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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended **December 31,
2006**

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-49632

SOLANEX MANAGEMENT INC.(Name of small business issuer in its charter)

|Nevada                                                               | 98-0361151                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|Suite 440                                                            | (604) 601-2107                      
|1555 E. Flamingo Road                                                | (Issuer's phone number)             
|Las Vegas, Nevada 89119                                              |                                     
|(Address of principal executive offices)                             |                                     

Securities registered under Section 12(b) of the Exchange
Act:None

Securities registered under Section 12(g) of the Exchange
Act:100,000,000 shares of common stock, par value $0.001 per share

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

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B 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-KSB or any amendment to this Form 10-KSB. [   ]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange ActYes [X] No [   ]

State issuers revenues for its most recent fiscal year:
$nil

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at
which the common equity was sold, or the average bid and asked price of such
common equity, as of a specified date within the past 60 days. N/A

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date.
12,033,730 common shares as of February 15, 2007

Transitional Small Business Disclosure Format: Yes [ 
 ] No [X]

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TABLE OF CONTENTS

|               |                                                                                                                       | Page
|-------------- | --------------------------------------------------------------------------------------------------------------------- | ----
|Part I         |                                                                                                                       |     
|Item 1         | Description of Business                                                                                               | 3   
|Item 2         | Description of Property                                                                                               | 7   
|Item 3         | Legal Proceedings                                                                                                     | 7   
|Item 4         | Submission of Matters to a Vote of Security Holders                                                                   | 8   
|               |                                                                                                                       |     
|Part II        |                                                                                                                       |     
|Item 5         | Market for Common Equity and Related Stockholder Matters                                                              | 8   
|Item 6         | Management's Discussion and Analysis or Plan of Operation                                                             | 9   
|Item 7         | Financial Statements                                                                                                  | 19  
|Item 8         | Changes In and Disagreements With Accountants on Accounting
      and Financial Disclosure                            | 36  
|Item 8A        | Controls and Procedures                                                                                               | 36  
|Item 8B        | Other Information                                                                                                     | 36  
|               |                                                                                                                       |     
|Part III       |                                                                                                                       |     
|Item 9         | Directors, Executive Officers, Promoters and Control Persons;
      Compliance With Section 16(a) of the Exchange Act | 37  
|Item 10        | Executive Compensation                                                                                                | 39  
|Item 11        | Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters                  | 40  
|Item 12        | Certain Relationships and Related Transactions                                                                        | 41  
|               |                                                                                                                       |     
|Part IV        |                                                                                                                       |     
|Item 13        | Exhibits                                                                                                              | 42  
|Item 14        | Principal Accountant Fees and Services                                                                                | 41  
|               |                                                                                                                       |     
|Signatures     | 43                                                                                                                   
|Certifications | 45                                                                                                                   

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PART I

ITEM 1. DESCRIPTION OF BUSINESS

Corporate Background

Solanex Management Inc. was incorporated under the laws of the
State of Nevada on October 12, 2000 under the name Eco Soil Management Inc. We
changed our name to Solanex Management Inc. on December 6, 2001. To date, our
activities have been organizational in nature, directed at acquiring our
principal assets, raising capital, and implementing measures under our business
plan designed to position us to generate revenues.

Our business is divided into three areas: the development,
manufacture, and sale of Thermal Destructors; the development, manufacture, and
sale of portable Steam Injection System; and investing in mineral resource
properties.

Thermal Destructors

A Thermal Destructor is a self contained, mobile, soil residue
combustion system to be used for cleaning contaminated sites by sterilizing
soil. The Thermal Destructor consists of a high efficiency, waste or gas-fired
combustion chamber and a new generation, exhaust gas, low-pressure drop liquid
scrubber effective in trapping pollutants in air emissions. A common use of the
Thermal Destructor is what oilfield engineers refer to as post-op dirt
burning, the practice of cleaning up hydrocarbon spills at the end of the life
of a production well by passing the soil and substrate through a rotary kiln,
such as in our device, whereby the hydrocarbons are burned, delivering sterile
and cleaned soil and clay residues. We are also able to offer customers
desalination, microbial, and veremicultural services for site clean up projects
by contracting for such services with EcoTech Waste Management Systems, Inc.
(EcoTech), a company which will be discussed further in this report.

On October 12, 2000, we acquired a license to certain
technology and intellectual property from a group of investors and the developer
of the technology, Colin V. Hall, our President and sole member of our board of
directors. The license granted a non-exclusive right to manufacture, market and
sell a thermal destructor for on-site soil remediation to industrial,
petrochemical and site remediation organizations. The intellectual property
acquired included all licensing, modification, marketing, distribution and sales
rights worldwide in perpetuity. Under the terms of the Agreement and License of
Intellectual Property Rights (the Destructor Agreement), Mr. Hall was
compensated two thousand ($2,000) dollars plus one million five hundred thousand
(1,500,000) shares of our common stock and the investors, a group of ten
individuals, were compensated an aggregate of two million (2,000,000) shares of
our common stock. The license granted a royalty payable to Mr. Hall in the
amount of seven (7%) percent of gross revenue derived from the sale or use of
the soil Thermal Destructor. We have not commenced commercial operations, have
generated no revenues, have no full-time employees, own no real estate and have
valued the intellectual property rights at $nil on our balance sheet for
accounting purposes.

Since our organization and initial acquisition, we have
struggled to raise money to develop our acquired technology and finance our
business plan. In adapting to a lack of financing, we have engaged in a number
of measures to stay in business. For example, we shifted focus from
manufacturing our thermal destructor at a cost of around $750,000 to less
expensive pursuits

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under our business plan including financing marketing efforts
in order to stimulate demand for our product. In an effort to reduce cash
expenditures, our management has served without compensation and we have
successfully negotiated stock payments in lieu of cash to repay several of our
trade creditors and loans provided by our shareholders. Although these efforts
have served to maintain our company as a going concern, we have not been able to
create enough investor interest in our original concept to sustain long-term
business operations.

The original Destructor Agreement provided that the license may
be revoked if we do not manufacture at least one Thermal Destructor within three
(3) years of the licensing date. We did not meet the manufacturing requirement;
however, the Destructor Agreement was subsequently renewed on a month to month
basis.

As a consequence of our inability to finance our business plan,
we have been looking for companies with better access to financing to partner
with and better expose our technology to its intended market. EcoTech has been a
stable partner in our quest to develop our technologies. We have also been
analyzing and searching for synergistic business opportunities that will allow
us to utilize our existing technology in other business applications. Our Steam
Injection technology, described below, is an example of these efforts. We have
also searched out other business opportunities as well and used our contacts
within the industry to diversify our business plan to attract financing.

Our Arrangement with EcoTech

EcoTech is a company wholly-owned by Mr. Hall that has owned
the Intellectual Property rights to the Thermal Destructor since October 12,
2000.

On October 1, 2002, we entered into a joint venture agreement
with EcoTech. Under that agreement, we agreed to shed certain business and
administrative responsibilities including product manufacturing, inventory
maintenance, and website development, thereby enabling our company to
concentrate more fully on marketing and sales efforts. Most integral under the
agreement, we contracted the responsibility of manufacturing the Thermal
Destructor to EcoTech. In consideration for the services provided by EcoTech, we
are required to pay $100,000 to EcoTech in cash or shares of stock over the life
of the agreement which is three (3) years. As of December 31, 2006, we have paid
$85,500 and accrued $14,500 in accounts payable towards fulfilling our
obligations under the agreement. We are still responsible for these remaining
amounts to EcoTech, and hope to reconcile when we are financially capable of
doing so.

On May 23, 2006 we negotiated with EcoTech and extended the
terms of our original joint venture agreement. Under the Strategic Alliance
Agreement, we defined the marketing responsibilities and agreed that the parties
will meet in 2007 and explore a schedule for marketing to prospective customers.
For the initial customer, we agreed to pay $40,000 of the costs associated with
these marketing efforts and EcoTech agreed to bear the balance of such costs.
For each subsequent customer, we agreed to bear $50,000 worth of costs or
whatever adjusted price is agreed upon between the parties on a later date.
EcoTech remains responsible to build each Thermal Destructor unit for a cost not
to exceed $2,000,000 USD per unit. We agreed with EcoTech to work together to
determine revenue sharing arrangements in connection with any sales.

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On September 29, 2006, aware that an ongoing relationship
between ourselves and EcoTech was critical to achieving success, EcoTech
assigned to us the full rights to the Thermal Destructor and an offshoot
technology known as the Steam Injection System in exchange for $2,000.

Steam Injection System

The Steam Injection System is a natural offshoot from our
original high temperature Thermal Destructor, and is also being developed for
use by the oil industry. We have utilized the body, drive mechanism, and heating
components from the Thermal Detonator to create a portable high temperature,
high pressure steam generation unit.

The Steam Injection System is designed specifically for use in
oil fields where high-pressure steam can be injected into the oil formation to
soften the material in which the oil is trapped and to help dilute and separate
heavy oil from the earth. The injection of steam under high pressure also
creates channels and cracks through which the oil can flow to the well. This is
a tertiary retrieval method, used to capture oil from wells which have already
been exhausted via primary and secondary means of oil retrieval.

The most immediate market for a quick-deployment, mobile or
short term steam generation and delivery system such as our Steam Injection
System is companies who are in the bitumen/heavy oil exploitation business.
Bitumen is a semisolid, degraded, tar-like form of oil that does not flow at
normal temperatures and pressures. Bitumen cannot be produced from a well unless
it is heated or diluted. Most of today's major commercial on-site projects use
steam to heat and dilute the bitumen.

There are two principal methods used under different reservoir
conditions. High-pressure steam is injected into the oil sands formation
(bitumen deposit) for several weeks. The heat softens the bitumen, while the
water vapor helps to dilute and separate the bitumen from the sand grains. The
pressure also creates channels and cracks through which the bitumen can flow to
the well. When a portion of the reservoir is thoroughly saturated, the steam is
turned off and the reservoir "soaks" for several weeks. This is followed by the
production phase, when the bitumen flows, or is pumped, up the same wells to the
surface. When production rates decline, another cycle of steam injection begins.
This process is sometimes called "huff and puff" recovery and only involves
vertical wells.

A variation of this method, developed by Shell Canada for the
Peace River oil sands, is known as the "soak radial" technique involving a
vertical well with four horizontal arms that extend spoke-like into the
reservoir. Steam is injected for two months, followed by six to eighteen months
of reverse action, during which oil is pumped to the surface through the same
horizontal arms. Pairs of parallel horizontal wells, one for steam injection and
one for production, make it possible to recover bitumen continuously from such
an oil formation.

Current steam generation systems are usually major structures
that produce large volumes of steam that is fed to a manifold from which steam
pipes lead to an array of wellheads. The steam is forced into the wells where it
heats up the porous strata containing the bitumen or heavy oil resource,
softening the oil (thermally reducing the viscosity), so it can be released to
flow like less dense crude oil. These systems have the limitations of being
stationary structures, necessarily over-sized and accordingly expensive. They
have a finite range, due to the limitations in pumping steam over long distances
to outlying wells, with the attendant dangers of large overland pressure pipes
subject to damage and potential rupture with the heavy machinery

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movements in oil field operations. Also, distance results in an
unwelcome steam temperature drop in the cold ambient of a Northern Alberta
winter.

Our Steam Injection System offers several advantages to the
current steam generation systems:       
-     
 Portability,      
-       Lower cost to
manufacture,       
-       Efficiency of burner,
and       
-       Flexibility of fuel required to
create steam.

Because of these advantages, our Steam Injection System can
also be used to recover heavy oil from shale deposits. These deposits could not
previously be recovered profitably because of the expense of building large,
permanent steam generation units. This is yet another untapped market for our
Steam Injection System where we plan to focus our marketing efforts.

We estimate that it will require $3,500,000 to create a working
prototype Steam Injection System to be sold, rented or leased to an oil
production company on a weekly, monthly or annual basis. We intend to obtain the
required financing for the manufacture of each system from the intended
customer.

Our Arrangement with EcoTech

Under the October 1, 2002 joint venture agreement, EcoTech
agreed to search out and advise us on the development of technologies that may
complement our business plan with the Thermal Destructor. In fulfillment of that
contractual obligation, on October 12, 2006, Eco Tech signed an Addendum to the
May 23, 2006 Strategic Alliance Agreement. For consideration of $2,000 to be
paid to EcoTech, the parties agreed to expand our business relationship to
include the Steam Injection System, a portable high temperature steam generation
technology, and to jointly develop and market SISs for use across North America.
Our marketing costs and revenue sharing provisions under the Strategic Alliance
Agreement apply with equal force to both the Thermal Destructors and the Steam
Injection System technology.

Mineral Resource Properties

We have considered implementing steps which may include taking
our company into a new channel of business by way of actively seeking investment
opportunities in mineral resource properties. Such opportunities have previously
become available to us through our network of contacts in the mineral resources
sector. During 2006, we turned down an opportunity to acquire an option interest
in a sand and gravel deposit for payment of up to $75,000 over four years and
the issuance of up to 2,000,000 shares of common stock. Management believed that
acquiring the option at that stage was premature in our development and would
divert needed capital away from our core business pursuits. However, we intend
to continue our search in the resources sector and seize the right opportunity
when our capital position permits.

Competition

Many of our potential competitors have longer operating
histories, larger customer or user bases, greater brand recognition and
significantly greater financial, marketing and other resources than we do as we
attempt to enter the marketplace. In addition, existing competitors may be
acquired by, receive investments from, or enter into other commercial
relationships with, larger well-established and well-financed companies.
Competitors have and may continue to adopt

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aggressive pricing or availability policies and devote
substantially more resources to technology and methodology development than we
do.

Intellectual Property

We recognize the need to file patents, trademarks and trade
names on the unique features of the technology we are developing. We currently
hold no such registrations of any intellectual property. We believe that we hold
significant patentable technology and intend to apply for intellectual property
protection through patents once our capital position permits such actions.

Government Regulation

There are no specific government regulations known to us, other
than standard business practice, law and conduct, which may affect us in
following our business plan. The use of our products may be subject to
regulation by one or more U.S. federal agencies, including the Federal Trade
Commission and the Environmental Protection Agency. These activities also may be
regulated by various agencies of the states, localities and foreign countries in
which potential applications of the technology are located.

Numerous U.S. federal and state government agencies have
demonstrated significant activity in promoting environmental protection and
enforcing other regulatory and disclosure statutes. Additionally, it is possible
that new laws and regulations may be enacted with respect to soil remediation.
The adoption of such laws or regulations and the applicability of existing laws
and regulations may impair our growth and result in a decline in our prospects.

Employees

Currently, we have no employees and rely solely upon our
officer and director to provide management and further our affairs. Management
devotes only a portion of their time to the affairs of our company. We contract
with individuals and companies to meet our needs for field operations,
promotional materials, and other products and services.

ITEM 2. DESCRIPTION OF PROPERTY

We currently maintain an office in two locations. The Companys
official address is 1555 East Flamingo Road, #440, in Las Vegas, Nevada.
Additionally, we have a working office on the 14th floor, 355 Burrard
Street, Vancouver, British Columbia. Mr. Hall, our President, works out of his
facilities located at 1786 Angus Campbell Road, Abbotsford, British Columbia.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any pending legal proceeding. We are not
aware of any pending legal proceeding to which any of our officers, directors,
or any beneficial holders of 5% or more of our voting securities are adverse to
us or have a material interest adverse to us.

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

No matters have been submitted to our security holders for a
vote, through the solicitation of proxies or otherwise, during the fourth
quarter of the fiscal year ended December 31, 2006.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Market Information

We are a reporting company with the United States Securities
and Exchange Commission; however, our shares of common stock are not traded on
an exchange, nor are they quoted on any service such as Pinksheets.com or the
OTCBB.

Holders of Our Common Stock

As of February 15, 2007 there were 12,033,730 shares of common
stock outstanding, held by 53 shareholders of record.

Dividend Policy

To date, we have not paid any dividends on our common stock and
do not expect to declare or pay any dividends on our common stock in the
foreseeable future. Payment of any dividends will be dependent upon future
earnings, if any, our financial condition, and other factors as deemed relevant
by our Board of Directors.

Recent Sales of Unregistered Securities

Set forth below is information regarding the issuance and sales
of our securities without registration during the last fiscal year. No such
sales involved the use of an underwriter. See Note 8 to our audited financial
statements for the fiscal year ended December 31, 2006 for more information on
recent sales of unregistered securities.

On February 9, 2006, we closed a private placement offering for
subscriptions of 1,000,000 shares of our common stock at a purchase price of
$0.10 per share for total cash proceeds of $100,000. This offering was exempt
from registration under Rule 506 and Section 4(2) of the Securities Act of 1933,
as amended (the "Act"). Each certificate representing securities issued to the
investors in this private placement bears a legend restricting transfer. In
addition, if the exemptions under Rule 506 under and Section 4(2) of the Act are
not available, the sales to non-U.S. residents were exempt pursuant to
Regulation S under the Act.

On February 9, 2006 we issued 375,000 shares for $15,000 cash
subscriptions received and on June 9, 2006, we issued 250,000 shares of common
stock in settlement of $10,000 in notes payable. These offerings were exempt
from registration under Rule 506 and Section 4(2) of the Securities Act of 1933,
as amended (the "Act"). Each certificate representing securities issued to the
investors in this private placement bears a legend restricting transfer. In
addition, if the exemptions under Rule 506 under and Section 4(2) of the Act are
not available, the sales to non-U.S. residents were exempt pursuant to
Regulation S under the Act.

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On September 28, 2006 we closed a private placement offering
for subscriptions of 750,000 shares of our common stock at a purchase price of
$0.10 per share for total cash proceeds of $75,000. This offering was exempt
from registration under Rule 506 and Section 4(2) of the Securities Act of 1933,
as amended (the "Act"). Each certificate representing securities issued to the
investors in this private placement bears a legend restricting transfer. In
addition, if the exemptions under Rule 506 under and Section 4(2) of the Act are
not available, the sales to non-U.S. residents were exempt pursuant to
Regulation S under the Act.

Equity Compensation Plans

On July 21, 2004, we registered our Performance Stock Plan (the
Plan), under the Securities Act of 1933 (the Act), for up to 1,000,000 stock
options, which may be granted to employees, directors and consultants. We have
not granted any stock options since inception and there were no stock options
outstanding as of December 31, 2006.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain statements, other than purely historical information,
including estimates, projections, statements relating to our business plans,
objectives, and expected operating results, and the assumptions upon which those
statements are based, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements generally are identified by the words believes,
project, expects, anticipates, estimates, intends, strategy, plan,
may, will, would, will be, will continue, will likely result, and
similar expressions. We intend such forward-looking statements to be covered by
the safe-harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and are including this
statement for purposes of complying with those safe-harbor provisions.
Forward-looking statements are based on current expectations and assumptions
that are subject to risks and uncertainties which may cause actual results to
differ materially from the forward-looking statements. Our ability to predict
results or the actual effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse affect on our operations
and future prospects on a consolidated basis include, but are not limited to:
changes in economic conditions, legislative/regulatory changes, availability of
capital, interest rates, competition, and generally accepted accounting
principles. These risks and uncertainties should also be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements. We undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise. Further information concerning our business, including
additional factors that could materially affect our financial results, is
included herein and in our other filings with the SEC.

Plan of Operation

Our plans for the next 12 months related to our Thermal
Destructor are currently secondary to pursuing marketing efforts with our Steam
Injection System. Our Steam Injector System is designed to aid in heavy oil and
bitumen retrieval using technology borrowed from the Thermal Destructor. While
we plan to focus our resources in marketing the Steam Injection System for its

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intended purpose, we also plan to cross-market our Thermal
Destructor for potential clients in the same industry (oil production) that are
in need of soil contamination cleanup on their old oil fields.

Product Development

We intend to finalize the technical designs for our Steam
Injection System within the next twelve months, at which time we will begin the
sale and manufacture of Steam Injection Systems to oil companies who do or could
utilize steam injection as a method to recover oil held in Bitumen or oil sands.
Our marketing program will begin in earnest prior to the completion of the
finalization of our technical designs.

During the coming year, we will also seek out other
applications for our technology, and may modify our product development plans
based on new applications and opportunities that arise.

We have hired John Matthews as our field operations specialist
to finalize designs for technical applications. Mr. Matthews has worked with Mr.
Hall for 37 years and has detailed knowledge of our Steam Injection System and
Thermal Destructor. These designs are necessary for integrating our products
into proposed contracts, as described below under our discussion of
Manufacturing. We expect Mr. Matthews to:

- provide services that include analyses of operation of field units, in
  connection with our Thermal Destructor) operation; and
- be a liaison with site engineers for specifications of our Steam Injection
  System.

In the build-up of client and field readiness during this first
year, Mr. Matthews will also act as designer of promotional materials and
displays and he will assist management with the overall design of the Steam
Injection System, its presentation and technology. We have a verbal arrangement
to compensate our designer and expect to incur roughly $40,000 on our designer
in the next twelve months. Colin Hall, the Companys president, will oversee the
overall project, including design, marketing and finance.

Manufacturing

During the next year, we plan to contract with third parties to
manufacture and assemble our Steam Injection System according our technical
specifications. There are a number of manufacturing facilities capable of
producing technical products of this type and size. We have made initial
arrangements with TS2000-Star Vehicle Technologies Inc. (www.ts2000-star.com), a company that has production
facilities under construction in Malakwa, British Columbia in a joint venture
with Heromin, the North American arm of Yituo China Manufacturing Group (YTO).
YTO is a large company in China with approximately 52,000 employees (www.yto.com.cn). We are currently pursuing bids from
other manufacturing companies, and intend to sign a contract with at least one
company in the coming year.

The TS2000/Heromin Joint Venture has indicated that it may open
a U.S. facility in the Free Trade Zone at the Port of Bellingham, once the
Canadian operation is running smoothly in about 18 months. With assembly in
Bellingham of components manufactured in China (heavy steel components) and
others in the United States (controls, computer systems and electronics), an
alliance with this manufacturer should prove be very advantageous in our U.S.
operations and our Master USA license guarantees exclusivity to U.S.
clients.

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Because our Steam Injection System requires a significant
amount of capital to manufacture, we will not maintain a standing inventory of
products. As is customary with companies that develop and manufacture large
construction and/or mining equipment, each unit will be made to order,
manufactured to the customers specifications in order to meet their unique
needs. This not only provides the most appropriate product to our customer, but
allays our need to tie up large amounts of capital in inventory.

When a customer purchases one of our Steam Injection Systems,
we plan to send a field operations specialist to their operations site. Our
specialist will interview the customers engineers, survey the operations site,
and collect other relevant data. He will then provide our technicians and our
contract manufacturer with 3D terrain and site modeling and design
specifications based upon the customers needs. As our liaison with the
customers site engineers, he will provide information such as required delivery
temperatures and pressures, and pumping distances. He will also help determine
the number of systems we will need to supply to meet the customers needs for a
particular operations site.

Marketing

To date, interest in our technology has been generated through
the direct efforts of our sole executive officer, Mr. Hall, with engineers and
engineering firms servicing the oil production industry in North America.
Through this contact, Mr. Hall has been able to generate some positive interest
in our technology. Additionally, Mr. Hall is commencing a program to identify
marginal oil shale opportunities, from which oil could not previously be
profitably recovered because of the high fixed costs associate with building
large, permanent steam-generation units. By offering access to our technology,
which will make oil recovery from such properties a profitable operation, Mr.
Hall is seeking joint ventures with oil firms to bring those oil shale deposits
into production.

In the next twelve months, we intend to continue to use the
services of Mr. Hall to sell our technology, seeking joint ventures as well as
direct sales. If future sales justify the expense, however, we may employ sales
personnel to market our products to potential customers. These representatives
will be responsible for soliciting, selecting and securing opportunities within
a particular regional territory. We expect to pay such representatives on a
commission basis, with commissions depending on the size of the sale. We expect
to provide service and support to our representatives, including advertising,
technical data sheets, design services (usually bespoke and on a fee basis), and
sales materials. We do not intend to incur the costs of representation personnel
in the next twelve months unless our revenues are enough to absorb the cost of
these personnel, especially as it will be some months before we have field-ready
systems to offer.

Access International Matting (AIM) and Heromin Machinery
(Canada) will assist Mr. Hall in the development of an overall project marketing
plan and a project financial plan. The intention is to have the first customer
finance their initial plant, which it is anticipated will take nine months to
build. AIM has recently employed three people to develop the Heromin market and
we are to be represented by AIM on an ad-hoc, commission only basis, starting in
April 2007. A web site describing Solonex Management's services is under
construction and will be linked from the TS2000, ecoTECH, Heromin and AIM
sites.

We are also currently working with engineering firms that are
connected with steam stimulation or steam-assisted gravity drainage projects in
Alberta, Canada. We hope to secure an agreement

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in the next 12 months with one or more of these firms on a
project in Alberta. We anticipate that an engineering firm will help us provide
consulting on engineering and product application needs, audit the finished
systems performance, and with proven performance, thereafter recommend the
system to the firms clients, with an option to invest in, or take over the
program.

Financing Plans

The completion of our business plan for the next twelve months
is contingent upon us obtaining additional financing. As of December 31, 2006,
we had cash in the amount of $93,797. We have forecasted expenditures of
$150,000 for the next twelve months. Therefore, we will require financing to
pursue our business plan for the next twelve months. We plan to offer equity
securities in an exempt offering as a means of meeting our financial
requirements over the next twelve months. Although neither Colin Hall nor
EcoTech Waste Management Systems, Inc. have any legal obligations to infuse
additional capital, it is anticipated that each party will continue to do so as
reasonably necessary by providing short-term demand loans carrying a market
interest rate. If we are unable to obtain additional financing, our business
plan will be significantly delayed or will fail.

We have not contacted any broker-dealers or other parties
regarding our financing plans but may do so in the second quarter of 2007. We
have not identified any broker-dealers to assist in our financing efforts.
Currently, we believe we have the required funds to cover our expenses through
the end of June 2007. Our anticipated expenses for the following year are:

Quarter 1  January/February/March 2007

- We have a budget for general administration and operating costs of $4,000
  per month, or $12,000 this quarter, and to advance no more than $10,000 to Mr.
  John Mathews, our field operations specialist, for his work in this quarter.
  We have attracted investor loans to cover these costs.

Quarter 2  April/May/June 2007

- We have agreed to pay $40,000 towards the cost of marketing of our products
  and technology to our first customer. The marketing funds are included in our
  budget for June 30, 2007.
- We have budgeted $12,000 for this quarter to cover the costs associated
  with the general administration and regulatory reporting requirements of our
  company.
- We intend to complete a private placement of a minimum of $50,000 pursuant
  to an offering under Rule 901 of Regulation S during this quarter. These funds
  will be used to cover any additional costs not included in the current budget,
  and may be used for the hiring of corporate management personnel, and to cover
  any additional costs associated with the ongoing business development and
  attracting a commercial partner.

Quarter 3  July/August/September 2007

- We believe we will have funds still available for this quarter to cover
  the approximate $12,000 in costs associated with the general administration
  and regulatory reporting requirements of our company.

12

---

Quarter 4  October/November/December 2007

- Once the technical drawings for the prototype have been completed, we
  expect to require minimal additional funding as we will continue looking for a
  commercial and financial partner at this stage.
- We will require the $12,000 that has been budgeted for this quarter to
  cover the costs associated with the general administration and regulatory
  reporting requirements of our company, and additional funds that may be
  required based on our progress over the year.
- We expect to have a working relationship with a commercial and financial
  partner by December 31, 2007. Therefore, we expect to reassess our financing
  requirements during this quarter. The initial requirements for research and
  development of our technology will have been paid for and we hope the initial
  sales and marketing program for our prototype will have been completed.

Results of Operations

For the 2006 fiscal year, we incurred a loss in the amount of
$229,755 compared to a loss of $78,151 in the previous year. Both years losses
are a result of organizational expenses and expenses associated with setting up
a company structure to begin implementing our business plan.

We are in the process of evaluating our technologys business
potential and incurred costs of $113,606 during the year ended December 31, 2006
to that end (compared to $16,919 during 2005). We anticipate that until these
procedures are completed, we will not generate revenues, and may continue to
operate at a loss thereafter, depending upon the performance of the business.

At the fiscal year ended December 31, 2006, we had spent an
accumulated total of $100,000 towards the research and development of our
technology (no change from December 31, 2005). During the period from October
12, 2000 (date of incorporation) through December 31, 2006, we received no
revenues.

We have no commitments for capital expenditures. In the process
of carrying out our business plan, we may determine that we cannot raise
sufficient capital to support our business on acceptable terms, or at all.

Liquidity and Capital Resources

We remain in our developmental stage and, since inception, have
experienced no significant change in liquidity or capital resources. We expect
to carry out our plan of business as discussed above. The officers and directors
of our company will serve without compensation until we successfully achieve a
source of revenue.

The expenses of implementing our business plan will exceed our
current available funds. We will have to obtain additional funding through an
offering of our securities or through capital contributions from our
stockholders. From inception to date, we have settled $95,269 of accounts
payable by the issuance of 2,381,725 shares of our common stock. We settled
loans payable in the amount of $127,000 for the issuance of 1,044,300 shares and
issued 2,227,000 shares for $179,770 in cash.

13

---

During the year ended December 31, 2006, we raised $73,841 in
loans for total loans outstanding of $128,500 at December 31, 2006 (compared to
$54,659 at December 31, 2005) and issued 1,750,000 shares of common stock for
proceeds to our company of $175,000. Since we do not anticipate generating
significant revenues over the next year, we intend to depend upon equity
financing through private placement offerings of our common stock to fund the
implementation of our business plan. Over the longer term, two to five years, we
expect to fund our operations through a combination of revenues from the
operation of our business and through additional equity financing. To date, we
have generated $nil revenue.

We will need additional capital to carry out our business
plans. No commitments to provide additional funds have been made by management
or other stockholders or investors. Accordingly, there can be no assurance that
any additional funds will be available on terms acceptable to us or at all.

Off Balance Sheet Arrangements

As of December 31, 2006, there were no off balance sheet
arrangements.

Going Concern

Since inception, we have suffered recurring losses and net cash
outflows from operations, and at December 31, 2006, have a working capital
deficiency of $176,313 (2005 - $131,558). We expect to continue to incur
substantial losses as we develop our business plan. Since inception, we have
funded operations through common stock issuances and accounts payable in order
to meet our strategic objectives. Management believes that sufficient funding
will be available to meet our business objectives including anticipated cash
needs for working capital and is currently evaluating several financing options.
However, there can be no assurance that we will be able to obtain sufficient
funds to continue the development of, and if successful, to commence the sale of
our products under development. As a result of the foregoing, there exists
substantial doubt about our ability to continue as a going concern. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list
their three to five most critical accounting polices in the Management
Discussion and Analysis. The SEC indicated that a critical accounting policy
is one which is both important to the portrayal of a companys financial
condition and results, and requires managements most difficult, subjective or
complex judgments, often as a result of the need to make estimates about the
effect of matters that are inherently uncertain. We believe that the following
accounting policies fit this definition.

a)    Technology Development Costs The costs
to acquire and develop new technology and enhancements to existing technology
are expensed as incurred until such time as technological feasibility is
demonstrated.

b)    Use of Estimates 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

14

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the financial statements, and the reported amounts of revenues
and expenses during the periods. Actual results could differ from these
estimates.

c)     Basic and Diluted Loss Per Share
The Company computes loss per share in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128  Earnings Per Share (SFAS
128). Under the provisions of SFAS No. 128, basic loss per share is computed
using the weighted average number of common stock outstanding during the period.
Diluted loss per share is computed using the weighted average number of common
and potentially dilutive common stock outstanding during the period. The basic
and diluted loss per share are the same as any exercise of options or warrants
would be anti-dilutive.

d)     Foreign Currency Translation 
  The Companys functional currency is the U.S. dollar. Transactions in foreign
  currency are translated into U.S. dollars as follows:
  i. monetary items at the rate prevailing at the balance sheet date; 
  ii. non-monetary items at the historical exchange rate;
  iii. revenue and expense items at the average rate in effect during the applicable
  accounting period.

e)     Income Taxes The Company has
adopted SFAS No. 109  Accounting for Income taxes (SFAS 109). This standard
requires the use of an asset and liability approach for financial accounting,
and reporting on income taxes. If it is more likely than not that some portion
or all of a deferred tax asset will not be realized, a valuation allowance is
recognized.

f)     Financial Instruments The
Companys financial instruments consist of cash, accounts payable and accrued
liabilities, and loans payable.

Unless otherwise noted, it is managements opinion that the
Company is not exposed to significant interest or credit risks arising from
these financial instruments. The fair value of these financial instruments
approximate their carrying values, unless otherwise noted.

The Company has adopted SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity. This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. SFAS No. 150 requires that an issuer classify a financial instrument
that is within its scope as a liability (or an asset in some circumstances). The
financial instruments affected includes certain obligations that can be settled
with shares of stock.

g)     Stock Based Compensation In
December 2002, the Financial Accounting Standards Board (FASB) issued SFAS No.
148, Accounting for Stock-Based Compensation  Transition and Disclosure
(SFAS No. 148), an amendment of SFAS No. 123 Accounting for Stock-Based
Compensation (SFAS No. 123). The purpose of SFAS No. 148 is to: (1) provide
alternative methods of transition for an entity that voluntarily changes to the
fair value based method of accounting for stock-based employee compensation, (2)
amend the disclosure provisions to require prominent disclosure about the
effects on reported net income of an entitys accounting policy decisions with
respect to stock-based employee compensation, and (3) require disclosure of
those effects in interim financial information. The disclosure provisions of
SFAS No. 148 were effective for the Company from the year ended December 31,
2004.

15

---

The Company has elected to account for stock-based employee
compensation arrangements in accordance with the provisions of Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees,
(APB No. 25) and comply with the disclosure provisions of SFAS No. 123, as
amended by SFAS No. 148 as described above. In addition, in accordance with SFAS
No. 123, the Company applies the fair value method using the Black-Scholes
option-pricing model in accounting for options granted to consultants. Under APB
No. 25, compensation expense for employees is recognized based on the
difference, if any, on the date of grant between the estimated fair value of the
Companys stock and the amount an employee must pay to acquire the stock.
Compensation expense is recognized immediately for past services and pro-rata
for future services over the option-vesting period. To December 31, 2006, the
Company has not granted any stock options.

Recently Issued Accounting Pronouncements

In September 2006, FASB issued SFAS No. 157, Fair Value
Measures (SFAS 157). This Statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
(GAAP), expands disclosures about fair value measurements, and applies under
other accounting pronouncements that require or permit fair value measurements.
SFAS 157 does not require any new fair value measurements. However, the FASB
anticipates that for some entities, the application of SFAS 157 will change
current practice. SFAS 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, which for the Company would be
the fiscal year beginning December 1, 2007. The Company is currently evaluating
the impact of adopting SFAS 157 but does not expect that it will have a
significant effect on its financial position or results of operations.

In September 2006, the Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin (SAB) No. 108, Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements (SAB 128). SAB 108 addresses how the effects of
prior year uncorrected misstatements should be considered when quantifying
misstatements in current year financial statements. SAB 108 requires companies
to quantify misstatements using a balance sheet and income statement approach
and to evaluate whether either approach results in quantifying an error that is
material in light of relevant quantitative and qualitative factors. SAB 108 is
effective for interim periods ending after November 15, 2006. The Company is
currently evaluating the impact of adopting SAB 108 but does not expect that it
will have a significant effect on its financial position or results of
operations.

In June 2006, FASB issued Interpretation No. 48, Accounting
for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109
(SFAS 48). This Interpretation clarifies the accounting for uncertainty in
income taxes recognized in an enterprises financial statements in accordance
with FASB No. 109, Accounting for Income Taxes. This Interpretation
prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. This Interpretation also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. This Interpretation is effective for fiscal
years beginning after December 15, 2006. The Company has determined that the
adoption of SFAS 48 does not have any material impact on the Companys results
of operations or financial position.

In February 2006, FASB issued SFAS No. 155, Accounting for
Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and
140 (SFAS 155), to simplify and make more consistent the accounting for
certain financial instruments. SFAS 155 amends SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, to permit fair 16

---

value remeasurement for any hybrid financial instrument with an
embedded derivative that otherwise would require bifurcation, provided that the
whole instrument is accounted for on a fair value basis. SFAS 155 amends SFAS
140, Accounting for the Impairment or Disposal of Long-Lived Assets, to allow
a qualifying special-purpose entity to hold a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. SFAS 155 applies to all financial instruments acquired or issued
after the beginning of an entity's first fiscal year that begins after September
15, 2006, with earlier application allowed. The adoption of this statement is
not expected to have a significant effect on the Companys future reported
financial position or results of operations.

In November 2005, FASB issued Staff Position No. (FSP)
Financial Accounting Standard (FAS)115-1, The Meeting of
Other-Than-Temporary Impairment and Its Application to Certain Investments
(FAS FASP 115-1). FAS FSP 115-1 provides accounting guidance for identifying
and recognizing other-than-temporary impairments of debt and equity securities,
as well as cost method investments in addition to disclosure requirements. FAS
FSP 115-1 is effective for reporting periods beginning after December 15, 2005,
and earlier application is permitted. The Company has determined that the
adoption of FAS FSP 115-1 does not have any material impact on the Companys
results of operations or financial position.

In July 2005, FASB issued SFAS No. 154, Accounting Changes and
Error Corrections  A Replacement of APB Opinion No. 20 and SFAS No. 3 (SFAS
154). SFAS 154 changes the requirements for the accounting for and reporting of
a change in accounting principle and applies to all voluntary changes in
accounting principle. It also applies to changes required by an accounting
pronouncement in the unusual instance that the pronouncement does not include
specific transition provisions. SFAS 154 requires retrospective application to
prior periods financial statements of changes in accounting principle, unless
it is impracticable to determine either the period-specific effects or the
cumulative effect of the change. The provisions of SFAS 154 are effective for
accounting changes and correction of errors made in fiscal years beginning after
December 15, 2005. The adoption of this statement did not have a significant
effect on the Companys reported financial position or results of operations.

In March 2005, FASB issued Interpretation No. 47, Accounting
for Conditional Asset Retirement Obligations (FIN 47). FIN 47 clarifies that
an entity must record a liability for a conditional asset retirement obligation
if the fair value of the obligation can be reasonably estimated. This
interpretation also clarifies the circumstances under which an entity would have
sufficient information to reasonably estimate the fair value of an asset
retirement obligation. This Interpretation is effective no later than the end of
fiscal years ending after December 15, 2005. The Company has determined that
this guidance does not have any material impact on the Companys results of
operations or financial position.

In December 2004, FASB issued SFAS No. 153, Exchanges of
Non-monetary Assets - An Amendment of APB Opinion No. 29 (SFAS 153). The
guidance in APB Opinion No. 29, Accounting for Non-monetary Transactions, is
based on the principle that exchanges of non-monetary assets should be measured
based on the fair value of the assets exchanged. The guidance in that Opinion,
however, included certain exceptions to that principle. SFAS 153 amends Opinion
No. 29 to eliminate the exception for non-monetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
non-monetary assets that do not have commercial substance. A non-monetary
exchange has commercial substance if the future cash flows of the entity are
expected to change significantly as a result of the exchange. The provisions of
SFAS 153 are effective for non-monetary asset exchanges

17

---

occurring in fiscal periods beginning after June 1, 2006. Early
application is permitted and companies must apply the standard prospectively.
The Company has determined that the adoption of this standard is not expected to
have any material impact on the Companys results of operations or financial
position.

18

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ITEM 7. FINANCIAL STATEMENTS

SOLANEX MANAGEMENT INC. 
  (A Development Stage Company)
  FINANCIAL STATEMENTS
  (Stated in U.S. Dollars)

|Report of Independent Registered Public Accounting Firm                                                                                                         | 20
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- | --
|Balance Sheets as at December 31, 2006 and 2005                                                                                                                 | 21
|Statements of Operations for the years ended December 31,
        2006 and 2005 and for the period from inception October 12, 2000 to December
        31, 2006 | 22
|Statements of Cash Flows for the years ended December 31,
        2006 and 2005 and for the period from inception October 12, 2000 to December
        31, 2006 | 23
|Statement of Stockholder's Deficiency for the period from
        inception October 12, 2000 to December 31, 2006                                               | 24
|Notes to Financial Statements                                                                                                                                   | 26

19

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Directors of 
  Solanex Management Inc. 
  (A Development Stage Company)

We have audited the accompanying balance sheets of Solanex Management
  Inc. (a development stage company) as of December 31, 2006 and 2005, and the
  related statements of operations, cash flows, and stockholders deficiency
  for each of the years ended December 31, 2006 and 2005, and for the cumulative
  period from October 12, 2000 (date of inception) to December 31, 2006. 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. An audit includes examining,
  on a test basis, evidence supporting the amounts and disclosures in the financial
  statements. An audit also includes assessing the accounting principles used
  and significant estimates made by management, as well as evaluating the overall
  financial statement presentation. We believe that our audits provide a reasonable
  basis for our opinion.

In our opinion, the financial statements referred to above present
  fairly, in all material respects, the financial position of Solanex Management
  Inc. as of December 31, 2006 and 2005, and the results of its operations and
  its cash flows for each of the years ended December 31, 2006 and 2005, and for
  the period from October 12, 2000 (date of inception) to December 31, 2006, in
  conformity with accounting principles generally accepted in the United States
  of America.

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.

The accompanying financial statements have been prepared assuming
  the Company will continue as a going concern. As discussed in Note 1(b) to the
  financial statements, the Company has suffered recurring losses from operations,
  has negative cash flows, has a stockholders deficiency and is dependent
  upon obtaining adequate financing to fulfil its development activities. These
  factors raise substantial doubt about its ability to continue as a going concern.
  Managements plans in regard to these matters are also discussed in Note
  1(b). The financial statements do not include any adjustments that might result
  from the outcome of this uncertainty.

|Vancouver, Canada | Morgan & Company   
|----------------- | ---------------------
|                  |                      
|March 20, 2007    | Chartered Accountants

20

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|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|BALANCE SHEETS               
|(Stated in U.S. Dollars)     

|                                                                 |   | DECEMBER 31 |  
|---------------------------------------------------------------- | - | ----------- | -
|                                                                 |   | 2006        |  
|ASSETS                                                           |   |             |  
|Current                                                          |   |             |  
|Cash                                                             | $ | 93,797      |  
|LIABILITIES                                                      |   |             |  
|Current                                                          |   |             |  
|Accounts payable and accrued liabilities                         | $ | 141,835     |  
|Promissory notes
      payable (Note 5)                          |   | 128,500     |  
|                                                                 |   | 270,335     |  
|STOCKHOLDERS DEFICIENCY                                         |   |             |  
|Capital Stock(Note 6)                                            |   |             |  
|Authorized:                                                      |   |             |  
|100,000,000 common shares, par value of $0.001 per share         |   |             |  
|20,000,000 preferred shares, par value of $0.001
      per share |   |             |  
|Issued and outstanding:                                          |   |             |  
|12,033,730 common shares (2005
       9,658,730)                |   | 12,034      |  
|Additional paid-in capital                                       |   | 395,005     |  
|Share Subscriptions Received                                     |   | -           |  
|Deficit Accumulated During The Development Stage                 |   | (583,577    | )
|                                                                 |   | (176,538    | )
|                                                                 | $ | 93,797      |  

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

21

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|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|STATEMENTS OF OPERATIONS     
|(Stated in U.S. Dollars)     

|                                        |   |             |   |   |             |   |   | CUMULATIVE  |  
|--------------------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | -
|                                        |   |             |   |   |             |   |   | PERIOD FROM |  
|                                        |   |             |   |   |             |   |   | INCEPTION   |  
|                                        |   |             |   |   |             |   |   | OCTOBER 12  |  
|                                        |   | YEARS ENDED |   |   | 2000 TO     |  
|                                        |   | DECEMBER 31 |   |   | DECEMBER 31 |  
|                                        |   | 2006        |   |   | 2005        |   |   | 2006        |  
|                                        |   |             |   |   |             |   |   |             |  
|Revenue                                 | $ | -           |   | $ | -           |   | $ | -           |  
|                                        |   |             |   |   |             |   |   |             |  
|Expenses                                |   |             |   |   |             |   |   |             |  
|Administration                          |   | 29,490      |   |   | 13,178      |   |   | 99,626      |  
|Consulting fees                         |   | 113,606     |   |   | 16,919      |   |   | 147,815     |  
|Feasibility study                       |   | -           |   |   | -           |   |   | 9,250       |  
|Foreign exchange
      loss             |   | -           |   |   | 438         |   |   | 2,387       |  
|Office and rent                         |   | 47,039      |   |   | 16,878      |   |   | 130,943     |  
|Organization expenses                   |   | -           |   |   | -           |   |   | 6,228       |  
|Professional fees                       |   | 39,845      |   |   | 16,238      |   |   | 87,328      |  
|Technology cost                         |   | -           |   |   | 14,500      |   |   | 100,000     |  
|                                        |   | 229,980     |   |   | 78,151      |   |   | 583,577     |  
|                                        |   |             |   |   |             |   |   |             |  
|Net Loss For The
      Period           | $ | (229,980    | ) | $ | (78,151     | ) | $ | (583,577    | )
|                                        |   |             |   |   |             |   |   |             |  
|                                        |   |             |   |   |             |   |   |             |  
|Basic And Diluted Loss Per Common Share |   |             |   |   |             |   |   |             |  
|                                        | $ | (0.02       | ) | $ | (0.01       | ) |   |             |  
|                                        |   |             |   |   |             |   |   |             |  
|                                        |   |             |   |   |             |   |   |             |  
|Weighted Average Number Of Common       |   |             |   |   |             |   |   |             |  
|Shares
      Outstanding                |   | 11,200,511  |   |   | 8,065,079   |   |   |             |  

The accompanying notes are an integral part of the financial statements

22

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|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|STATEMENTS OF CASH FLOWS     
|(Stated in U.S. Dollars)     

|                                                               |   |             |   |   |             |   |   | CUMULATIVE  |  
|-------------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | -
|                                                               |   |             |   |   |             |   |   | PERIOD FROM |  
|                                                               |   |             |   |   |             |   |   | INCEPTION   |  
|                                                               |   |             |   |   |             |   |   | OCTOBER 12  |  
|                                                               |   | YEARS ENDED |   |   | 2000 TO     |  
|                                                               |   | DECEMBER 31 |   |   | DECEMBER 31 |  
|                                                               |   | 2006        |   |   | 2005        |   |   | 2006        |  
|                                                               |   |             |   |   |             |   |   |             |  
|Cash Flows Used In Operating Activities                        |   |             |   |   |             |   |   |             |  
|Net loss for the period                                        | $ | (229,980    | ) | $ | (78,151     | ) | $ | (583,577    | )
|Adjustment for item
      not affecting working capital:       |   |             |   |   |             |   |   |             |  
|Expenses
      not paid with cash                              |   | -           |   |   | 438         |   |   | 7,387       |  
|Adjustment for item
      affecting working capital:           |   |             |   |   |             |   |   |             |  
|Increase in accounts payable and accrued                       |   |             |   |   |             |   |   |             |  
|liabilities                                                    |   | 49,506      |   |   | 19,938      |   |   | 237,104     |  
|                                                               |   | (180,474    | ) |   | (57,775     | ) |   | (339,086    | )
|Cash Flows Provided By Financing Activities                    |   |             |   |   |             |   |   |             |  
|Share subscriptions                                            |   | -           |   |   | 15,000      |   |   | -           |  
|Issuance of common
      shares                                |   | 175,000     |   |   | -           |   |   | 264,998     |  
|Loans payable                                                  |   | 83,841      |   |   | 21,000      |   |   | 170,272     |  
|                                                               |   | 258,841     |   |   | 36,000      |   |   | 435,270     |  
|                                                               |   |             |   |   |             |   |   |             |  
|Foreign Exchange Effect On Cash                                |   | -           |   |   | (438        | ) |   | (2,387      | )
|                                                               |   |             |   |   |             |   |   |             |  
|(Decrease) Increase In Cash                                    |   | 78,367      |   |   | (22,213     | ) |   | 93,797      |  
|                                                               |   |             |   |   |             |   |   |             |  
|Cash, Beginning Of Period                                      |   | 15,430      |   |   | 37,643      |   |   | -           |  
|                                                               |   |             |   |   |             |   |   |             |  
|Cash, End Of Period                                            | $ | 93,797      |   | $ | 15,430      |   | $ | 93,797      |  
|                                                               |   |             |   |   |             |   |   |             |  
|Supplemental Information of Cash-Flow Information              |   |             |   |   |             |   |   |             |  
|Interest paid                                                  | $ | -           |   | $ | -           |   | $ | -           |  
|Income taxes paid                                              |   | -           |   |   | -           |   |   | -           |  
|                                                               |   |             |   |   |             |   |   |             |  
|Supplemental Disclosure Of Non-Cash
      Financing Activities |   |             |   |   |             |   |  
|Common shares issued for the acquisition
      of              |   |             |   |   |             |   |   |             |  
|technology                                                     | $ | -           |   | $ | -           |   | $ | 3,500       |  
|Common shares on conversion of promissory
      notes          |   |             |   |   |             |   |   |             |  
|                                                               |   | 10,000      |   |   | -           |   |   | 26,772      |  
|Common shares issued for organization
      of the             |   |             |   |   |             |   |   |             |  
|Company                                                        |   | -           |   |   | -           |   |   | 1,500       |  
|Common shares issued to settle payables                        |   | -           |   |   | -           |   |   | 95,269      |  
|Common shares issued
      for share subscriptions             |   |             |   |   |             |   |   |             |  
|received                                                       |   | 15,000      |   |   | -           |   |   | 15,000      |  

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

23

---

|SOLANEX MANAGEMENT INC.                                                    
|---------------------------------------------------------------------------
|(A Development Stage Company)                                              
|STATEMENT OF STOCKHOLDERS DEFICIENCY                                      
|PERIOD FROM OCTOBER 12, 2000 (DATE OF INCEPTION) TO DECEMBER
      31, 2006
|(Stated in U.S. Dollars)                                                   

|                                   |  |               |   |   |        |   |   |             |  |   |                   |  |   | DEFICIT     |   |   |          |  
|---------------------------------- |  | ------------- | - | - | ------ | - | - | ----------- |  | - | ----------------- |  | - | ----------- | - | - | -------- | -
|                                   |  | CAPITAL STOCK |   |   | SHARE  |   |   | ACCUMULATED |  |   |                   | 
|                                   |  |               |   |   |        |   |   | ADDITIONAL  |  |   | **SUBSCRIPTIONS** |  |   | DURING THE  |   |   |          |  
|                                   |  | COMMON        |   |   |        |   |   | PAID-IN     |  |   | RECEIVED          |  |   | DEVELOPMENT |   |   |          |  
|                                   |  | SHARES        |   |   | AMOUNT |   |   | CAPITAL     |  |   | (RECEIVABLE)      |  |   | STAGE       |   |   | TOTAL    |  
|Balance, October 12, 2000          |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|(Date of inception)                |  | -             |   | $ | -      |   | $ | -           |  | $ | -                 |  | $ | -           |   | $ | -        |  
|                                   |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|Stock issued for $1,500 of         |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|organization expenses,             |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|October, 2000 at $0.001 per        |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|share                              |  | 1,500,000     |   |   | 1,500  |   |   | -           |  |   | -                 |  |   | -           |   |   | 1,500    |  
|Stock issued for technology,       |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|October, 2000 at $0.001
      per  |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|share                              |  | 3,500,000     |   |   | 3,500  |   |   | -           |  |   | -                 |  |   | -           |   |   | 3,500    |  
|Net loss for the period            |  | -             |   |   | -      |   |   | -           |  |   | -                 |  |   | (10,758     | ) |   | (10,758  | )
|                                   |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|Balance, December 31, 2000         |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|                                   |  | 5,000,000     |   |   | 5,000  |   |   | -           |  |   | -                 |  |   | (10,758     | ) |   | (5,758   | )
|                                   |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|Net loss for the year              |  | -             |   |   | -      |   |   | -           |  |   | -                 |  |   | (470        | ) |   | (470     | )
|                                   |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|Balance, December 31, 2001         |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|                                   |  | 5,000,000     |   |   | 5,000  |   |   | -           |  |   | -                 |  |   | (11,228     | ) |   | (6,228   | )
|                                   |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|Net loss for the year              |  | -             |   |   | -      |   |   | -           |  |   | -                 |  |   | (26,972     | ) |   | (26,972  | )
|                                   |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|Balance, December 31, 2002         |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|                                   |  | 5,000,000     |   |   | 5,000  |   |   | -           |  |   | -                 |  |   | (38,200     | ) |   | (33,200  | )
|                                   |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|Stock issued for cash in 2003 at   |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|$0.01 per share                    |  | 310,000       |   |   | 310    |   |   | 2,790       |  |   | -                 |  |   | -           |   |   | 3,100    |  
|Stock issued for accounts          |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|payable in 2003 at $0.04
      per |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|share                              |  | 2,548,725     |   |   | 2,549  |   |   | 94,390      |  |   | -                 |  |   | -           |   |   | 96,939   |  
|Stock cancelled, December,         |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|2003                               |  | (750,000      | ) |   | (750   | ) |   | 750         |  |   | -                 |  |   | -           |   |   | -        |  
|Net loss for the year              |  | -             |   |   | -      |   |   | -           |  |   | -                 |  |   | (120,637    | ) |   | (120,637 | )
|                                   |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|Balance, December 31, 2003         |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|                                   |  | 7,108,725     |   |   | 7,109  |   |   | 97,930      |  |   | -                 |  |   | (158,837    | ) |   | (53,798  | )
|                                   |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|Stock issued on conversion of      |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|promissory notes, April            |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|2004 at $0.04 per share            |  | 419,300       |   |   | 419    |   |   | 16,353      |  |   | -                 |  |   | -           |   |   | 16,772   |  
|Share subscriptions                |  | -             |   |   | -      |   |   | -           |  |   | 85,228            |  |   | -           |   |   | 85,228   |  
|Net loss for the year              |  | -             |   |   | -      |   |   | -           |  |   | -                 |  |   | (116,609    | ) |   | (116,609 | )
|                                   |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|                                   |  |               |   |   |        |   |   |             |  |   |                   |  |   |             |   |   |          |  
|Balance, December 31, 2004         |  | 7,528,025     |   | $ | 7,528  |   | $ | 114,283     |  | $ | 85,228            |  | $ | (275,446    | ) | $ | (68,407  | )

24

---

|SOLANEX MANAGEMENT INC.                                                    
|---------------------------------------------------------------------------
|(A Development Stage Company)                                              
|                                                                           
|STATEMENT OF STOCKHOLDERS DEFICIENCY (Continued)                          
|                                                                           
|PERIOD FROM OCTOBER 12, 2000 (DATE OF INCEPTION) TO DECEMBER
      31, 2006
|(Stated in U.S. Dollars)                                                   

|                            |  |               |  |   |        |  |   |                |  |   |               |   |   | DEFICIT     |   |   |          |  
|--------------------------- |  | ------------- |  | - | ------ |  | - | -------------- |  | - | ------------- | - | - | ----------- | - | - | -------- | -
|                            |  | CAPITAL STOCK |  |   | SHARE  |  |   | ACCUMULATED    |  |   |               |  
|                            |  |               |  |   |        |  |   | ADDITIONA**L** |  |   | SUBSCRIPTIONS |   |   | DURING THE  |   |   |          |  
|                            |  | COMMON        |  |   |        |  |   | PAID-IN        |  |   | RECEIVED      |   |   | DEVELOPMENT |   |   |          |  
|                            |  | SHARES        |  |   | AMOUNT |  |   | CAPITAL        |  |   | (RECEIVABLE)  |   |   | STAGE       |   |   | TOTAL    |  
|                            |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|Balance, December 31,       |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|2004                        |  | 7,528,025     |  | $ | 7,528  |  | $ | 114,283        |  | $ | 85,228        |   | $ | (275,446    | ) | $ | (68,407  | )
|                            |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|Stock issued on conversion  |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|of share subscriptions,     |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|September, 2005 at $0.04    |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|per share                   |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|                            |  | 2,130,705     |  |   | 2,131  |  |   | 83,097         |  |   | (85,228       | ) |   | -           |   |   | -        |  
|Share subscriptions         |  | -             |  |   | -      |  |   | -              |  |   | 15,000        |   |   | -           |   |   | 15,000   |  
|Net loss for the year       |  | -             |  |   | -      |  |   | -              |  |   | -             |   |   | (78,151     | ) |   | (78,151  | )
|                            |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|Balance, December 31,       |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|2005                        |  | 9,658,730     |  |   | 9,659  |  |   | 197,380        |  |   | 15,000        |   |   | (353,597    | ) |   | (131,558 | )
|                            |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|Stock issued for cash,      |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|February, 2006 at $0.10     |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|per share                   |  | 1,000,000     |  |   | 1,000  |  |   | 99,000         |  |   | (15,000       | ) |   | -           |   |   | 85,000   |  
|Stock issued for cash,      |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|February, 2006 at $0.04     |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|per share                   |  | 375,000       |  |   | 375    |  |   | 14,625         |  |   | -             |   |   | -           |   |   | 15,000   |  
|Stock issued for promissory |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|notes, June, 2006 at $0.04  |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|per share                   |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|                            |  | 250,000       |  |   | 250    |  |   | 9,750          |  |   | -             |   |   | -           |   |   | 10,000   |  
|Stock issued for cash,      |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|September, 2006 at $0.10    |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|per share                   |  | 750,000       |  |   | 750    |  |   | 74,250         |  |   | -             |   |   | -           |   |   | 75,000   |  
|Net loss for the year       |  | -             |  |   | -      |  |   | -              |  |   | -             |   |   | (229,980    | ) |   | (229,980 | )
|                            |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|Balance, December 31,       |  |               |  |   |        |  |   |                |  |   |               |   |   |             |   |   |          |  
|2006                        |  | 12,033,730    |  | $ | 12,034 |  | $ | 395,005        |  | $ | -             |   | $ | (583,577    | ) | $ | (176,538 | )

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

25

---

|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|DECEMBER 31, 2006 AND 2005   
|(Stated in U.S. Dollars)     

|1. | NATURE OF OPERATIONS AND GOING CONCERN
|-- | --------------------------------------

| | a) | Development Stage Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | Solanex Management Inc. (the Company) was
        incorporated in the State of Nevada on October 12, 2000, under the name
        EcoSoil Management Corp., and is in its early developmental stage. The
        Company changed its name to Solanex Management Inc. on December 6, 2001.
        To date, the Companys only activities have been organizational,
        directed at acquiring a principal asset, raising initial capital and developing
        its business plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The Company intends to develop and market technology
        specializing in high temperature soil remediation, as well as portable
        high temperature steam generation technology for the resource and environmental
        industries. Systems include a portable high temperature burner system
        and high temperature burner gasifier systems.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | b) | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | Since inception, the Company has suffered recurring
        losses, net cash outflows from operations, and at December 31, 2006, has
        a working capital deficiency of $178,538 (2005 - $131,558). The Company
        expects to continue to incur substantial losses as it develops its business
        plan. Since inception, the Company has funded operations through common
        stock issuances and accounts payable in order to meet its strategic objectives.
        Management believes that sufficient funding will be available to meet
        its business objectives including anticipated cash needs for working capital
        and is currently evaluating several financing options. However, there
        can be no assurance that the Company will be able to obtain sufficient
        funds to continue the development of, and if successful, to commence the
        sale of its products under development. As a result of the foregoing,
        there exists substantial doubt about the Companys ability to continue
        as a going concern. These financial statements do not include any adjustments
        that might result from the outcome of this uncertainty.

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

| | a) | Technology Development Costs                                                                                                                                                                  
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                               
| |    | The costs to acquire and develop new technology and
        enhancements to existing technology are expensed as incurred until such
        time as technological feasibility is demonstrated.

26

---

|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|DECEMBER 31, 2006 AND 2005   
|(Stated in U.S. Dollars)     

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------

| | b) | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | 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 periods. Actual results could differ from these
        estimates.                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | c) | Basic and Diluted Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Company computes loss per share in accordance
        with Statement of Financial Accounting Standards (SFAS) No.
        128  Earnings Per Share (SFAS 128). Under
        the provisions of SFAS No. 128, basic loss per share is computed using
        the weighted average number of common stock outstanding during the period.
        Diluted loss per share is computed using the weighted average number of
        common and potentially dilutive common stock outstanding during the period.
        The basic and diluted loss per share are the same as any exercise of options
        or warrants would be anti-dilutive.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | d) | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Companys functional currency is
        the U.S. dollar. Transactions in foreign currency are translated into
        U.S. dollars as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | e) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The Company has adopted SFAS No. 109 
        Accounting for Income taxes (SFAS 109). This standard
        requires the use of an asset and liability approach for financial accounting,
        and reporting on income taxes. If it is more likely than not that some
        portion or all of a deferred tax asset will not be realized, a valuation
        allowance is recognized.                                                                                                                                                                                                                                                      

27

---

|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|DECEMBER 31, 2006 AND 2005   
|(Stated in U.S. Dollars)     

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------

| | f) | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The Companys financial instruments consist of
        cash, accounts payable and accrued liabilities, and loans payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Unless otherwise noted, it is managements opinion
        that the Company is not exposed to significant interest or credit risks
        arising from these financial instruments. The fair value of these financial
        instruments approximate their carrying values, unless otherwise noted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The Company has adopted SFAS No. 150, Accounting
        for Certain Financial Instruments with Characteristics of both Liabilities
        and Equity. This Statement establishes standards for how an issuer
        classifies and measures certain financial instruments with characteristics
        of both liabilities and equity. SFAS No. 150 requires that an issuer classify
        a financial instrument that is within its scope as a liability (or an
        asset in some circumstances). The financial instruments affected includes
        certain obligations that can be settled with shares of stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | g) | Stock Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | In December 2002, the Financial Accounting Standards
        Board (FASB) issued SFAS No. 148, Accounting for Stock-Based
        Compensation  Transition and Disclosure (SFAS No. 148),
        an amendment of SFAS No. 123 Accounting for Stock-Based Compensation
        (SFAS No. 123). The purpose of SFAS No. 148 is to: (1) provide
        alternative methods of transition for an entity that voluntarily changes
        to the fair value based method of accounting for stock-based employee
        compensation, (2) amend the disclosure provisions to require prominent
        disclosure about the effects on reported net income of an entitys
        accounting policy decisions with respect to stock- based employee compensation,
        and (3) require disclosure of those effects in interim financial information.
        The disclosure provisions of SFAS No. 148 were effective for the Company
        from the year ended December 31, 2004.                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The Company has elected to account for stock-based employee
        compensation arrangements in accordance with the provisions of Accounting
        Principles Board Opinion No. 25, Accounting for Stock Issued to
        Employees, (APB No. 25) and comply with the disclosure
        provisions of SFAS No. 123, as amended by SFAS No. 148 as described above.
        In addition, in accordance with SFAS No. 123, the Company applies the
        fair value method using the Black-Scholes option-pricing model in accounting
        for options granted to consultants. Under APB No. 25, compensation expense
        for employees is recognized based on the difference, if any, on the date
        of grant between the estimated fair value of the Companys stock
        and the amount an employee must pay to acquire the stock. Compensation
        expense is recognized immediately for past services and pro-rata for future
        services over the option-vesting period. To December 31, 2006, the Company
        has not granted any stock options.

28

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|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|DECEMBER 31, 2006 AND 2005   
|(Stated in U.S. Dollars)     

|3. | RECENT ACOUNTING PRONOUNCEMENTS
|-- | -------------------------------

In September 2006, FASB issued SFAS No.
  157, Fair Value Measures (SFAS 157). This Statement
  defines fair value, establishes a framework for measuring fair value in generally
  accepted accounting principles (GAAP), expands disclosures about
  fair value measurements, and applies under other accounting pronouncements that
  require or permit fair value measurements. SFAS 157 does not require any new
  fair value measurements. However, the FASB anticipates that for some entities,
  the application of SFAS 157 will change current practice. SFAS 157 is effective
  for financial statements issued for fiscal years beginning after November 15,
  2007, which for the Company would be the fiscal year beginning December 1, 2007.
  The Company is currently evaluating the impact of adopting SFAS 157 but does
  not expect that it will have a significant effect on its financial position
  or results of operations.

In September 2006, the Securities and
  Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB)
  No. 108, Considering the Effects of Prior Year Misstatements when Quantifying
  Misstatements in Current Year Financial Statements (SAB 128).
  SAB 108 addresses how the effects of prior year uncorrected misstatements should
  be considered when quantifying misstatements in current year financial statements.
  SAB 108 requires companies to quantify misstatements using a balance sheet and
  income statement approach and to evaluate whether either approach results in
  quantifying an error that is material in light of relevant quantitative and
  qualitative factors. SAB 108 is effective for interim periods ending after November
  15, 2006. The Company is currently evaluating the impact of adopting SAB 108
  but does not expect that it will have a significant effect on its financial
  position or results of operations.

In June 2006, FASB issued Interpretation
  No. 48, Accounting for Uncertainty in Income Taxes-an Interpretation
  of FASB Statement No. 109 (SFAS 48). This Interpretation
  clarifies the accounting for uncertainty in income taxes recognized in an enterprises
  financial statements in accordance with FASB No. 109, Accounting for
  Income Taxes. This Interpretation prescribes a recognition threshold
  and measurement attribute for the financial statement recognition and measurement
  of a tax position taken or expected to be taken in a tax return. This Interpretation
  also provides guidance on derecognition, classification, interest and penalties,
  accounting in interim periods, disclosure and transition. This Interpretation
  is effective for fiscal years beginning after December 15, 2006. The Company
  has determined that the adoption of SFAS 48 does not have any material impact
  on the Companys results of operations or financial position.

29

---

|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|DECEMBER 31, 2006 AND 2005   
|(Stated in U.S. Dollars)     

|3. | RECENT ACOUNTING PRONOUNCEMENTS(Continued)
|-- | ------------------------------------------

In February 2006, FASB issued SFAS No.
  155, Accounting for Certain Hybrid Financial Instruments-an amendment
  of FASB Statements No. 133 and 140 (SFAS 155), to simplify
  and make more consistent the accounting for certain financial instruments. SFAS
  155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging
  Activities, to permit fair value remeasurement for any hybrid financial
  instrument with an embedded derivative that otherwise would require bifurcation,
  provided that the whole instrument is accounted for on a fair value basis. SFAS
  155 amends SFAS 140, Accounting for the Impairment or Disposal of Long-Lived
  Assets, to allow a qualifying special-purpose entity to hold a derivative
  financial instrument that pertains to a beneficial interest other than another
  derivative financial instrument. SFAS 155 applies to all financial instruments
  acquired or issued after the beginning of an entity's first fiscal year that
  begins after September 15, 2006, with earlier application allowed. The adoption
  of this statement is not expected to have a significant effect on the Companys
  future reported financial position or results of operations.

In November 2005, FASB issued Staff Position
  No. (FSP) Financial Accounting Standard (FAS)115-1,
  The Meeting of Other-Than-Temporary Impairment and Its Application
  to Certain Investments (FAS FASP 115-1). FAS FSP 115-1
  provides accounting guidance for identifying and recognizing other-than-temporary
  impairments of debt and equity securities, as well as cost method investments
  in addition to disclosure requirements. FAS FSP 115-1 is effective for reporting
  periods beginning after December 15, 2005, and earlier application is permitted.
  The Company has determined that the adoption of FAS FSP 115-1 does not have
  any material impact on the Companys results of operations or financial
  position.

In July 2005, FASB issued SFAS No. 154,
  Accounting Changes and Error Corrections  A Replacement of APB Opinion
  No. 20 and SFAS No. 3 (SFAS 154). SFAS 154 changes the requirements
  for the accounting for and reporting of a change in accounting principle and
  applies to all voluntary changes in accounting principle. It also applies to
  changes required by an accounting pronouncement in the unusual instance that
  the pronouncement does not include specific transition provisions. SFAS 154
  requires retrospective application to prior periods financial statements
  of changes in accounting principle, unless it is impracticable to determine
  either the period-specific effects or the cumulative effect of the change. The
  provisions of SFAS 154 are effective for accounting changes and correction of
  errors made in fiscal years beginning after December 15, 2005. The adoption
  of this statement did not have a significant effect on the Companys reported
  financial position or results of operations.

30

---

|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|DECEMBER 31, 2006 AND 2005   
|(Stated in U.S. Dollars)     

|3. | RECENT ACOUNTING PRONOUNCEMENTS(Continued)
|-- | ------------------------------------------

In March 2005, FASB issued Interpretation
  No. 47, Accounting for Conditional Asset Retirement Obligations
  (FIN 47). FIN 47 clarifies that an entity must record a liability
  for a conditional asset retirement obligation if the fair value of the obligation
  can be reasonably estimated. This interpretation also clarifies the circumstances
  under which an entity would have sufficient information to reasonably estimate
  the fair value of an asset retirement obligation. This Interpretation is effective
  no later than the end of fiscal years ending after December 15, 2005. The Company
  has determined that this guidance does not have any material impact on the Companys
  results of operations or financial position.

In December 2004, FASB issued SFAS No.
  153, Exchanges of Non-monetary Assets - An Amendment of APB Opinion No.
  29 (SFAS 153). The guidance in APB Opinion No. 29, Accounting
  for Non-monetary Transactions, is based on the principle that exchanges
  of non-monetary assets should be measured based on the fair value of the assets
  exchanged. The guidance in that Opinion, however, included certain exceptions
  to that principle. SFAS 153 amends Opinion No. 29 to eliminate the exception
  for non-monetary exchanges of similar productive assets and replaces it with
  a general exception for exchanges of non-monetary assets that do not have commercial
  substance. A non-monetary exchange has commercial substance if the future cash
  flows of the entity are expected to change significantly as a result of the
  exchange. The provisions of SFAS 153 are effective for non-monetary asset exchanges
  occurring in fiscal periods beginning after June 1, 2006. Early application
  is permitted and companies must apply the standard prospectively. The Company
  has determined that the adoption of this standard is not expected to have any
  material impact on the Companys results of operations or financial position.

31

---

|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|DECEMBER 31, 2006 AND 2005   
|(Stated in U.S. Dollars)     

|4. | LICENSE AND TECHNOLOGY RIGHTS
|-- | -----------------------------

On October 12, 2000, the Company acquired
  a license to certain technology and intellectual property from Colin V. Hall,
  the developer of the technology, and a group of investors. The license granted
  a non-exclusive right to manufacture, market and sell a thermal destructor (soil
  Remediator) for on site remediation to industrial, petrochemical and site
  remediation organizations. The technology and intellectual property acquired
  included all licensing, modification, marketing, distribution and sales rights
  worldwide in perpetuity. Under the terms of the Agreement and License, a cash
  payment of $2,000 was made on behalf of the Company and the Company issued 3,500,000
  shares of common stock.

On October 1, 2002, the Company entered
  into a joint venture agreement (the Agreement) with EcoTech Waste
  Management Systems (1991) Inc. (EcoTech) to design the systems for
  the soil Remediator and provide marketing and business concept expertise. Under
  the terms of the Agreement, EcoTech will evaluate, improve and complete the
  assets of the Company, and market and/or find customers for the assets of the
  Company. Furthermore, EcoTech will search for, recommend and advise the Company
  on the acquisition of further technology, complementary to the current business
  direction and assets of the Company. In consideration for the services provided
  by EcoTech, the Company is required to pay $100,000 to EcoTech over the life
  of the contract (3 years), in cash or common stock.

As of December 31, 2006, the Company
  had paid $85,500 to EcoTech, and the remaining $14,500 is included in accounts
  payable and accrued liabilities. This agreement is being renegotiated by both
  parties.

On May 23, 2006, the Company entered
  into a joint venture with EcoTech (the Strategic Alliance Agreement)
  to develop a portable soil remediation system to clean soils contaminated by
  industrial use. The Company agreed to pay $40,000 in marketing costs for the
  initial customer (increasing to $50,000 for each subsequent customer).

Further, EcoTech agreed to build portable
  high temperature burner units for a cost not to exceed $2 million per unit.
  The Company would then be the exclusive distributor under revenue sharing arrangements
  to be negotiated.

On October 12, 2006, the Company and
  EcoTech signed an addendum to the Strategic Alliance Agreement, whereby, in
  consideration for $2,000 to be paid to EcoTech, the parties agreed to expand
  their business relationship to include portable high temperature steam generation
  technology and to market portable high temperature burner gasifier systems.

The Companys president, Colin Hall,
  is also a principal of EcoTech.

32

---

|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|DECEMBER 31, 2006 AND 2005   
|(Stated in U.S. Dollars)     

|5. | PROMISSORY NOTES PAYABLE
|-- | ------------------------

The promissory notes may be converted
  in whole or in part into common shares of the Company at the option of the lender
  at a mutually agreed price per share. The promissory notes are unsecured and
  bear no interest.

Of these notes, at December 31, 2006,
  two promissory notes, aggregating principal amounts of $12,700, were due during
  the year. Another promissory note, in the principal amount of $8,000 at December
  31, 2006, was due on January 12, 2007. Renewal dates or terms have not yet been
  negotiated for these notes.

All other promissory notes are due on
  demand.

|6. | CAPITAL STOCK
|-- | -------------

On October 12, 2000, the Company issued
  3,500,000 shares of common stock at $0.001 per share in compensation for the
  acquisition of a license agreement to certain technology and intellectual property,
  and issued 1,500,000 shares of common stock at $0.001 per share in compensation
  for organizational expenses.

In 2003, the Company issued 310,000 restricted
  shares of common stock at $0.01 per share pursuant to a private placement in
  the amount of $3,100, and issued 281,725 free trading and 2,267,000 restricted
  shares of common stock for settlement of a $96,939 payable.

On December 1, 2003, the Company acquired
  and cancelled 750,000 restricted shares of common stock for the consideration
  of $1.00.

On April 12, 2004, the Company issued
  419,300 shares of common stock at $0.04 per share in settlement of $16,772 in
  promissory notes payable.

On September 30, 2005, the Company recorded
  the issuance of 2,130,705 common shares at $0.04 per share in settlement of
  share subscriptions received by the Company on October 1, 2004.

On February 9, 2006, the Company issued
  1,000,000 shares of common stock at $0.10 per share pursuant to a private placement
  in the amount of $100,000 and issued 375,000 shares for cash at $0.04 in the
  amount of $15,000.

On June 9, 2006, the Company issued 250,000
  shares of common stock at $0.04 per share in settlement of a $10,000 promissory
  note payable.

On September 28, 2006, the Company issued
  750,000 restricted shares of common stock at $0.10 per share pursuant to a private
  placement in the amount of $75,000.

33

---

|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|DECEMBER 31, 2006 AND 2005   
|(Stated in U.S. Dollars)     

|7. | STOCK OPTIONS
|-- | -------------

On July 21, 2004, the Company registered
  its Performance Stock Plan (the Plan), under the Securities Act
  of 1933 (the Act), for up to 1,000,000 stock options, which may
  be granted to employees, directors and consultants. The Company has not granted
  any stock options since inception and there were no stock options outstanding
  as of December 31, 2006.

|8. | RELATED PARTY TRANSACTIONS AND AMOUNTS OWING
|-- | --------------------------------------------

During the year ended December 31, 2006,
  the Company carried out a number of transactions with related parties in the
  normal course of business. These transactions were recorded at their exchange
  amount, which is the amount of consideration established and agreed to by the
  related parties.

Except as disclosed elsewhere in these
  notes, following are related party transactions and amounts owing:

As of December 31, 2006, $14,500 (2005
  - $14,500) was owing to EcoTech, of which the President of the Company is a
  principal, and $4,290 (2005 - nil) was owing to the President. These amounts
  are included in accounts payable and accrued liabilities.

The Company currently has no employees
  and relies upon its officers and directors to further its affairs. The officers
  and directors provide services to the Company without any compensation.

34

---

|SOLANEX MANAGEMENT INC.      
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|DECEMBER 31, 2006 AND 2005   
|(Stated in U.S. Dollars)     

|9. | INCOME TAXES
|-- | ------------

A reconciliation of statutory federal
  income tax rates to the Companys effective tax rate is as follows:

| |                               |   | 2006    |   |   | 2005    |  
| | ----------------------------- | - | ------- | - | - | ------- | -
| | Expected tax recovery at 34%  | $ | (79,560 | ) | $ | (26,600 | )
| | Change in valuation allowance |   | 79,560  |   |   | 26,600  |  
| | Income tax provision          | $ | -       |   | $ | -       |  

The Company was not taxable in 2006 and
  2005.

Deferred tax assets at December 31 were
  as follows:

| |                              |   | 2006     |   |   | 2005     |  
| | ---------------------------- | - | -------- | - | - | -------- | -
| |                              |   |          |   |   |          |  
| | Gross tax deferred asset     |   |          |   |   |          |  
| | Operating loss carryforwards | $ | 230,000  |   | $ | 120,200  |  
| | Valuation allowance          |   | (230,000 | ) |   | (120,200 | )
| |                              |   |          |   |   |          |  
| | Net deferred tax asset       | $ | -        |   | $ | -        |  

The Company has net operating losses
  carried forward of approximately $584,000 (2005 - $354,000) and has provided
  a full valuation allowance due to the uncertainty of the utilization of the
  benefits of these losses.

|10. | CONTRACTUAL OBLIGATIONS AND COMMITMENTS
|--- | ---------------------------------------

The Company has no significant contractual
  obligations or commitments with any parties respecting executive compensation,
  consulting arrangements, rental premises or other matters, except as disclosed
  elsewhere in these notes. Management services provided and rental of premises
  are on a month to month basis

35

---

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

There are no reportable disagreements on accounting or
financial disclosure issues.

ITEM 8A. CONTROLS AND PROCEDURES

We carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2006. This evaluation was
carried out under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, Mr. Colin V. Hall. Based upon
that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that, as of December 31, 2006, our disclosure controls and procedures
are effective. There have been no significant changes in our internal controls
over financial reporting during the quarter ended December 31, 2006 that have
materially affected or are reasonably likely to materially affect such
controls.

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act are recorded,
processed, summarized and reported, within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and
procedures or our internal control over financial reporting will necessarily
prevent all fraud and material error. Our disclosure controls and procedures are
designed to provide reasonable assurance of achieving our objectives and our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective at that reasonable assurance
level. Further, the design of a control system must reflect the fact that there
are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of the internal control. The design of any system of controls also is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions. Over time, control may
become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate.

ITEM 8B. OTHER INFORMATION

None

36

---

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS

This table sets forth the name, age and position of each
director and executive officer of the Company:

Name
    Age
      Position(s) and Office(s) HeldColin V. Hall
    62
      President and Director


Colin V. Hall  Director

Mr. Hall was born and educated in England, and has diplomas in
design, graphics, technology and management. He is an innovative designer of
chemical and pollution abatement processing systems and machinery, thermal
devices, power generation systems, heavy vehicles, transport and handling
equipment, machinery and processing systems for the past 25 years. Over the past
15 years his abilities have been directed towards the development of fully
integrated systems for waste management, reduction and processing. He is a
recognized expert in the design and development of environmental control and
processing systems. He led the development and promotion of the Western
Renewable Fuels project for four years in the 1990's. Mr. Hall has been
President of EcoTerra Remediation Systems Inc. for the last two years, and is
the CEO of EcoTech Waste Management Systems (1991) Inc., a company he founded in
1980. He designed EcoTech's integrated system for waste management, reduction
and processing and has made many improvements on existing designs for components
of environmental remediation systems.

Significant Employees

Mr. Todd Ingram is the Secretary of our company and performs
  administrative functions. He has a Bachelors of Business Administration
  and has completed studies in advanced Business Management. He has a varied background
  with public and private companies working in marketing, sales, and advanced
  administration including setup and design of corporate structure. Mr. Ingram
  was paid $17,000 in consulting fees during the year ended December 31, 2006.

Family Relationships

There are no family relationships between or among the
directors, executive officers or persons nominated or chosen by us to become
directors or executive officers.

Involvement in Certain Legal Proceedings

To the best of our knowledge, during the past five years, none
of the following occurred with respect to a present or former director,
executive officer, or employee: (1) any bankruptcy petition filed by or against
any business of which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior to that time; (2)
any conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses); (3) being
subject to any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any court of

37

---

competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his or her involvement in any type of
business, securities or banking activities; and (4) being found by a court of
competent jurisdiction (in a civil action), the SEC or the Commodities Futures
Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended or vacated.

Audit Committee

We do not have a separately-designated standing audit
committee. The entire board of directors performs the functions of an audit
committee, but no written charter governs the actions of the board of directors
when performing the functions of that would generally be performed by an audit
committee. The board of directors approves the selection of our independent
accountants and meets and interacts with the independent accountants to discuss
issues related to financial reporting. In addition, the board of directors
reviews the scope and results of the audit with the independent accountants,
reviews with management and the independent accountants our annual operating
results, considers the adequacy of our internal accounting procedures and
considers other auditing and accounting matters including fees to be paid to the
independent auditor and the performance of the independent auditor.

We do not have an audit committee financial expert because of
the size of our company and our board of directors at this time. We believe that
we do not require an audit committee financial expert at this time because we
retain outside consultants who possess these attributes.

For the fiscal year ending December 31, 2006, the board of
directors:

| | 1. | Reviewed and discussed the audited financial statements
      with management, and                                                                            
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                               
| | 2. | Reviewed and discussed the written disclosures and the
      letter from our independent auditors on the matters relating to the
      auditor's independence.

Based upon the board of directors review and discussion of the
matters above, the board of directors authorized inclusion of the audited
financial statements for the year ended December 31, 2006 to be included in this
Annual Report on Form 10-KSB and filed with the Securities and Exchange
Commission.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and
executive officers and persons who beneficially own more than ten percent of a
registered class of the Companys equity securities to file with the SEC initial
reports of ownership and reports of changes in ownership of common stock and
other equity securities of the Company. Officers, directors and greater than ten
percent beneficial shareholders are required by SEC regulations to furnish us
with copies of all Section 16(a) forms they file. To the best of our knowledge
based solely on a review of Forms 3, 4, and 5 (and any amendments thereof)
received by us during or with respect to the year ended December 31, 2006, the
following persons have failed to file, on a timely basis, the identified reports
required by Section 16(a) of the Exchange Act during fiscal year ended December
31, 2006:

38

---

Name and principal
      position
    Number of late
      reports
    Transactions not
      timely reported
    Known failures to
      file a required formColin V. Hall President and Director
    0
    0
    1EcoTech Waste Management Affiliate
      Shareholder
    0
    0
    1


Code of Ethics Disclosure

As of December 31, 2006, we have not adopted a Code of Ethics
for Financial Executives, which include our principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions, as required by sections 406 and 407 of the
Sarbanes-Oxley Act of 2002. Our management believes that the size of our company
and current operations at this time do not require a code of ethics to govern
the behavior of our sole officer. We anticipate that we will adopt a code of
ethics once we are in a position to do so.

ITEM 10. EXECUTIVE COMPENSATION

The table below summarizes all compensation awarded to, earned
by, or paid to our former or current executive officers for the fiscal years
ended 2006 and 2005.

SUMMARY COMPENSATION TABLE

Name
      
      
      
      
      
      Non-Equity
      Nonqualifiedand
      
      
      
      Stock
      Option
      Incentive Plan
      Deferred
    All Otherprincipal
      
      Salary
      Bonus
      Awards
      Awards
      Compensation
      Compensation
    Compensation
    Totalposition
      Year
      ($)
      ($)
      ($)
      ($)
      ($)
      Earnings ($)
    ($)
    ($)Colin V.
      2006
      0
      0
      0
      0
      0
      0
    6,464
    6,464Hall,
      2005
      0
      0
      0
      0
      0
      0
    0
    0President


Narrative Disclosure to the Summary Compensation Table

During the year ended December 31, 2006 the Companys officers
received fees for services and described as all other compensation.

39

---

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END:
        NoneOPTION AWARDS - Nil
      STOCK AWARDS - NilNumber of 
        Securities 
        Underlying 
        Unexercised 
        Options 
        (#)
        Exercisable
      Number of 
        Securities 
        Underlying 
        Unexercised 
        Options 
        (#)  Unexercisable
      Equity 
        Incentive 
        Plan 
        Awards: 
        Number of 
        Securities 
        Underlying 
        Unexercised 
        Unearned 
        Options
        (#)
      Option 
        Exercise 
        Price
        ($)
      Option 
        Expiration 
        Date
      Number of 
        Shares or 
        Units of 
        Stock That 
        Have Not 
        Vested  (#)
      Market 
        Value of 
        Shares or 
        Units of 
        Stock 
        That 
        Have 
        Not 
        Vested 
        ($)
      Equity 
        Incentive 
        Plan 
        Awards: 
        Number of 
        Unearned 
        Shares, 
        Units or 
        Other 
        Rights 
        That Have 
        Not 
        Vested  (#)
      Equity 
        Incentive 
        Plan 
        Awards: 
        Market or 
        Payout 
        Value of 
        Unearned 
        Shares, 
        Units or 
        Other 
        Rights 
        That 
        Have Not 
        Vested  (#)Colin V. Hall
      0
      0
      0
      0
      0
      0
      0
      0


DIRECTOR COMPENSATIONName
      Fees 
        Earned or 
        Paid in 
        Cash 
        ($)
      Stock 
        Awards 
        ($)
      Option 
        Awards 
        ($)
      Non-Equity 
        Incentive 
        Plan 
        Compensation 
        ($)
      Non-Qualified 
        Deferred 
        Compensation 
        Earnings 
        ($)
      All 
        Other 
        Compensation 
        ($)
      Total 
        ($)Colin V. Hall
      0
      0
      0
      0
      0
      6,464
      6,464


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of February 15, 2007, the
beneficial ownership of our common stock by each executive officer and director,
by each person known by us to beneficially own more than 5% of the our common
stock and by the executive officers and directors as a group. Except as
otherwise indicated, all shares are owned directly and the percentage shown is
based on 12,033,730 shares of common stock issued and outstanding on February
15, 2007.

Title of class
      Name and address of beneficial
        owner(1)
      Amount of beneficial ownership
      Percent of classExecutive Officers & Directors:Common
      Colin V. Hall 
        4567 Prospect Road 
        North Vancouver, B.C., V7N 3M1, 
        CANADA
      1,500,000 shares
      12.5%Total of All Directors and Executive Officers:
      1,500,000 shares
      12.5%More Than 5% Beneficial Owners:Common
      EcoTech Waste Management 
        7588 Winston Street 
        Burnaby, B.C., V5Z 4C2, CANADA
      2,000,000 shares
      16.6%


(1) As used in this table, "beneficial ownership" means the
sole or shared power to vote, or to direct the voting of, a security, or the
sole or shared investment power with respect to a security (i.e., the power to
dispose of, or to direct the disposition of, a security). In addition, for
purposes of this table, a person is deemed, as of any date, to have "beneficial
ownership" of any security that such person has the right to acquire within 60
days after such date.

40

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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except as disclosed below, none of our directors or executive
officers, nor any proposed nominee for election as a director, nor any person
who beneficially owns, directly or indirectly, shares carrying more than 5% of
the voting rights attached to all of our outstanding shares, nor any members of
the immediate family (including spouse, parents, children, siblings, and
in-laws) of any of the foregoing persons has any material interest, direct or
indirect, in any transaction since the beginning of our last fiscal year on
January 1, 2006 or in any presently proposed transaction which, in either case,
has or will materially affect us.

|1. | On September 29, 2006, EcoTech Waste Management Systems,
      Inc. (EcoTech)  a major shareholder of our company owned by Mr. Colin
      V. Hall  agreed to assign to us the full rights to the Thermal Destructor
      and an offshoot technology known as the Steam Injection System in exchange
      for $2,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | On October 1, 2002, we entered into a joint venture
      agreement with EcoTech. Under that agreement, we agreed to shed certain
      business and administrative responsibilities including product
      manufacturing, inventory maintenance, and website development, thereby
      enabling our company to concentrate more fully on marketing and sales
      efforts. Most integral under the agreement, we contracted the
      responsibility of manufacturing the Thermal Destructor to EcoTech. In
      consideration for the services provided by EcoTech, we are required to pay
      $100,000 to EcoTech in cash or shares of stock over the life of the
      agreement which is three (3) years. As of December 31, 2006, we have paid
      $85,500 and accrued $14,500 in accounts payable towards fulfilling our
      obligations under the agreement. We are still responsible for these
      remaining amounts to EcoTech, and hope to reconcile when we are
      financially capable of doing so.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | On May 23, 2006 we negotiated with EcoTech and extended
      the terms of our original joint venture agreement. Under the Strategic
      Alliance Agreement, we defined the marketing responsibilities and agreed
      that the parties will meet and explore a schedule for marketing to
      prospective customers. For the initial customer, we agreed to pay $40,000
      of the costs associated with these marketing efforts and EcoTech agreed to
      bear the balance of such costs. For each subsequent customer, we agreed to
      bear $50,000 worth of costs or whatever adjusted price is agreed upon
      between the parties on a later date. EcoTech remains responsible to build
      each Thermal Destructor unit for a cost not to exceed $2,000,000 USD per
      unit. We agreed with EcoTech to work together to determine revenue sharing
      arrangements in connection with any sales.                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3. | Under the October 1, 2002 joint venture agreement,
      EcoTech agreed to search out and advise us on the development of
      technologies that may compliment our business direction with the Thermal
      Destructor. In fulfillment of that contractual obligation, on October 12,
      2006, Eco Tech signed an Addendum to the May 23, 2006 Strategic Alliance
      Agreement. In consideration for $2,000 to be paid to EcoTech, the parties
      agreed to expand their business relationship to include a portable high
      temperature steam generation technology (the Steam Injection System) and
      jointly develop and market portable high temperature burner gasifier
      systems for use across North America. Our marketing costs and revenue
      sharing provisions under the Strategic Alliance Agreement apply with equal
      force to the Steam Injection System technology.                                                                                                          

41

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PART IV

ITEM 13. EXHIBITS

INDEX TO EXHIBITS

Exhibit No.
      Description3.1*
      Amended and Restated Articles of Incorporation
        dated December 3, 20013.2*
      Amended and Restated Bylaws dated December 3,
        20014.1*
      Specimen Common Stock Certificate10.1*
      Technology Assignment Agreement, dated September
        29, 200610.2*
      Strategic Alliance Agreement, dated May 23,
        200610.3*
      Addendum to Strategic Alliance Agreement, dated
        October 12, 200631.1
      Certifications of
        CEO pursuant to section 302 of the Sarbanes- Oxley Act of 200231.2
      Certifications of
        CFO pursuant to section 302 of the Sarbanes- Oxley Act of 200232.1
      Certifications pursuant
        to section 906 of the Sarbanes-Oxley Act of 2002 (CEO)32.2
      Certifications pursuant
        to section 906 of the Sarbanes-Oxley Act of 2002 (CFO)


* Previously filed with the SEC.

Reports on Form 8-K: None

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Table of Audit Fees (amounts in US$) billed by Morgan &
Company in connection with the audit of the Companys annual financial
statements included in our annual report filed on form 10K-SB for the years
ended:

Financial Statements for the Year Ended December 31
    Audit Services
    Audit Related Fees
    Tax Fees
    Other Fees2006
    $18,600
    0
    0
    02005
    $7,000
    0
    0
    02004
    $8,250
    0
    0
    02003
    $3,317
    0
    0
    02002
    $2,205
    0
    0
    0


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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                    | SOLANEX MANAGEMENT INC.       
|------------------- | ------------------------------
|                    |                               
|Date: April 2, 2007 | By: /s/ Colin V. Hall         
|                    | Colin V.
      Hall: President

43

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