*Table
        of Contents*







**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-K/A**


**(AMENDMENT
      NO. 1)**







þ  ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
      FOR THE FISCAL YEAR ENDED APRIL 30, 2008




or




o  TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
      FOR THE TRANSITION PERIOD FROM _____________ TO _________________




Commission
      file number 333-145967




**PAX
      BIOFUELS INC.**


(Exact
      name of registrant as specified in its charter)




**Delaware**
            
            **98-0543691**(State
                or other jurisdiction ofincorporation
                or organization)
            
            (I.R.S.
                EmployerIdentification
                No.)**1278
                Laurel Road****,
                North Saanich, BC Canada**
            
            **V8L
                5K8**(Address
                of principal executive offices)
            
            (Zip
                Code)


**(250)
      655-3776**


(Registrant’s
      telephone number, including area code)




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 þ




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act. Yes o No þ




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 þ No o




Indicate
      by check mark if there is disclosure of delinquent filers in response to Item
      405 of Regulation S-K contained herein and will not be contained, to the best
      of
      registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):




Large
              accelerated filero
            Accelerated
                fileroNon-accelerated
              filero(Do not check if a smaller reporting company)
            Smaller
                reporting company þ




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




The
      aggregate market value of the voting stock held by non-affiliates of the issuer
      as of October 31, 2007 was $101,300.




The
      number of shares outstanding of the registrant’s Common Stock on August 4, 2008
      was 10,713,000.










*Table
        of Contents*


**Explanatory
        Note**
  This
        Annual Report on Form 10-K/A (Amendment No.1) (the “Amended Report”) is filed as
        an amendment to the Annual Report on Form 10-K for the year ended April 30,
        2008
        filed by Pax Biofuels Inc. (the “Company”) on August 7, 2008 (the “Original
        10-K”). The Company is amending Item 8 to revise the headers to the financial
        tables together with the financial index. The Company has also corrected
        certain
        non-material typographical errors throughout this Amended Report. This Amended
        Report has not been updated or modified in any other way and speaks only
        as of
        the date of the original filing, August 7, 2008.
  *Table
            of Contents*




**PAX
      BIOFUELS INC.**


**ANNUAL
      REPORT ON FORM 10-K**


**TABLE
      OF CONTENTS**




Page**PART
                  I**ITEM
                  1.
              BUSINESS
              1ITEM
                  1A.
              RISK
                  FACTORS
              5ITEM
                  2.
              PROPERTIES
              5ITEM
                  3.
              LEGAL
                  PROCEEDINGS
              5ITEM
                  4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY
                  HOLDERS
              5**PART
                  II**ITEM
                  5.
              MARKET
                  FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
                  MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
              6ITEM
                  7.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS
              7ITEM
                  8.
              FINANCIAL
                  STATEMENTS AND SUPPLEMENTARY
                  DATA
              9ITEM
                  9.
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURES
              20ITEM
                  9A.
              CONTROLS
                  AND PROCEDURES
              20ITEM
                  9B.
              OTHER
                  INFORMATION
              21**PART
                  III**ITEM
                  10.
              DIRECTORS,
                  EXECUTIVE OFFICERS AND CORPORATE
                  GOVERNANCE
              22ITEM
                  11.
              EXECUTIVE
                  COMPENSATION
              23ITEM
                  12.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT AND RELATED STOCKHOLDERS MATTERS
              24ITEM
                  13.
              CERTAIN
                  RELATIONSHIPS AND RELATED
                  TRANSACTIONS
              25ITEM
                  14.
              PRINCIPAL
                  ACCOUNTING FEES AND SERVICES
              26**PART
                  IV**ITEM
                  15.
              EXHIBITS,
                  FINANCIAL STATEMENTS
                  SCHEDULES
              26SIGNATURES
              27


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**PART
      I**




**ITEM
      1.****BUSINESS**




**General**




Pax
      Biofuels Inc. (“we,” “us,” “our,” “Pax Biofuels,” or the “Company”) was
      incorporated in the state of Delaware on February 5, 2007. We are a
      development-stage company with no prior operating history. We intend to be
      in
      the business of producing and distributing biodiesel fuel. We intend to
      construct and operate a 30,000 metric ton per year biodiesel processing plant
      to
      be fed with a rapeseed oil crushing plant which we also intend to construct
      and
      operate. Our plant will be located in Serbia, formerly part of Yugoslavia.
      We do
      not expect to generate any revenue until we begin operating the proposed
      biodiesel plant.




We
      anticipate that our primary source of revenue will be the sale of biodiesel,
      both in blended and unblended forms with petroleum-based diesel fuel. We intend
      to produce and sell biodiesel fuel primarily to wholesalers who purchase pure
      biodiesel (known as B100) or blended fuel such as B20 (which is a blend of
      20
      percent biodiesel, and petrodiesel). Our sales will be dependent on the volume
      and price of the biodiesel fuel we sell in the future. The selling prices we
      realize in the future for our biodiesel will be closely linked to market prices
      of petroleum-based diesel fuel, the supply and demand for biodiesel, as well
      as
      the tax incentives offered by the governments of Serbia and other European
      countries for the production and blending of alternative fuels.




Our
      gross
      margin will be driven by the cost of feedstock (primarily rapeseed oil) and
      other chemical inputs used in our production of biodiesel fuel. We will
      initially purchase feedstock and other inputs both on the spot market and
      pursuant to fixed, short-term supply agreements. Our profit margins and
      financial condition are significantly affected by the cost and supply of
      rapeseed oil feedstock and other inputs in the commodity markets.




We
      have
      taken the following steps to implement our business plan:




·
            Conducted
                extensive research on the biodiesel markets, costing analyses for
                capital
                expenditure requirements, budget projections for operational costs
                and
                analysis of requirements for raw material supply and sale of by-products
                such as glycerin and meal.




·
            Met
                with representatives of potential buyers to establish relationships
                and
                determine their requirements.




·
            Traveled
                to Serbia to establish offices and form relationships with government
                agencies.




·
            Established
                contacts with sources of financing for plant
                construction.




·
            Engaged
                local management expertise for our Serbian
                operations.




**Serbia**




***Country
      and People***




The
      Republic of Serbia, together with the Republic of Montenegro, is a constituent
      part of the Federal Republic of Yugoslavia. It contains three autonomous
      provinces: Vojvodinam, Kosovo and Metohija. Belgrade is the capital city.




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***Position,
      Geography and Climate***




Serbia
      is
      located in the central part of the Balkan Peninsula, on the most important
      route
      linking Europe and Asia, occupying an area of 88,361 sq. km. Serbia is in the
      West European time zone (one hour ahead of Greenwich Mean Time). Its climate
      is
      temperate continental, with a gradual transition between the four seasons of
      the
      year.




Serbia
      is
      referred to as the crossroads of Europe. The international roads and railways
      passing down its river valleys make up the shortest link between Western and
      Central Europe, on the one side, and the Middle East, Asia and Africa, on the
      other; hence, the geopolitical importance of its territory. These roads follow
      the course of the valley of the river Morava, splitting in two near the city
      of
      Nis. One track follows the Southern Morava River and Vardar River valleys to
      Thessaloniki; the other follows the river Nisava to Sofia, Bulgaria and
      Istanbul, Turkey.




Serbian
      rivers belong to the basins of the Black, Adriatic and Aegean Seas. Three of
      them, the Danube, Sava and Tisa, are navigable. The longest river is the Danube,
      which flows for 588 kilometres of its 2,857-kilometer course through Serbia.
      The
      Danube basin has always been important for Serbia. With the commissioning of
      the
      Rhine-Main-Danube Canal in September 1992, the Black Sea and the Near and Far
      Eastern ports have become much easier to reach from Europe. Serbia is linked
      to
      the Adriatic Sea and Montenegro via Belgrade-Bar railway.




Northern
      Serbia is mainly flat, while its central and southern areas consist of highlands
      and mountains. The flatlands are mainly in Vojvodina (the Pannonian Plain and
      its rim: Macva, the Sava Valley, the Morava Valley, Stig and the Negotin Marches
      in Eastern Serbia). 55% of Serbia is arable land, and 27% is forested. Of its
      mountains, 15 reach heights of over 2,000 meters, the highest being Djeravica
      in
      the Prokletija range (2,656 m).




The
      length of Serbia’s border is 2,397 km. To the East, Serbia borders with
      Bulgaria; to the Northeast with Romania; to the North with Hungary; to the
      West
      with Croatia, Bosnia and Herzegovina; and to the South with Albania and
      Macedonia.




***Agriculture***




Most
      of
      the land in Serbia is privately owned. About 1,700,000 farmers hold 82% of
      the
      arable land. Serbia produces a marked surplus of food. Wheat, maize, oil, sugar,
      fruit, wine and meat are the most significant products.




**The
      Product**




Biodiesel
      is an alternative fuel (i.e., energy not derived from petroleum) that has
      important environmental and economic advantages over petroleum-based diesel
      (“petrodiesel”). It is derived from renewable agricultural-based resources,
      including vegetable oils, recycled grease and animal fats, and has significant
      environmental benefits. According to the Methanol Institute and International
      Fuel Quality Center, biodiesel is non-toxic and biodegradable with no emissions
      of sulfur and significantly lower emissions of particulate matter, carbon
      monoxide, and hydrocarbons than petrodiesel when burned. Biodiesel is the first
      and only alternative fuel to have a complete evaluation of emission results
      and
      potential health effects submitted to the U.S. Environmental Protection Agency
      (EPA) under the Clean Air Act Section 211(b). These programs include the most
      stringent emissions testing protocols ever required by the EPA for certification
      of fuels or fuel additives. The data gathered represents the most thorough
      inventory of the environmental and human health effects that current technology
      will allow. The EPA has surveyed the




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large
      body of biodiesel emissions studies and averaged the health effects testing
      results with other major studies. To view EPA’s report titled “A Comprehensive
      Analysis of Biodiesel Impacts on Exhaust Emissions,” visit:
      www.epa.gov/otaq/models/analysis/biodsl/p02001.pdf.




Biodiesel
      can be blended with petrodiesel, or it can be used entirely on its own (known
      as
      B100 fuel, or 100% biodiesel) in diesel engines without major modifications.
      The
      diesel engine was originally developed in 1892 by Rudolph Diesel specifically
      to
      be run on vegetable oils (his prototypes used peanut oil), and to be more
      efficient than gasoline engines. The most common blends are between 2% to 20%
      biodiesel (B2 to B20). According to the National Biodiesel Board, most major
      engine companies have stated formally that the use of blends up to B20 will
      not
      void their parts and workmanship warranties.




***Biodiesel
      Production***




Biodiesel
      production was first perfected in Germany in 1991. Since then, several countries
      have been involved in making improvements in the process. Most recently, Japan
      has developed a process to lower nitrogen emissions, the one persistent
      environmental problem remaining with use of biodiesel fuels.




Biodiesel
      is made through a process known as “trans-esterification,” which converts
      plant-based oils or animal fat into biodiesel by affecting a chemical reaction
      that uses the alcohol, primarily methanol, from the biomass and a catalyst
      such
      as sodium hydroxide. The resulting fuel can be used in most conventional diesel
      engines with a reduction in toxic emissions and in the reliance on traditional
      petrochemical fuel sources. Because biodiesel can be simply splash-blended
      with
      petroleum-based diesel in any concentration, it can easily be used as an
“extender” of existing petroleum-based diesel supplies. Further, biodiesel does
      not require any special handling or storage facilities to maintain inventories.
      More importantly, 100% biodiesel specific fuels (B100) do not require any major
      modifications to conventional vehicle or stationary diesel engines, and offers
      improved lubricity for more efficient engine operation.




Two
      specifications currently exist that determine the market and commercial
      character of biodiesel production: ASTM (D6751) and CEN (EN14214). While both
      meet the purity requirements demanded by original equipment manufacturers and
      petroleum suppliers, EN14214 is emerging as the preferred standard for European
      consumption. With most of Europe falling in colder climates, the temperature
      below which biowax in biodiesels forms a cloudy appearance becomes an essential
      issue and biodiesel fuels manufactured using canola methyl ester or rapeseed
      methyl ester are the preferred sources of biomass because they have better
      performance characteristics in colder climates.




***Production
      Economics***




The
      primary biodiesel production cost is feedstock (primarily rapeseed oil) and
      other chemical input costs. The European average wholesale price of biodiesel
      is
      currently approximately 700 Euro, or $965.00 dollars, per metric ton. The margin
      between the sales price and feedstock costs may be used to cover fixed
      production costs and operating expenses (including Selling, General and
      Administrative Expenses).




***Usage
      Mandates***




The
      European Union (the “EU”) has mandated a 5.75% use of biodiesel either as a
      blending element (B5-B20) or as an alternative to petroleum-based diesel
      products (B100).




The
      increase in crude oil prices and the policies to encourage the production and
      use of biofuels such as bio-diester, which is produced using rapeseed, have
      led
      to an increase in the areas under rapeseed: 31.5% relative to the 2002-2006
      average, and 13.6% compared with 2006, that is, an EU area exceeding
      6




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million
      hectares. Rapeseed is the fourth most important crop by area in the EU, after
      wheat, maize and barley. The largest producers of rapeseed, France, Germany
      and
      Poland, are estimated to have increased their areas under rapeseed by 11% (to
      1.5 million hectares), 7% (to 1.5 million hectares) and 8% (to 674,000 hectares)
      respectively.




**Plan
      of Operation**




We
      have
      developed a three-phase strategy for the development and distribution of
      Serbian-produced biodiesel. Phase I will include the construction of a crusher
      plant to convert the raw biomass (rapeseed/canola) into the stock vegetable
      oil
      used in the production of biodiesel. The construction of the necessary
      conversion capability would provide an immediate revenue source for farmers
      and
      would provide Serbia with an important regional export to sustain growth until
      the construction of a more comprehensive biodiesel production facility can
      be
      completed. Phase II will include the development of a biodiesel production
      facility, which will cover the period between the beginning of plant
      construction through the initial biodiesel production phase. Finally, Phase
      III
      will address the issues of distribution and will cover the period from initial
      production through the development and stabilization of the domestic and
      regional distribution of Serbian-produced biodiesel.




**Intellectual
      Property**




We
      hold
      no patents, trademarks or licenses that are material to our
      business.




**Environmental
      Issues**




Serbia
      is
      currently working toward signing a Stabilization and Association Agreement
      with
      the EU with the expectation of completing preparations for full EU membership
      by
      2012. In connection therewith, Serbia will be adopting the laws promulgated
      by
      the EU regarding environmental protection. The issues we will have to address
      relate to the handling of waste materials and water. Water is continually
      recycled and poses very minimal environmental issues. Waste material will be
      utilized as fuel in a small power generation plant onsite.




**Competition**




The
      biodiesel production industry is extremely competitive. Many of our competitors
      have greater financial and other resources than we do and one or more of these
      competitors could use their greater resources to gain market share at our
      expense.




Many
      of
      our competitors in the biodiesel production industry have substantially greater
      production, financial, research and development, personnel and marketing
      resources than we do. As a result, our competitors may be able to compete more
      aggressively than we could and sustain that competition over a longer period
      of
      time. Our lack of resources relative to many of our competitors may cause us
      to
      fail to anticipate or respond adequately to new developments and other
      competitive pressures. This failure could reduce our competitiveness and cause
      a
      decline in our market share, sales and profitability.




Recently,
      The Victoria Group of Novi Sad in Serbia constructed a biodiesel plant near
      Belgrade. The facility is capable of producing 100,000 metric tons per year.
      The
      facility began commercially processing sunflower oil, soybean oil and rapeseed
      in early 2007. They are currently producing 25,000 metric tons per year. All
      of
      this production will be consumed within Serbia and will not detract a great
      deal
      from the regional demand for processed biomass.




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**Employees**




We
      have
      two employees: Miodrag (Mike) Andric and Paul Leslie (Les) Hammond.




**ITEM
      1A.****RISK
      FACTORS**




Not
      applicable.




**ITEM
      2.****PROPERTIES**




We
      do not
      own any real property. Our executive office is currently located in the
      residence of Mr. Hammond, who provides the space to us at no
      charge.




**ITEM
      3.****LEGAL
      PROCEEDINGS**




There
      are
      no pending, nor to our knowledge threatened, legal proceedings against
      us.




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




No
      matters were submitted to a vote of our security holders during the fiscal
      year
      ended April 30, 2008.




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**PART
      II**




**ITEM
              5.**
            **MARKET
                FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
                PURCHASES OF EQUITY
                SECURITIES**




**Market
      Information**




Our
      common stock is listed on the OTC Bulletin Board under the symbol “PAXB,”
however, there is no established trading market for our common stock.




**Holders**




As
      of
      April 30, 2008, there were 38 holders of record of our common stock. See
“Security Ownership of Certain Beneficial Owners and Management” for information
      on the holders of our common stock. Also see “Description of Registrant’s
      Securities” for a description of our outstanding and issued capital
      stock.




**Dividend
      Policy**




We
      have
      never paid cash dividends on our common stock and anticipate that we will
      continue to retain our earnings, if any, to finance the growth of our
      business.




**Equity
      Compensation Plans**




We
      have
      not established any equity compensation plans as of the date of this Annual
      Report on Form 10-K, however we reserve the right to do so at a later
      date.




**Recent
      Sales of Unregistered Securities**


From
        May
        2007 through October 2007, we sold an aggregate of 90,000 shares of common
        stock
        for total cash proceeds of $9,000 to nine investors. These sales were not
        registered under the Securities Act of 1933, as amended (the “Act”) in reliance
        on an exemption from registration under Section 4(2) of the Act and/or Rule
        506
        of Regulation D promulgated thereunder based upon (i) the limited number
        of
        purchasers, (ii) their representation of sophistication in financial matters,
        and (iii) their access to information concerning our
        operations.




**Repurchase
      of Securities**




We
      have
      never purchased any shares of our common stock and we are not likely to purchase
      any shares in the foreseeable future. In addition, our founders have not
      repurchased any shares of our common stock and are not likely to do so in the
      foreseeable future.




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ITEM
      6.SELECTED
      FINANCIAL DATA




Not
      applicable.




**ITEM
      7.****MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**




The
      following discussion and analysis of our plan of operations should be read
      in
      conjunction with our financial statements and notes thereto appearing elsewhere
      in this Form 10-K.




**Overview**




During
      the year ended April 30, 2008, we have taken the following steps to implement
      our business plan:




·
            Conducted
                extensive research on the biodiesel markets, costing analyses for
                capital
                expenditure requirements, budget projections for operational costs
                and
                analysis of requirements for raw material supply and sale of by-products
                such as glycerin and meal;




·
            Met
                with representatives of potential buyers to establish relationships
                and
                determine their requirements;




·
            Traveled
                to Serbia to establish offices and form relationships with government
                agencies;




·
            Established
                contacts with sources of financing for plant construction;
                and




·
            Engaged
                local management expertise for our Serbian
                operations.




We
      had
      delayed implementation of further steps in our business plan in order to more
      adequately assess the Kosovo political situation. The Serbian Democratic Party
      has recently taken power in Serbia and has indicated its complete accordance
      with Serbia’s entry into the European Union. The Serbian Government’s approach
      and successful membership in the European Union will ensure political stability
      and a rising standard of living for all Serbians.




Management
      continues to assess the multi-faceted issues impacting the biodiesel industry
      in
      Serbia in particular and Europe in general.




**Liquidity
      and Capital Resources**




During
      the year ended April 30, 2008, and the period from inception on February 5,
      2007
      to April 30, 2007, we incurred net losses of ($143,288) and ($39,500)
      respectively. We had $42 in current assets and $128,466 in current liabilities
      at April 30, 2008, leaving us a working capital balance deficit of ($128,424).
      Our net losses are a result of ongoing working capital expenses.




We
      are
      presently seeking additional financing. We believe that we will require a
      minimum of $1.5 million in additional capital over the next six months in order
      to acquire land, pay for engineering drawings and initiate deposits on capital
      equipment requirements. We intend to pursue additional financing as
      opportunities arise.




Our
      ability to obtain additional financing will be subject to a variety of
      uncertainties. The inability to raise additional funds on terms favorable to
      us,
      or at all, could have a material adverse effect on our business, financial
      condition and results of operations. If we are unable to obtain additional
      capital when required,




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we
      will
      be forced to scale back our planned expenditures, which would adversely affect
      our business and financial condition.




As
      a
      result of our limited operating history, our operating plan and our growth
      strategy are unproven and we have limited insight into the long-term trends
      that
      may impact our business. We cannot assure you that our operating plan and growth
      strategy will be successful or that we will be able to compete effectively,
      achieve market acceptance for our biofuel, or address the risks associated
      with
      our existing and planned business activities.




**Contractual
      Obligations**




We
      have
      contractual obligations that may affect our financial condition. We have a
      contract with Hammond Management Corporation, a company controlled by our
      President, Paul Leslie Hammond, for the provision of management services.
      Hammond Management Corporation waived its monthly fee of $6,500 for each of
      March and April 2008.




**Off-balance
      Sheet Arrangements**




We
      have
      no off-balance sheet arrangements.







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ITEM
      8.FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA




**Financial
      Statements of Pax Biofuels Inc.**


**Index
      to Financial Statements**




PageReport
                  of Independent Registered Public Accounting
                  Firm
              10Balance
                  Sheets
              11Statements
                  of Operations
              12Statements
                  of Cash Flows
              13Statements
                  of Stockholders' Deficit
              14Notes
                  to the Financial
                  Statements
              15




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**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
      FIRM**




To
      the
      Stockholders and Board of Directors of


Pax
      Biofuels Inc.




We
      have
      audited the accompanying balance sheet of Pax Biofuels Inc., a development
      stage
      company, as of April 30, 2008 and 2007 and the statements of operations, cash
      flows, and stockholders’ deficit for the year ended April 30, 2008, the period
      from February 5, 2007 to April 30, 2007 and the period from February 5, 2007
      (inception) to April 30, 2008. These financial statements are the responsibility
      of the Company's management. Our responsibility is to express an opinion on
      these financial statements based on our audits.




We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform an audit to obtain reasonable assurance 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 also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements and 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 these financial statements present fairly, in all material respects,
      the
      financial position of Pax Biofuels Inc. as of April 30, 2008 and 2007 and the
      results of its operations and its cash flows for the year ended April 30, 2008,
      the period from February 5, 2007 to April 30, 2007 and the period from February
      5, 2007 (inception) to April 30, 2008 in conformity with accounting principles
      generally accepted in the United States of America.




The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 1 to the financial
      statements, to date the Company has reported losses since inception from
      operations and requires additional funds to meet its obligations and fund the
      costs of its operations. These factors raise substantial doubt about the
      Company’s ability to continue as a going concern. Management’s plans in this
      regard are described in Note 1. The financial statements do not include any
      adjustments that might result from the outcome of this uncertainty.




*“DMCL”*




DALE
      MATHESON CARR-HILTON LABONTE LLP


CHARTERED
      ACCOUNTANTS




Vancouver,
      Canada


July
      22,
      2008









-
          10 -
 *Table
          of Contents*




**PAX
      BIOFUELS INC.**


**(A
      Development Stage Company)**


**BALANCE
      SHEETS**








April 30,
              2008
            
            April 30,
              2007**ASSETS****Current**Cash
            
            $
            42
            
            $
            23**Equipment,**net
            
            
            1,675
            
            
            1,662$
            1,717
            
            $
            1,685**LIABILITIES
                AND STOCKHOLDERS' DEFICIT****Current**Accounts
                payable and accrued liabilities
            
            $
            30,825
            
            $
            534****Due
                to related party (Note 3)
            
            
            97,641
            
            
            18,021128,466
            
            
            18,555**Stockholders'
                Deficit**Common
                stock (Note 4)Authorized:100,000,000
                common shares, par value $0.001 per shareIssued
                and outstanding:10,713,000
                common shares (April 30, 2007 – 10,663,000)
            
            
            10,713
            
            
            10,663Additional
                paid-in capital
            
            
            70,587
            
            
            65,637Subscription
                receivable
            
            
            (25,261
            )
            
            (53,670
            )Deficit
                accumulated during the development stage
            
            
            (182,788
            )
            
            (39,500
            )(126,749
            )
            
            (16,870
            )$
            1,717
            
            $
            1,685




The
      accompanying notes are an integral part of these financial
      statements.


-
          11 -
 
 *Table of Contents*


**PAX
      BIOFUELS INC.**


**(A
      Development Stage Company)**


**STATEMENTS
      OF OPERATIONS**








Year Ended
              April 30,
              2008
            
            February 5,
              2007
              (Inception)
              to April 30,
              2007
            
            February 5,
              2007
              (Inception)
              to April 30,
              2008**EXPENSES**Amortization
            
            $
            486
            
            $
            -
            
            $
            486Communications
            
            
            264
            
            
            -
            
            
            264Foreign
                exchange (gain) loss
            
            
            (79
            )
            
            (372
            )
            
            (451
            )Interest
                and bank charges
            
            
            600
            
            
            -
            
            
            600Management
                fees (Note 3)
            
            
            70,039
            
            
            16,664
            
            
            86,703Miscellaneous
            
            
            288
            
            
            -
            
            
            288Office
                supplies
            
            
            756
            
            
            268
            
            
            1,024Printing
                and reproduction
            
            
            875
            
            
            -
            
            
            875Professional
                fees
            
            
            63,756
            
            
            980
            
            
            64,736Travel
            
            
            6,303
            
            
            21,960
            
            
            28,263**NET
                LOSS**
            
            $
            143,288
            
            $
            39,500
            
            $
            182,788**NET
                LOSS PER SHARE – BASIC AND DILUTED**
            
            $
            (0.01
            )
            $
            (0.00
            )**WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND
                DILUTED**
            
            
            10,701,333
            
            
            10,248,333




The
      accompanying notes are an integral part of these financial
      statements.


-
          12 -
 
 *Table of Contents*


**PAX
      BIOFUELS INC.**


**(A
      Development Stage Company)**


**STATEMENTS
      OF CASH FLOWS**










Year Ended
              April 30,
              2008
            
            February 5,
              2007
              (Inception)
              to April 30,
              2007
            
            February 5,
              2007
              (Inception)
              to April 30,
              2008**CASH
                FLOWS FROM OPERATING ACTIVITIES**Net
                loss
            
            $
            (143,288
            )
            $
            (39,500
            )
            $
            (182,788
            )Non-cash
                item:Amortization
            
            
            486
            
            
            -
            
            
            486Changes
                in non-cash operating working capitalitems:Accounts
                payable and accrued liabilities
            
            
            27,291
            
            
            534
            
            
            27,825Amounts
                due to related parties
            
            
            82,620
            
            
            18,021
            
            
            100,641**Net
                cash used in operating activities**
            
            
            (32,891
            )
            
            (20,945
            )
            
            (53,836
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES**Acquisition
                of equipment
            
            
            (499
            )
            
            (1,662
            )
            
            (2,161
            )**Net
                cash used in investing activities**
            
            
            (499
            )
            
            (1,662
            )
            
            (2,161
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES**Issuance
                of common shares
            
            
            33,409
            
            
            22,630
            
            
            56,039**Net
                cash provided by financing activities**
            
            
            33,409
            
            
            22,630
            
            
            56,039**INCREASE
                IN CASH**
            
            
            19
            
            
            23
            
            
            42**CASH,
                BEGINNING**
            
            
            23
            
            
            -
            
            
            -**CASH,
                ENDING**
            
            $
            42
            
            $
            23
            
            $
            42**SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:****Cash
                paid for:**Interest
            
            $
            -
            
            $
            -
            
            $
            -Income
                taxes
            
            $
            -
            
            $
            -
            
            $
            -




The
      accompanying notes are an integral part of these financial
      statements.


-
          13 -
 
 *Table of Contents*





**PAX
      BIOFUELS INC.**


**(A
      Development Stage Company)**


**STATEMENT
      OF STOCKHOLDERS' DEFICIT**





Common
              Stock
              Number
            
            Common
              Stock
              Amount
            
            Additional
              Paid-in
              Capital
            
            Subscriptions
              Receivable
            
            Deficit
              Accumulated
              During the
              Development
              Stage
            
            Total**Balance,
                February 05, 2007****(Inception)**
            
            
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Common
                stock issued for cash at $0.001 per share, February 5, 2007 Inception)
            
            
            10,000,000
            
            
            10,000
            
            
            -
            
            
            -
            
            
            -
            
            
            10,000Common
                stock issued for cash at $0.10 per share, March 16, 2007 per share,
                October 30, 2005
            
            
            82,000
            
            
            82
            
            
            8,118
            
            
            -
            
            
            -
            
            
            8,200Common
                stock issued for cash at $0.10 per share, March 30, 2007 per share,
                October 30, 2005
            
            
            581,000
            
            
            581
            
            
            57,519
            
            
            (53,670
            )
            
            -
            
            
            4,430Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (39,500
            )
            
            (39,500
            )**Balance**,
                **April 30, 2007**
            
            
            10,663,000
            
            
            10,663
            
            
            65,637
            
            
            (53,670
            )
            
            (39,500
            )
            
            (16,870
            )Common
                stock issued for cash at $0.10 per share, July 25, 2007
            
            
            10,000
            
            
            10
            
            
            990
            
            
            -
            
            
            -
            
            
            1,000Common
                stock issued for cash at $0.10 per share, August 1, 2007 per share,
                October 30, 2005
            
            
            20,000
            
            
            20
            
            
            1,980
            
            
            -
            
            
            -
            
            
            2,000Common
                stock issued for cash at $0.10 per share, August 3, 2007
            
            
            10,000
            
            
            10
            
            
            990
            
            
            -
            
            
            -
            
            
            1,000Common
                stock issued for cash at $0.10 per share, August 7, 2007
            
            
            10,000
            
            
            10
            
            
            990
            
            
            -
            
            
            -
            
            
            1,000Subscriptions
                receivable
            
            
            -
            
            
            -
            
            
            -
            
            
            28,409
            
            
            -
            
            
            28,409Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (143,288
            )
            
            (143,288
            )**Balance,
                April 30, 2008**
            
            
            10,713,000
            
            $
            10,713
            
            $
            70,587
            
            $
            (25,261
            )
            $
            (182,788
            )
            $
            (126,749
            )




The
      accompanying notes are an integral part of these financial
      statements.


-
          14 -
 
 *Table of Contents*





**PAX
      BIOFUELS INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS**


**April
      30, 2008**




**Note
      1** **Nature
      and Continuance of Operations**




Pax
      Biofuels Inc. (the “Company”) was incorporated in the State of Delaware on
      February 5, 2007. The Company is in the development stage and intends to produce
      biodiesel.




***Going
      Concern***




These
      financial statements have been prepared on a going concern basis which assumes
      the Company will be able to realize its assets and discharge its liabilities
      in
      the normal course of business for the foreseeable future. The Company has
      incurred losses since inception resulting in an accumulated deficit of $182,788
      as at April 30, 2008 and further losses are anticipated in the development
      of
      its business raising substantial doubt about the Company’s ability to continue
      as a going concern. The ability to continue as a going concern is dependent
      upon
      the Company generating profitable operations in the future and/or to obtain
      the
      necessary financing to meet its obligations and repay its liabilities arising
      from normal business operations when they come due. Management intends to
      finance operating costs over the next twelve months with loans from directors
      and/or private placement of common stock.




**Note
      2** **Summary
      of Significant Accounting Policies**




***Basis
      of Presentation***




These
      financial statements are presented in United States dollars and have been
      prepared in accordance with accounting principles generally accepted in the
      United States.




***Development
      Stage***




The
      Company is a development stage company as defined in Statement of Financial
      Accounting Standards (“SFAS”) No. 7, “Development Stage Enterprises”, as it is
      devoting substantially all of its efforts to establish a new business and
      planned principal operations have not commenced.




***Use
      of Estimates and Assumptions***




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


-
          15 -
 
 *Table of Contents*




**PAX
      BIOFUELS INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS**


**April
      30, 2008**




**Note
      2** **Summary
      of Significant Accounting Policies (continued)**




***Foreign
      Currency Translation***




In
      accordance with SFAS No. 52, “Foreign Currency Translation,” foreign denominated
      monetary assets and liabilities are translated into their United States dollar
      equivalents using foreign exchange rates which prevailed at the balance sheet
      date. Non-monetary assets and liabilities are translated at the exchange rates
      prevailing on the transaction date. Revenue and expenses are translated at
      average rates of exchange during the year. Gains and losses arising on
      translation are included in comprehensive income, as a separate component of
      stockholders’ equity. Foreign currency transaction gain or losses are included
      in net loss.




***Fair
      Value of Financial Instruments***




The
      carrying value of cash and accounts payable and amounts due to related parties
      approximates their fair value because of the short maturity of these
      instruments. Unless otherwise noted, it is management’s opinion the Company is
      not exposed to significant interest, currency or credit risks arising from
      these
      financial statements.




***Income
      Taxes***




The
      Company follows the liability method of accounting for income taxes. Under
      this
      method, deferred income tax assets and liabilities are recognized for the
      estimated tax consequences attributable to differences between the financial
      statement carrying values and their respective income tax basis (temporary
      differences). The effect on deferred income tax assets and liabilities of a
      change in tax rates is recognized in income in the period that includes the
      enactment date. At April 30, 2008, a full deferred-tax asset valuation allowance
      has been provided and no deferred tax asset has been recorded.





In
      June
      2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
      No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB
      Statement No. 109" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty
      in income taxes by prescribing a two-step method of first evaluating whether
      a
      tax position has met a more likely than not recognition threshold and, second,
      measuring that tax position to determine the amount of benefit to be recognized
      in the financial statements. FIN 48 provides guidance on the presentation of
      such positions within a classified balance sheet as well as on de-recognition,
      interest and penalties, accounting in interim periods, disclosure and
      transition. FIN 48 was adopted by the Company on May 1, 2007.




***Basic
      and Diluted Loss per Share***




The
      Company computes loss per share in accordance with SFAS No. 128, “Earnings per
      Share” which requires presentation of both basic and diluted earnings per share
      on the face of the statement of operations. Basic loss per share is computed
      by
      dividing net loss available to common stockholders by the weighted average
      number of outstanding common shares during the period. Diluted loss per share
      gives effect to all dilutive potential common shares outstanding during the
      period. Dilutive loss per share excludes all potential common shares if their
      effect is anti-dilutive. The Company has no potential dilutive instruments
      and
      accordingly dilutive loss per share is equal to basic loss per
      share.


-
          16 -
 
 *Table of Contents*




**PAX
      BIOFUELS INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS**


**April
      30, 2008**





**Note
      2** **Summary
      of Significant Accounting Policies (continued)**




***Equipment***




Equipment
      is recorded at cost. Depreciation is provided using the declining balance method
      at 30% per year.





The
      Company evaluates the recoverability of equipment whenever events or changes
      in
      circumstances indicate that carrying amount of the asset may not be recovered.
      The Company determines impairment by comparing the undiscounted future cash
      flows estimated to be generated by these assets to their respective carrying
      amounts.




***Stock-based
      Compensation***




The
      Company has not adopted a stock option plan and has not granted any stock
      options from its inception. Accordingly, no stock-based compensation has been
      recorded to date.




***Recent
      Accounting Pronouncements***





In
      December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
      Consolidated Financial Statements” (“SFAS No. 160”). This Statement amends
      Accounting Research Bulletin (ARB) No. 51 to establish accounting and reporting
      standards for the non-controlling (minority) interest in a subsidiary and for
      the deconsolidation of a subsidiary. It clarifies that a non-controlling
      interest in a subsidiary is an ownership interest in the consolidated entity
      that should be reported as equity in the consolidated financial statements
      will
      have no impact. SFAS No. 160 is effective for the Company’s fiscal year
      beginning May 1, 2009. Management has determined that the adoption of this
      standard will not have an impact on the Company’s financial
      statements.





In
      December 2007, the FASB issued SFAS 141R, Business Combinations, SFAS 141R
      replaces SFAS 141. The statement retains the purchase method of accounting
      for
      acquisitions, but requires a number of changes, including changes in the way
      assets and liabilities are recognized. Management has determined that the
      accounting standard will have no effect on the Company’s Financial
      Statements.





In
      March
      2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments
      and
      Hedging Activities. SFAS 161 is intended to improve financial reporting about
      derivative instruments and hedging activities by requiring enhanced disclosures
      to enable investors to better understand their effects on an entity's financial
      position, financial performance, and cash flows. SFAS 161 achieves these
      improvements by requiring disclosure of the fair values of derivative
      instruments and their gains and losses in a tabular format. It also provides
      more information about an entity’s liquidity by requiring disclosure of
      derivative features that are credit risk-related. Finally, it requires
      cross-referencing within footnotes to enable financial statement users to locate
      important information about derivative instruments. SFAS 161 will be effective
      for financial statements issued for fiscal years and interim periods beginning
      on May 1, 2009. The Company will adopt SFAS No. 161 beginning in the first
      quarter of 2009. The Company does not expect there to be any significant impact
      of adopting SFAS 161 on its financial position, cash flows and results of
      operations.


-
          17 -
 
 *Table of Contents*





**PAX
      BIOFUELS INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS**


**April
      30, 2008**




**Note
      2** **Summary
      of Significant Accounting Policies (continued)**




***Recent
      Accounting Pronouncements (continued)***





On
      December 21, 2007, the Securities and Exchange Commission issued Staff
      Accounting Bulletin (“SAB”) No. 110. SAB 110 provides guidance to issuers on the
      method allowed in developing estimates of expected term of "plain vanilla"
      share
      options in accordance with SFAS No. 123(R), "Share-Based Payment". The staff
      will continue to accept, under certain circumstances, the use of a simplified
      method beyond December 31, 2007 which amends question 6 of Section D.2 as
      included in SAB 107, "Valuation of Share-Based Payment Arrangements for Public
      Companies", which stated that the simplified method could not be used beyond
      December 31, 2007. SAB 110 is effective May 1, 2008 for the Company. The Company
      is currently evaluating the potential impact, if any, that the adoption of
      SAB
      110 will have on its financial statements.




**Note
      3** **Related
      Party Transactions**




At
      April
      30, 2008, $97,641 (2007 - $18,021) was owed to two directors for expenses
      incurred on the Company’s behalf. The amounts owed to the related parties are
      unsecured, non-interest bearing and have no set terms of repayment. During
      the
      period ended April 30, 2008, the Company paid $70,039 (2007 - $16,664) in
      management fees to a company controlled by one of the directors.





Related
      party transactions are measured at the exchange amount which is the amount
      of
      consideration agreed to between the related parties.




**Note
      4** **Common
      Stock**




As
      at
      April 30, 2008, the authorized capital was 100,000,000 common shares with a
      par
      value of $0.001.





As
      at
      April 30, 2008 the Company had no outstanding options or warrants.





**Note
      5** **Income
      Taxes**




The
      provision for income taxes reported differs from the amounts computed by
      applying aggregate income tax rates for the loss before tax provision due to
      the
      following:





**2008**
            
            **2007**$
            
            
            $Loss
                before income taxes
            
            
            (143,288
            )
            
            (39,500
            )Statutory
                tax rate
            
            
            35
            %
            
            35
            %Expected
                recovery of income taxes computed at standard rates
            
            
            50,151
            
            
            13,825Valuation
                Allowance
            
            
            (50,151
            )
            
            (13,825
            )$
            -
            
            $
            -




-
          18 -
 
 *Table of Contents*





**PAX
      BIOFUELS INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS**


**April
      30, 2008**





At
      April
      30, 2008, the Company had accumulated non-capital loss carry-forwards of
      approximately $182,800, which are available to reduce taxable income in future
      taxation years and expire as follows:





2027
            
            $
            39,5002028
            
            $
            143,288$
            182,788





The
      potential future tax benefits of these expenses and losses carried-forward
      have
      not been reflected in these financial statements due to the uncertainty
      regarding their ultimate realization.





The
      Company has not filed income tax returns since inception in the United States
      and Canada. Both taxing authorities prescribe penalties for failing to file
      certain tax returns and supplemental disclosures. Upon filing there could be
      penalties and interest assessed. Such penalties vary by jurisdiction and by
      assessing practices and authorities. As the Company has incurred losses since
      inception there would be no known or anticipated exposure to penalties for
      income tax liability. However, certain jurisdictions may assess penalties for
      failing to file returns and other disclosures and for failing to file other
      supplementary information associated with foreign ownership, debt and equity
      positions. Inherent uncertainties arise over tax positions taken with respect
      to
      transfer pricing, related party transactions, tax credits, tax based incentives
      and stock based transactions. Management has considered the likelihood and
      significance of possible penalties associated with its current and intended
      filing positions and has determined, based on their assessment, that such
      penalties, if any, would not be expected to be material.




-
          19
          -
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          of Contents*






**ITEM
      9.****CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURES**




As
      of the
      date of this Annual Report on Form 10-K, there have been no changes in or
      disagreements with our auditors.




**ITEM
      9A.****CONTROLS
      AND PROCEDURES**




**(a)**
            **Evaluation
                of Disclosure Control and
                Procedures**




We
      maintain a system of disclosure controls and procedures that are designed to
      ensure that information required to be disclosed in our SEC reports is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules and forms, and to ensure that such information is accumulated and
      communicated to our management, including the principal executive officer and
      the principal financial officer, as appropriate, to allow timely decisions
      regarding required disclosure. Management necessarily applied its judgment
      in
      assessing the costs and benefits of such controls and procedures, which, by
      their nature, can provide only reasonable assurance regarding management’s
      control objectives.





Our
      management, with the participation of our principal executive officer and
      principal financial officer, has evaluated the effectiveness of our disclosure
      controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
      the
      Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end
      of the period covered by this Annual Report on Form 10-K. Based upon this
      evaluation, we conclude that for the Company’s current level of activities our
      disclosure controls and procedures are effective.




**(b)**
            **Management’s
                Report on Internal Control over Financial Reporting******




Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting as defined in Rules 13a-15(f) and
      15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal
      control over financial reporting is designed to provide reasonable assurance
      regarding the reliability of financial reporting and the preparation of
      financial statements for external purposes in accordance with generally accepted
      accounting principles.





Our
      internal control over financial reporting includes those policies and procedures
      that:





(i) pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of our assets;





(ii) provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being made
      only in accordance with authorizations of our management and directors; and





(iii) provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use or disposition of our assets that could have a material effect
      on the financial statements. Because
      of the 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 of compliance
      with the policies or procedures may deteriorate.


-
          20
          -
 *Table
          of Contents*


Management
      assessed the effectiveness of our internal control over financial reporting
      as
      of April 30, 2008. Management’s assessment included an evaluation of the
      design of our internal control over financial reporting and testing of the
      operational effectiveness of these controls.





Based
      on
      this assessment, management has concluded that as of April 30, 2008, our
      internal control over financial reporting was effective to provide reasonable
      assurance regarding the reliability of financial reporting and the preparation
      of financial statements for external purposes in accordance with U.S. generally
      accepted accounting principles.





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 the temporary rules of the Securities and Exchange
      Commission that permit us to provide only management's report in this annual
      report.




**(c)**
            **Changes
                in Internal****Control Over Financial
                Reporting**




There
      were no changes in our internal control over financial reporting during our
      fiscal year ended April 30, 2008 that have materially affected, or are
      reasonably likely to materially effect, our internal control over financial
      reporting.




**ITEM
      9B.****OTHER
      INFORMATION**




Not
      applicable.




-
          21
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          of Contents*




**PART
      III**




**ITEM
      10.****DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**




**Name**
            
            **Age**
            
            **Position**Paul
                Leslie Hammond
            
            62
            
            President
                and DirectorMiodrag
                Andric
            
            40
            
            Chairman
                of the Board of Directors





***Paul
      Leslie Hammond*** has
      served as our President and Director since our inception in February 2007.
      Since
      March 1985, Mr. Hammond has been President of Hammond Management Corporation,
      which provides management and financial consulting services. From June 1992
      to
      March 1998 he served as President of West Shore Ventures Limited, which provided
      investment banking services to multiple clients. Mr. Hammond holds a license
      as
      Chartered Accountant (1974) and is a member of both the Institute of Chartered
      Accountants of British Columbia and the Canadian Institute of Chartered
      Accountants. In July 1968, he received a Bachelor of Arts from Simon Fraser
      University with a double major in Economics and Commerce.




***Miodrag
      Andric*** has
      served as our Chairman since our inception in February 2007. From June 2005
      to
      February 2007, Mr. Andric served as President of Scientific Biofuel Solutions,
      Ltd., which was engaged in assessing the feasibility of establishing a biodiesel
      production facility in Canada on behalf of European interests. From August
      1998
      to June 1999, he was an executive of West Shore Ventures Ltd., which was engaged
      in international mining and opportunistic investments. From July 1999 to June
      2005, Mr. Andric served as the President of Ski4U.net, which was engaged in
      the
      business of arranging international ski tours to Italy. He is a graduate of
      the
      University of Sport Beograd and currently resides in West Vancouver, Canada.




There
      are
      no family relationships among our officers, directors and significant employees.




**Board
      of Directors**




Members
      of our Board of Directors (the “Board”) are elected for one-year terms serving
      until the next annual stockholders’ meeting or until their death, resignation,
      retirement, removal, disqualification, or until a successor has been elected
      and
      qualified. All officers are appointed annually by the Board and serve at the
      discretion of the Board. Currently, our directors receive no compensation for
      their service on our Board and we do not anticipate paying any compensation
      to
      directors in the foreseeable future.




All
      directors will be reimbursed by us for any accountable expenses incurred in
      attending Board meetings provided that we have the resources to pay these fees.
      We will consider applying for officers and directors liability insurance when
      we
      have the resources to do so.




***Board
      Independence***




We
      apply
      the standards of the NASDAQ Stock Market, Inc., for determining the independence
      of the members of our Board. We have determined that Miodrag Andric is
      independent within the meaning of such rule.




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***Committees
      of the Board of Directors***




Concurrent
      with having sufficient members and resources, the Board intends to establish
      an
      audit committee and a compensation committee. The audit committee will review
      the results and scope of the audit and other services provided by the
      independent auditors and review and evaluate the system of internal controls.
      The compensation committee will review and recommend compensation arrangements
      for the officers and employees. No final determination has yet been made as
      to
      the memberships of these committees or when we will have sufficient members
      to
      establish committees. We believe that we will need a minimum of three
      independent directors to have effective committee systems.




**ITEM
      11.****EXECUTIVE
      COMPENSATION**




**Compensation
      Discussion and Analysis**




Not
      applicable.




**Summary
      Compensation Table**




**Name
                and Principal Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Stock**
              **Awards**
              **($)**
            
            **Option**
              **Awards**
              **($)**
            
            **Non-Equity**
              **Incentive**
              **Plan**
              **Compen-sation**
              **($)**
            
            **Non-qualified**
              **Deferred
                Compen-sation Earnings**
              **($)**
            
            **All
                Other Compen-sation**
              **($)**
            
            **Total**
              **($)**Paul
                Leslie Hammond(1),
                Principal Executive Officer
              and
                Principal Financial Officer
            
            
            2008
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            70,039
            
            
            70,0392007
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            19,500
            
            
            19,500





(1)
            We
                are a party to a Management Services contract with Hammond Management
                Corporation, a company controlled by our President, Paul Leslie Hammond.
                The contract calls for management fees of $6,500 Canadian per month.
                Hammond Management Corporation has waived its fees for March and
                April
                2008.




We
      intend
      to provide our named executive officers with salary and possibly incentives
      that
      are aligned with the performance of our business and intended to be competitive
      with similarly situated companies.




**Committee
      Report on Executive Compensation**




Executive
      compensation is determined by the Board of Directors as a whole. There is no
      separate compensation committee.




·
            The
                Company had no outstanding grants or other plan-based awards as of
                the
                fiscal year end 2008 and 2007.




·
            There
                were no outstanding equity awards at the fiscal year end 2008 or
                2007.




·
            There
                were no options outstanding or exercised during the fiscal year end
                2008
                or 2007.




·
            There
                were no pension benefit plans during the fiscal year end 2008 or
                2007.




·
            There
                was no non-qualified deferred compensation at fiscal year end 2008
                or
                2007.




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**Director
      Compensation**




No
      directors were compensated during the fiscal years ended April 30, 2007 or
      2008,
      except as reflected in the Summary Compensation Table.




**Employment
      Agreements**




None.




**ITEM
      12.****SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS
      MATTERS**




The
      following tables set forth certain information regarding beneficial ownership
      of
      our capital stock as of August 4, 2008 by (i) each person whom we know
      to beneficially own more than five percent of any class of our common stock,
      (ii) each of our directors, (iii) each of the executive officers and (iv) all
      our directors and executive officers as a group. Unless otherwise indicated,
      each of the persons listed below has sole voting and investment power with
      respect to the shares beneficially owned.




Our
      total
      authorized capital stock consists of 100,000,000 shares of common stock, $0.001
      par value per share. As of August 4, 2008, there were 10,713,000 shares of
      our
      common stock outstanding, all of which were fully paid, non-assessable and
      entitled to vote. Each share of our common stock entitles its holder to one
      vote
      on each matter submitted to our stockholders. As of August 4, 2008, there were
      no shares of preferred stock issued and outstanding.




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**Name
                and Address of Beneficial Owner****(1)**
            
            **Shares
                of Common Stock**
              **Beneficially
                Owned****(2)**
            
            **Percentage
                of Common Shares**
              **Beneficially
                Owned**Paul
                Leslie Hammond
            
            
            4,870,000
            (3)
            
            45.46
            %Miodrag
                Andric
            
            
            4,890,000
            (4)
            
            45.65
            %All
                directors and officers as a group (2 persons)
            
            
            9,740,000
            
            
            90.92
            %Scientific
              Biofuel Solutions Ltd.(5)
            
            
            4,880,000
            
            
            45.55
            %Hammond
                Management Corporation(6)
            
            
            4,820,000
            
            
            44.99
            %Minh
                Binh Tinh
            
            
            663,000
            
            
            6.19
            %





(1)
            Unless
                otherwise indicated, the address of each person listed below is c/o
                Pax
                Biofuels Inc.


(2)
            Pursuant
                to the rules and regulations of the Securities and Exchange Commission,
                shares of common stock that an individual or group has a right to
                acquire
                within 60 days pursuant to the exercise of options or warrants are
                deemed
                to be outstanding for the purposes of computing the percentage ownership
                of such individual or group, but are not deemed to be outstanding
                for the
                purposes of computing the percentage ownership of any other person
                shown
                in the table.


(3)
            Consists
                of 4,820,000 shares owned by Hammond Management Corporation, a company
                controlled by Mr. Hammond; 10,000 shares owned by Mr. Hammond’s son, David
                Hammond; 10,000 shares owned by Mr. Hammond’s daughter, Adrienne Hammond;
                10,000 shares owned by Mr. Hammond’s wife, Celina Milman; 10,000 shares
                owned by Mr. Hammond’s step-son Tristan Appleby; and 10,000 shares owned
                by Mr. Hammond’s step-son Tremayne
                Appleby.


(4)
            Consists
                of 4,880,000 shares owned by Scientific Biofuel Solutions Ltd., a
                company
                controlled by our Chairman, Mr. Andric; and 10,000 shares owned by
                Mr.
                Andric’s wife, Giorgia Andric.


(5)
            Scientific
                Biofuel Solutions Ltd., is a company controlled by our Chairman,
                Mr.
                Andric, who is the beneficial owner of these securities.


(6)
            Hammond
                Management Corporation, is a company controlled by our President,
                Mr.
                Hammond, who is the beneficial owner of these securities.




**ITEM
      13.****CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS**




Upon
      formation, we issued 5,000,000 shares to Hammond Management Corporation, a
      company controlled by our President, Mr. Hammond, and 5,000,000 shares to
      Scientific Biofuel Solutions Ltd., a company controlled by our Chairman, Mr.
      Andric. We valued these shares at $0.001 per share or $10,000 in the aggregate,
      based upon par value.




On
      April
      30, 2008, $57,877 was owed to Mr. Hammond for expenses incurred on our behalf.
      The amounts owed to him are unsecured, non-interest bearing and have no set
      terms of repayment.




During
      the period ended April 30, 2008, management fees of $70,039 were paid to Hammond
      Management Corporation, a company controlled by Mr. Hammond. Please see
“Executive Compensation” for a description of Mr. Hammond’s management services.




At
      April
      30, 2008, $39,765 was owed to Mr. Andric for expenses incurred on our behalf.
      The amounts owed to him are unsecured, non-interest bearing and have no set
      terms of repayment.




We
      have
      not entered into any other material transactions with any director, executive
      officer, and promoter, beneficial owner of five percent or more of our common
      stock, or family members of such persons.




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ITEM
      14.PRINCIPAL
      ACCOUNTING FEES AND SERVICES




Dale
      Matheson Carr-Hilton LaBonte LLP (“Dale Matheson”) serves as our independent
      registered public accounting firm and audited our financial statements for
      the
      fiscal years ended April 30, 2008 and April 30, 2007. Aggregate fees for
      professional services rendered to us by Dale Matheson are set forth below:




**Fiscal
                Year****2008**
            
            
            **2007**Audit
                Fees
            
            $
            7,500.00
            
            $
            6,360.00Audit-Related
                Fees
            
            $
            7,320.00
            
            $
            0.00Tax
                Fees
            
            $
            901.00
            
            $
            0.00Total
            
            $
            15,721.00
            
            $
            6,630.00





***Audit
      Fees*** .
      Aggregate fees for professional services rendered by Dale Matheson in connection
      with its audit of our annual financial statements for the fiscal years ended
      April 30, 2008, and the quarterly reviews of our financial statements included
      in our quarterly reports on Form 10-QSB during the fiscal year ended April
      30,
      2008.




***Audit-Related
      Fees.*** During
      the fiscal years ended April 30, 2008 and 2007 Dale Matheson did not provide
      any
      audit-related services to us not described under “Audit Fees”
above.




***Tax
      Fees.*** During
      the fiscal years ended April 30, 2008 and 2007 Dale Matheson provided tax
      preparation services.




***All
      Other Fees.*** During
      the fiscal years ended April 30, 2008 and 2007, Dale Matheson did not provide
      any other services to us other than those described above.




**PART
      IV**




**ITEM
      15.****EXHIBITS,
      FINANCIAL STATEMENTS SCHEDULES******




**Exhibit**
              **Number**
            
            **Description**3.1
            
            Articles
                of Incorporation (incorporated by reference to Exhibit 3.1 to the
                Company’s Registration Statement on Form SB-2 (Registration No.
                333-145967)).3.2
            
            By-laws
                of the Company (incorporated by reference to Exhibit 3.2 to the Company’s
                Registration Statement on Form SB-2 (Registration No.
                333-145967)).4.1
            
            Specimen
                common stock certificate for the Company (incorporated by reference
                to
                Exhibit 4.1 to the Company’s Registration Statement on Form SB-2
                (Registration No. 333-145967)).10.1
            
            Management
                Contract with Hammond Management Corporation (incorporated by reference
                to
                Exhibit 10.1 to the Company’s Registration Statement on Form SB-2
                (Registration No. 333-145967)).31.1
            
            Certification
              of Principal Executive Officer and Principal Financial Officer Pursuant
              to
              Section 302 of the Sarbanes-Oxley Act of 2002.32.1
            
            Certification
              Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
              906 of
              the Sarbanes - Oxley Act of 2002.





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**SIGNATURES**




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




**Pax
                Biofuel, Inc.**Date: September
                11, 2008
            By:
            /s/
                Paul Leslie HammondPaul
                Leslie Hammond
              President,
                Principal Executive Officer, Principal Financial Officer,
              Principal
                Accounting Officer and Director






Pursuant
      to and in accordance with the requirements of the Securities Exchange Act of
      1934, this report has been signed by the following persons on behalf of the
      registrant and in the capacities and on the dates indicated.




**Name**
            
            **Title**
            
            **Date**/s/
                Paul Leslie Hammond
            
            President,
                Principal Executive Officer, Principal Financial Officer,
            
            September
                11, 2008Paul
                Leslie Hammond
            
            Principal
                Accounting Officer and Director/s/
                Miodrag Andric
            
            Chairman
                of the Board of Directors
            
            September
                11, 2008Miodrag
                Andric


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