable market data for
substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs to the valuation methodology that are
significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less
observable or unobservable in the market, the determination of fair value
requires more judgment. In certain cases, the inputs used to measure fair value
may fall into different levels of the fair value hierarchy. In such cases, for
disclosure purposes, the level in the fair value hierarchy within which the
fair value measurement is disclosed is determined based on the lowest level
input that is significant to the fair value measurement.

F-28

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 14  FAIR VALUE (continued)

Items recorded or measured at fair value on a recurring basis in the
accompanying consolidated financial statements consisted of the following
items as of December 31, 2010:

|                               |  |       |         |                                                                         |   |                                                 |  |                                            |   |  |   |   | 
|------------------------------ |  | ----- | ------- | ----------------------------------------------------------------------- | - | ----------------------------------------------- |  | ------------------------------------------ | - |  | - | - | 
|                               |  | Total |         | Quoted
 Prices in
 Active
 Markets for
 Identical
 Instruments
 Level 1 |   | Significant
 Other
 Observable
 Inputs
 Level 2 |  | Significant
 Unobservable
 Inputs
 Level 3 |  
|                               |  |       |         |                                                                         |   |                                                 |  |                                            |  
|Assets:                        |  |       |         |                                                                         |   |                                                 |  |                                            |   |  |   |   | 
|Securities
 available for sale |  | $     | 576,990 |                                                                         | $ | 576,990                                         |  | $                                          |  |  | $ |  | 
|                               |  |       |         |                                                                         |   |                                                 |  |                                            |   |  |   |   | 
|Total                          |  | $     | 576,990 |                                                                         | $ | 576,990                                         |  | $                                          |  |  | $ |  | 
|                               |  |       |         |                                                                         |   |                                                 |  |                                            |   |  |   |   | 

The Company adopted the provisions of ASC 825-10 prospectively
effective as of the beginning of Fiscal 2008. For financial assets and
liabilities included within the scope of ASC 825-10, the Company will be
required to adopt the provisions of ASC 825-10 prospectively as of the
beginning of Fiscal 2009. The adoption of ASC 825-10 did not have a material
impact on our consolidated financial position or results of operations.

The fair value of the assets, securities available for sale, at
December 31, 2010 was grouped as Level 1 valuation as the market price was
readily available.

NOTE 15  INCOME TAXES

The Company follows Accounting Standards Codification subtopic 740-10,
Income Taxes (ASC 740-10) which requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statement or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between financial statements and tax bases of assets and liabilities
using enacted tax rates in effect for the year in which the differences are
expected to reverse. Temporary differences between taxable income reported for
financial reporting purposes and income tax purposes include, but not limited
to, accounting for intangibles, debt discounts associated with convertible
debt, equity based compensation and depreciation and amortization.

At December 31, 2010, the Company has available for federal income tax
purposes a net operating loss carryforward of approximately $12,629,904, of
which $7,020,406 expires in the year 2030, that may be used to offset future
taxable income. The Company has provided a valuation reserve against the full
amount of the net operating loss benefit, since in the opinion of management
based upon the earnings history of the Company; it is more likely than not that
the benefits will not be realized. Based upon the change in ownership rules
under section 382 of the Internal Revenue Code of 1986, if in the future the
Company issues common stock or additional equity instruments convertible in
common shares which result in an ownership change exceeding the 50% limitation
threshold imposed by that section, all of the Companys net operating losses
carryforwards may be significantly limited as to the amount of use in a
particular years. Components of deferred tax assets as of December 31, 2010 are
as follows. All or portion of the remaining valuation allowance may be reduced
in future years based on an assessment of earnings sufficient to fully utilize
these potential tax benefits.

The Company follows the provisions of uncertain tax positions as addressed in FASB Accounting Standards Codification 740-10-65-1.
The Company recognized no increase in the liability for unrecognized tax benefits. The company has no tax position at December 31, 2010 for which the ultimate
deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.
The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.
No such interest or penalties were recognized during the periods presented. The Company had no accruals for interest and penalties at December 31, 2010. The Companys utilization of any net operating
loss carry forward may be unlikely due to its continuing losses.

F-29

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 15  INCOME TAXES (continued)

At December 31, 2010, the significant components of the deferred
tax assets (liabilities) are summarized below:

|                                                         |  |   |            |  
|-------------------------------------------------------- |  | - | ---------- | -
|Net operating loss carry forwards
 expiring through 2029 |  | $ | 12,629,904 |  
|                                                         |  |   |            |  
|Tax Asset                                                |  |   | 4,420,466  |  
|Less valuation allowance                                 |  |   | (4,420,466 | )
|                                                         |  |   |            |  
|Balance                                                  |  | $ |           |  
|                                                         |  |   |            |  
|Net operating loss carry forwards 2007                   |  | $ | 638,693    |  
|Net operating loss carry forwards 2008                   |  |   | 1,060,683  |  
|Net operating loss carry forwards 2009                   |  |   | 3,910,122  |  
|                                                         |  |   |            |  
|Net operating loss carry forwards 2010                   |  |   | 7,020,406  |  
|                                                         |  |   |            |  
|Balance                                                  |  | $ | 12,629,904 |  
|                                                         |  |   |            |  

The Company recognizes interest and penalties related to uncertain tax
positions in general and administrative expenses. As of December 31, 2009 and
2008, the Company has no unrecognized tax benefit from uncertain tax positions,
including interest and penalties.

The difference between income tax expense computed by applying the
federal statutory corporate tax rate and actual income tax expense is as
follows:

|                                  |  |              |      |      |  |      |  
|--------------------------------- |  | ------------ | ---- | ---- |  | ---- | -
|                                  |  | December 31, |     
|                                  |  | 2010         |      | 2009 | 
|                                  |  |              |      |      | 
|Statutory federal income tax rate |  |              | 35.0 | %    |  | 35.0 | %
|State income taxes and other      |  |              | 0.0  | %    |  | 0.0  | %
|                                  |  |              |      |      |  |      |  
|Effective tax rate                |  |              | 35.0 | %    |  | 35.0 | %

Deferred income taxes result from temporary differences in the
recognition of income and expenses for the financial reporting purposes and for
tax purposes. The tax effect of these temporary differences representing
deferred tax asset and liabilities result principally from the following:

|                                    |  |              |           |      |   |           | 
|----------------------------------- |  | ------------ | --------- | ---- | - | --------- | 
|                                    |  | December 31, |          
|                                    |  | 2010         |           | 2009 |  
|                                    |  |              |           |      |  
|Deferred Tax
 Asset: (Liability)    |  |              |           |      |   |           | 
|                                    |  |              |           |      |   |           | 
|Net
 operating loss carry forward   |  | $            | 3,052,903 |      | $ | 641,569   | 
|Depreciation                        |  |              | 44,136    |      |   | 35,628    | 
|Travel and
 entertainment           |  |              | 76,825    |      |   | 39,525    | 
|Debt
 Discount                      |  |              | 1,157,722 |      |   | 1,157,722 | 
|Deferred
 compensation and taxes    |  |              | 88,880    |      |   | 88,880    | 
|                                    |  |              |           |      |   |           | 
|Subtotal                            |  |              | 4,420,466 |      |   | 1,963,324 | 
|Valuation
 allowance                |  |              | 4,420,466 |      |   | 1,963,324 | 
|                                    |  |              |           |      |   |           | 
|                                    |  |              |           |      |   |           | 
|Net Deferred
 Tax Asset (Liability) |  | $            |          |      | $ |          | 
|                                    |  |              |           |      |   |           | 

F-30

---



11 GOOD ENERGY, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009

NOTE 16  SUBSEQUENT EVENTS

In January 2011, we released a private placement memorandum to raise
$10,000,000 through the sale of equity shares. As of the date of this filing, we
have not closed any sales of equity shares nor received any proceeds as a result of the Private Placement Memorandum.

On September 30, 2010, the Company became a reporting company under the
Securities Exchange Act of 1934. Subsequent to that date, a member of Financial
Industry Regulatory Authority, Inc. (FINRA) filed a Form 211 to have our
securities listed for trading on the OTC Bulletin Board. In March 2011, a
symbol of ELVN was assigned to our Common Stock; however, trading has not
commenced on the OTC Bulletin Board as of the filing date of this Form 10-K.

F-31

---



Item 9.B. Other Information.

Not
Applicable.

37

---



PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The names,
ages and principal occupations of the Companys present officers and directors
are listed below. There are two vacancies on the Board of Directors and the
Board is currently searching to fill such vacancies.

|                     |  |     |  |                                        |  |                                                              
|-------------------- |  | --- |  | -------------------------------------- |  | -------------------------------------------------------------
|Name (1)             |  | Age |  | First Became Director 
 and/or Officer |  | Position                                                     
|                     |  |     |  |                                        |  |                                                              
|Frederick C.
 Berndt |  | 36  |  | 2007                                   |  | Chief
 Executive Officer, President and Chairman of the Board
|                     |  |     |  |                                        |  |                                                              
|Gary R.
 Smith       |  | 67  |  | 2009                                   |  | Chief
 Operating Officer, Director                           
|                     |  |     |  |                                        |  |                                                              
|Daniel T.
 Lapp      |  | 41  |  | 2007                                   |  | Chief
 Financial Officer, Director                           
|                     |  |     |  |                                        |  |                                                              
|John D. Lane         |  | 63  |  | 2009                                   |  | Director                                                     
|                     |  |     |  |                                        |  |                                                              
|Dennis A.
 Nash      |  | 56  |  | 2009                                   |  | Director                                                     

|
|
|

|    |                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------
|(1) | Directors
 are elected at the annual meeting of stockholders and hold office until the
 following annual meeting.

Frederick
C. Berndt serves as the Companys Chief Executive Officer and President. Gary
R. Smith services as the Companys Chief Operating Officer and Daniel T. Lapp
serves as the Companys Chief Financial Officer. The terms of all officers
expire at the annual meeting of directors following the annual stockholders
meeting. Officers serve at the pleasure of the Board and may be removed, either
with or without cause, by the Board of Directors, and a successor elected by a
majority vote of the Board of Directors, at any time. There is currently one
vacancy on the Companys Board of Directors.

Frederick C. Berndt

Frederick C. Berndt has an extensive background in banking, having
studied Finance and Economics at Geneva College in Pennsylvania. Mr. Berndt
began his career in Commercial Banking in 1995. In 1997, he became licensed as
an NASD Series 7 and 63, for Rise Securities and became a Partner/Vice
President of Berndt & Associates Investment Management, a full service
money management firm that was formed in the early 1970s. In 1999, Mr. Berndt
passed his Securities Principals license and became the principal and
compliance officer for Rise Securities, Inc. In 2001, Mr. Berndt left Berndt
& Associates to pursue a consulting career in investment banking. He
consulted for EWRX Internet solutions, an anti-virus software company and also
consulted for Hamilton Scientific, a New Jersey based medical software company.
In 2002, Mr. Berndt founded Bible Resources, Inc., a private corporation formed
for the purpose of oil and gas exploration. He then successfully orchestrated
the reverse takeover of The Havana Group, and co-developed this company which
is now known as Surge Global Energy, Inc. Mr. Berndt served Surge Global Energy
as Executive Vice President and a member of the Board of Directors for
approximately three years between 2004 and 2006. Since 2007, Mr. Berndt has
served as Chairman and Chief Executive Officer of 11 Good Energy, Inc. Mr.
Berndts experience in executive management and experience and contacts in the
oil and gas industry led to the conclusion of our Board that he should serve as
a director of our company in light of our business and structure.

38

---



Gary R. Smith

Mr. Smiths leadership ability, decision making skills, determination,
and strength come largely from his longtime involvement in sports, as both an
athlete and an official. At St. Cloud State University, Mr. Smith won the 1963
and 1964 National Collegiate NAIA Wrestling Championships. He then placed
fourth in the 1964 Olympic Wrestling trials.

In 1977, Mr. Smith joined Cummins Engine Company, managing major
accounts for the industrial division. Mr. Smith advanced with Cummins, becoming
the Executive Director of national accounts before leaving Cummins in 1984. Mr.
Smith then joined Hercules Engines, Inc. where he gained an extensive knowledge
of alternative fuel engines.

In 1998, Mr. Smith joined High Plains Corporation, an ethanol
manufacturer, for the purpose of restructuring the company. Mr. Smith
coordinated Abengoas acquisition of High Plains Corporation and as a result of
Mr. Smiths leadership in the deal, per share value of High Plains increased
from $.69 to $5.64, the amount Abengoa offered per share for High Plains
Corporation. After the successful restructuring and sale of High Plains in
2002, Mr. Smith decided to leave the company and pursue other interests,
leaving behind the solid management team that he created. He was a member of
the Abengoa Board of Directors for three years. He also served two terms as
Chairman of the Renewable Fuels Association in 2000 and 2001. From May 2002
through March 2009, Mr. Smith served as Chief Executive Officer of Signa
Stortech Systems, a metal manufacturing company. Today, Mr. Smith lives in
Canton, Ohio and serves on the Board of Directors for the National Wresting
Hall of Fame and the Professional Football Hall of Fame. Since March 1, 2009,
Mr. Smith serves as Chief Operating Officer and as a Director for 11 Good
Energy, Inc. As Chief Operating Officer, Mr. Smiths duties include providing
strategic planning advice in the areas including, but not limited to, marketing
strategies; developing strategic alliances with suppliers, affiliations, and
end users; assisting in attracting key personnel; general business consulting
and operations. Mr. Smiths experience with an ethanol manufacturer as well as
serving as chairman of the Renewable Fuels Association, led to the conclusion
of our Board that he should serve as a director of our company in light of our
business and structure.

Daniel T. Lapp

Daniel T. Lapp began his accounting and finance career 17 years ago as
an auditor with Coopers & Lybrand, LLP, in Washington D.C., planning and
performing audits for the government contractor, high technology and oil and
gas industries. His public accounting experience lead to the position of
manager of operational/internal audits for Harman International Industries,
Inc., an international Fortune 1000 electronics manufacturer. This position
focused on financial audits of all aspects of the balance sheet, review of the
internal control environment, and analysis of manufacturing facilities for
accounting and asset valuation issues and performing due diligence procedures
for potential acquisition targets. Mr. Lapp planned and performed the
accounting/operational audits of over 50 subsidiary companies within this
company. From March 2005 to August 2006, Mr. Lapp held an accounting management
position with Microstrategy, Inc., a business intelligence software development
company. From September 2006 through May 2007, Mr. Lapp performed accounting
and consulting services as an independent consultant and beginning in February
2007 began consulting for 11 Good Energy, Inc. In May 2007, Mr. Lapp joined 11
Good Energy, Inc. as the Chief Financial Officer and Director. Over his career,
Mr. Lapp has also has built and extensive knowledge of accounting system
management and contract review to complement his internal audit and public
accounting experience. Mr. Lapp graduated from Kent State University and is a
licensed CPA. Mr. Lapps public accounting experience and the fact that he is a
financial expert led to the conclusion of our Board that he should serve as a
director of our company in light of our business and structure.

39

---



John D. Lane

Mr. Lane entered the securities industry in May 1969 with a
bank-trading firm in New Jersey. He founded Lane Capital Markets, LLC in 2001
as an Investment Banking Partnership. Mr. Lane has managed/co-managed over 45
IPO or secondary transactions and has participated in hundreds of underwriting
and selling groups since the early 1990s. Prior to forming Lane Capital
Markets, he held the position of Managing Director of Capital Markets at a New
York based firm in Fairfield County, Connecticut. He has been associated with
several major firms including Boettcher & Co., Advest & Co. and Dain
Rauscher. Mr. Lane has served as officer, director, owner, trader, department
manager, corporate finance director and syndicate manager. He has been active
in several Fairfield County organizations. Mr. Lane has been quoted in Business Week, Barrons, Forbes, Investment Dealer
Digest, The New York Times, The Wall Street Journal, Entrepreneurial Magazine
and several other business publications. Mr. Lane served as a Director of the
National Investment Bankers Association between 1991-1995 and has served as a
Director and Advisor to several other boards. He regularly speaks on issues
facing the changing securities industry. Having traveled several times to
Washington, D.C. he has lobbied on behalf of the securities industry.

Mr. Lane has been an active member of several SIFMA committees,
including the SIFMA Small Firms Committee, in which he was Chairman in 1994,
the SIFMA Membership Committee, in which he was Chairman for several terms, and
also served three years on the SIFMA Syndicate Committee. He is currently
serving as District Chairman for the Security Industry association in the New
England district. In 1996, John traveled to China with the SIFMA for 17 days as
a guest of the Chinese government to meet with banks, brokerage firms and the
government to discuss experiences in the capital-raising arena and several
topics regarding the securities business.

Mr. Lane is currently a FINRA mediator working to resolve industry
disputes. John was appointed to a three-year term to serve as Chairman in 2002
on the FINRA District Business Conduct Committee out of Boston, MA. He has
recently completed his three year term on the FINRA Small Firm Advisory Board,
which meets and recommends solutions to industry issues and their impact on
regional and small broker/dealers. Also, Mr. Lane has recently completed his
3rd three year term on the FINRA Corporate Finance Committee and has been
active in crafting a policy on the hot topic of research analyst payment for
deal gathering. Mr. Lane worked for two years toward the restructuring of the
recently adopted FINRAs Corporate Finance Rules. Mr. Lane was elected to a one
year term on the FINRA Advisory Board in 2002, meeting on national issues
affecting the securities industry. In September 2002 Mr. Lane was appointed to
the FINRA Nominating Committee, and served as Chairman in 2003 representing the
Boston District. Mr. Lane was appointed, in January 2003, to serve on the
standing FINRA consultive committee designed to provide input to FINRA staff on
the investigations of disciplinary matters involving emerging regulatory
issues, standards of practices, or new practices, or market and securities
industry issued where industry expertise would be of value. Mr. Lane has served
as a director of 11 Good Energy since July 2009. Mr. Lanes investment banking
experience as well as his expertise in corporate finance, led to the conclusion
of our Board that he should serve as a director of our company in light of our
business and structure.

Dennis A. Nash

Dennis A. Nash has been President, Chief Executive Officer and a
Director of Kenan Advantage Group (KAG) and it predecessors since 1991. As a
young teen, he moved from Alma, Michigan to Pittsburg, Pennsylvania where he
later began his career in the transportation industry. He then moved to Akron,
Ohio to participate in a transportation management program sponsored by Coastal
Industries and attended Kent State University. After spending several years in
the petroleum transportation industry with Coastal,

40

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he moved to Leaseway Transportation, based in Cleveland, Ohio. With
Leaseway, Mr. Nash spent the next fifteen years holding senior management
positions in operations, sales and marketing.

In 1991, Mr. Nash made a decision to join entrepreneurial ranks by forming
KAG predecessor company, Advantage Tank Lines, Inc. He has served as President
and CEO from the beginning and has taken the company (now known as Kenan
Advantage Group) from annual revenues of $7 million in 1992 to over $800
million today. The company is North Americas largest bulk transportation and
logistics provider to the petroleum and specialty products industries. KAG
operates from 100 terminals and 98 satellite locations in 38 states, employs
approximately 5,000 people, and is the only fuels delivery business with a
national presence.

With respect to industry affiliations, for many years Mr. Nash has
served on various labor and advisory councils and the Board of Directors for
National Tank Truck Carriers and the American Trucking Association. He also
serves on the Northwestern University Transportation Center Business Advisory
Council. Other professional affiliations include the Pro Football Hall of Fame,
Stark Development Board, Dedicated Transport and Mercy Medical Center, where he
also serves on the boards Executive Committee. Mr. Nash has served as a
director of the company since July 8, 2009.

No family relationships exist among any of our executive officers or
directors. Except as indicated above, no director of ours is a director of, or
has served as a director of during the past five years, any company with a
class of securities registered pursuant to Section 12 of the Exchange Act,
or subject to the requirements of Section 15(d) of the Securities Act of
1933 or any company registered as an investment company under the Investment
Company Act of 1940. Mr. Nashs experience in executive management in the
transportation industry and the diversification that his background brings to
the board, led to the conclusion of our Board that he should serve as a
director of our company in light of our business and structure.

Independent Directors

John
D. Lane and Dennis A Nash may be considered independent directors under Rule
10-A.3 of the Exchange Act. See Committees below.

Committees

We do not have a standing audit, nominating, compensation committee, or
committees performing similar functions. Our board of directors believes that
it is not necessary to have standing audit, nominating or compensation
committees at this time because the functions of such committees are adequately
performed by our board of directors. The Sarbanes-Oxley Act of 2002, as
amended, requires the company to have an audit committee consisting solely of
independent directors.

John D. Lane and Dennis A Nash may be considered independent
directors: however, neither of them are financial experts as those terms are
defined herein. Under the National Association of Securities Dealers Automated
Quotations (NASDAQ) definition, an independent director means a person other
than an officer or employee of the company or its subsidiaries or any other
individuals having a relationship that, in the opinion of the company board of
directors, would interfere with the exercise of independent judgment in
carrying out the responsibilities of the director. The boards discretion in
determining director independence is not completely unfettered. Further, under
the NASDAQ definition, an independent director is a person who (1) is not
currently (or whose immediate family members are not currently), and has not
been over the past three years (or whose immediate family members have not been
over the past three years), employed by the company; (2) has not (or whose
immediate family members have not) been paid more than $60,000 during the
current or past three fiscal years; (3) has not (or whose immediately family
has not) been a partner in or controlling shareholder or executive officer of
an organization which the company made, or from which the company received,
payments in excess of the

41

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greater of $200,000 or 5% of that organizations consolidated gross
revenues, in any of the most recent three fiscal years; (4) has not (or whose
immediate family members have not), over the past three years been employed as
an executive officer of a company in which an executive officer of our company
has served on that companys compensation committee; or (5) is not currently
(or whose immediate family members are not currently), and has not been over
the past three years (or whose immediate family members have not been over the
past three years) a partner of our companys outside auditor. The term
Financial Expert is defined as a person who has the following attributes: an
understanding of generally accepted accounting principles and financial
statements; has the ability to assess the general application of such
principals in connection with the accounting for estimates, accruals and
reserves; experience preparing, auditing, analyzing or evaluating financial
statements that present a breadth and level of complexity of accounting issues
that are generally comparable to the breadth and complexity of issues that can
reasonably be expected to be raised by the companys financial statements, or
experience actively supervising one or more persons engaged in such activities;
an understanding of internal controls and procedures for financial reporting;
and an understanding of audit committee functions.

In the future, we intend to have an audit committee, compensation
committee, management committee, nominating committee and such other committees
as determined by the Board of Directors to be in the best interest of the
company and to be in compliance with all applicable securities and state laws
and listing requirements of any applicable exchanges or NASDAQ that the
companys securities may become listed on in the future, of which we can
provide no assurances that this will occur. In the event we form an audit
committee, we intend to have a financial expert as an independent board
member serving on the Audit Committee, although no assurances can be given in
this regard.

Corporate Governance

Our business, property and affairs are managed by, or under the
direction of, our Board, in accordance with the General Corporation Law of the
State of Delaware and our By-Laws. Members of the Board are kept informed of
our business through discussions with the Chief Executive Officer and other key
members of management, by reviewing materials provided to them by management.

In the past, there have been no arrangements or understandings pursuant
to which a director or executive officer was selected to be a director or
executive officer other than employment contracts with each of our executive
officers. We have had no nominating committee of the Board. Executive officers
serve at the pleasure of the Board, subject to their rights under any
employment contracts.

We review our corporate governance policies and practices by comparing
our policies and practices with those suggested by various groups or
authorities active in evaluating or setting best practices for corporate
governance of public companies. Based on this review, we have adopted, and will
continue to adopt, changes that the Board believes are the appropriate
corporate governance policies and practices for our Company. We intend to
comply with the Sarbanes-Oxley Act of 2002 and subsequent rule changes made by
the SEC and any applicable securities exchange.

Director Qualifications and Diversity

The board seeks independent directors who represent a diversity of backgrounds
and experiences that will enhance the quality of the boards deliberations and
decisions. Candidates shall have substantial experience with one or more
publicly traded companies or shall have achieved a high level of distinction in
their chosen fields. The board is particularly interested in maintaining a mix
that includes individuals who are active or retired executive officers and
senior executives, particularly those with experience in the natural resources,
finance and capital market industries.

In evaluating nominations to the Board of Directors, our Board also
looks for certain personal attributes, such as integrity, ability and
willingness to apply sound and independent business judgment,

42

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comprehensive understanding of a directors role in corporate
governance, availability for meetings and consultation on Company matters, and
the willingness to assume and carry out fiduciary responsibilities. Qualified
candidates for membership on the Board will be considered without regard to
race, color, religion, sex, ancestry, national origin or disability.

Risk Oversight

Enterprise risks will be identified and prioritized by management and
each prioritized risk will be assigned to the full board for oversight as
follows:

Risks and exposures associated with corporate governance, and
management and director succession planning, strategic, financial and execution
risks and other current matters that may present material risk to our
operations, plans, prospects or reputation.

Risks and exposures associated with financial matters, particularly
financial reporting, tax, accounting, disclosure, internal control over
financial reporting, financial policies, investment guidelines and credit and
liquidity matters.

Risks and exposures associated with leadership assessment, and
compensation programs and arrangements, including incentive plans.

Board Leadership Structure

The Chairman of the Board presides at all meetings of the Board.
Currently, the offices of Chairman of the Board and Chief Executive Officer are
not separated. The company has no fixed policy with respect to the separation
of the offices of the Chairman of the Board and Chief Executive Officer. The
Board believes that the separation of the offices of the Chairman of the Board
and Chief Executive Officer could become part of the succession planning
process and that it is in the best interests of the company to make this
determination from time to time.

Code of Ethics

In fiscal
2011, the Company intends to adopt a code of ethics that applies to the
Companys Chief Executive Officer and Chief Financial Officer which will be
been designed to deter wrongdoing and to promote:

| |   |                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Honest and ethical conduct, including the ethical handling of actual
 or apparent conflicts of interest between personal and professional
 relationships;                                        
| |   |                                                                                                                                                                                                  
| |  | Full, fair, accurate, timely and understandable disclosure in reports
 and documents that the Company files with, or submits to, the SEC and in
 other public communications made by the Company;
| |   |                                                                                                                                                                                                  
| |  | Compliance with applicable governmental law, rules and regulations;                                                                                                                              
| |   |                                                                                                                                                                                                  
| |  | The prompt internal reporting of violations of the code of ethics to
 an appropriate pre-identified person; and                                                                                  
| |   |                                                                                                                                                                                                  
| |  | Accountability for adherence to the code of ethics.                                                                                                                                              

43

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Compliance with Section 16(a) of the Exchange Act

Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our officers
and directors, and persons who own more than ten percent of a registered class
of our equity securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission (the Commission). Officers,
directors and greater than ten percent stockholders are required by the
Commissions regulations to furnish us with copies of all Section 16(a) forms
they file. During fiscal 2010, none of our officers, directors or 10% or
greater stockholders filed any forms late to the best of our knowledge.

Item 11. Executive Compensation.

The
following table sets forth the overall compensation earned over the fiscal year
ended December 31, 2009 and 2010 by (1) each person who served as the principal
executive officer of the company during fiscal year 2010; (2) the companys
most highly compensated (up to a maximum of two) executive officers as of December
31, 2010 with compensation during fiscal year 2010 of $100,000 or more; and (3)
those two individuals, if any, who would have otherwise been in included in
section (2) above but for the fact that they were not serving as an executive
of the company as of December 31, 2010.

|                                   |  |            |      |           |   |          |  |             |         |                     |  |                                         |  |                                              |        |                                 |   |           |  |   |   |  |   |   |  |   |         | 
|---------------------------------- |  | ---------- | ---- | --------- | - | -------- |  | ----------- | ------- | ------------------- |  | --------------------------------------- |  | -------------------------------------------- | ------ | ------------------------------- | - | --------- |  | - | - |  | - | - |  | - | ------- | 
|                                   |  |            |      |           |   |          |  |             |         | Salary Compensation |  |                                         |  |                                              |        |                                 |  
|                                   |  |            |      |           |   |          |  |             |         |                     |  |                                         |  |                                              |        |                                 |  
|Name andPrincipalPosition          |  | FiscalYear |      | Salary($) |   | Bonus($) |  | StockAwards |         | OptionsAwards($)(1) |  | Non-EquityIncentive PlanCompensation($) |  | NonqualifiedDeferredCompensationEarnings ($) |        | All OtherCompensation($) (2)(3) |   | Total ($) | 
|                                   |  |            |      |           |   |          |  |             |         |                     |  |                                         |  |                                              |        |                                 |   |           | 
|Frederick C. Berndt                |  |            | 2009 |           | $ | 196,000  |  | $           | 50,000  |                     |  | N/A                                     |  |                                              | N/A    |                                 | $ |          |  | $ |  |  | $ |  |  | $ | 246,000 | 
|Chief Executive Officer, President |  |            | 2010 |           | $ | 196,000  |  | $           | 135,000 |                     |  | N/A                                     |  |                                              | N/A    |                                 | $ |          |  | $ |  |  | $ |  |  | $ | 331,000 | 
|                                   |  |            |      |           |   |          |  |             |         |                     |  |                                         |  |                                              |        |                                 |   |           |  |   |   |  |   |   |  |   |         | 
|Daniel T. Lapp                     |  |            | 2009 |           | $ | 105,000  |  | $           | 50,000  |                     |  | N/A                                     |  |                                              | N/A    |                                 | $ |          |  | $ |  |  | $ |  |  | $ | 155,000 | 
|Chief Financial Officer            |  |            | 2010 |           | $ | 105,000  |  | $           | 65,000  |                     |  | N/A                                     |  |                                              | N/A    |                                 | $ |          |  | $ |  |  | $ |  |  | $ | 170,000 | 
|                                   |  |            |      |           |   |          |  |             |         |                     |  |                                         |  |                                              |        |                                 |   |           |  |   |   |  |   |   |  |   |         | 
|Gary R. Smith                      |  |            | 2009 |           | $ | 250,000  |  | $           | 80,000  |                     |  | N/A                                     |  | $                                            | 40,041 |                                 | $ |          |  | $ |  |  | $ |  |  | $ | 370,041 | 
|Chief Operating Officer            |  |            | 2010 |           | $ | 250,000  |  | $           |        |                     |  | N/A                                     |  |                                              | N/A    |                                 | $ |          |  | $ |  |  | $ |  |  | $ | 250,000 | 




N/A Not
applicable.


|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | ASC 718 requires
 the company to determine the overall value of the options as of the date of
 grant based upon the Black-Scholes method of valuation, which number is
 reflected in the table above, and to then expense that value over the service
 period over which the options become exercisable (vest). As a general rule,
 for time-in-service-based options, the company will immediately expense any
 option or portion thereof which is vested upon grant, while expensing the
 balance on a pro rata basis over the remaining vesting term of the option.
 For a description ASC 718 and the assumptions used in determining the value
 of the options under the Black-Scholes model of valuation, see the notes to
 the financial statements included with this Memorandum.

44

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Includes all
 other compensation not reported in the preceding columns, including (i)
 perquisites and other personal benefits, or property, unless the aggregate
 amount of such compensation is less than $10,000; (ii) any gross-ups or
 other amounts reimbursed during the fiscal year for the payment of taxes;
 (iii) discounts from market price with respect to securities purchased from
 the company except to the extent available generally to all security holders
 or to all salaried employees; (iv) any amounts paid or accrued in connection
 with any termination (including without limitation through retirement,
 resignation, severance or constructive termination, including change of
 responsibilities) or change in control; (v) contributions to vested and
 unvested defined contribution plans; (vi) any insurance premiums paid by, or
 on behalf of, the company relating to life insurance for the benefit of the
 named executive officer; and (vii) any dividends or other earnings paid on
 stock or option awards that are not factored into the grant date fair value
 required to be reported in a preceding column.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(3) | Includes
 compensation for service as a director described under Director Compensation,
 below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

For a description of the material terms of each named executive
officers employment agreement, including the terms of the terms of any common
share purchase option grants, see that section of this Prospectus captioned
Employment Agreements.

Compensation
Policies

Under direction of our Board, executive officers are limited in
subjective planning and implementing compensation including generation or
modification of any arrangements, primarily of key executives and senior
management members and candidates for membership, given the need to
conform to protocols. Protocols are summarized as follows: (a) no arrangement
may be made unless in writing, (b) no arrangements may be implemented
unless the Board has had an opportunity to consider, comment
and vote, (c) no member of Management may vote or implement their own
compensation plan or modification, and (d) if a member of the Board, they
must abstain from discussion and voting (this includes restricting them
from signing any agreement or modification as to their personal
compensation), in the event of any particular factors as to any person,
such as nepotism, physical disability, minority status and similar,
contracting, and modification requires an additional aspect of Board
consideration and legal consultation. This tacit approach or protocols is
believed to avoid any material adverse effect on our Company and we have taken
steps to formalize these by written Board mandate.

Miscellaneous
Compensation Matters

Section 162(m) of the Internal Revenue Code (Section 162(m)) imposes a
$1 million limit on the amount that a public company may deduct for compensation
paid to the companys chief executive officer or any of the companys four
other most highly compensated executive officers who are employed as of the end
of the year. This limitation does not apply to compensation that meets the
requirements under Section 162(m) for qualifying performance-based
compensation (i.e., compensation paid only if the individuals performance
meets pre-established objective goals based on performance criteria approved by
the stockholders). Prior to this offering, we were not subject to Section
162(m). Going forward, we will seek to maximize the compensation deduction of
our executive officers and to structure the performance-based portion of the
compensation of our executive officers in a manner that complies with Section
162(m). However, because we will compensate our executive officers in a manner
designed to promote our varying corporate objectives, our compensation
committee may not adopt a policy requiring all compensation to be deductible.
For 2010, cash compensation paid to our executive officers did not exceed the
$1 million limit for any covered officer.

No outstanding common share purchase option or other equity-based award
granted to or held by any named executive officer in 2010 were re-priced or
otherwise materially modified, including extension of

45

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exercise periods, the change of vesting or forfeiture conditions, the
change or elimination of applicable performance criteria, or the change of the
bases upon which returns are determined, nor was there any waiver or
modification of any specified performance target, goal or condition to payout.

For a description of the material terms of any contract, agreement,
plan or other arrangement that provides for any payment to a named executive
officer in connection with his or her resignation, retirement or other
termination, or a change in control of the company see Employment Agreements.

Executive Officer Outstanding Equity Awards
At Fiscal Year-End

The following table provides certain information concerning any common
share purchase options, stock awards or equity incentive plan awards held by
each of our named executive officers that were outstanding as of December 31,
2010.

|                    |  |                                                               |         |                                                                 |  |                                                                                        |  |                         |   |                      |   |                                                        |  |                                                         |            |                                                                                         |  |                                                                                                           |  |  |   |  |  |   |  |  |   | 
|------------------- |  | ------------------------------------------------------------- | ------- | --------------------------------------------------------------- |  | -------------------------------------------------------------------------------------- |  | ----------------------- | - | -------------------- | - | ------------------------------------------------------ |  | ------------------------------------------------------- | ---------- | --------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------- |  |  | - |  |  | - |  |  | - | 
|Option Awards       |  | Stock Awards                                                  |        
|Name                |  | Number ofSecuritiesUnderlyingUnexercisedOptions(#)Exercisable |         | Number ofSecuritiesUnderlyingUnexercisedOptions(#)Unexercisable |  | EquityIncentive PlanAwards:Number ofSecuritiesUnderlyingUnexercisedUnearnedOptions (#) |  | OptionExercisePrice ($) |   | OptionExpirationDate |   | Number ofShares orUnits ofStock ThatHave NotVested (#) |  | MarketValue ofShares orUnits ofStock ThatHave NotVested |            | EquityIncentivePlanAwards:NumberofUnearnedShares,Units or OtherRightsThat HaveNotVested |  | EquityIncentive PlanAwards:Market orPayout Value ofUnearnedShares, UnitsorOther RightsThat Have NotVested | 
|                    |  |                                                               |         |                                                                 |  |                                                                                        |  |                         |   |                      |   |                                                        |  |                                                         |            |                                                                                         |  |                                                                                                           | 
|Frederick C. Berndt |  |                                                               |        |                                                                 |  |                                                                                       |  |                         |  |                      | $ |                                                       |  |                                                         |           |                                                                                         |  |                                                                                                          |  |  |  |  |  |  |  |  |  | 
|                    |  |                                                               |         |                                                                 |  |                                                                                        |  |                         |   |                      |   |                                                        |  |                                                         |            |                                                                                         |  |                                                                                                           |  |  |   |  |  |   |  |  |   | 
|Daniel T. Lapp      |  |                                                               |        |                                                                 |  |                                                                                       |  |                         |  |                      | $ |                                                       |  |                                                         |           |                                                                                         |  |                                                                                                          |  |  |  |  |  |  |  |  |  | 
|                    |  |                                                               |         |                                                                 |  |                                                                                        |  |                         |   |                      |   |                                                        |  |                                                         |            |                                                                                         |  |                                                                                                           |  |  |   |  |  |   |  |  |   | 
|Gary R. Smith       |  |                                                               | 100,000 |                                                                 |  |                                                                                       |  |                         |  |                      | $ | 3.00                                                   |  |                                                         | 06/30/2012 |                                                                                         |  |                                                                                                          |  |  |  |  |  |  |  |  |  | 

Employment Agreements

Each of the
following executive officers is a party to an employment agreement with the
company.

|                     |  |          |                                     |                    |   |            |  |  |     | 
|-------------------- |  | -------- | ----------------------------------- | ------------------ | - | ---------- |  |  | --- | 
|Name                 |  | Position |                                     | Annual Salary
 (1) |   | Bonus
 (1) | 
|                     |  |          |                                     |                    |   |            | 
|                    
|Frederick C.
 Berndt |  |          | Chief
 Executive Officer, President |                    | $ | 196,000    |  |  | (1) | 
|                     |  |          |                                     |                    |   |            |  |  |     | 
|Daniel T.
 Lapp      |  |          | Chief
 Financial Officer            |                    | $ | 105,000    |  |  | (1) | 
|                     |  |          |                                     |                    |   |            |  |  |     | 
|Gary R.
 Smith       |  |          | Chief
 Operating Officer            |                    | $ | 250,000    |  |  | (1) | 

---

|    |                                                                          
|--- | -------------------------------------------------------------------------
|(1) | Bonuses each
 year are at the discretion of the Board as described below.

The company entered into employment contracts as of November 11, 2007
with each of Frederick C. Berndt and Daniel T. Lapp. The term of each contract
terminates on the close of business on December 31, 2012. Gary R. Smith entered
into a three year employment contract on March 1, 2009 and his contract

46

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expires on March 1, 2012. Mr. Berndts contract provides for him to act
as the Chief Executive Officer of the company. Mr. Lapps contract provides for
him to serve as the Chief Financial Officer of the company. Mr. Smiths
contract provides for him to serve as the Chief Operating Officer. The
employment contracts provide for essentially the same terms and conditions
except as otherwise noted herein. The base annual salaries of Messrs. Berndt,
Lapp and Smith are $196,000, $105,000 and $250,000, respectively, plus bonuses
in the discretion of the company. Each agreement provides for indemnification
to the fullest extent permitted by law. Each executive may be terminated for
cause after providing the executive with 30 days prior written notice. The
executive may terminate his employment contract after providing the company
with 30 days prior written notice upon the occurrence of one of the following
events: (i)failure of the company to elect the executive or to reappoint the
executive to his current job title;(ii)Any material change by the company in
executives functions, duties and responsibilities;(iii)The liquidation,
consolidation or merger (including assumption of control by other parties) of
the company or transfer of all or substantially all of the companys assets
unless such consolidation, merger or business consolidation does not adversely
affect executives position or the dignity of responsibility of executive,
executives judgment; and(iv)Any material breach of the agreement by the
company.

In the event that agreement is
terminated other than for cause, the company shall pay a lump sum on the date
of termination, severance compensation to the executive in an amount equal to
the sum of executives salary and bonus paid in the prior fiscal year. In the
event the employment contract expires and the executive is not rehired in the
same position under the terms and conditions of a new executive employment
agreement mutually acceptable to the parties or in the event executive dies or
becomes disabled, the company shall pay in lump sum on the date of termination
severance compensation in an amount equal to the sum of executives salary and
bonus paid in the prior fiscal year. In addition, executive (except in the case
of his death) shall be entitled to continue health benefits for a period of 18
months or until the executive is employed full time with another employer.

In the event of a reorganization, merger of consolidation where the
company is not the surviving corporation or in the case of a sale or transfer
of all or substantially all of the assets of the company, then all of
executives options to purchase common stock of the company outstanding at the
time of the event and which were granted six months or more prior to the event,
shall immediately become exercisable in full and, upon the election of the
executive given to the company within 180 days of the event, and the company
shall repurchase for cash all or any part of the options as specified in the
written election at a price per share equal to the difference between the fair
market value of the companys stock on the execution date and the option exercise
price per share.

Pursuant to his employment agreement, Frederick C. Berndt entered into
a revolving note agreement with the company beginning on November 11, 2007. The
company initiated the note arrangement to allow Mr. Berndt to assist the
company, primarily in the early stages of development, personally with
operating capital as required. In addition, the company initiated the revolving
note agreement to allow the company to assist Mr. Berndt with cash advances
used for costs incurred during the process of improving the companys
marketing, political and regulatory exposure Mr. Berndt has agreed to reimburse
the company for the costs of these promotions. These costs consisted primarily
of travel and sponsorship costs. The company charges 5% interest per annum
calculated on the last day of the year based on an average of the quarterly
balance of the note. The balance of the note including interest was due and
payable on December 31, 2009, with a term of 30 days to settle the note
payable. Mr. Berndt has signed a note receivable for $508,688, as of December
31, 2008. On December 15, 2009, Mr. Berndt retired the note and accrued
interest balances of $787,144 through a stock repurchase transaction with the
company. See Certain Transactions

47

---



DIRECTOR COMPENSATION

Stock Options

Stock options and equity compensation awards to our non-employee /
non-executive directors are at the discretion of the Board. On July 22, 2009,
three year options to purchase 100,000 shares exercisable at a price of $3.00
per share were granted to five directors, including four non-employee /
non-executive directors. The company recorded $200,205 of compensation expense
relating to these options as of December 31, 2009.

Cash Compensation

Each of our non-employee / non-executive directors is eligible to
receive a fee of $2,500 quarterly to be paid for attending each Board meeting.
In addition, each non-employee/non-executive director also receives $3,000 for
each annual in person meeting attended.

Travel Expenses

All directors shall be reimbursed for their reasonable out of pocket
expenses associated with attending the meeting.

Director Compensation

The following table shows the overall compensation earned for the 2010
fiscal year with respect to each non-employee and non-executive director. It
should be noted that the stock awards required transfer of shares to the named
directors from principal stockholders of the company.

|                          |  |                             |        |                    |   |                    |  |                                             |  |                                              |   |                                 |  |           |   |  |   |   |  |   |        | 
|------------------------- |  | --------------------------- | ------ | ------------------ | - | ------------------ |  | ------------------------------------------- |  | -------------------------------------------- | - | ------------------------------- |  | --------- | - |  | - | - |  | - | ------ | 
|                          |  | DIRECTOR COMPENSATION       |       
|                          |  |                             |       
|Name andPrincipalPosition |  | FeesEarnedor Paidin Cash($) |        | StockAwards ($)(4) |   | OptionAwards($)(1) |  | Non-EquityIncentive PlanCompensation($) (2) |  | NonqualifiedDeferredCompensationEarnings ($) |   | All OtherCompensation($)(3) (4) |  | Total ($) |  
|                          |  |                             |        |                    |   |                    |  |                                             |  |                                              |   |                                 |  |           |  
|John D. Lane              |  | $                           | 10,000 |                    | $ |                   |  | $                                           |  |                                              | $ |                                |  | $         |  |  | $ |  |  | $ | 10,000 | 
|Dennis A. Nash            |  | $                           | 10,000 |                    | $ |                   |  | $                                           |  |                                              | $ |                                |  | $         |  |  | $ |  |  | $ | 10,000 | 

---

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | ASC 718
 requires the company to determine the overall value of the options as of the
 date of grant based upon the Black-Scholes method of valuation, and to then expense
 that value over the service period over which the options become exercisable
 (vest). The table above reflects the full value of the options granted for
 the year of grant. As a general rule, for time-in-service-based options, the
 company will immediately expense any option or portion thereof which is
 vested upon grant, while expensing the balance on a pro rata basis over the
 remaining vesting term of the option. For a description ASC 718 and the
 assumptions used in determining the value of the options under the
 Black-Scholes model of valuation, see the notes to the financial statements
 included with this Memorandum.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(2) | Excludes
 awards or earnings reported in preceding columns.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(3) | Includes all
 other compensation not reported in the preceding columns, including (i)
 perquisites and other personal benefits, or property, unless the aggregate
 amount of such compensation is less than $10,000; (ii) any gross-ups or
 other amounts reimbursed during the fiscal year for the payment of taxes;
 (iii) discounts from market price with respect to securities purchased from
 the company except to the extent available generally to all security holders
 or to all salaried employees; (iv) any amounts paid or accrued in connection
 with any termination (including without limitation through retirement,
 resignation, severance or constructive termination, including change of                                                                                                                 

48

---



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | responsibilities)
 or change in control; (v) contributions to vested and unvested defined
 contribution plans; (vi) any insurance premiums paid by, or on behalf of, the
 company relating to life insurance for the benefit of the director; (vii) any
 consulting fees earned, or paid or payable; (viii) any annual costs of
 payments and promises of payments pursuant to a director legacy program and similar
 charitable awards program; and (ix) any dividends or other earnings paid on
 stock or option awards that are not factored into the grant date fair value
 required to be reported in a preceding column.

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

The following
table sets forth information regarding the beneficial ownership of company
common stock as of December 31, 2010 by

| |   |                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------
| |  | each of our
 stockholders who is known by us to beneficially own more than 5% of our
 common stock;
| |  | each of the
 companys executive officers; and                                                     
| |  | each of the
 companys directors.                                                                  

Beneficial
ownership is determined based on the rules and regulations of the Commission. A
person has beneficial ownership of shares if the individual has the power to
vote and/or dispose of shares. This power can be sole or shared, and direct or
indirect. In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of common stock subject to
options or warrants held by that person are counted as outstanding. These
shares, however, are not counted as outstanding for the purposes of computing
the percentage ownership of any other person. Except as indicated in the
footnotes to this table and pursuant to applicable community property laws,
each stockholder named in the table has sole voting and dispositive power with
respect to the shares set forth opposite that stockholders name.

|                                                          |  |                      |           |                                                |  |                                          |  |                                     |            |                     |  |                             |  |  |            |  |  |      | 
|--------------------------------------------------------- |  | -------------------- | --------- | ---------------------------------------------- |  | ---------------------------------------- |  | ----------------------------------- | ---------- | ------------------- |  | --------------------------- |  |  | ---------- |  |  | ---- | 
|Name ofBeneficial Owner                                   |  | Shares ofCommonStock |           | % of Sharesof CommonStockBeneficiallyOwned (1) |  | Shares ofPreferredStockBeneficiallyOwned |  | % ofPreferredStockBeneficiallyOwned |            | CombinedVotingStock |  | % ofCombinedVotingStock (7) | 
|                                                          |  |                      |           |                                                |  |                                          |  |                                     |            |                     |  |                             | 
|                                                         
|Frederick C.
 Berndt (2)                                  |  |                      | 3,089,000 |                                                |  | 15.6                                     |  |                                     | 11,000,000 |                     |  | 100                         |  |  | 14,089,000 |  |  | 45.7 | 
|Daniel T.
 Lapp (2)                                       |  |                      | 350,000   |                                                |  | 1.8                                      |  |                                     |           |                     |  |                            |  |  | 350,000    |  |  | 1.1  | 
|Gary R.
 Smith (3)                                        |  |                      | 267,000   |                                                |  | 1.3                                      |  |                                     |           |                     |  |                            |  |  | 267,000    |  |  | 0.9  | 
|John Lane
 (4)                                            |  |                      | 801,000   |                                                |  | 4.0                                      |  |                                     |           |                     |  |                            |  |  | 801,000    |  |  | 2.6  | 
|Dennis Nash
 (5)                                          |  |                      | 320,000   |                                                |  | 1.6                                      |  |                                     |           |                     |  |                            |  |  | 320,000    |  |  | 1.0  | 
|All officers
 and directors as a group (five persons) (6) |  |                      | 4,827,000 |                                                |  | 23.8                                     |  |                                     | 11,000,000 |                     |  | 100                         |  |  | 15,827,000 |  |  | 50.6 | 
|                                                          |  |                      |           |                                                |  |                                          |  |                                     |            |                     |  |                             |  |  |            |  |  |      | 
|5% Shareholders                                           |  |                      |           |                                                |  |                                          |  |                                     |            |                     |  |                             |  |  |            |  |  |      | 
|Clayton
 Livengood and Susan Livengood                    |  |                      | 1,470,000 |                                                |  | 7.4                                      |  |                                     |           |                     |  |                            |  |  | 1,470,000  |  |  | 4.8  | 

---

|    |                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Based upon
 19,856,239 common shares outstanding as of December 31, 2010.                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                         
|(2) | Mr. Berndt
 owns 11,000,000 shares of Preferred Stock which have the same voting rights
 as Common Stock, except as otherwise provided by Delaware law. Mr. Lapp
 directly owns 300,000 common shares and he owns 50,000 shares held in a
 family trust.

49

---



|    |                                                                           
|--- | --------------------------------------------------------------------------
|(3) | Includes
 options to purchase 100,000 common shares.                      
|    |                                                                           
|(4) | Includes
 options and warrants to purchase 101,000 shares of common stock.
|    |                                                                           
|(5) | Includes
 options and warrants to purchase 140,000 shares.                
|    |                                                                           
|(6) | Includes
 options and warrants to purchase 441,000 shares of common stock.
|    |                                                                           
|(7) | Based upon
 30,835,251 outstanding voting shares of capital stock.        

Securities Authorized for Issuance under
Equity Compensation Plans

We have no compensation plans to issue equity securities. However, on
July 22, 2009, we granted to our officers and Directors options to purchase an
aggregate of 500,000 shares of Common Stock exercisable at $3.00 per share over
a term of three years ending July 22, 2012. The fair value of the options of
$200,205 was charged to current period operations.

Item 13. Certain Relationships, Related Transactions and Director
Independence.

In May 2007, the company was formed and we issued its founder stock in
the amount of 9,700,000 shares to six persons at a cash purchase price of
$.0001 per share. Included in the 9,700,000 shares were 9,050,000 shares issued
to Frederick C. Berndt, 300,000 shares issued to Daniel T. Lapp, 100,000 shares
issued to Krista R. Ringer, 200,000 shares issued to Steven S. Quinn and 50,000
shares issued to members of the law firm of Morse & Morse, PLLC, securities
counsel to the company. Mr. Berndt also purchased at a cash purchase price of
$.0001 per share, 11,000,000 shares of Series A Preferred Stock which have no
rights, preferences or privileges other than the right to vote the same as an
equivalent number of shares of Common Stock, except as otherwise provided by
applicable Delaware law.

In October 2007, the company completed its acquisition of 11 Goods
Energy LTD., its operating subsidiary, and in connection therewith, the company
issued an aggregate of 4,285,714 shares to the founders of 11 Goods Energy
LTD., including 2,782,000 to Clayton Livengood, 1,218,000 shares to his wife,
Susan K. Livengood, and 285,714 shares to Aaron R. Harnar.

Subsequent to the receipt of shares by Frederick C. Berndt and Clayton
Livengood, they have reduced their Common Stock ownership directly owned by them
to 3,555,000 shares and 252,000 shares, respectively; through the sale and/or
gift of 5,495,000 shares and 2,530,000 shares, respectively, to various
directors of the company identified herein and to various family, friends and
non-affiliated persons.

On September 11, 2008 Frederick C. Berndt personally secured a $275,000
note payable of the company to Surge Global Energy, Inc. with real property
owned by him. This loan has since been retired by the company.

In October 2009, we agreed to purchase 450,000 shares of the companys
outstanding common stock held by Surge Global Energy, Inc, an investor in 11
Good Energy, Inc. The purchase price was $450,000 ($1 per share). The company
has recorded the transaction at cost to Treasury Stock.

On December 15, 2009, we agreed to purchase 425,000 shares of our
outstanding common stock held by Frederick C. Berndt, our founder and CEO. The
purchase price was $850,000 ($2 per share). The transaction satisfied a loan
payable by Frederick C. Berndt to the company in the amount of $787,144.

50

---



The remaining amount was paid to Frederick C. Berndt in 2010. The
company has recorded the transaction at cost to Treasury Stock.

In February 2010, the company agreed to purchase 50,000 shares of the
companys outstanding common stock held by Surge Global Energy, Inc, an
investor in 11 Good Energy, Inc. The purchase price was $122,500 ($2.45 per
share). The company has recorded the transaction at cost to Treasury Stock. Mr.
Berndt is a stockholder of Surge and a former director of Surge.

Note Offering

Between 2007 and 2009, the company raised approximately $7,930,000 in
gross proceeds from the sale of its convertible promissory notes which became
due and payable on June 30, 2009. The company paid commissions (finders fees)
totaling $643,700 in connection with this offering. The notes provided for each
noteholder to have the option to convert their notes into common stock based
upon a 15% discount to the companys first equity raise which later occurred
between August and December 2009 at $3.00 per share. Therefore, the conversion
price of the notes became $2.55 per share. Upon repayment of each note or the
conversion thereof, each noteholder received one warrant for each share of
common stock that was issued upon conversion of the notes (including accrued
interest thereon) or, in the case the notes were retired through the payment of
cash, one warrant for each share of common stock that would have been issued
upon the conversion of these notes had the noteholder converted the principal
only into common stock. These unclassified warrants, which total 3,228,523,
have an expiration date of June 30, 2012. The exercise price of the warrants
which is equal to the conversion price of the notes is fixed at $2.55 per
share. Upon completion of the equity offering described below, the noteholders
had 30 days to elect to convert their notes as described above or to receive
its return of their principal and accrued interest thereon. As of December 31,
2009, the company repaid $1,967,916 in principal plus accrued interest thereon
to note holders and as of March 1, 2010, converted the remaining $6,498,709 in
principal plus accrued interest thereon to 2,548,513 shares of common stock.

Equity Offering

In August 2009, the company commenced an equity offering which had
several closings between August 2009 and March 2010. The company raised gross
proceeds of $11,932,000 from the sale of 3,977,333 shares of common stock and
Class A warrants to purchase 1,988,667 shares of the companys common stock at
an exercise price of $4.50 per share through the close of business on June 30,
2012. The company paid commissions totaling $1,193,200 in connection with this
offering. In April 2010, the company also issued 686,239 warrants to the
placement agent in connection with the equity offering.

Transactions with Affiliates

Since April 1, 2008, the company has occupied warehouse space provided
by one of the companys founders. The company agreed to pay a total of $1 per
month for the space. The company records this fee as rent expense when
incurred. During this time period, the company constructed a leasehold
improvement to the leased warehouse space for the purpose of locating our
bio-fuel manufacturing facility.

Other Transactions

The company has entered into consulting agreements with outside
building contractors, individuals responsible for creating political liaisons
and investor relations. The agreements are generally for a term of one year or
less from inception and renewable unless either the company or the consultant
terminates such agreement by written notice. The company incurred $1,643,161
and $750,996 in fees to these individuals for the year ended December 31, 20010
and 2009, respectively, in a consulting role.

51

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Transactions with Non-Affiliates

In August 2010, the company repurchased 30,322 shares of Common Stock
from a non-affiliated person at a cost of approximately $2.47 per share.

Item 14. Principal Accountant Fees and Services.

RBSM LLP
has served as our independent auditors for the past two fiscal years.

The
following table presents aggregate fees for professional services rendered by
our independent registered public accounting firm, RBSM LLP for the audit of
our annual consolidated financial statements for the years ended
December 31, 2010 and 2009.

|                         |  |                         |         |      |   |         | 
|------------------------ |  | ----------------------- | ------- | ---- | - | ------- | 
|                         |  | Year Ended December 31, |        
|                         |  |                         |        
|                         |  | 2010                    |         | 2009 |  
|                         |  |                         |         |      |  
|Audit fees
 (1)          |  | $                       | 262,344 |      | $ | 95,456  | 
|Audit-
 related fees (2) |  |                         | 36,163  |      |   | 14,407  | 
|Tax fees (3)             |  |                         |        |      |   |        | 
|All other
 fees          |  |                         |        |      |   |        | 
|                         |  |                         |         |      |   |         | 
|Total fees               |  | $                       | 298,507 |      | $ | 109,863 | 
|                         |  |                         |         |      |   |         | 

|    |                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Audit fees
 are comprised of annual audit fees and quarterly review fees.                                                                             
|(2) | Audit-related
 fees for fiscal years 2010 and 2009 are comprised of fees related to
 accounting consultation fees and form S-1 registration Statement.
|(3) | Tax fees are
 comprised of tax compliance, preparation and consultation fees.                                                                         

Policy on Board Pre-Approval of Services of
Independent Registered Public Accounting Firm

Our Board
has responsibility for appointing, setting compensation and overseeing the work
of the independent registered public accounting firm. In recognition of this
responsibility, the Board has established a policy to pre-approve all audit and
permissible non-audit services provided by the independent registered public
accounting firm. Prior to engagement of the independent registered public
accounting firm for the following years audit, management will submit to the
Board for approval a description of services expected to be rendered during
that year for each of following categories of services:

Audit
services include audit work performed in the
preparation and audit of the annual financial statements, review of quarterly
financial statements, reading of annual, quarterly and current reports, as well
as work that generally only the independent auditor can reasonably be expected
to provide, such as the provision of consents and comfort letters in connection
with the filing of registration statements.

Audit-related
services are for assurance and related services that
are traditionally performed by the independent auditor, including due diligence
related to mergers and acquisitions and special procedures required to meet
certain regulatory requirements.

52

---



Tax
services consist principally of assistance with tax
compliance and reporting, as well as certain tax planning consultations.

Other
servicesare those associated with services not
captured in the other categories. We generally do not request such services
from our independent auditor.

Prior to
the engagement, the Board pre-approves these services by category of service.
The fees are budgeted, and the Board requires the independent registered public
accounting firm and management to report actual fees versus the budget
periodically throughout the year by category of service. During the year,
circumstances may arise when it may become necessary to engage the independent
registered public accounting firm for additional services not contemplated in
the original pre-approval. In those instances, the Board requires specific
pre-approval before engaging the independent registered public accounting firm.

The Board
may delegate pre-approval authority to one or more of its members. The member
to whom such authority is delegated must report, for informational purposes
only, any pre-approval decisions to the audit Board at its next scheduled
meeting.

None of the
services described above for 2010 or 2009 provided by RBSM LLP were
approved by the Board pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X.

Part IV

Item 15.Exhibits and Financial Statement Schedules

(a)
Financial
Statements

The
following documents are filed under Item 8. Financial Statements and
Supplementary Data,pages F-1 through F-31, and are included as part of this Form 10-K
as the financial statements of the Company for the years ended December 31,
2010 and 2009:

Reports
of Independent Registered Public Accounting Firms
          Consolidated
Balance Sheets
          Consolidated
Statements of Income
          Consolidated
Statement of Shareholders Equity
          Consolidated
Statements of Cash Flows
          Notes to
Consolidated Financial Statements

53

---



(b) Exhibits

The following
exhibits were previously filed under a Form S-1 Registration Statement, file
No. 333-166149 unless otherwise noted:

|        |  |                        |                                                                                                                                                                                     
|------- |  | ---------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                       
|No.     |  | Description of Exhibit
|        |  |                       
|        |  |                        |                                                                                                                                                                                     
|2.1     |  |                        | Agreement
 and Plan of Organization between Registrant and 11 Goods Energy, LTD.                                                                                                   
|        |  |                        |                                                                                                                                                                                     
|2.2     |  |                        | Corrections
 to Exhibit 2.1                                                                                                                                                         
|        |  |                        |                                                                                                                                                                                     
|3.1     |  |                        | Certification
 of Incorporation                                                                                                                                                     
|        |  |                        |                                                                                                                                                                                     
|3.2     |  |                        | By-Laws                                                                                                                                                                             
|        |  |                        |                                                                                                                                                                                     
|3.3     |  |                        | Certificate
 of Amendment to Certificate of Incorporation                                                                                                                           
|        |  |                        |                                                                                                                                                                                     
|3.4     |  |                        | Certificate
 of Designation                                                                                                                                                         
|        |  |                        |                                                                                                                                                                                     
|10.1    |  |                        | Employment
 Contract - Frederick C. Berndt                                                                                                                                          
|        |  |                        |                                                                                                                                                                                     
|10.2    |  |                        | Employment
 Contract - Daniel Lapp                                                                                                                                                  
|        |  |                        |                                                                                                                                                                                     
|10.3    |  |                        | Employment
 Contract - Aaron Harnar                                                                                                                                                 
|        |  |                        |                                                                                                                                                                                     
|10.4    |  |                        | Consulting
 Agreement with Clayton R. Livengood                                                                                                                                     
|        |  |                        |                                                                                                                                                                                     
|10.5    |  |                        | Employment
 Agreement - Gary R. Smith                                                                                                                                               
|        |  |                        |                                                                                                                                                                                     
|10.6    |  |                        | Finders
 Agreement - Jesup Lamont                                                                                                                                                  
|        |  |                        |                                                                                                                                                                                     
|10.7    |  |                        | Consulting
 Agreement with Capital Keys                                                                                                                                             
|        |  |                        |                                                                                                                                                                                     
|10.8    |  |                        | Consulting
 Agreement with California Strategies                                                                                                                                    
|        |  |                        |                                                                                                                                                                                     
|10.9    |  |                        | Office Lease
 dated April 25, 2007 between the Registrant and Triad Realty, LLC, including
 a First Lease Amendment dated June 21, 2007 and a Second Amendment dated July
 15, 2009.
|        |  |                        |                                                                                                                                                                                     
|21.1    |  |                        | Subsidiary
 of Registrant                                                                                                                                                           
|        |  |                        |                                                                                                                                                                                     
|31.1    |  |                        | Principal
 Executive Officer Rule 13a-14(a)/15d-14(a) Certification (*)                                                                                                             
|        |  |                        |                                                                                                                                                                                     
|31.2    |  |                        | Principal
 Financial Officer Rule 13a-14(a)/15d-14(a) Certification (*)                                                                                                             
|        |  |                        |                                                                                                                                                                                     
|32.1    |  |                        | Principal
 Executive Officer and Principal Financial Officer Section 1350 Certification
 (*)                                                                                        

---

* Filed
herewith.


54

---



SIGNATURES

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

| |                       |                                       
| | --------------------- | --------------------------------------
| | 11 Good
 Energy, INC.
| |                       |                                       
| | By:                   | /s/ Frederick
 C. Berndt              
| |                       |                                       
| |                       | Frederick C.
 Berndt, Chairman of the 
| |                       | Board and
 Principal Executive Officer

Dated:
Canton,Ohio
April 15, 2011

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:

|                         |  |                                       |  |                
|------------------------ |  | ------------------------------------- |  | ---------------
|Signatures               |  | Title                                 |  | Date           
|                         |  |                                       |  |                
|                        
|/s/
 Frederick C. Berndt |  | Chairman of
 the Board                |  | April 15,
 2011
|                         |  | Principal
 Executive Officer          |  |                
|Frederick C.
 Berndt     |  |                                       |  |                
|                         |  |                                       |  |                
|/s/ Daniel
 T. Lapp      |  | Principal
 Financial Officer          |  | April 15,
 2011
|                         |  | Secretary
 and Treasurer              |  |                
|Daniel T.
 Lapp          |  |                                       |  |                
|                         |  |                                       |  |                
|/s/ Gary R.
 Smith       |  | Director and
 Chief Operating Officer |  | April 15,
 2011
|                         |  |                                       |  |                
|Gary R.
 Smith           |  |                                       |  |                
|                         |  |                                       |  |                
|/s/ John D.
 Lane        |  | Director                              |  | April 15,
 2011
|                         |  |                                       |  |                
|John D. Lane             |  |                                       |  |                
|                         |  |                                       |  |                
|/s/
  Dennis A. Nash     |  | Director                              |  | April 15,
 2011
|                         |  |                                       |  |                
|Dennis A.
 Nash          |  |                                       |  |                

The
aforementioned directors represent all the current members of the Board of
Directors.

55

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