**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

 

**FORM 10-K/A**

**Amendment No. 1**

 
|                |        |                                                                                                                                                                 |
|----------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (Mark One)     |   |                                                                                                                                                            |
| þ         |   | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934                                                                            |
|           |   | **For the fiscal year ended December 31, 2008**                                                                                                                 |
|  

**or** |
| **o**          |   | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934                                                                        |
|           |   | For the transition period from                      to |

 

**Commission file number 0-31423**

 

**FRIENDLY ENERGY EXPLORATION**

 

(Exact name of Small Business Issuer as specified in its charter)
|                          |        |                                      |
|--------------------------|--------|--------------------------------------|
| **Nevada**               |   | **91-1832462**                       |
| (State of incorporation) |   | (I.R.S. employer identification no.) |
|                                                |        |            |
|------------------------------------------------|--------|------------|
| **502 North Division Street, Carson City, NV** |   | **89703**  |
| (Address of principal executive offices)       |   | (Zip code) |

 

**702-953-0411**

 

(Registrant’s telephone number, including area code)

 

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

Common Stock, par value $.001 per share

 

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

 

**None**

 

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yeso No x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yeso No x

 

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

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is contained herein, 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.o

 

1

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

  
|                                            |              |                                     |              |                                          |              |                                                         |
|--------------------------------------------|--------------|-------------------------------------|--------------|------------------------------------------|--------------|---------------------------------------------------------|
| Large Accelerated Filer    ̈ |    | Accelerated Filer   ̈ |    | Non-accelerated Filer    ̈ |    | Smaller Reporting Company  x   |

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

On June 30, 2008, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the issuer was approximately $330,000 computed by reference to the price at which the common equity was last transacted on that date.

 

On December 31, 2007, the issuer had 21,568,790 shares of Common Stock, $0.001 par value issued and outstanding.

 

No documents are incorporated by reference.

 

**PART I**

**ITEM 1.  BUSINESS.**

**Our Background** . Friendly Energy Exploration was formed under the laws of the State of Nevada on January 7, 1993 under the name Eco-Systems Marketing. Eco-Systems subsequently changed its name to Rama Financial Corporation. An amendment to the Articles of Incorporation was filed changing the corporate name to Friendly Energy Corporation and then to Friendly Energy Exploration in April 2008.

Friendly Energy Exploration was originally incorporated to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Nevada. Friendly Energy Exploration, from its inception in 1993 to 2005, was engaged primarily in establishing itself as an electric service provider to California customers.

Friendly Energy Exploration changed its business focus in February 2005 to pursuing oil and gas development opportunities.

**Our Business.** Friendly Energy Exploration was inactive from 2002 to February 2005, when the company began the process of identifying potential oil and gas prospects for development. The primary focus is on property in established oil fields to minimize any potential risk.  

We currently hold interests in an oil field prospect in Texas, in a gas well in southwest Iowa, and in an oil field prospect in central Oklahoma.

 

**Our Oil and Gas**Property.  The oil and gas properties are as follows:

Talpa Project  Friendly Energy Exploration purchased a 25% working interest in an 1,100 acre oil and gas lease in Texas.  However, there is an unresolved dispute concerning this working interest.  We expect to have this dispute resolved in April 2009.

**Red Oak Prospect  **Friendly Energy Exploration participated in the drilling of a 3,200 foot deep oil and gas well in southwest Iowa through its wholly owned subsidiary, Friendly Energy Services, Inc. (FES).  FES owns a 42.5% working interest in the well.  The well has not been completed yet until arrangements can be made to sell the gas.  

**West Peach Creek Prospect  **Friendly Energy Exploration is planning to drill a 5,400 foot deep well in central Oklahoma through its wholly owned subsidiary, Friendly Energy Services, Inc. (FES).  If the geophysicist and operator each purchase a 10% working interest, as expected, then FES will own an 80% working interest in the well.  The location is on the West Peach Creek Prospect, a development/exploratory prospect, located on the western edge of the giant St. Louis Oil Field. 

**Asher Well and Prospect**  The Company has written down its interest in the Asher #1 oil well and the Asher #2 Project and has given its interest to D-Mil Production in return for canceling our accounts payable balance.

**ITEM 1A. RISK FACTORS**

In evaluating the Company, careful consideration should be given to the following risk factors, in addition to the other information included or incorporated by reference in this annual report. In addition, the "Forward-Looking Statements" located in this Form 10-KSB describe additional uncertainties associated with our business and the forward-looking statements included or incorporated by reference. Each of these risk factors could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our common stock.

2

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**Accumulated Losses**

To date the Company's operations have generated very little operating cash flows to provide working capital for the Company's ongoing overhead, the funding of its lease acquisitions and the exploration and development of these properties. Without adequate financing, the Company may not be able to successfully develop any prospects that it acquires or achieve profitability from its operations in the near future or at all.

During the year ended December 31, 2008, Friendly incurred a net loss of $365,473 and as of December 31, 2008 has an accumulated deficit of $2,365,599 since beginning in the oil and gas exploration business in February 2005..

**We cannot predict the future price of oil and natural gas.**

Our revenues, profitability and liquidity are substantially dependent upon prevailing prices for oil and natural gas, which can be extremely volatile and in recent years have been depressed by excess total domestic and imported supplies. Prices also are affected by actions of state and local agencies, the United States and foreign governments, and international cartels. In addition, sales of oil and natural gas are seasonal in nature, leading to substantial differences in cash flow at various times throughout the year. These external factors and the volatile nature of the energy markets make it difficult to estimate future prices of oil and natural gas. Any substantial or extended decline in the price of oil and/or natural gas would have a material adverse effect on our financial condition and results of operations, including reduced cash flow and borrowing capacity. All of these factors are beyond our control.

**We could be adversely impacted by changes in the oil and gas market.**

The marketability of any future oil and gas production depends in part upon the availability, proximity and capacity of gas gathering systems, pipelines and processing facilities. Federal and state regulation of oil and gas production and transportation, general economic conditions, changes in supply and changes in demand all could adversely affect our ability to produce and market its oil and natural gas. If market factors were to change dramatically, the financial impact could be substantial because we would incur expenses without receiving revenues from the sale of production. The availability of markets is beyond our control.

**New government regulation and environmental risks could increase our costs.**

The production and sale of oil and gas are subject to a variety of federal, state and local government regulations. These include:
|        |        |                                                                                                                                    |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|
|   | · | the prevention of waste                                                                                                            |
|   | · | the discharge of materials into the environment                                                                                    |
|   | · | the conservation of oil and natural gas, pollution, permits for drilling operations, drilling bonds, reports concerning operations |
|   | · | the spacing of wells                                                                                                               |
|   | · | the unitization and pooling of properties                                                                                          |

Many jurisdictions have at various times imposed limitations on the production of oil and gas by restricting the rate of flow for oil and gas wells below their actual capacity to produce. Because current regulations covering our operations are subject to change at any time, and despite our belief that we are in substantial compliance with applicable environmental and other government laws and regulations, we may incur significant costs for compliance in the future.

**Our prices may be impacted adversely by new taxes.**

The federal, state and local governments in which we operate impose taxes on the oil and gas products we sell. In the past, there has been a significant amount of discussion by legislators and presidential administrations concerning a variety of energy tax proposals. In addition, many states have raised state taxes on energy sources and additional increases may occur. We cannot predict whether any of these measures would have an adverse impact on oil and natural gas prices.

**Exploration and Production Risks**

The business of exploring for and producing oil and gas involves a substantial risk of investment loss that even a combination of experience, knowledge and careful evaluation may not be able to overcome. Drilling oil and gas wells involves the risk that the wells will be unproductive or that, although productive, the wells do not produce oil and/or gas in economic quantities. Other hazards, such as unusual or unexpected geological formations, pressures, fires, blowouts, loss of circulation of drilling fluids or other conditions may substantially delay or prevent completion of any well. Adverse weather conditions can also hinder drilling operations.

3

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A productive well may become uneconomic in the event water or other deleterious substances are encountered, which impair or prevent the production of oil and/or gas from the well. In addition, production from any well may be unmarketable if it is impregnated with water or other deleterious substances.

**Financing Risks**

Friendly has relied in the past primarily on the sale of equity capital, shareholder loans and other similar types of transactions to fund working capital and the acquisition of its prospects and related leases. Failure to generate operating cash flow or to obtain additional financing for the development of the Company's properties could result in substantial dilution of our property interests, or delay or cause indefinite postponement of further exploration and development of its prospects with the possible loss of such properties.

**Risks Associated with Management of Growth**

Because of its small size, Friendly Energy’s growth in accordance with its business plans, if achieved, will place a significant strain on its financial, technical, operation and management resources. As Friendly Energy expands its activities and increases the number of projects it is evaluating or in which it participates, there will be additional demands on its financial, technical and management resources. The failure to continue to upgrade our technical, administrative, operating and financial control systems or the occurrence of unexpected expansion difficulties, including the recruitment and retention of experienced managers, geoscientists and engineers, could have a material adverse effect on its business, financial condition and results of operations and its ability to timely execute its business plan.

**Conflicts of Interest**

Certain of the officers and directors of Friendly Energy will also serve as directors of other companies or have significant shareholdings in other companies. To the extent that such other companies participate in ventures in which Friendly Energy may participate, or compete for prospects or financial resources with Friendly Energy, these officers and directors of Friendly Energy will have a conflict of interest in negotiating and concluding terms relating to the extent of such participation. In the event that such a conflict of interest arises at a meeting of the board of directors, a director who has such a conflict must disclose the nature and extent of his interest to the board of directors and abstain from voting for or against the approval of such participation or such terms.

In accordance with the laws of the State of Nevada, the directors of Friendly Energy are required to act honestly and in good faith with a view to the best interests of Friendly Energy. In determining whether or not Friendly will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the degree of risk to which Friendly may be exposed and its financial position at that time.

**ITEM 2. PROPERTIES.**

As of the dates specified in the following table, Friendly Energy Exploration held the following property in the following amounts:
|                      |                             |        |                             |
|----------------------|-----------------------------|--------|-----------------------------|
| Property             | December 31, 2008 |   | December 31, 2007 |
| Cash and equivalents | $

115                 |   | $

628                 |
| Notes                | $

319,000             |   | $

319,000             |
| Equipment            | $

1,644               |   | $

2,466               |
| LLC Investment       | $

1,000               |   | $

1,000               |
| Asher #1 Well        | $

-                   |   | $

103,077             |
| Asher #2 Project     | $

-                   |   | $

5,008               |
| Red Oak Project      | $

242,000             |   |                        |
| Talpa Project        | $

50,000              |   |                        |
| West Peach Project   | $

36,970              |   | $

52,005              |
|                 | $

650,729             |   | $

483,184             |

Friendly Energy Exploration defines cash equivalents as all highly liquid investments with a maturity of 3 months or less when purchased. Friendly Energy Exploration does not presently own any interests in real estate.

**Facilities.** Friendly Energy Exploration does not own any real or personal property nor does the Company currently lease any office space.

 

**ITEM 3. LEGAL PROCEEDINGS.**

4

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NONE

 

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

NONE

**PART II**

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

As at December 31, 2008 there were approximately 577 holders of the outstanding shares of the Friendly Energy Exploration’s $0.001 par value common stock. Friendly Energy Exploration participates in the PinkSheets Electronic Quotation System maintained by the National Association of Securities Dealers, Inc., under the most recent trading symbol "FEGR". The Friendly Energy Exploration's common stock has closed at:
|                     |                |                |
|---------------------|----------------|----------------|
| Quarter             | High           | Low            |
| 2005 First Quarter  | $

1.500  | $

1.050  |
| 2005 Second Quarter | $

1.625  | $

1.375  |
| 2005 Third Quarter  | $

1.950  | $

1.575  |
| 2005 Fourth Quarter | $

1.275  | $

1.000  |
| 2006 First Quarter  | $

4.700  | $

1.250  |
| 2006 Second Quarter | $

3.000  | $

1.375  |
| 2006 Third Quarter  | $

3.375  | $

1.500  |
| 2006 Fourth Quarter | $

1.975  | $

1.000  |
| 2007 First Quarter  | $

1.725  | $

0.500  |
| 2007 Second Quarter | $

2.625  | $

0.900  |
| 2007 Third Quarter  | $

1.625  | $

0.800  |
| 2007 Fourth Quarter | $

0.800  | $

0.250  |
| 2008 First Quarter  | $

0.570  | $

0.200  |
| 2008 Second Quarter | $

0.120  | $

0.680  |
| 2008 Third Quarter  | $

0.014  | $

0.070  |
| 2008 Fourth Quarter | $

0.008  | $

0.024  |

Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street NW, Washington, D.C. 20549. The public may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.

**Common Stock** . Friendly Energy Exploration is authorized to issue 100,000,000 shares of common stock, $.001 par value, each share of common stock having equal rights and preferences, including voting privileges. The shares of $.001 par value common stock of Friendly Energy Exploration constitute equity interests in Friendly Energy Exploration entitling each shareholder to a pro rata share of cash distributions made to shareholders, including dividend payments. As of December 31, 2008, 21,568,790 shares of the Friendly Energy Exploration’s common stock were issued and outstanding.

The holders of Friendly Energy Exploration’s common stock are entitled to one vote for each share of record on all matters to be voted on by shareholders. Holders of preferred stock are entitled to ten votes for each share of record on all matters to be voted on by shareholders.  There is no cumulative voting with respect to the election of directors of Friendly Energy Exploration or any other matter, with the result that the holders of more than 50% of the shares voted for the election of those directors can elect all of the Directors.

The holders of Friendly Energy Exploration’s common stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to Friendly Energy Exploration’s common stock. All of the outstanding shares of Friendly Energy Exploration’s common stock are duly authorized, validly issued, fully paid and non-assessable.

5

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**Dividends** . The holders of the Friendly Energy Exploration’s  common stock are entitled to receive dividends when, as and if declared by Friendly Energy Exploration’s  Board of Directors from funds legally available therefore; provided, however, that cash dividends are at the sole discretion of Friendly Energy Exploration’s Board of Directors. In the event of liquidation, dissolution or winding up of Friendly Energy Exploration, the shareholders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities of Friendly Energy Exploration and after provision has been made for each class of stock, if any, having preference in relation to Friendly Energy Exploration’s common stock.

Friendly Energy Exploration has never declared or paid any dividends on its common stock. Friendly Energy Exploration does not intend to declare or pay any dividends in the foreseeable future.

**Sales of Securities**

2008 Stock Transactions

 

During the year ended December 31, 2008, the Company issued common shares relating to the reverse stock split on March 24, 2008; shareholders with less than 25 old shares were issued a total of 979 common shares.  No other shares were issued during 2008.

 

2008 Stock Options

No stock options were issued during 2008.

**ITEM 6. SELECTED FINANCIAL DATA.**

This item is not required by smaller by smaller reporting companies.

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

This following information specifies certain forward-looking statements of management of the company. Forward-looking statements are statements that estimate the happening of future events are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may", "shall", "will", "could", "expect", "estimate", "anticipate", "predict", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

 

The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

**Liquidity and Capital Resources.**

For the year ended December 31, 2008, we had total assets of $650,729, compared to total assets in 2007 of $483,184. The increase in assets was mainly due mainly to borrowing for participation in the Red Oak Prospect. At December 31, 2008, we had current liabilities of $1,520,961 which was represented by accounts payable, payroll liabilities, judgment payable, deferred salaries, interest payable and loans payable. At December 31, 2007 we had current liabilities of $987,973.

We do not believe that our current cash resources will be able to maintain our current operations for an extended period of time. We will be required to raise additional funds or arrange for additional financing over the next 12 months to adhere to our development schedule. No assurance can be given, however, that we will have access to additional cash in the future, or that funds will be available on acceptable terms to satisfy our working capital requirements. If we are not able to arrange for additional funding or if our officers, directors and shareholders stop advancing funds to us, we may be forced to make other arrangements for financing such as loans or entering into strategic alliances. We have not identified any alternative sources of financing.

 

**Results of Operations**

6

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We realized revenue from operations in 2008 of $5,035 received from the Asher #1 oil well. During the year ended December 31, 2008 the loss from operations is $365,473 (2007 - $484,269). This decrease in loss was due primarily to a reduction of stock based compensation and interest expense in 2008. From February 11, 2005 (inception of oil and gas exploration operations) to December 31, 2008, Friendly Energy Exploration has incurred cumulative net losses of $2,365,599.

The cash and equivalents constitute our present internal sources of liquidity.

Because we are not generating any significant revenues, our only external source of liquidity is the sale of our capital stock and any advances from officers, directors or shareholders.

**Our Plan of Operation for the Next Twelve Months**

We anticipate that we will need to raise additional capital within the next 12 months in order to continue as a going concern.  The Company is in the process of raising capital to fund the development of future wells. To the extent that additional capital is raised through the sale of equity or equity- related securities, the issuance of such securities could result in dilution of stockholders. There can be no assurance that additional funding will be available on favorable terms, if at all. If adequate funds are not available within the next 12 months, we may be required to curtail our operations significantly or to obtain funds through entering into arrangements with collaborative partners or others that may require us to relinquish rights to certain of our assets that we would not otherwise relinquish.

**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

This item is not required by smaller by smaller reporting companies.

7

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**ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.**

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To:  the Board of Directors and Shareholders

Friendly Energy Exploration

502 North Division Street

Carson City, Nevada  92684

I have audited the accompanying consolidated balance sheet of Friendly Energy Exploration as of December 31, 2008 and 2007 and the related consolidated statements of operations and of cash flows for the yearsthen ended , the period from February 11, 2005 (inception) through December 31,2008, and the period from February 11, 2005 (inception) through December 31, 2007.  These consolidated financial statements are the responsibility of the Company’s management.  My responsibility is to express an opinion on these financial statements based on my audit.

 

I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that I plan and perform the audit to obtain reasonable assurance about 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.  I believe that my audit provides a reasonable basis for my opinion.

 

In my opinion, based on my audit, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Friendly Energy Exploration as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the years ended December 31, 2008 and 2007, the period from February 11, 2005 (inception) through December 31,2008, and the period from February 11, 2005 (inception) through December 31, 2007, in conformity with United States generally accepted accounting principles.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has suffered recurring losses and has yet commenced limited operations.  This raises substantive doubt about the Company’s ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The Company has determined that it is not required to have, nor was I engaged to perform, an audit of the effectiveness of its documented internal controls over financial reporting.

 

/s/ John Kinross-Kennedy

 

John Kinross-Kennedy

Certified Public Accountant

Irvine, California

April 11, 2009

Revised September 28, 2009

 

8

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**FRIENDLY ENERGY CORP.**

**(An Exploration Stage Company)**

**CONSOLIDATED BALANCE SHEET**
|                                             |                                                                                                                                   |                                                                                                                                                                         |                                                                                                                                   |                                                                                                                                                                         |                                                                                                                                   |           |
|---------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|-----------|
|                                        |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              | 31-Dec-08                                                                                                                                                               |                                                                                                                              | 31-Dec-07 |
|                                        |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |      |
|  ASSETS                                |
|                                        |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |      |
|  Current assets                        |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |
|                                        |  Cash and cash equivalents                                                                                                   | $                           115  |                                                                                                                              | $                           268  |
|                                        |  Advances                                                                                                                    | -                                                                                                                                                                  |                                                                                                                              | 360                                                                                                                                                                |
|                                        |                                                                                                                              |  Total current assets                                                                                                                                              | 115                                                                                                                          |                                                                                                                                                                    | 628                                                                                                                          |
|                                        |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |      |
|  Other Assets                          |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |
|                                        |  Property and equipment, net                                                                                                 | 1,644                                                                                                                                                              |                                                                                                                              | 2,466                                                                                                                                                              |
|                                        |  Investment                                                                                                                  | 1,000                                                                                                                                                              |                                                                                                                              | 1,000                                                                                                                                                              |
|                                        |  Notes                                                                                                                       | 319,000                                                                                                                                                            |                                                                                                                              | 319,000                                                                                                                                                            |
|                                        |  Asher #1 Oil Well                                                                                                           | -                                                                                                                                                                  |                                                                                                                              | 103,077                                                                                                                                                            |
|                                        |  Asher #2 Project                                                                                                            | -                                                                                                                                                                  |                                                                                                                              | 5,008                                                                                                                                                              |
|                                        |  Red Oak Project                                                                                                             | 242,000                                                                                                                                                            |                                                                                                                              | -                                                                                                                                                                  |
|                                        |  Talpa Project                                                                                                               | 50,000                                                                                                                                                             |                                                                                                                              | -                                                                                                                                                                  |
|                                        |  West Peach Project                                                                                                          | 36,970                                                                                                                                                             |                                                                                                                              | 52,005                                                                                                                                                             |
|                                        |                                                                                                                              |  Total Other Assets                                                                                                                                                | 650,614                                                                                                                      |                                                                                                                                                                    | 482,556                                                                                                                      |
|                                        |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |      |
|  Total Assets                          | $                    650,729  |                                                                                                                                                                    | $                    483,184  |
|                                        |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |      |
|  LIABILITIES AND STOCKHOLDERS' DEFICIT |
|                                        |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |      |
|  LIABILITIES                           |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |
|  Current liabilities                   |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |
|                                        |  Accounts Payable                                                                                                            | $                      87,990                             |                                                                                                                              | $                    158,419                                        |
|                                        |  Payroll Tax Liabilities                                                                                                     | 96,609                                                                                                                                                             |                                                                                                                              | 83,085                                                                                                                                                             |
|                                        |  Judgement payable                                                                                                           | 216,605                                                                                                                                                            |                                                                                                                              | 196,074                                                                                                                                                            |
|                                        |  Deferred Salaries                                                                                                           | 588,000                                                                                                                                                            |                                                                                                                              | 348,000                                                                                                                                                            |
|                                        |  Interest Payable                                                                                                            | 144,697                                                                                                                                                            |                                                                                                                              | 143,710                                                                                                                                                            |
|                                        |  Loan Payable                                                                                                                | 358,779                                                                                                                                                            |                                                                                                                              | 51,569                                                                                                                                                             |
|                                        |  Loans Payable-Related Parties                                                                                               | 28,281                                                                                                                                                             |                                                                                                                              | 7,086                                                                                                                                                              |
|                                        |                                                                                                                              |  Total current liabilities                                                                                                                                         | 1,520,961                                                                                                                    |                                                                                                                                                                    | 987,943                                                                                                                      |
|                                        |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |      |
|                                        |                                                                                                                              |  Total liabilities                                                                                                                                                 | 1,520,961                                                                                                                    |                                                                                                                                                                    | 987,943                                                                                                                      |
|                                        |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |      |
|  STOCKHOLDERS' DEFICIT                 |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |
|                                        |  Common stock, $0.001 par value; 100,000,000 shares                                                                          |                                                                                                                                                                    |                                                                                                                              |                                                                                                                                                                    |
|                                        |                                                                                                                              |  authorized, 21,568,790 and 2,782,271 shares,                                                                                                                      |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |
|                                        |                                                                                                                              |  respectively, issued and outstanding                                                                                                                              | 21,569                                                                                                                       |                                                                                                                                                                    | 2,782                                                                                                                        |
|                                        |  Preferred Stock, $0.001 par value, 10,000,000 shares                                                                        |                                                                                                                                                                    |                                                                                                                              |                                                                                                                                                                    |
|                                        |                                                                                                                              |  authorized, 7,667,302 and 9,545,856 shares,                                                                                                                       | 7,667                                                                                                                        |                                                                                                                                                                    | 9,546                                                                                                                        |
|                                        |                                                                                                                              |  respectively, issued and outstanding                                                                                                                              |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |
|                                        |  Additional paid-in capital                                                                                                  | 3,667,693                                                                                                                                                          |                                                                                                                              | 3,684,601                                                                                                                                                          |
|                                        |  Accumulated deficit in the develoment stage                                                                                 | (4,567,161)                                                                                                                                                             |                                                                                                                              | (4,201,688)                                                                                                                                                             |
|                                        |                                                                                                                              |  Total stockholders' deficit                                                                                                                                       | (870,232)                                                                                                                         |                                                                                                                                                                    | (504,759)                                                                                                                         |
|                                        |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |                                                                                                                                                                    |                                                                                                                              |      |
|                                        |                                                                                                                              |  Total liabilities and stockholders' deficit                                                                                                                       | $                    650,729  |                                                                                                                                                                    | $                    483,184  |

9

----

**FRIENDLY ENERGY CORP.**

**(An Exploration Stage Company)**

**CONSOLIDATED STATEMENTS OF OPERATIONS**
|                                                 |                                                                                                                                                               |                                              |                                                                                                                                                          |                 |                                                                                                                                                          |                 |                                                                                                         |
|-------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------|---------------------------------------------------------------------------------------------------------|
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            |  From Inception                                                                               |
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            |  (February 11, 2005)                                                                               |
|                                            |                                                                                                                                                          |                                         |  For the year ended                                                                                                                                 |            |  For the year ended                                                                                                                                 |            |  through                                                                                           |
|                                            |                                                                                                                                                          |                                         |  December 31, 2008                                                                                                                                  |            |  December 31, 2007                                                                                                                                  |            |  December 31, 2008                                                                                 |
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            |                                                                                                    |
|  Revenue                                   | $                         5,035  |                                         | $                       11,018        |            | $                       16,053        |
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            |                                                                                                    |
|  Operating expenses                        |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |
|                                            |  Amortization Expense                                                                                                                                    | -                                       |                                                                                                                                                     | -          |                                                                                                                                                     | -          |
|                                            |  Depreciation                                                                                                                                            | 822                                     |                                                                                                                                                     | 1,004      |                                                                                                                                                     | 8,897      |
|                                            |  Dry Hole Cost                                                                                                                                           | -                                       |                                                                                                                                                     | 1,348      |                                                                                                                                                     | 88,157     |
|                                            |  Intangible Drilling Costs                                                                                                                               | -                                       |                                                                                                                                                     | 17,953     |                                                                                                                                                     | 333,206    |
|                                            |  Legal Fees                                                                                                                                              | 850                                     |                                                                                                                                                     | 5,907      |                                                                                                                                                     | 20,427     |
|                                            |  Officer Wages                                                                                                                                           | 240,000                                 |                                                                                                                                                     | 241,000    |                                                                                                                                                     | 987,000    |
|                                            |  Oil Well Operations Cost                                                                                                                                | 3,157                                   |                                                                                                                                                     | 6,111      |                                                                                                                                                     | 9,740      |
|                                            |  Payroll Expenses                                                                                                                                        | 13,524                                  |                                                                                                                                                     | 12,800     |                                                                                                                                                     | 59,341     |
|                                            |  Professional Fees                                                                                                                                       | 23,572                                  |                                                                                                                                                     | 5,962      |                                                                                                                                                     | 56,653     |
|                                            |  Rent                                                                                                                                                    | -                                       |                                                                                                                                                     | -          |                                                                                                                                                     | -          |
|                                            |  Stock Based Compensation                                                                                                                                | -                                       |                                                                                                                                                     | 93,484     |                                                                                                                                                     | 355,842    |
|                                            |  Telephone                                                                                                                                               | 2,765                                   |                                                                                                                                                     | 5,451      |                                                                                                                                                     | 19,381     |
|                                            |  Travel & Entertainment                                                                                                                                  | 5,154                                   |                                                                                                                                                     | 5,951      |                                                                                                                                                     | 23,756     |
|                                            |  General and administrative                                                                                                                              | 30,731                                  |                                                                                                                                                     | 5,303      |                                                                                                                                                     | 52,614     |
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            | -                                                                                                  |
|                                            |                                                                                                                                                          |  Total operating expenses               | 320,575                                                                                                                                             |            | 402,274                                                                                                                                             |            | 2,015,013                                                                                          |
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            | -                                                                                                  |
|                                            |                                                                                                                                                          |  Loss from operations                   | (315,540)                                                                                                                                                |            | (391,256)                                                                                                                                                |            | (1,998,961)                                                                                             |
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            |                                                                                                    |
|  Other income (expenses):                  |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |
|                                            |  Other income                                                                                                                                            | -                                       |                                                                                                                                                     | -          |                                                                                                                                                     | -          |
|                                            |  Forgiveness of Debt                                                                                                                                     | -                                       |                                                                                                                                                     | -          |                                                                                                                                                     | -          |
|                                            |  Impairment Loss on Asset                                                                                                                                | -                                       |                                                                                                                                                     | -          |                                                                                                                                                     | -          |
|                                            |  Interest Expense                                                                                                                                        | (49,933)                                     |                                                                                                                                                     | (93,013)        |                                                                                                                                                     | (256,638)       |
|                                            |  Lawsuit Judgement                                                                                                                                       | -                                       |                                                                                                                                                     | -          |                                                                                                                                                     | (110,000)       |
|                                            |                                                                                                                                                          |  Total other income (expenses)          | (49,933)                                                                                                                                                 |            | (93,013)                                                                                                                                                 |            | (366,638)                                                                                               |
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            |                                                                                                    |
|                                            |                                                                                                                                                          |  Loss before provision for income taxes | (365,473)                                                                                                                                                |            | (484,269)                                                                                                                                                |            | (2,365,599)                                                                                             |
|  Provision for income taxes                | -                                                                                                                                                        |                                         | -                                                                                                                                                   |            |                                                                                                                                                     |
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            |                                                                                                    |
|                                            |                                                                                                                                                          |  Net loss                               | $                   (365,473)                                  |            | $                   (484,269)                                  |            | $                (2,365,599) |
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            |                                                                                                    |
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            |                                                                                                    |
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            |                                                                                                    |
|  Basic and diluted loss per common share   | $                         (0.03)      |                                         | $                         (0.21) |            | $                         (0.50) |
|                                            |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |            |                                                                                                    |
|  Basic and diluted weighted average   |                                                                                                                                                          |                                         |                                                                                                                                                     |            |                                                                                                                                                     |
|                                            |  common shares outstanding                                                                                                                               | 13,693,977                              |                                                                                                                                                     | 2,307,327  |                                                                                                                                                     | 4,772,034  |

10

----

|  |  |  |  |  |  |  |  |
|--|--|--|--|--|--|--|--|

**FRIENDLY ENERGY CORP.**

**(An Exploration Stage Company)**

**STATEMENT OF STOCKHOLDERS DEFICIT**
|                                                                                          |                         |                       |               |              |                     |           |               |  |  |
|------------------------------------------------------------------------------------------|-------------------------|-----------------------|---------------|--------------|---------------------|-----------|---------------|--|--|
|                                                                                     |                    |        |          |         |  Additional    |      |  Total   |
|                                                                                     |  Common Stock      |  Preferred Stock |  Paid-in | Accumulated  |  Stockholders' |
|                                                                                     |  Shares (Restated) |  Amount          |  Shares  |  Amount | Capital             | Deficit   | Deficit       |
| Balance at January 7, 1993 (Date of inception)                                           | 0                  | $0               | 0        | $0      | $0             | $0   | $0       |
| Common shares issued to officers & directors for cash, $0.016 per share                  | 2,550              | 3                | 0        | 0       | 997            | 0    | 1,000    |
| Net loss                                                                                 | 0                  | 0                | 0        | 0       | 0              | (1,000)   | (1,000)       |
| Balance at December 31, 1993, 1994, and 1995                                             | 2,550              | 3                | 0        | 0       | 997            | (1,000)   | 0        |
|                                                                                     |                    |                  |          |         |                |      |          |
| Common shares cancelled                                                                  | (2,550)                 | (3)                   | 0        | 0       | 3              | 0    | 0        |
| Common shares issued for cash, $0.00 per share                                           | 100,000            | 100              | 0        | 0       | (90)                | 0    | 10       |
| Conversion to preferred stock                                                            | (20,000)                | (20)                  | 50,000   | 50      | (30)                | 0    | 0        |
| Net loss                                                                                 | 0                  | 0                | 0        | 0       | 0              | (10)      | (10)          |
| Balance at December 31, 1996                                                             | 80,000             | 80               | 50,000   | 50      | 880            | (1,010)   | 0        |
|                                                                                     |                    |                  |          |         |                |      |          |
| Common shares issued relating to spin-out                                                | 609                | 1                | 0        | 0       | (1)                 | 0    | 0        |
| Common shares issued for cash, $0.80 per share                                           | 1,500              | 1                | 0        | 0       | 29,999         | 0    | 30,000   |
| Common shares issued to officers and directors for cash, $0.685 per share                | 1,750              | 2                | 0        | 0       | 29,998         | 0    | 30,000   |
| Preferred shares issued to officers and directors for services, $0.04 per share          | 0                  | 0                | 750,000  | 750     | 29,250         | 0    | 30,000   |
| Net loss                                                                                 | 0                  | 0                | 0        | 0       | 0              | (63,266)  | (63,266)      |
| Balance at December 31, 1997                                                             | 83,859             | 84               | 800,000  | 800     | 90,126         | (64,276)  | 26,734   |
|                                                                                     |                    |                  |          |         |                |      |          |
| Common shares issued for cash, $1.74 per share                                           | 390                | 0                | 0        | 0       | 17,000         | 0    | 17,000   |
| Common shares issued to officers and directors for services, $0.004                      | 105,000            | 105              | 0        | 0       | 10,395         |      | 10,500   |
| Conversion of preferred stock                                                            | 320,000            | 320              | (800,000)     | (800)        | 480            | 0    | 0        |
| Net loss                                                                                 | 0                  | 0                | 0        | 0       | 0              | (33,234)  | (33,234)      |
| Balance at December 31, 1998                                                             | 509,249            | 509              | 0        | 0       | 118,001        | (97,510)  | 21,000   |
|                                                                                     |                    |                  |          |         |                |      |          |
| Cancellation of common stock                                                             | (1,850)                 | (2)                   | 0        | 0       | 2              | 0    | 0        |
| Preferred shares issued for debt settlement, $3.69 per share                             | 0                  | 0                | 146,883  | 147     | 541,853        | 0    | 542,000  |
| Preferred shares issued for services, $3.69 per share                                    | 0                  | 0                | 5,000    | 5       | 18,445         | 0    | 18,450   |
| Net loss                                                                                 | 0                  | 0                | 0        | 0       | 0              | (556,309) | (556,309)     |
| Balance at December 31, 1999                                                             | 507,399            | 507              | 151,883  | 152     | 678,301        | (653,819) | 25,141   |
|                                                                                     |                    |                  |          |         |                |      |          |
| Preferred shares issued for debt settlement, $3.69 per share                             | 0                  | 0                | 174,798  | 175     | 644,825        | 0    | 645,000  |
| Issuance of stock related to merger with Friendly Energy Services, Inc., $3.69 per share | 0                  | 0                | 120,000  | 120     | 442,680        | 0    | 442,800  |

11

----

|                                                                                 |                 |             |                 |             |                 |             |               |  |  |
|---------------------------------------------------------------------------------|-----------------|-------------|-----------------|-------------|-----------------|-------------|---------------|--|--|
| Preferred shares issued for services, $3.69 per share                           | 0          | 0      | 37,500     | 37     | 138,338    | 0      | 138,375  |
| Net loss                                                                        | 0          | 0      | 0          | 0      | 0          | (914,511)   | (914,511)     |
| Balance at December 31, 2000                                                    | 507,399    | 507    | 484,181    | 484    | 1,904,144  | (1,568,330) | 336,805  |
|                                                                            |            |        |            |        |            |        |          |
| Net loss                                                                        | 0          | 0      | 0          | 0      | 0          | (584,851)   | (584,851)     |
| Balance at December 31, 2001                                                    | 507,399    | 507    | 484,181    | 484    | 1,904,144  | (2,153,181) | (248,046)     |
|                                                                            |            |        |            |        |            |        |          |
| Preferred shares issued for debt settlement, $3.69 per share                    | 0          | 0      | 2,973,080  | 2,973  | 145,681    | 0      | 148,654  |
| Net loss                                                                        | 0          | 0      | 0          | 0      | 0          | (12,371)    | (12,371)      |
| Balance at December 31, 2002                                                    | 507,399    | 507    | 3,457,261  | 3,457  | 2,049,825  | (2,165,552) | (111,763)     |
|                                                                            |            |        |            |        |            |        |          |
| Net loss                                                                        | 0          | 0      | -          | 0      | 0          | (24,215)    | (24,215)      |
| Balance, December 31, 2003                                                      | 507,399    | 507    | 3,457,261  | 3,457  | 2,049,825  | (2,189,767) | (135,978)     |
| Net loss                                                                        | 0          | 0      | 0          | 0      | 0          | (11,795)    | (11,795)      |
| Balance, December 31, 2004                                                      | 507,399    | 507    | 3,457,261  | 3,457  | 2,049,825  | (2,201,562) | (147,773)     |
|                                                                            |            |        |            |        |            |        |          |
| Common shares issued for cash, $0.025                                           | 16,000     | 16     | 0          | 0      | 9,984      | 0      | 10,000   |
| Common shares issued for servicees, $0.05 per share                             | 10,000     | 10     | 0          | 0      | 12,490     | 0      | 12,500   |
| Common shares issued to officers and directors for services, $0.04 per share    | 20,000     | 20     | 0          | 0      | 19,980     | 0      | 20,000   |
| Preferred shares issued to officers and directors for services, $0.40 per share | 0          | 0      | 450,000    | 450    | 179,550    | 0      | 180,000  |
| Conversion of preferred stock                                                   | 789,680    | 790    | (1,974,200)     | (1,974)     | 1,185      | 0      | 0        |
| Issuance of stock options to two officers                                       | 0          | 0      | 0          | 0      | 24,929     | 0      | 24,929   |
| Net loss                                                                        | 0          | 0      | -          | 0      | 0          | (691,271)   | (691,271)     |
| Balance, December 31, 2005                                                      | 1,343,079  | 1,343  | 1,933,061  | 1,933  | 2,297,942  | (2,892,833) | (591,615)     |
|                                                                            |            |        |            |        |            |        |          |
| Common shares issued for cash, $0.05                                            | 20,000     | 20     | -          | -      | 24,980     |        | 25,000   |
| Conversion of preferred stock                                                   | 380,677    | 381    | (951,692)       | (952)       | 571        | -      | -        |
| Issuance of stock options to 2 officers (2nd half vested)                       | -          | -      | -          | -      | 24,929     | -      | 24,929   |
| Preferred shares issued for debt settlement, $0.195 per share                   | -          | -      | 278,554    | 279    | 54,039     | -      | 54,318   |
| Net Loss                                                                        | -          | -      | -          | -      | -          | (824,586)   | (824,586)     |
|                                                                            |            |        |            |        |            |        |          |
| Balance, December 31, 2006                                                      | 1,743,756  | 1,744  | 1,259,923  | 1,260  | 2,402,461  | (3,717,419) | (1,311,954)   |
|                                                                            |            |        |            |        |            |        |          |
| Preferred shares issued for debt settlement, $0.090 per share                   | -          | -      | 5,222,222  | 5,222  | 464,778    | -      | 470,000  |
| Common shares issued for notes $0.020                                           | 732,000    | 732    | -          | -      | 318,268    |        | 319,000  |
| Issuance of stock options to 2 officers (vested)                                | -          | -      | -          | -      | 93,484     | -      | 93,484   |
| Common shares issued for cash, $0.05                                            | 20,000     | 20     | -          | -      | 24,980     |        | 25,000   |
| Common shares issued for cash, $0.025                                           | 16,000     | 16     | -          | -      | 9,964      |        | 9,980    |
| Preferred shares issued to officers and directors for services, $0.10 per share | -          | -      | 3,740,000  | 3,740  | 370,260    | -      | 374,000  |
| Conversion of preferred stock                                                   | 270,516    | 271    | (676,289)       | (676)       | 406        | -      | -        |
| Net Loss                                                                        | -          | -      | -          | -      | -          | (484,269)   | (484,269)     |
| Balance, December 31, 2007                                                      | 2,782,271  | 2,782  | 9,545,856  | 9,546  | 3,684,601  | (4,201,688) | (504,759)     |
|                                                                            |            |        |            |        |            |        |          |

12

----

|                                                                                                  |                  |              |                 |             |                 |             |           |  |  |
|--------------------------------------------------------------------------------------------------|------------------|--------------|-----------------|-------------|-----------------|-------------|-----------|--|--|
| Common shares issued relating to reverse stock split (shareholders with less than 25 old shares) | 979         | 1       | -          | -      | (1)             | -      | -    |
| Conversion of preferred stock                                                                    | 18,785,540  | 18,786  | (1,878,554)     | (1,879)     | (16,907)        | -      | -    |
| Net Loss                                                                                         | -           | -       | -          | -      | -          | (365,473)   | (365,473) |
| Balance, December 31, 2008                                                                       | 21,568,790  | 21,569  | 7,667,302  | 7,667  | 3,667,693  | (4,567,161) | (870,232) |

 

13

----

**FRIENDLY ENERGY CORP.**

**(An Exploration Stage Company)**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**
|                                             |                                                                                                                                                 |                                                                                                 |                                                                                                                                                 |                                                                                                 |                                                                                                                                                 |                                                                                 |                          |                 |                             |
|---------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------|--------------------------|-----------------|-----------------------------|
|                                        |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                            |                     |            |  From Inception   |
|                                        |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                            |                     |            |  (February 11, 2005)   |
|                                        |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                                            |  For the year ended                                                                                                                        |                                                                            |  For the year ended |            |  through               |
|                                        |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                                            |  December 31, 2008                                                                                                                         |                                                                            |  December 31, 2007  |            |  December 31, 2008     |
|  Cash flows from operating activities: |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            |
|                                        |  Net loss                                                                                                                                  | $               (365,473) |                                                                                                                                            | $               (484,269) |                                                                                                                                            | $            (2,364,599) |
|                                        |  Adjustments to reconcile net loss to                                                                                                      |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                            |
|                                        |   net cash used by operating activities:                                                                                              |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                            |
|                                        |                                                                                                                                            |  Depreciation                                                                              | 822                                                                                                                                        |                                                                                            | 1,004                                                                                                                                      |                                                                            | 8,897               |
|                                        |                                                                                                                                            |  Stock Based Compensation                                                                  | -                                                                                                                                          |                                                                                            | 93,484                                                                                                                                     |                                                                            | 574,302             |
|                                        |                                                                                                                                            |  Impairment Loss                                                                           | -                                                                                                                                          |                                                                                            | -                                                                                                                                          |                                                                            | -                   |
|                                        |  Changes in operating assets and liabilities:                                                                                              |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            | -                                                                          |
|                                        |                                                                                                                                            |  Accounts Payable                                                                     | (81,478)                                                                                                                                        |                                                                                            | 34,672                                                                                                                                     |                                                                            | 2,084               |
|                                        |                                                                                                                                            |  Advances                                                                                  | -                                                                                                                                          |                                                                                            | 83                                                                                                                                         |                                                                            | (361)                    |
|                                        |                                                                                                                                            |  Judgement payable                                                                         | 20,531                                                                                                                                     |                                                                                            | 18,585                                                                                                                                     |                                                                            | 216,605             |
|                                        |                                                                                                                                            |  Interest Payable                                                                          | 12,036                                                                                                                                     |                                                                                            | 74,428                                                                                                                                     |                                                                            | 132,667             |
|                                        |                                                                                                                                            |  Notes                                                                                     | -                                                                                                                                          |                                                                                            | (319,000)                                                                                                                                       |                                                                            | (319,000)                |
|                                        |                                                                                                                                            |  Payroll Liabilities                                                                       | 13,524                                                                                                                                     |                                                                                            | 12,800                                                                                                                                     |                                                                            | 59,341              |
|                                        |                                                                                                                                            |  Deferred Salaries                                                                         | 240,000                                                                                                                                    |                                                                                            | 241,000                                                                                                                                    |                                                                            | 588,000             |
|                                        |                                                                                                                                            |  Loans Payable                                                                             | 307,570                                                                                                                                    |                                                                                            | 18,588                                                                                                                                     |                                                                            | 359,139             |
|                                        |                                                                                                                                            |  Loans Payable-Related Parties                                                             | 21,195                                                                                                                                     |                                                                                            | (791)                                                                                                                                           |                                                                            | 21,195              |
|                                        |                                                                                                                                            |                                                                                            |  Net cash used by operating activities                                                                                                     | 168,727                                                                                    |                                                                                                                                            | (309,416)                                                                       |                     | (721,729)       |
|                                        |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                            |                     |            |                        |
|  Cash flows from investing activities: |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            |
|                                        |  Purchase of property and equipment                                                                                                        | -                                                                                          |                                                                                                                                            | -                                                                                          |                                                                                                                                            | (4,110)                                                                         |
|                                        |  Investment                                                                                                                                | -                                                                                          |                                                                                                                                            | -                                                                                          |                                                                                                                                            | (1,000)                                                                         |
|                                        |  Asher #1 Oil Well                                                                                                                         | 103,077                                                                                    |                                                                                                                                            | -                                                                                          |                                                                                                                                            | 0                                                                          |
|                                        |  Asher #2 Project                                                                                                                          | 5,008                                                                                      |                                                                                                                                            | (5,008)                                                                                         |                                                                                                                                            | 0                                                                          |
|                                        |  Red Oak Project                                                                                                                           | (242,000)                                                                                       |                                                                                                                                            |                                                                                            |                                                                                                                                            | (242,000)                                                                       |
|                                        |  Talpa Project                                                                                                                             | (50,000)                                                                                        |                                                                                                                                            |                                                                                            |                                                                                                                                            | (50,000)                                                                        |
|                                        |  West Peach Project                                                                                                                        | 15,035                                                                                     |                                                                                                                                            | (15,035)                                                                                        |                                                                                                                                            | (36,970)                                                                        |
|                                        |                                                                                                                                            |                                                                                            |  Net cash used by investing activities                                                                                                     | (168,880)                                                                                       |                                                                                                                                            | (20,043)                                                                        |                     | (334,080)       |
|                                        |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                            |                     |            |                        |
|  Cash flows from financing activities: |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            |
|                                        |  Proceeds from issuance of common stock                                                                                                    | -                                                                                          |                                                                                                                                            | 328,980                                                                                    |                                                                                                                                            | 364,520                                                                    |
|                                        |  Proceeds from issuance of preferred stock                                                                                                 |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            | 704,318                                                                    |
|                                        |  Proceeds on borrowings from related parties                                                                                               |                                                                                            |                                                                                                                                            | -                                                                                          |                                                                                                                                            | (12,914)                                                                        |
|                                        |                                                                                                                                            |                                                                                            |  Net cash provided by financing activities                                                                                            | -                                                                                          |                                                                                                                                            | 328,980                                                                    |                     | 1,055,924  |
|                                        |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                            |                     |            |                        |
|  Net increase in cash                  | (153)                                                                                                                                           |                                                                                            | (479)                                                                                                                                           |                                                                                            | 115                                                                                                                                        |
|                                        |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                            |                     |            |                        |
|  Cash, beginning of period             | 268                                                                                                                                        |                                                                                            | 748                                                                                                                                        |                                                                                            | -                                                                                                                                          |
|                                        |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                                            |                                                                                                                                            |                                                                            |                     |            |                        |
|  Cash, end of period                   | $                       115  |                                                                                            | $                       269  |                                                                                            | $                       115  |

14

----

FRIENDLY ENERGY EXPLORATION

 (AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS - 2008

1.

DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES

Description of business and history – Friendly Energy Exploration, Nevada corporation, (hereinafter referred to as the “Company” or “Friendly Energy”) was incorporated in the State of Nevada on January 7, 1993.  The company was originally in the business of selling electric power and related services to small and medium sized businesses in a newly deregulated California market.  The Company is now in the business of oil and gas exploration.  The Company operations have been limited to general administrative operations, participation in the drilling of three oil wells, and participation in development of three oil and gas prospects.  It is considered a development stage company in accordance with Statement of Financial Accounting Standards No. 7.  The Company entered the oil and gas exploration business in February 2005, so the cumulative columns in the financial statements include activities from that date.

Management of Company – The company filed its articles of incorporation with the California Secretary of State on January 7, 1993, indicating G. Alfred Roensch as the incorporator.  

The company filed its annual list of officers and directors with the California Secretary of State on January 7, 1993, indicating its President is G. Alfred Roensch and its Secretary and Treasurer is Owen Stephenson and    were both listed as directors on this filing.  The current President is Douglas Tallant and the current Secretary and Treasurer is Donald Trapp.

Going concern – The Company incurred net losses of approximately $2,365,599 from the period of February 1, 2005 (date of entering the oil and gas exploration business) through December 31, 2008 and has commenced its operations on a very limited basis. However, it is still in the development stages, raising substantial doubt about the Company’s ability to continue as a going concern.  The Company may seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives.

The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company’s plan.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Year end – The Company’s yearend is December 31.

Principles of consolidation – The consolidated financial statements include the accounts of the Company and its subsidiaries.  All significant intercompany transactions and balances have been eliminated.

Use of estimates – The preparation of consolidated 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 revenue and expenses during the reporting period.  Actual results could differ from those estimates.

Property and equipment – Property and equipment are stated at cost less accumulated depreciation.  Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are generally 3 to 27 years.  The amounts of depreciation provided are sufficient to charge the cost of the related assets to operations over their estimated useful lives.  

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

15

----

Income taxes – The Company accounts for its income taxes in accordance with Statement of Financial Accounting Standards No. 109, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

Management feels the Company will have a net operating loss carryover to be used for future years.  Such losses may not be fully deductible due to the significant amounts of non-cash service costs.  The Company has not established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization. 

Net loss per common share – The Company computes net loss per share in accordance with SFAS No. 128, Earnings per Share (SFAS 128) and SEC Staff Accounting Bulletin No. 98 (SAB 98).  Under the provisions of SFAS 128 and SAB 98, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period.  The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is antidilutive.  For the period from February 1, 2005 through December 31, 2007, no options and warrants were excluded from the computation of diluted earnings per share because their effect would be antidilutive.  

Stock-Based Compensation -- The Company follows SFAS No. 123(R), Accounting for Stock-Based Compensation, and accordingly has expensed  the fair value of the stock options which vested during the period and is reflected in the net loss for the period. 

The following table represents the effect on net loss and loss per share for the Company. 
|                                         |              |                 |
|-----------------------------------------|--------------|-----------------|
|                                    | 2008         | 2007            |
|                                    |         |            |
| Net loss as reported                    | $

(365,473) | $

(484,269)    |
|                                    |         |            |
| Add: Stock-based employee compensation  |         |            |
| expense included in reported loss,      |         |            |
| net of related tax effects              | $

-    | $

62,322  |
|                                    |         |            |
| Deduct: Total stock-based employee      |         |            |
| compensation expense determined under   |         |            |
| fair value based methods of all awards, |         |            |
| net of related tax effects.             | $

-    | $

(62,322)     |
|                                    |         |            |
| Proforma net loss                       | $

(365,473) | $

(484,269)    |
|                                    |         |            |
| Net loss per common share               | $

(0.01)    | $

(0.01)       |
|                                    |         |            |
| Basic and diluted loss, pro forma       | $

(0.01)    | $

(0.01)       |

Concentration of risk – A significant amount of the Company’s assets and resources are currently dependent on the financial support of Douglas Tallant and Donald Trapp.  Should they determine to no longer finance the operations of the company before new capital is raised, it may be unlikely for the company to continue.

Revenue recognition – The Company has had revenues of $16,053 to date from its operations.  Revenue is recognized as it is received.

16

----

Inventory valuation – At this time the Company is not expected to hold inventory.

Legal Procedures – The Company is not aware of, nor is it involved in any pending legal proceedings.  

New accounting pronouncements – 

In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment of ARB No. 43, Chapter 4. SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handing costs, and spoilage. This statement requires that those items be recognized as current period charges regardless of whether they meet the criterion of "so abnormal" which was the criterion specified in ARB No. 43. In addition, this Statement requires that allocation of fixed production overheads to the cost of production be based on normal capacity of the production facilities. This pronouncement is effective for the Company beginning October 1, 2005. The Company expects no impact on adopting this new standard. 

In December 2004, the FASB issued SFAS No. 123 (revised 2004). Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The new standard will be effective for the Company in the first interim or annual reporting period beginning after December 15, 2005. The Company expects the adoption of this standard will not have a material impact on its financial statements. 

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29 "effective for non-monetary asset exchanges occurring in the fiscal year beginning January 1, 2006. SFAS No. 153 requires that exchanges of productive assets be accounted for at fair value unless fair value cannot be reasonably determined or the transaction lacks commercial substance. SFAS No. 153 is not expected to have a material effect on the company's Consolidated Financial Statements.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections” (“SFAS 154”). SFAS 154 replaces Accounting Principles Board Opinion No. 20 “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements-An Amendment of APB Opinion No. 28.” SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. SFAS 154 requires “retrospective application” of the direct effect of a voluntary change in accounting principle to prior periods’ financial statements where it is practicable to do so. SFAS 154 also redefines the term “restatement” to mean the correction of an error by revising previously issued financial statements. SFAS 154 is effective for accounting changes and error corrections made in fiscal years beginning after December 15, 2005 unless adopted early. We do not expect the adoption of SFAS 154 to have a material impact on its consolidated financial position, results of operations or cash flows, except to the extent that the statement subsequently requires retrospective application of a future item.

In February 2006, the FASB issued Statement of Financial Accounting Standards No. 155,*Accounting for Certain Hybrid Financial Instruments* (“SFAS No. 155”), which amends Statement of Financial Accounting Standards No. 133,*Accounting for Derivative Instruments and Hedging Activities* (“SFAS No. 133”) and Statement of Financial Accounting Standards No. 140,*Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities* (“SFAS No. 140”). SFAS No. 155 permits fair value measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or hybrid financial instruments containing embedded derivatives.   We expect the adoption of SFAS 155 to have a material impact on its consolidated financial position, results of operations or cash flows.

17

----

In March 2006, the FASB issued Statement of Financial Accounting Standards No. 156,*Accounting for Servicing of Financial Assets*(“SFAS No. 156”), which amends FASB Statement No. 140 (“SFAS No. 140”). SFAS 156 may be adopted as early as January 1, 2006, for calendar year-end entities, provided that no interim financial statements have been issued. Those not choosing to early adopt are required to apply the provisions as of the beginning of the first fiscal year that begins after September 15, 2006 (e.g., January 1, 2007, for calendar year-end entities).  The intention of the new statement is to simplify accounting for separately recognized servicing assets and liabilities, such as those common with mortgage securitization activities, as well as to simplify efforts to obtain hedge-like accounting.  Specifically, the FASB said FAS No. 156 permits a servicer using derivative financial instruments to report both the derivative financial instrument and related servicing asset or liability by using a consistent measurement attribute, or fair value.  We do not expect the adoption of SFAS 155 to have a material impact on its consolidated financial position, results of operations or cash flows.

2.    FIXED ASSETS

Fixed assets consist of the following as of December 31, 2007 and 2006:
|                                                |                  |                  |
|------------------------------------------------|------------------|------------------|
|                                           | 2008             | 2007             |
| Furniture and fixtures                         | $

20,102   | $

20,102   |
| Computers and equipment                        | $

25,726   | $

25,726   |
|                                           | $

45,828   | $

45,828   |
| Less: accumulated depreciation                 | $

(44,184)      | $

(43,362)      |
| Net Furniture, fixtures, computers & equipment | $

1,644    | $

2,466    |
| LLC Investment                                 | $

1,000    | $

1,000    |
| West Peach Exploration Costs                   | $

36,970   | $

52,005   |
| Asher #1 Oil Well                              | $

-        | $

103,077  |
| Asher #2 Exploration Costs                     | $

-        | $

5,008    |
| Red Oak Oil Well                               | $

242,000  | $

-        |
| Talpa Prospect                                 | $

50,000   | $

-        |
| Total Fixed Assets                             | $

331,614  | $

163,556  |

The company will use percentage depletion as amortization for the Asher #1 Oil Well.  While there was a small amount of revenue from the well in 2007, no depletion is taken in 2007 because depletion is limited to 65% of taxable income from all sources and our taxable income for 2007 is zero.

3.    RELATED PARTY TRANSACTIONS

In 2008, the officers agreed with the Company to defer their salaries totaling $240,000, see note 7.

 

As of December 31, 2008 and 2007, loans payable from related parties consists of the following:
|                                      |                                                          |                                                                     |
|--------------------------------------|----------------------------------------------------------|---------------------------------------------------------------------|
|                                 | 2008                                                     | 2007                                                                |
| Notes payable  from officers of |                                                     |                                                                |
| the Company bearing interest at 8%   |                                                     |                                                                |
| unsecured and due on demand          |  $        28,281 |  $          7,086 |

                    

4.     OTHER CURRENT LIABILITIES

The company has accrued for unpaid federal payroll taxes in the amounts of $96,609 and**$**83,085 for  the  years ended December 31, 2008 and 2007, respectively.  $37,268 is owed from 2000 and 2001 unpaid federal payroll taxes; the Company has filed the payroll taxes with the Internal Revenue Service.  $45,817 is owed for accrued payroll taxes on deferred salaries; the Company has yet to file the payroll tax forms with the Internal Revenue Service or related state taxing authorities.   

18

----

The company has accrued deferred salaries owed to three officers in the amount of $240,000 and 241,000 for the years ended December 31, 2008 and 2007, respectively.  

The company has accrued interest in the amount of $144,697 and $143,710 for the years ended December 31, 2008 and 2007, respectively.  The accrued interest includes interest on unpaid payroll taxes and related party loans. 

The company borrowed $18,588 in 2007 from another company for the drilling and completion of wells and other operational expenses.  An additional $288,982 was borrowed in 2008.    

5.   STOCKHOLDERS’ DEFICIT

        Common Shares:  As of December 31, 2008 and 2007, there were 21,568,790 and 2,782,271 shares of common stock outstanding (restated for 25-for-1 reverse split in March 2008). 

a)

In 1993, the company issued 63,750 shares of common stock for cash at $0.016 per share to officers and directors. 

b)

On June 2, 1996, in connection with the acquisition of the Company by Granite Development Corporation   ("Granite"), the Company cancelled all outstanding shares of common  stock and issued a total of 2,500,000 shares to Granite for  consideration of $10.

c)

In 1996, 500,000 common shares were converted to 50,000 shares of preferred stock.  

d)

In 1997, the Company issued 15,223 shares of common stock relating to the spin out from Granite Development Corporation. 

e)

On April 21, 1997, the company issued 21,875 shares of common stock for cash at $0.685 per share to officers and directors.

f)

On July 31, 1997, the company issued 37,500 shares of common stock for cash at $0.80 per share.

g)

On August 14, 1997, the company issued 21,875 shares of common stock for cash at $0.685 per share to officers and directors. 

h)

From February 18, 1998, through March 16, 1998, a total of 9,750 shares of common stock were sold for cash pursuant to Regulation D, Rule 504 offering at $1.74  per share.  

i)

On October 29, 1998, 625,000 shares of common stock were issued for cash at $0.004. 

j)

On October 30, 1998, 8,000,000 shares of common stock were issued as a result of the conversion of 800,000  preferred shares.                            

 

k)

On November 11, 1998, the company issued 2,000,000 shares of common stock for cash at $0.004 per share.

l)

During 1999, the company cancelled 46,250 shares of common stock. 

m)

On March 29, 2005, 1,200,000 shares of the company’s preferred stock were converted to 1,200,000 shares of common stock.

n)

On May 28, 2005, 528,000 shares of the company’s preferred stock were converted to 5,280,000 shares of common stock.

o)

On June 22, 2005, 122,000 shares of the company’s preferred stock were converted to 1,220,000 shares of common stock.

p)

On July 1, 2005, the company issued 250,000 shares of common stock at $0.05 per share for services.  

q)

On July 7, 2005, 5000 shares of the company’s preferred stock were converted to 50,000 shares of common stock.

r)

On August 8, 2005,  300,000 shares of the company’s preferred stock were converted to 3,000,000 shares of common stock.

s)

On August 23, 2005, 150,000 shares of the company’s preferred stock were converted to 1,500,000 shares of common stock.

t)

On August 30, 2005,  the company issued 500,000 shares of  common stock  as a sign-up bonus to an officer of the company  valued at $0.04 per share. 

u)

On September 19, 2005, 146,200 shares of the company’s preferred stock were converted to 1,462,000 shares of common stock.

v)

On September 29, 2005, 150,000 shares of the company’s preferred stock were converted to 1,500,000 shares of common stock.

w)

On October 14, 2005, 3,000 shares of the company’s preferred stock were converted to 30,000 shares of common stock.

x)

 On October 31, 2005, the Company issued 400,000 shares of common stock for cash at $0.025 per share.   

y)

On November 3, 2005, 300,000 shares of the company’s preferred stock were converted to 3,000,000 shares of common stock.

19

----

z)

On December 5, 2005, 150,000 shares of the company’s preferred stock were converted to 1,500,000 shares of common stock.

aa)

On January 9, 2006, 150,000 shares of the company’s preferred stock were converted to 1,500,000 shares of common stock.

bb)

On February 10, 2006, 150,000 shares of the company’s preferred stock were converted to 1,500,000 shares of common stock.

cc)

On March 1, 2006, 150,000 shares of the company’s preferred stock were converted to 1,500,000 shares of common stock.

dd)

On March 6, 2006, 496,692 shares of the company’s preferred stock were converted to 4,966,920 shares of common stock.

ee)

On July 18, 2006, the Company issued 500,000 shares of common stock for cash at $0.050 per share.

ff)

On August 11, 2006, 5,000 shares of the company’s preferred stock were converted to 50,000 shares of common stock.

gg)

On February 22, 2007, the Company issued 500,000 shares of common stock for cash at $0.050 per share.

hh)

On May 8, 2007, 350,000 shares of the company’s preferred stock were converted to 3,500,000 shares of common stock.

ii)

On June 1, 2007, the Company issued 8,900,000 shares of common stock for notes at $0.02 per share.

jj)

On July 17, 2007, 100,000 shares of the company’s preferred stock were converted to 1,000,000 shares of common stock.

kk)

On August 16, 2007, the Company issued 4,700,000 shares of common stock for notes at $0.02 per share.

ll)

On August 30, 2007, 226,289 shares of the company’s preferred stock were converted to 2,262,890 shares of common stock.

mm)

On October 1, 2007, the Company issued 4,700,000 shares of common stock for notes at $0.02 per share.

nn)

On October 4, 2007, the Company issued 400,000 shares of common stock for cash at $0.025 per share.

Preferred Shares:   Each share of preferred stock is convertible into ten shares of common stock and has voting rights equal to ten shares of common stock.  The board of directors has not specified any other rights or privileges with respect to the preferred stock.  As of December 31, 2008 and 2007 there were 7,667,302 and 5,905,856 shares of preferred stock outstanding.

a)

 During 1996, 500,000 common shares were converted to 50,000 shares of preferred stock.  

b)

 During 1997 the company issued 750,000 shares of preferred stock to officers and directors for services valued at $0.04 per share.  

c)

On October 30, 1998, 800,000 shares of preferred stock were converted to 8,000,000 shares of common stock.        

d)

On February 26, 1999, the company issued 24,390 shares of preferred stock in satisfaction of debt valued at $3.69 per share.

e)

On April 30, 1999, the company issued 16,290 shares of preferred stock in stock in satisfaction of debt valued at $3.69 per share. 

f)

On April 30, 1999, the company issued 21,680 shares of preferred stock in stock in satisfaction of debt valued at $3.69 per share.

g)

 On September 30, 1999, the company issued 33,062 shares of preferred stock in stock in satisfaction of debt valued at $3.69 per share. 

h)

On December 30, 1999, the company issued 51,491 shares of preferred stock in stock in satisfaction of debt valued at $3.69 per share.

i)

On December 22, 1999, the company issued 5,000 shares of preferred stock for a yearend bonus valued at $3.69 per share.                   

j)

On January 30, 2000, the company issued 2,500 shares of preferred stock for a sign up bonus valued at $3.69 per share.                   

k)

On March 31, 2000, the company issued 56,911 shares of preferred stock in stock in satisfaction of debt valued at $3.69 per share.

l)

On April 21, 2000, the company issued 10,000 shares of preferred stock for services of an officer valued at $3.69 per share. 

m)

On May 1, 2000, the company issued 2,500 shares of preferred stock for a sign up bonus valued at $3.69 per share.  

n)

On May 1, 2000, the company issued 10,000 shares of preferred stock for a sign up bonus valued at $3.69 per share.  

o)

On June 30, 2000, the company issued 58,266 shares of preferred stock in stock in satisfaction of debt valued at $3.69 per share.

20

----

p)

On June 30, 2000, the company issued 2,500 shares of preferred stock for a sign up bonus valued at $3.69 per share.  

q)

On September 19, 2000, the company issued 100,000 shares in exchange for 100,000 shares of Friendly Energy Services Inc valued at $3.69 per share.  

r)

On September 19, 2000, the company issued 20,000 shares to employees of Friendly Energy Services Inc. relating to an assumed obligation from the merger with Friendly Energy Services Inc. valued at $3.69 per share.

s)

October 4, 2000, the company issued 59,621 shares of preferred stock in stock in satisfaction of debt valued at $3.69 per share.

t)

On October 16, 2000, the company issued 10,000 shares of preferred stock for a sign up bonus valued at $3.69 per share.  

u)

On January 8, 2002, the company issued 120,000 shares of preferred stock in stock in satisfaction of debt valued at $0.05 per share.

v)

On March 5, 2002, the company issued 701,200 shares of preferred stock in stock in satisfaction of debt valued at $0.05 per share.

w)

On March 5, 2002, the company issued 551,880 shares of preferred stock in stock in satisfaction of debt owed to an officer of the company valued at $0.05 per share.

x)

On June 6, 2002, the company issued 1,600,000shares of preferred stock in stock in satisfaction of debt valued at $0.05 per share.

y)

On April 21, 2005, the company issued 450,000 shares of preferred stock to two officers of the company for services valued at $0.40. 

z)

On September 29, 2006, the company issued 278,554 shares of preferred stock in stock in satisfaction of debt valued at $0.195 per share.

aa)

On March 10, 2007, the company issued 5,222,222 shares of preferred stock in stock in satisfaction of debt valued at $0.090 per share.

bb)

 On December 28, 2007, the company issued 3,740,000 shares of preferred stock to two officers of the company for services valued at $0.10. 

During 2008, as noted above in the common shares section, 1,878,554 shares of preferred stock were converted to 18,785,540 shares of common stock.

During 2000, 11,000 shares of preferred stock were cancelled.  As of December 31, 2008 the issue was not completely resolved and the stock agent had not received the returned share certificates.  Therefore the 11,000 shares are still reflected in the preferred stock balance. 

6.

STOCK OPTIONS

In 2008, the Company granted no stock options.  In 2007, the Company granted stock options for 7,500,000 common shares to its officers on December 28, 2007.   The option price is $0.010.  50% vest after six months from the date of the grant and the remaining 50% vest after one year.  All options expire ten years from the date of grant.  The Company may issue additional stock options in the future.           

The following table summarizes the Company’s stock option activity. 

Number

Weighted

of

Average

Shares

Exercise Price

Balance, December 31, 2005

1,000,000

$

.05

Options granted and assumed

1,500,000

.0625

Options expired

--

--

Options canceled

--

--

Options exercised

--

--

Balance, December 31, 2006

--

$

--

Options granted and assumed

7,500,000

.010

Options expired

--

--

Options canceled

--

--

21

----

Options exercised

--

--

Balance, Dec. 31, 2007 and Dec. 31, 2008

10,000,000

$

             .0219

The Company estimates the fair value of these options granted to the officers by using the Black-Scholes option pricing-model with the following assumptions used for grants in 2007 using specific grant dates; no dividend yield; expected volatility of 185%; risk free interest rates of 3.50%; and expected life of 10 years for all employee stock options. Accordingly, the Company valued the services under SFAS No. 123R relating to stock options for $74,787 as of December 31, 2007.  All of the options granted in 2006 vested in 2007; $62,322 was taken as an expense in 2007.

The following table summarizes information about options granted during the year ended December 31, 2007: 

Exercise Price

Equals, Exceeds or

Number of

is Less Than Mkt.

Weighted

Weighted

Options Granted

Price of Stock

Average

Range of

Average

During 2007

on Grant Date

Exercise Price

Exercise Price

Fair Value

--

Equals

$

--

$    --  to $ --

$             --

--

Exceeds

$

--

$     -- to $ --

$             --

7,500,000

Less Than

$

0.010

$0.010 to $0.010

$

0.010

7,500,000

$

0.010

$0.010 to $0.010

$

0.010

7.

COMMITMENTS AND CONTINGENCIES

Employment contracts –

Douglas Tallant - The Company entered into an employment agreement with Douglas Tallant effective January 1, 2007.  Pursuant to the terms of the agreement, Mr. Tallant is to be paid an annual salary of $180,000 in consideration of which Mr. Tallant agreed to act as the Company’s President.  The term of the agreement is for an indefinite period, unless otherwise terminated pursuant to the terms of the agreement.

Tim DeHerrera - The Company entered into an employment agreement with Tim DeHerrera effective January 1, 2007.  Pursuant to the terms of the agreement, Mr. Herrera is to be paid an annual salary of $12,000 in consideration of which Mr. Herrera agreed to act as the Company’s Vice President.  Mr. DeHerrera resigned on February 1, 2007. 

Donald Trapp - The Company entered into an employment agreement with Donald Trapp effective February 1, 2005.  Pursuant to the terms of the agreement, Mr. Trapp is to be paid an annual salary of $60,000 in consideration of which Mr. Trapp agreed to act as the Company’s Corporate Secretary and Treasurer.  The term of the agreement is for an indefinite period, unless otherwise terminated pursuant to the terms of the agreement.  

8.

LITIGATION

In 2005, an employee received a defaulted judgment against the Company concerning the case Bowers v. Friendly Energy Corporation, San Diego Superior Court Case No. 775084.  The default judgment in the principle sum of $434,211.50 was reduced to a principal amount of $110,000, with interest from October 13, 2000.   The transaction has been recorded on the financial statements along with accrued interest of  $86,074.  The total of $196,074 is reported in the liability section of the balance sheet. 

9.   SUBSEQUENT EVENTS

None.

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

There have been no disagreements with Friendly Energy Exploration’s auditors since formation of the company that require disclosure pursuant to Item 304(B) of Regulation S-K.

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

**Evaluation Of Disclosure Controls And Procedures**

Our Chief Executive Officer and our Chief Financial Officer, have performed an evaluation of the Company's disclosure controls and procedures, as that term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of December 31, 2008 and each has concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission's rules and forms and includes, without limitation, controls and procedures designed to insure that information required to be disclosed is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

 

**Management's Report On Internal Control Over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. and 15d-15(f) as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: 

 

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

 

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

 

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

 

Our process contains self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Under the supervision and with the participation of our management, including Our Chief Executive Officer and Chief Financial Officer, the Company conducted an assessment of the effectiveness of its our internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control — Integrated Framework”. 

 

Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2008. Management's assessment of the effectiveness of the Company's internal control over the financial reporting period ended December 31, 2008 has been audited by our auditors, an independent registered public accounting firm, as stated in their report included herein.

 

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

 

**Changes In Internal Controls**

No changes in the Company's internal controls over financial reporting occurred during the period ending December 31, 2008 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

**Code of Ethics**

We intend to adopt a code of ethics in 2009 that applies to our principle executive officer, principal financial officer, principle accounting officer or controller, other persons performing similar functions. We intend to post the text of our code of ethics on our website in connection with our "Investor Relations" materials. In addition, we intend to promptly disclose (1) the nature of any amendment to our code of ethics that applies to our principle executive officer principal financial officer, principle accounting officer or controller, other persons performing similar functions (2) the nature of any wavier, including an implicit wavier, from a provision of our code of ethics that is granted to one of these specific officers, the name of such person who is granted the waiver and the date of the waiver on our web site in the future.

We do not currently have a code of ethics as this is a new regulatory requirement and we are examining the various form and contents of other companies written code of ethics, discussing the merits and meaning of a code of ethics to determine the best form for our Company.

 

**ITEM 9B. OTHER INFORMATION.**

Friendly Energy Exploration does not believe there is other information required to be disclosed on Form 8-K during the fourth quarter of 2008.

**PART III**

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

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1. Officers and Directors of the Company
|                 |        |        |        |                                      |        |                       |
|-----------------|--------|--------|--------|--------------------------------------|--------|-----------------------|
|            |   |   |   |                                 |   | DATE OF APPOINTMENT   |
| NAME            |   | AGE    |   | POSITION                             |   | TO BOARD OF DIRECTORS |
| Douglas Tallant |   | 64     |   | President & Director                 |   | February 6, 2002      |
| Donald Trapp    |   | 69     |   | CFO, Secretary, Treasurer & Director |   | February 8, 2005      |

The chart above specifies Friendly Energy Exploration’s officers and directors as of December 31, 2008.

All directors of the Company hold office until the next annual meeting or until their successors have been elected and qualified. All officers serve at the discretion of the Board of Directors.

Douglas Tallant, President. Douglas Tallant was born and raised in Oklahoma. He has owned several businesses including the largest automobile dealership in Denver and physical therapy clinics in Denver and Oklahoma City. He has formed and managed several public companies including Entec, the developer of the original breathalyzer. Mr. Tallant has a Bachelor of Science degree in Mechanical Engineering from the University of Oklahoma.

Donald Trapp, Chief Financial Officer. He also serves as the corporation’s Secretary. He has worked as an engineer and financial analyst. He was the CFO of Infohighway International, Inc., an Internet service provider. He has bought and sold oil and gas leases, been the operator of two oil wells, and the General Partner of four oil & gas partnerships in New Mexico. Mr. Trapp has a Master of Science degree in Nuclear Engineering from M.I.T.

There are no familial relationships between our officers and directors.

**Section 16(a) Beneficial Ownership Reporting Compliance**. We believe that our officers, directors, and principal shareholders have not filed all reports required to be filed on, respectively, a Form 3 (Initial Statement of Beneficial Ownership of Securities), a Form 4 (Statement of Changes of Beneficial Ownership of Securities), or a Form 5 (Annual Statement of Beneficial Ownership of Securities).

 

**ITEM 11. EXECUTIVE COMPENSATION - RENUMERATION OF DIRECTORS AND OFFICERS.**

 
|                                      |                                     |                             |               |
|--------------------------------------|-------------------------------------|-----------------------------|---------------|
| Name of Individual or | Capacities in which       | Aggregate Remuneration |
| Identity of Group     | Remuneration was received | For 2008               | For 2007 |
| Douglas Tallant                      | President and Director              | 180,000                     | 180,000       |
| Donald Trapp                         | Director, Secretary & Treasurer     | 60,000                      | 60,000        |
| Tim DeHerrera                        | Vice President                      | 0                           | 1,000         |

The compensation was paid as deferred salaries.

**Stock Based Compensation** . During the year ended December 31, 2008, there was no stock based compensation paid.  There may be stock based compensation in 2009.

**Transactions with Promoters**

NONE

**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAND RELATED STOCKHOLDER MATTERS.**

The following table sets forth information as of December 31, 2008, with respect to the ownership of the Friendly Energy Exploration’s common stock by each person known by Friendly Energy Exploration to be the beneficial owner of more than five percent (5%) of Friendly Energy Exploration’s common stock, by each director and officer and by all officers and directors as a group.

24

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|                                                      |                        |                            |                            |
|------------------------------------------------------|------------------------|----------------------------|----------------------------|
| Name of                                              | Address of        | Amount of Shares | % of Outstanding |
| Beneficial Holder                                    | Beneficial Holder | Beneficially Owned    | Common Stock          |
|                                                 |                   |                       |                       |
| Douglas Tallant, President/Director                  | (1)                    | 1,620,673                  | 7.5%                       |
|                                                 |                   |                       |                       |
| Donald Trapp, CFO/Director                           | (1)                    | 1,182,502                  | 5.5%                       |
|                                                 |                   |                       |                       |
| All directors and Officers as a group                |                   | 2,803,175                  | 13.0%                      |
|                                                 |                   |                       |                       |
| (1) 502 North Division Street, Carson City, NV 89703 |                   |                       |

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. In accordance with Securities and Exchange Commission rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees. Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them. Currently there are only the stock options listed above issued or outstanding.

**Changes in Control.** Our management is not aware of any arrangements which may result in "changes in control" as that term is defined by the provisions of Item 404 of Regulation S-K.

 

**ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.**

NONE

All related party transactions are in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

**ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.**

 

1. Audit Fees: Aggregate fees billed for each of the last two (2) fiscal years for professional services rendered by the principal accountant for the audit of the annual financial statements and review of financial statements included on Form 10-K & 10-Q:

2008: $4,400

2007: $0

 

2. Audit-Related Fees: Aggregate fees billed in each of the last two (2) fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the financial statements and are not reported previously.

2008: $0

2007: $0

 

3. Tax Fees: Aggregate fees billed in each of the last two (2) fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

2008: $0

2007: $0

 

4. All Other Fees: Aggregate fees billed in each of the last two (2) fiscal years for products and services provided by the principal accountant, other than the services previously reported.

2008: $0

2007: $0

 

5. Audit Committee Pre-Approval Procedures. The Board of Directors has not, to date, appointed an Audit Committee.

**PART IV**

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

25

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Exhibit 31.1 - Amended Section 906 Certification of Periodic Report of the Chief Executive Officer.

 

Exhibit 31.2 - Amended Section 906 Certification of Periodic Report of the Chief Financial Officer.

 

Exhibit 32.1 - Amended Section 302 Certification of Periodic Report of the Chief Executive Officer.

 

Exhibit 32.2 - Amended Section 302 Certification of Periodic Report of the Chief Financial Officer.

The following documents are incorporated by reference in this Form 10-K:

NONE

**SIGNATURES**

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

FRIENDLY ENERGY EXPLORATION

Date: September 29, 2009
|                                                             |
|-------------------------------------------------------------|
| By: /s/ Douglas Tallant                                     |
| Douglas Tallant, Director and President |

 

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

Date : September 29, 2009
|                        |
|------------------------|
| By: /s/ Donald Trapp   |
| Donald Trapp, Director |

**Exhibit 31.1**

 

I, Douglas Tallant, certify that:

(1) I have reviewed this Annual Report on Form 10-K of Friendly Energy Exploration;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

(4) The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

26

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(c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

(5) The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date: September 29, 2009
|                                                                 |
|-----------------------------------------------------------------|
| /s/ Douglas Tallant                                             |
|     Douglas Tallant, Director and President |

**Exhibit 31.2**

 

I, Donald Trapp, certify that:

(1) I have reviewed this Annual Report on Form 10-K of Friendly Energy Exploration;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

(4) The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

27

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(5) The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date: September 29, 2009
|                                                |
|------------------------------------------------|
| /s/ Donald Trapp                               |
|     Donald Trapp, Director |

**Exhibit 32.1**

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES- OXLEY ACT OF 2002

In connection with the Annual Report of Friendly Energy Exploration (the "Company") on Form 10-K for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"),

I, Douglas Tallant, Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

IN WITNESS WHEREOF, the undersigned has executed this certification as of the 29th day September 2009.
|                                                             |
|-------------------------------------------------------------|
| /s/ Douglas Tallant                                         |
|     Douglas Tallant, President/Director |

**Exhibit 32.2**

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES- OXLEY ACT OF 2002

In connection with the Annual Report of Friendly Energy Exploration (the "Company") on Form 10-K for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"),

I, Donald Trapp, Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

IN WITNESS WHEREOF, the undersigned has executed this certification as of the 29th day of September 2009.
|                                                |
|------------------------------------------------|
| /s/ Donald Trapp                               |
|     Donald Trapp, Director |

28