**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**





x
            **ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934****For
                the fiscal year ended September 30, 2006**o
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934****For
                the transition period from ____________ to ______________**





**Commission
      File Number** **000-51753**





**CHINA
      WEST COAL ENERGY INC.**


(Exact
      name of Registrant as specified in its charter)





**NEVADA**
              (State
                or other jurisdiction of
              incorporation
                or organization)
            **75-2882833**
              (I.R.S.
                Employer Identification No.)





**Room
                2205, Suite A, Zhengxin Building,**
              **No.
                5, Gaoxin 1st Road, Gao Xin District,**
              **Xi’an,
                Shaanxi Province, People’s Republic of China**
              (Address
                of principal executive offices)
            **N/A**
              (Zip
                Code)





**(029)
                8209-1099**
              (Issuer's
                telephone number, including area code)Securities
                registered pursuant to Section 12(b) of the Act:Title
                of each class
              **None**
            Name
                of each exchange on which registered
              **None**Securities
                registered pursuant to Section 12(g) of the Act:Title
                of Class
              **Common
                Stock, $.001 par value**





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





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and will not be contained, to the
      best of Registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. o





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





Issuer's
      revenues for its most recent fiscal year: $923,129*




The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the Registrant on January 15, 2007 was approximately
      $18,228,800. The per share stock price for computational purposes was $1.05,
      based on the closing sale price per share for the Registrant's common stock
      on
      the OTC Bulletin Board on January 15, 2007. This value is not intended to be
      a
      representation as to the value or worth of the Registrant's common stock. The
      number of non-affiliates of the Registrant has been calculated by subtracting
      the number of shares held by persons affiliated with the Registrant from the
      number of outstanding shares.





The
      number of shares of the Registrant's common stock outstanding on January 15,
      2007 was 28,227,250.





Transitional
      Business Disclosure Format (Check One). Yes o No x




*
      Please see Explanatory Note on page A-2 regarding
      the financial information in this Form 10-KSB Annual Report.




















**TABLE
      OF CONTENTS**


**TO
      ANNUAL REPORT ON FORM 10-KSB**


**FOR
      YEAR ENDED SEPTEMBER 30, 2006**





**Page**Explanatory
                Note
            A-2Introductory
                Notes - Forward Looking Statements and Certain Terminology
            A-2








**PART
                I**Item
                1.
            Description
                of Business
            1Item
                2.
            Description
                of Property
            7Item
                3.
            Legal
                Proceedings
            7Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            8








**PART
                II**Item
                5.
            Market
                for Registrant's Common Equity and Related Stockholder
              Matters
            9Item
                6.
            Management's
                Discussion and Analysis
            11Item
                7.
            Financial
                Statements
            30Item
                8.
            Changes
                in and Disagreements on Accounting and Financial
                Disclosure
            32Item
                8A.
            Controls
                and Procedures
            32Item
                8B.
            Other
                Information
            32








**PART
                III**Item
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section
                16(a) of the Exchange Act
            33Item
                10.
            Executive
                Compensation
            34Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management
            36Item
                12.
            Certain
                Relationships and Related Transactions
            36Item
                13.
            Exhibits
            38Item
                14.
            Principal
                Accountant Fees and Services
            38**Signatures**
            
            40














(REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK)








A-1


**EXPLANATORY
      NOTE**





As
      previously reported in our Current Report on Form 8-K, on October 20, 2006,
      the
      Company, under its predecessor name Endo Networks, Inc. (“Endo”) and Endo’s
      prior majority shareholders, completed a share exchange transaction with Hangson
      Limited, a British Virgin Islands company (“Hangson”) and Hangson’s shareholders
      (the “Exchange”) that resulted in Hangson becoming a wholly-owned subsidiary of
      Endo and also resulted in a change of control of the Company. The Exchange
      w as
      accounted for as a reverse acquisition and recapitalization and, as a result,
      Endo’s (the legal acquirer) consolidated financial statements will, in
      substance, be those of Hangson (the accounting acquirer), with the assets and
      liabilities, and revenues and expenses, of Endo being included effective from
      the date of the Exchange. However,
      the Exchange was not completed until after the end of Company’s current fiscal
      year, September 30, 2006 and thus the Company was required to file this Annual
      Report on Form 10-KSB for Endo’s business activities prior to the Share Exchange
      and as of September 30, 2006. Although this Annual Report on Form 10-KSB
      includes descriptions of the Share Exchange and the business of the combined
      entity after the Closing of the Share Exchange, the financial statements and
      information included are only those of Endo, the legal acquirer. The financial
      statements for Hangson for the years ended December 31, 2004 and December 31,
      2005 were included with the Form 8-K filed on October 26, 2006 in connection
      with the Exchange. Further, the
      Company has also decided to adopt the fiscal year end of Hangson, its operating
      business after the share exchange transaction, and thus the Company will be
      filing an annual report on Form 10-KSB for its new fiscal year ending December
      31st, commencing with the Company’s annual report for the year ending December
      31, 2006.








**INTRODUCTORY
      NOTES - FORWARD LOOKING STATEMENTS AND CERTAIN TERMINOLOGY**





Some
      of
      the statements made by us in this Annual Report on Form 10-KSB are
      forward-looking in nature, including but not limited to, statements relating
      to
      our future revenue, product development, demand, acceptance and market share,
      gross margins, levels of research and development, our management's plans and
      objectives for our current and future operations, and other statements that
      are
      not historical facts. Forward-looking statements include, but are not limited
      to, statements that are not historical facts, and statements including forms
      of
      the words "intend", "believe", "will", "may", "could", "expect", "anticipate",
      "plan", "possible", and similar terms. Actual results could differ materially
      from the results implied by the forward looking statements due to a variety
      of
      factors, many of which are discussed throughout this Annual Report and
      particularly in the sections titled “Factors That May Affect Future Results” and
“Factors Affecting Business, Operating Results and Financial Condition”, both of
      which are included in the section titled “Management’s Discussion and Analysis
      of Plan of Operation”. Readers are cautioned not to place undue reliance on
      these forward-looking statements, which speak only as of the date hereof. We
      undertake no obligation to publicly release any revisions to these
      forward-looking statements that may reflect events or circumstances after the
      date hereof or to reflect the occurrence of unanticipated events. Factors that
      could cause actual results to differ materially from those expressed in any
      forward-looking statement made by us include, but are not limited to:





●  our
      ability to finance our activities and maintain our financial liquidity;


●  our
      ability to attract and retain qualified, knowledgeable employees;


●  the
      impact of general economic conditions on our business;


●  postponements,
      reductions, or cancellations in orders from new or existing
      customers;


●  the
      limited number of potential customers for our products;


●  the
      variability in gross margins on our products;


●  our
      ability to design and market new products successfully;


●  our
      failure to acquire new customers in the future;


●  deterioration
      of business and economic conditions in our markets;


●  intensely
      competitive industry conditions with increasing price competition;
      and


●  the
      rate
      of growth in the alternative fuel markets.




In
      this
      document, the words "we," "our," "ours," "us," and “Company” refer to China West
      Coal Energy Inc. and our subsidiaries.










A-2


**PART
      I**








**ITEM
      1.** **DESCRIPTION
      OF BUSINESS**





**History
      Of Endo Networks, Inc.**





China
      West Coal Energy Inc. (“CWCE” or the “Company”) was originally incorporated in
      Texas as “Discount Mortgage Services, Inc.” on July 11, 2000 and in September
      2001, the Company purchased Endo Networks, Inc., a corporation incorporated
      in
      Ontario, Canada on January 11, 2001 (“Endo Canada”). In November 2001, the
      Company changed its name to Endo Networks, Inc. and was redomiciled to the
      State
      of Nevada in December 2002.





Prior
      to
      the Share Exchange transaction described below, CWCE conducted through, and
      all
      of CWCE’s assets were contained within, Endo Canada, in which conceptual and
      software development was ongoing for approximately two years by the Company
      founders, through ongoing contract relationships with software development
      companies. The Company helped businesses acquire new customers and build sales
      and loyalty with existing customers. The Company used interactive technology
      such as touch screen kiosks, handheld computers, and websites, combined with
      promotional marketing tactics to filter large numbers of consumers, to find
      qualified prospects, and even precondition them for a sale. Our services can
      be
      deployed within a business' own retail environment, to increase sales with
      their
      own customer base by increasing frequency of visit and/or average spend with
      individual customers, or they can be deployed within a partner location such
      as
      an office tower or a consumer show, to find and acquire qualified new customers.
      The Company’s prior areas of expertise included: web, kiosk, handheld, wireless,
      loyalty, promotional marketing, direct marketing, integration with point of
      sale, surveys, incentive, sampling, and field and event marketing. The client
      base included specialty retail, general retail, food service, automotive,
      alcohol, energy, consumer packaged goods, entertainment, amateur sports, and
      telecommunications companies.





However,
      since its inception, the Company had incurred losses and had substantial trouble
      maintaining consistent cash flow necessary to operate our business. As recently
      as its last fiscal year and quarter, the Company reported losses and working
      with a capital deficit for those same periods.  The additional investment
      and infrastructure needed to sustain our business and develop our operations
      could not be supported by its current cash flow. In view of the foregoing,
      the
      Company’s lack of our growth and the limited platform for our future growth in
      its current state, the Company’s Board determined that it would be in our
      stockholders’ best interests to sell all of Endo’s assets to Peter B. Day, the
      Company’s previous President, CEO and sole director prior to the Closing of the
      Share Exchange.  In making the determination to sell all of our assets to
      Mr. Day, the Board gave primary consideration to Mr. Day’s familiarity with our
      operations and business relations.  The Company’s Board believed that Mr.
      Day’s knowledge of our operations would lead to an efficient and expeditious
      sale process.  The Board was also able to negotiate Mr. Day’s agreement to
      assume any liability with respect to the Company’s assets prior to the Closing.
      The Asset and Share Purchase Agreement (the “Purchase Agreement”) by and between
      the Company and Mr. Day was approved by our Board and executed on June 26,
      2006,
      and a majority of our shareholders approved the Purchase Agreement at our Annual
      Shareholder meeting on September 5, 2006.  The Purchase Agreement
      was filed as Exhibit A to our Schedule 14A Information Statement, which was
      filed with the Securities and Exchange Commission on August 8, 2006, and is
      incorporated herein by reference.  The description of the Purchase
      Agreement contained herein and the transactions contemplated thereby do not
      purport to be complete and are qualified in their entireties by reference to
      such document. On September 30, 2006, the Company completed its sale of all
      of
      its assets and shares of Endo Canada to Mr. Day, pursuant to the terms of that
      certain Purchase Agreement. Following the Closing of the Purchase Agreement,
      the
      Company had nominal assets and no business operations, and it sought to
      identify, evaluate and investigate various companies with the intent that,
      if
      such investigation warrants, a reverse merger transaction could be negotiated
      and completed pursuant to which the Company would acquire a target company
      with
      an operating business with the intent of continuing the acquired company’s
      business as a publicly held entity.





On
      October 18, 2006, the Company executed a Share Exchange Agreement (“Exchange
      Agreement”) by and among Hangson Limited, a business company incorporated under
      the laws of the British Virgin Islands (“Hangson”), and the stockholders of 100%
      of Hangson’s common stock (the “Hangson Stockholders”), on the one hand, and
      Endo and a majority of the Company’s stockholders (“Endo Stockholders”), on the
      other hand. The closing of this share exchange transaction (the “Share
      Exchange”) occurred on October 20, 2006 (the “Closing Date” or the “Closing”).
      Separately, Hangson has entered into consulting service agreements and
      equity-related agreements (the “Contractual Arrangements”) with Shaanxi Suoang
      Biological Science & Technology Co., Ltd. (“Shaanxi Suoang”), which is
      a limited liability company headquartered in the People’s Republic of China
      (“PRC”) and organized under the laws of the PRC. Hangson’s business operations
      are conducted through Shaanxi Suoang under these Contractual
      Arrangements.





1


Under
      the
      Exchange Agreement, on the Closing Date, the Company issued a total of
      26,000,000 shares of Common Stock (the “ENDO Shares”) to the Hangson
      Stockholders and to Viking Partners, Inc., a consultant in this transaction,
      in
      exchange for 100% of the common stock of Hangson. Additionally, immediately
      prior to the Closing Date, Peter B. Day, the Company’s then President, CEO and
      sole director voluntarily cancelled 715,500 (post-reverse split) shares of
      the
      915,500 (post 1 for 5 reverse split) shares of the Company’s common
      stock that he owns; and three of Company’s other shareholders also voluntarily
      cancelled a total of 438,850 (post 1 for 5 reverse split) shares of the
      Company’s common stock that they own, and the Company issued an additional
      669,600 shares pursuant to certain anti-dilution provisions contained in
      agreements the Company had with two consultants. Also pursuant to the
      Share Exchange, and as approved by a majority of the
      Company’s shareholders, the Company split its common stock on a 1-for-5
      reverse basis (the “Reverse Split”) prior to the Closing Date. After the
      cancellations, the consultant anti-dilution share issuances, the Reverse Split and
      minor
      corrective stock issuances for rounding of fractional shares resulting from
      the
      Reverse Split, the Company had approximately  2,227,250 shares of
      common stock outstanding and after the Share Exchange, the Company
      had approximately 28,227,250 shares of common stock outstanding, with the
      Hangson’s Shareholders owning approximately 85% of the
      Company’s common stock. In addition, at Closing, Hangson paid the
      Company’s creditors a total of US $500,000 for services rendered, in order to
      satisfy certain obligations as set forth in the Exchange Agreement. We accounted
      for this Share Exchange as a reverse acquisition and recapitalization and,
      as a
      result, the Company’s consolidated financial statements are in substance those
      of Hangson, with the assets and liabilities, and revenues and expenses, of
      the
      Company being included effective from the date of the Share
      Exchange.





From
      and
      after the Closing Date of the Share Exchange, the Company’s primary operations
      consisted of the operations of Hangson and its variable interest entity (“VIE”),
      Shaanxi Suo’ang Biological Science & Technology Co., Ltd. (“Shaanxi
      Suoang”)





Having
      no
      substantive operation of its own, Hangson, through its VIE, Shaanxi Suoang,
      is
      engaged in the production and sale of coal-polymer (“COPO”) resin products,
      including but not limited to, degradable mulch used for the conservation of
      moisture and warmth of soil and protection of the roots of plants, and materials
      used for plastic injection molding, electric wire covering, and garbage bags.
      Shaanxi Suoang is also engaged in the research, development, production and
      sale
      of “coal-water mixture,” which is a potential fuel substitute for coal, oil or
      gas.





**Recent
      Events**





Effective
      January 4, 2007, we changed our name from “Endo Networks, Inc.” to “China West
      Coal Energy Inc.” (the “Name Change”) and we increased the number of our
      authorized shares of capital stock to 250,000,000 shares, which include
      200,000,000 shares of common stock and 50,000,000 shares of preferred stock
      (“Authorized Shares Amendment”), by filing a Certificate of Amendment to amend
      our Articles of Incorporation. On November 27, 2006, holders of a majority
      of our outstanding common stock approved the Name Change and the Authorized
      Shares Amendment to our Articles of Incorporation. On December 8, 2006, we
      filed a definitive information statement on Schedule 14C with the SEC, which
      was
      delivered to our stockholders of record to notify them that the stockholders
      had
      approved the Name Change and the Authorized Shares Amendment to our Articles
      of
      Incorporation.




As
        discussed more fully in the Form 8-K Current Report filed with the SEC on
        January 16, 2007, the Company’s Board of Directors, by unanimous written
        consent, approved a change of the Company ’s fiscal year. The Company’s new
        fiscal year will begin on January 1 and end on December 31 of each year,
        and
        this change shall be applicable with the year ending December 31,
        2006.


Throughout
      the remainder of this report, when we use phrases such as "we," "our,"
      "company," "us," we are referring to CWCE, Hangson, and Shaanxi Suoang as a
      combined entity.





**Overview
      of Hangson Limited**





Hangson
      is a company incorporated under the laws of the British Virgin Islands on June
      2, 2006.  The Company is engaged in the production and sale of coal-polymer
      (“COPO”) resin products, including but not limited to, degradable mulch used for
      the conservation of moisture and warmth of soil and protection of the roots
      of
      plants, and materials used for plastic injection molding, electric wire
      covering, and garbage bags. The Company is also engaged in the research,
      development, production and sale of “coal-water mixture,” which is a potential
      fuel substitute for coal, oil or gas. Hangson does not conduct any substantive
      operations of its own and conducts its primary business operations through
      its
      variable interest entity (“VIE”), Shaanxi Suo’ang Biological Science &
Technology Co., Ltd. (“Shaanxi Suoang”)





PRC
      law
      currently has limits on foreign ownership of certain companies. To comply with
      these foreign ownership restrictions, we operate our business in China through
      Shaanxi Suo’ang Biological Science & Technology Co., Ltd., which is a
      limited liability company headquartered in Xi’an, China and organized under the
      laws of China (hereinafter, referred to together as “Shaanxi Suoang”). Shaanxi
      Suoang has the licenses and approvals necessary to operate our business in
      China. We have contractual arrangements with Shaanxi Suoang and its shareholders
      pursuant to which we provide technology consulting and other general business
      operation services to Shaanxi Suoang. Through these contractual arrangements,
      we
      also have the ability to substantially influence Shaanxi Suoang’s daily
      operations and financial affairs, appoint its senior executives and approve
      all
      matters requiring shareholder approval. As a result of these contractual
      arrangements, which enable us to control Shaanxi Suoang, we are considered
      the
      primary beneficiary of Shaanxi Suoang. Accordingly, we consolidate Shaanxi
      Suoang’s results, assets and liabilities in our financial statements. For a
      description of these contractual arrangements, see the section below titled
      “Contractual Arrangements with Shaanxi Suoang and its Shareholders.” The
      Company’s consolidated assets do not include any collateral for Shaanxi Suoang’s
      obligations. The creditors of Shaanxi Suoang do not have recourse to the general
      credit of the Company.





2


**Contractual
      Arrangements With Shaanxi Suoang And Its Shareholders**





Our
      relationships with Shaanxi Suoang and its shareholders are governed by a series
      of contractual arrangements. Under PRC laws, each of Hangson, and Shaanxi Suoang
      is an independent legal person and none of them is exposed to liabilities
      incurred by the other party. Other than pursuant to the contractual arrangements
      between Hangson and Shaanxi Suoang, Shaanxi Suoang does not transfer any other
      funds generated from its operations to Hangson. As of August 18, 2006, we
      entered into the following contractual arrangements with Shaanxi Suoang as
      described below:





*Consulting
      Services Agreement* *.* Pursuant
      to the exclusive consulting services agreements between Hangson and Shaanxi
      Suoang, Hangson has the exclusive right to provide to Shaanxi Suoang general
      business operations services as well as consulting services related to the
      technological research and development of coal-based products as well as general
      business operation advice and strategic planning (the “Services”). Under this
      agreement, Hangson owns the intellectual property rights developed or discovered
      through research and development, in the course of providing the Services,
      or
      derived from the provision of the Services. Shaanxi Suoang pays a quarterly
      consulting service fees in Renminbi (“RMB”) to Hangson that is equal to all of
      Shaanxi Suoang’s revenue for such quarter.





*Operating
      Agreement* *.* Pursuant
      to the operating agreement among Hangson, Shaanxi Suoang and all shareholders
      of
      Shaanxi Suoang (collectively “Shaanxi Suoang’s Shareholders”), Hangson provides
      guidance and instructions on Shaanxi Suoang’s daily operations, financial
      management and employment issues. The shareholders of Shaanxi Suoang must
      designate the candidates recommended by Hangson as their representatives on
      Shaanxi Suoang’s board of directors. Hangson has the right to appoint senior
      executives of Shaanxi Suoang. In addition, Hangson agrees to guarantee Shaanxi
      Suoang’s performance under any agreements or arrangements relating to Shaanxi
      Suoang’s business arrangements with any third party. Shaanxi Suoang, in return,
      agrees to pledge its accounts receivable and all of its assets to Hangson.
      Moreover, Shaanxi Suoang agrees that without the prior consent of Hangson,
      Shaanxi Suoang will not engage in any transactions that could materially affect
      the assets, liabilities, rights or operations of Shaanxi Suoang, including,
      without limitation, incurrence or assumption of any indebtedness, sale or
      purchase of any assets or rights, incurrence of any encumbrance on any of its
      assets or intellectual property rights in favor of a third party or transfer
      of
      any agreements relating to its business operation to any third party. The term
      of this agreement is ten (10) years from August 18, 2006 and may be extended
      only upon Hangson’s written confirmation prior to the expiration of this
      agreement, with the extended term to be mutually agreed upon by the
      parties.





*Equity
      Pledge Agreement* . ** Under
      the
      equity pledge agreement between the shareholders of Shaanxi Suoang and Hangson,
      the shareholders of Shaanxi Suoang pledged all of their equity interests in
      Shaanxi Suoang to Hangson to guarantee Shaanxi Suoang’s performance of its
      obligations under the technology consulting agreement. If Shaanxi Suoang or
      Shaanxi Suoang’s Shareholders breaches its respective contractual obligations,
      Hangson, as pledgee, will be entitled to certain rights, including the right
      to
      sell the pledged equity interests. Shaanxi Suoang’s Shareholders also agreed
      that upon occurrence of any event of default, Hangson shall be granted an
      exclusive, irrevocable power of attorney to take actions in the place and stead
      of the Shaanxi Suoang’s Shareholders to carry out the security provisions of the
      equity pledge agreement and take any action and execute any instrument that
      Hangson may deem necessary or advisable to accomplish the purposes of the equity
      pledge agreement. The shareholders of Shaanxi Suoang agreed not to dispose
      of
      the pledged equity interests or take any actions that would prejudice Hangson’
interest. The equity pledge agreement will expire two (2) years after Shaanxi
      Suoang’s obligations under the exclusive consulting services agreements have
      been fulfilled.





*Option
      Agreement* .  ** Under
      the
      option agreement between the shareholders of Shaanxi Suoang and Hangson, the
      shareholders of Shaanxi Suoang irrevocably granted Hangson or its designated
      person an exclusive option to purchase, to the extent permitted under PRC law,
      all or part of the equity interests in Shaanxi Suoang for the cost of the
      initial contributions to the registered capital or the minimum amount of
      consideration permitted by applicable PRC law. Hangson or its designated person
      has sole discretion to decide when to exercise the option, whether in part
      or in
      full. The term of this agreement is ten (10) years from August 18, 2006 and
      may
      be extended prior to its expiration by written agreement of the
      parties.





*Proxy
      Agreement* . Pursuant
      to the proxy agreement among Hangson and Shaanxi Suoang’s Shareholders, Shaanxi
      Suoang’s Shareholders agreed to irrevocably grant a person to be designated by
      Hangson with the right to exercise Shaanxi Suoang’s Shareholders’ voting rights
      and their other rights, including the attendance at and the voting of Shaanxi
      Suoang’s Shareholders’ shares at the shareholders’ meetings (or by written
      consent in lieu of such meetings) in accordance with applicable laws and its
      Article of Association, including but not limited to the rights to sell or
      transfer all or any of his equity interests of the Shaanxi Suoang, and appoint
      and vote for the directors and Chairman as the authorized representative of
      the
      shareholders of Shaanxi Suoang. The term of this Proxy Agreement is ten (10)
      years from August 18, 2006 and may be extended prior to its expiration by
      written agreement of the parties.





3


**Shaanxi
      Suo’ang Biological Science & Technology Co., Ltd.**





As
      discussed above, our operations are conducted through Shaanxi Suoang, which
      is a
      limited liability company headquartered in Xian, China and organized under
      the
      laws of PRC. Shaanxi Suoang was organized in May 2002. Shaanxi Suoang is engaged
      in research, development, marketing and sales of coal polymer resin products,
      and is also engaged in research, development, marketing and the sales
      of “coal water mixture”, which can potentially be used as a fuel substitute
      for oil, gas or coal.





**Principal
      Products Or Services**





Shaanxi
      Suoang currently has two major lines of products:





1.
            Coal-polymer
                (“COPO”) resin products, including degradable mulch used for the
                conservation of moisture and warmth of soil and protection of the
                roots of
                plants, materials used for plastic injection molding, electric wire
                covering, garbage bags, etc. The Company has a patent (number 94104380.0)
                regarding the production of COPO resin products. Currently, the Company
                is
                selling over 5 different COPO products to over 10 provinces and districts
                around China.





2.
            Coal
                Water Mixture Fuel. Coal water mixture fuel is a fuel substitute
                that can
                be used instead of oil, coal and gas, in industrial boilers, power
                plant
                boilers and industrial kilns. After two years of research and feasibility
                study, the Company is ready to commercialize this fuel
                substitute for use in boilers used for central heating for government
                buildings, schools, armed forces’ barracks, and residential communities,
                and also for use in industrial production facilities. The Company
                is
                currently constructing a coal water mixture production plant in western
                China. The whole construction project is estimated to cost approximately
                RMB60 million (US$7,500,000) in total. First phase of the
                construction is projected to be complete by the end of 2006 and
                the Company expects production of Coal Water Mixture Fuel to commence
                by
                early 2007.





**Coal
      Polymer Resin Products**





The
      development, production, marketing and sales of coal-polymer (“COPO”) resin
      based products is currently Hangson’s largest business. The Company has placed
      great emphasis on the research and development of diversified products by taking
      the multi-functional COPO resin parent material as the base for such products.
      It has launched more than five kinds of product in the COPO series by relying
      on
      the technologies of its research and development (“R&D”) center. The Company
      developed a series of products with high performance and relatively lower cost,
      such as COPO resin degradable film, COPO charcoal and COPO resin anti-static
      parent material in 2004 and continue to produce products such as degradable
      mulch used for the conservation of moisture and warmth of soil and protection
      of
      the roots of plants, and material components used in the manufacture of products
      such as plastic injection molding, electric wire covering, and garbage bags.
      Currently, these products are marketed, distributed and sold in over ten
      provinces of China, including Xian, Shaanxi, Gansu and Xinjiang, and the
      Company’s market share for these types of products in these areas continues to
      grow. **** The
      Company plans to continue developing, manufacturing and selling COPO resin
      based
      products in the future while developing and commercializing its Coal Water
      Mixture product described below.





**Coal
      Water Mixture Fuel**





Coal
      Water Mixture Fuel (“CWM Fuel”) is a viscous, heavy liquid fuel that is produced
      by mixing grinded coal, water and chemical additives. This liquid fuel can
      be
      stored, pumped and burned as a substitute for oil or gas in properly modified
      furnances or boilers. In general, CWM Fuel is cheaper than oil or gas but
      its combustion thermal efficiency may be similar to oil or gas.
      Further, CWM Fuel may burn cleaner than coal and thus, may be a more
      environmentally friendly fuel.





The
      Company is also currently constructing a CWM Fuel production facility in the
      city of Tongchuan with an expected annual production capacity of 300,000 tons
      that will enable the Company to supply several industrial users and two central
      heating stations in Tongchuan.





China
      is
      a large producer and consumer of coal and will remain so for the foreseeable
      future. Pollution resulting from coal combustion causes concern both within
      and outside China. Approximately 90% of environmental pollution in China is
      attributable to direct coal combustion. The Chinese Government is currently
      developing policies and implementing control-measures to reduce this pollution.
      Clean coal technology (CCT) can play an important part in this process,
      contributing to both improved energy utilization efficiency and reduced
      environmental pollution.





In
      August
      1995, the Chinese government formulated “the 9 th Five-Year Plan for Clean Coal Technology in China and a Development Program
      to
      2010.” In the “10 th Five-Year Plan” the State emphasized the need to strengthen clean coal
      technology R&D and also to promote commercialization of proven clean coal
      technologies. The potential clean coal technology market in China is
      substantial. The Company’s CWM Fuel, being a mixture of coal, water, and
      additives, presents itself as a fuel to substitute direct coal combustion.
      Use
      of the CWM Fuel not only allows the mixture to be transported as a
      fluid, which avoids coal dust dispersion and spontaneous combustion during
      transportation and storage, but it also allows the equipment used to burn this
      fuel to be simplified. CWM Fuel may enhance the combustion efficiency
      rate of coal while reducing the dust emission rate.





4


Because
      direct coal combustion has caused serious pollution in China, the Chinese
      government has enacted relevant laws and regulations to require enterprises
      to replace old direct coal combustion industrial burners or furnaces with
      furnaces that use cleaner fuels. In the city of Xian, for example,
      thousands of plants continue to use old direct coal combustion burners or
      furnaces. In addition, we believe on average, approximately 200
      furnaces are purchased by local enterprises in Xian each year. But based on
      prevailing regulations, no new direct coal combustion furnace is allowed to
      be
      installed within Xian’s city limits. Therefore, considering the high and
      fluctuating prices of petroleum, the potential demand for the
      Company’s CWM Fuel product as a cleaner substitute for direct coal
      combustion may be substantial.





In
      2003,
      Shaanxi Suoang’s board of directors realized this opportunity
      and initiated the development of CWM Fuel products.
      After studying the market demand for CWM Fuel in the cities
      of Qingdao, Shenyang, Maoming, Foshan for two years and conducting a
      feasibility study, the Company decided to develop its CWM Fuel product
      which complies with the environmental protection policies of “prohibiting the
      burning of raw coal” in large-sized or medium-sized cities such as Xi’an. The
      Company developed a series of patented technologies in 2004, including the
      “biological anticoagulation agent,” “combustion supporting agent,” “techniques
      for the production of coal water mixture by utilizing the waste fluid from
      paper
      making and silt in urban area” and the “garbage combustion techniques based on
      coal water mixture.” Thus, we believe that the conditions for the
      application, promotion and industrialized production and sale of CWM
      Fuel is now mature. The Company has invested approximately RMB60
      million to initiate the construction of the production facility base for its
      CWM
      Fuel in the city of Tongchuan, and the Company is currently planning for an
      annual production capacity of 300,000 tons, which would be one of the largest
      in
      Western China.





The
      Company’s future plans relating to its CWM products include either the purchase
      of or becoming a major shareholder in boiler manufacturers in Shaanxi Province
      that will produce boilers that are compatible with our CWM Fuel, and also the
      potential purchase of coal mines to supply the coal needed to manufacture the
      CWM Fuel.





**DISTRIBUTION
      METHODS OF THE PRODUCTS OR SERVICES AND OUR CUSTOMERS**





Most
      of
      the Company’s COPO products are sold through directly to dealers. Currently, we
      have approximately 24 distribution agents throughout the PRC such as Xinjiang,
      Shandong, Shanxi, Qinghai, Ningxia, Gansu and Xi’an. The Company will continue
      to establish more representative offices and engage additional distribution
      agents in order to strengthen its distribution network. The Company recognizes
      the importance of branding as well as packaging. All of our Company’s COPO
      products bear a uniform brand but we also brand and package our products with
      specialized designs to differentiate the different categories of the Company’s
      products.





We
      conduct promotional marketing activities to publicize and enhance the Company’s
      image as well as reinforce the recognition of the Company’s brand name by:





1.
            publishing
                advertisements and articles in national as well as specialized and
                provincial newspapers, magazines, and in other media, including the
                Internet;





2.
            participation
                in national meetings, seminars, symposiums, exhibitions for bio-technology
                and other related industries; and





3.
            sending
                direct mail to potential customers, including companies and government
                departments.





We currently
      have over 24 customers, including major direct customers located in Xi’an,
      Shandong, Guansu and Xinjiang.





Our CWM
      Fuel product will be sold and distributed by the Company directly to its
      customers. We plan to conduct promotional marketing activities to publicize
      our
      product and enhance the Company’s image as well as to reinforce the recognition
      of the Company’s brand name through assistance from the local
      government.





**COMPETITION**




With
      respect to our COPO products, we have ****** four
      major competitors in the PRC: Liaoyang North Degradable Plastic Co., Ltd.,
      Gansu
      Tianshui Plastic Co., Ltd., Shandong Shenxian Mulching Film Factory; and
      Xinjiang Tianye Joint-Stock Co., Ltd. These companies have more assets and
      have
      a larger market share. The Company is able to compete with these competitors
      because of the strong R&D capability, extensive sales network and lower
      prices.





5


In
      regards to our CWM Fuel product, we have no major competitors in Shaanxi
      province but we have four competitors in other provinces: Tai’an Liangda CWM
      Co., Ltd., Datong Huihai CWM Company, Daqing Shengtai Clean Coal Fuel Co.,
      Ltd.,
      and Ningbo Hongyuan CWM Co., Ltd. The Company will be able to compete with
      these
      competitors because of the strong R&D capability, extensive sales network,
      abundant coal resources, the local government’s assistance and lack of
      competitors in the Shaanxi market.





**SOURCES
      AND AVAILABILITY OF RAW MATERIALS AND THE PRINCIPAL SUPPLIERS**





Our
      principal raw material is coal that is supplied directly from the local coal
      mines and used to manufacture our products. The Company designs, develops and
      manufactures its products at its manufacturing facilities located at Xi’an, PRC.
      The prices for this raw material is subject to market forces largely beyond
      our
      control, including energy costs, market demand, and freight costs. The prices
      for this raw material have varied significantly in the past and may vary
      significantly in the future.





**PATENTS,
      TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR LABOR
      CONTRACTS**





We
      rely
      on a combination of trademark, copyright and trade secret protection laws in
      China and other jurisdictions, as well as confidentiality procedures and
      contractual provisions to protect our intellectual property and our brand.
      We
      have an issued patented special technology in regards to our COPO products
      in
      China, valid for 10 years and we intend to apply for more patents to protect
      our
      core technologies. We also enter into confidentiality, non-compete and invention
      assignment agreements with our employees and consultants and nondisclosure
      agreements with third parties. We also have a registered trademark in the PRC
      that we use for the branding of our COPO products.





Coal
      and
      bio-technology companies are at times involved in litigation based on
      allegations of infringement or other violations of intellectual property rights.
      Furthermore, the application of laws governing intellectual property rights
      in
      the PRC and abroad is uncertain and evolving and could involve substantial
      risks
      to us.





**GOVERNMENT
      APPROVAL AND REGULATION OF THE COMPANY’S PRINCIPAL PRODUCTS OR
      SERVICES**





The
      State
      Environmental Protection Laws of the PRC governs us and our products. The
      Company is subject to various PRC federal, state and local environmental laws
      and regulations, including the State Environmental Protection Laws concerning
      emissions to the air, discharges to waterways, the release of materials into
      the
      environment, the generation, handling, storage, transportation, treatment and
      disposal of waste materials or otherwise relating to the protection of the
      environment. The Company endeavors to ensure the safe and lawful operation
      of
      its facilities in manufacturing and distribution of products and believes it
      is
      in compliance in all material respects with applicable PRC laws and
      regulations.





No
      enterprise may start production at its facilities until it receives approval
      from the Ministry of Commerce to begin operations. The Company currently has
      obtained the requisite approval and licenses from the Ministry of Commerce
      in
      order to operate our production facilities.





**COSTS
      AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS**




In
      compliance with PRC environmental regulations, the Company will be required
      to
      pay for costs of environmental compliance and safety once it commences
      operations of its CWM Fuel production facility. No environmental
      compliance expenses were required in 2005 for the Company’s current COPO
      products production facility.





**RESEARCH
      AND DEVELOPMENT**





We
      place
      great emphasis on product research and development (“R&D”). Shaanxi Suoang
      has a research and development center located in Xian, PRC and it will continue
      to conduct research and development to develop and improve the quality of the
      products that it produces.





**EMPLOYEES**





As
      September 30, 2005, Endo Networks, Inc. had 18 employees. As of September 30,
      2006, the Company had 5 employees.




6


In
      2004,
      Shaanxi Suoang had 60 employees. In 2005, Shaanxi Suoang had 80 employees.
      Currently, Shaanxi Suoang has 76 employees. We
      believe the success of our business depends, in part, on our ability to attract
      and retain qualified personnel, particularly qualified scientific, technical
      and
      key management personnel. Our employees are not governed by collective
      bargaining agreements. We believe our relationships with our employees are
      good.





**PRINCIPAL
      EXECUTIVE OFFICES**





Our
      principal executive office is located at Room 2205, Suite A, Zhengxin Building,
      No. 5, Gaoxin 1st Road, Gao Xin District, Xi’an, Shaanxi Province, People’s
      Republic of China and our telephone number is (029) 8209-1099.





**FILING
      STATUS**





We
      file
      reports with the Securities and Exchange Commission ("SEC"). You can read and
      copy any materials we file with the Commission at its' Public Reference Room
      at
      450 Fifth Street, NW, Washington, DC 20549. You can obtain additional
      information about the operation of the Public Reference Room by calling the
      Commission at 1-800-SEC-0330. In addition, the Commission maintains an Internet
      site (www.sec.gov) that contains reports, proxy and information statements,
      and
      other information regarding issuers that file electronically with the
      Commission, including us.




**ITEM
      2.** **DESCRIPTION
      OF** **PROPERTY**





The
      Company’s headquarters is currently located in approximately 298 square meters
      of office space and production facilities at Room 2205, Suite A, Zhengxin Bldg.,
      No.5, Gaoxin 1st Road, Gao Xin District, Xi’an, Shaanxi Province, People’s
      Republic of China. The Company leases this office space. We believe that our
      existing production facilities for our COPO products are well maintained, in
      good operating condition, and will be sufficient for our production goals for
      the next year. The Company is also currently constructing a production facility
      for the Coal Water Mixture product in Tong Chuan City, PRC.





In
      China,
      the Company owns or leases the following properties:





**Property
                Location**
            **Area
                (sq. meters)**
            **Lease
                Expiration Period**
            **Purpose**Room
                2205, Suite A, Zhengxin Bldg., No.5, Gaoxin 1st Road, Gao Xin District,
                Xi’an, Shaanxi Province, People’s Republic of China
            248
            March
                17, 2008
            OfficesNo.
                36 Da Xing Lu,
              Xian
                Shi, People’s Republic of China
            2,310
            December
                30, 2013
            Production
                and Manufacturing FacilityYao
                Zhou Ou,
              Tong
                Chuan City,
              People’s
                Republic of China
            40,626
            None
                - Company owned
            Production
                facility for coal water mixture - under
                construction








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





We
      may be
      subject to, from time to time, various legal proceedings relating to claims
      arising out of our operations in the ordinary course of our business. We are
      not
      currently a party to any legal proceedings, the adverse outcome of which,
      individually or in the aggregate, would have a material adverse effect on the
      business, financial condition, or results of operations of the
      Company.





7


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





The
      Company held its
      Annual Meeting of Stockholders at its offices located at 2624 Dunwin Drive,
      Unit
      #3, Mississauga, Ontario, Canada L5l 3T5 on September 5, 2006 at 9:30 A.M.
      As
      described more fully in the Company’s Definitive Proxy Statement on Schedule 14A
      filed on August, 8, 2006, we held the meeting: (a) to elect Peter B. Day as
      the
      sole member of the Company’s Board of Directors, whose terms are described in
      the proxy statement; (b) to consider and vote on approval of the sale of all
      of
      our assets and shares of Endo Networks, Inc. (Canada) to Mr. Peter Day pursuant
      to that certain Asset and Share Purchase Agreement, dated as of June 26, 2006;
      (c) to grant our Board of Directors the authority to effect a reverse stock
      split of up to 20 to 1; and (d) to grant our Board of Directors the authority
      to
      effect a forward stock split of up to 20 to 1. The
      following is the results of the voting:





**1.** ****  **Election
      of Director:**




**Nominees**
            
            **Number
                of Shares**Peter
                B. Day
            
            For:
            
            11,957,113Against:
            
            0Abstain:
            
            1,600,253





**2.**
            **To
                approve****Asset
                and Share Purchase Agreement, dated as of June 26,
                2006**





**Approve**
            
            **Number
                of Shares**Asset
                and Share Purchase Agreement
            
            For:
            
            11,957,113Against:
            
            0Abstain:
            
            1,600,253




**3.**
            **To
                approve****grant
                of authority to the Board to effect a reverse stock split****of up to 20 to
                1.**





**Approve**
            
            **Number
                of Shares**Authority
                for Reverse Stock Split
            
            For:
            
            11,957,113Against:
            
            0Abstain:
            
            1,600,253








**4.**
            **To
                approve****grant
                of authority to Board to effect a forward stock
                split****of up to 20 to
                1.**





**Approve**
            
            **Number
                of Shares**Authority
                for Reverse Stock Split
            
            For:
            
            11,957,113Against:
            
            0Abstain:
            
            1,600,253











8


**PART
      II**








**ITEM
      5.** **MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**





Our
      common stock is not listed on any stock exchange. The common stock is traded
      over-the-counter on the Over-the-Counter Electronic Bulletin Board under the
      symbol "CWCE". The following table sets forth the high and low bid information
      for the common stock for each quarter within the last two fiscal years (for
      fiscal year ended September 30), as reported by the Over-the-Counter Electronic
      Bulletin Board. The bid prices reflect inter-dealer quotations, do not include
      retail markups, markdowns or commissions and do not necessarily reflect actual
      transactions.




LOW
            
            HIGH2006Fourth
                Quarter
            
            $
            0.13
            
            
            0.16Third
                Quarter
            
            $
            0.14
            
            
            0.15Second
                Quarter
            
            $
            0.10
            
            
            0.14First
                Quarter
            
            $
            0.10
            
            
            0.102005Fourth
                Quarter
            
            $
            0.10
            
            
            0.10Third
                Quarter
            
            $
            0.10
            
            
            0.10Second
                Quarter
            
            $
            0.09
            
            
            0.10First
                Quarter
            
            $
            0.08
            
            
            0.12








As
      of
      January 15, 2007, there were approximately 110 stockholders of record of our
      common stock.





**DIVIDENDS**





We
      have
      never paid any dividends on the Common Stock or the Preferred Stock. We
      currently anticipate that any future earnings will be retained for the
      development of our business and do not anticipate paying any dividends on the
      Common Stock or the Preferred Stock in the foreseeable future.





**TRANSFER
      AGENT**





Our
      transfer agent is Signature Stock Transfer, Inc., 14675 Midway Road, Suite
      221,
      Dallas, Texas 75244. Their telephone number is (972) 612-4120.





**EQUITY
      COMPENSATION PLAN INFORMATION**





We
      currently do not have any equity compensation plans. ******


9


**CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS**




As
      described in full detail in our Current Report on Form 8-K filed on November
      17,
      2006, which is incorporated herein by reference, on November 9, 2006, the
      Company's Board of Directors elected to dismiss Lopez,
      Blevins, Bork & Associates, L.L.P. (“LBB”) as its
      independent registered public accounting firm (“Independent Accountant”) and
      also elected to retain Schwartz Levitsky Feldman LLP, Chartered Accountants
      as
      its new Independent Accountant. During
      the Company’s fiscal year ended September 30, 2005 and the subsequent interim
      period through November 9, 2006, the date of the dismissal of LBB, the Company
      did not have any disagreement with LBB on any matter of accounting principles
      or
      practices, financial statement disclosure, or auditing scope or
      procedure.  The
      decision to change Independent Accountants was approved by the Board of
      Directors.





**RECENT
      SALES OF UNREGISTERED SECURITIES**





Pursuant
      to the Share Exchange Agreement entered by and among Hangson Limited, a British
      Virgin Islands company (“Hangson”), and the stockholders of 100% of Hangson’
common stock (the “Hangson Stockholders”), on the one hand, and the Registrant
      and a majority of the Registrant’s stockholders (“ENDO Stockholders”), on the
      other hand, the Company issued 26,000,000 shares of the Company’s common stock
      (the “ENDO Shares”) to the Hangson Shareholders and to Viking Partners, Inc.
      (“Viking”), a consultant in the Share Exchange transaction, in exchange for 100%
      of the common stock of Hangson. The issuance of the Endo Shares to the Hangson
      Shareholders and Viking pursuant to the Share Exchange Agreement was exempt
      from
      registration under the Securities Act pursuant to Section 4(2) and/or Regulation
      S thereof. We made this determination based on the representations of the
      Hangson Shareholders and Viking which included, in pertinent part, that such
      shareholders were either (a) "accredited investors" within the meaning of Rule
      501 of Regulation D promulgated under the Securities Act, and/or (b) not a
      "U.S.
      person" as that term is defined in Rule 902(k) of Regulation S under the Act,
      and that such shareholders were acquiring our common stock, for investment
      purposes for their own respective accounts and not as nominees or agents, and
      not with a view to the resale or distribution thereof, and that each member
      understood that the shares of our common stock may not be sold or otherwise
      disposed of without registration under the Securities Act or an applicable
      exemption therefrom.




On
      May 2,
      2006, we entered into a consulting agreement (the “TriPoint Agreement”) with
      TriPoint Capital Advisors, LLC (“TriPoint”), a business consultant, in order to
      assist us in our business development, with the structuring of capital
      transactions, to provide mergers and acquisition support services, and corporate
      compliance support.  As consideration for their services under the
      agreement, we agreed to issue Tripoint 472,000 shares  (94,400
      shares after givingeffect
      for the 5:1 reverse stock split on October 17, 2006)of our common stock.
      Based on the last trading price prior to the issuance of the stock a non-cash
      consulting expense of $70,800 was recorded for the issuance of these shares.
      The
      TriPoint Agreement provided that if a reduction in shares occurs after the
      date
      of the agreement by reason of a reverse stock split, then the Company is
      obligated to issue TriPoint a warrant for the purchase of additional shares
      of
      common stock, at the then par value, sufficient to preserve the original share
      issuance in the agreement of 472,000 (the “TriPoint Agreement Anti-Dilution
      Provision”). The shares were issued pursuant to the exemption from registration
      provided by Section 4(2) of the Securities Act for issuances not involving
      a
      public offering.





On
      May 2,
      2006, we entered into a consulting agreement (the “Progressive Agreement”) with
      Progressive Capital Markets, LLC (“Progressive”), a business consultant, in
      order to assist us in our business development, with the structuring of capital
      transactions, to provide mergers and acquisition support services, and corporate
      compliance support.  As consideration for their services under the
      agreement, we agreed to issue Progressive 365,000  (73,000
      shares after givingeffect
      for the 5:1 reverse stock split on October 17, 2006)shares of our common
      stock. Based on the last trading price prior to the issuance of the stock a
      non-cash consulting expense of $54,750 was recorded for the issuance of these
      shares. The Progressive Agreement provided that if a reduction in shares occurs
      after the date of the agreement by reason of a reverse stock split, then the
      Company is obligated to issue Progressive a warrant for the purchase of
      additional shares of common stock, at the then par value, sufficient to preserve
      the original share issuance in the agreement of 365,000 (the “Progressive
      Agreement Anti-Dilution Provision”). The shares were issued pursuant to the
      exemption from registration provided by Section 4(2) of the Securities Act
      for
      issuances not involving a public offering.





On
      October 11, 2006, pursuant to the TriPoint Agreement Anti-Dilution Provision
      and
      because the Company engaged in a 1 for 5 Reverse Stock Split (as discussed
      more
      fully above), the Company issued TriPoint a warrant (the “TriPoint Warrant”) for
      the purchase of an additional 377,600 shares of the Company’s common stock with
      an exercise price of $.001 per share, so as to preserve the number of shares
      held by TriPoint prior to the Reverse Split at 472,000 shares as required under
      the TriPoint Agreement. The warrant was issued pursuant to the exemption from
      registration provided by Section 4(2) of the Securities Act for issuances not
      involving a public offering.





On
      October 11, 2006, pursuant to the Progressive Agreement Anti-Dilution Provision
      and because the Company engaged in a 1 for 5 Reverse Stock Split (as discussed
      more fully above), the Company issued Progressive a warrant (the “Progressive
      Warrant”) for the purchase of an additional 292,000 shares of the Company’s
      common stock with an exercise price of $.001 per share, so as to preserve the
      number of shares held by Progressive prior to the Reverse Split at 365,000
      shares as required under the Progressive Agreement. The warrant was issued
      pursuant to the exemption from registration provided by Section 4(2) of the
      Securities Act for issuances not involving a public offering.





10


On
      October 17, 2006, TriPoint exercised their TriPoint warrant, as described above,
      and the Company issued to TriPoint 377,600 shares of the Company’s common stock
      at an exercise price of $.001 per share to TriPoint. These shares were issued
      pursuant to the exemption from registration provided by Section 4(2) of the
      Securities Act for issuances not involving a public offering.





On
      October 17, 2006, Progressive exercised their Progressive warrant, as described
      above, and the Company issued to Progressive 292,000 shares of the Company’s
      common stock at an exercise price of $.001 per share to Progressive. These
      shares were issued pursuant to the exemption from registration provided by
      Section 4(2) of the Securities Act for issuances not involving a public
      offering.




During
      July 2005, the Company issued 55,000 shares (11,000
      shares after givingeffect
      for the 5:1 reverse stock split on October 17, 2006) of its common
      stock to consultants for consulting services valued $0.10 per share or $5,500,
      which was the fair value of common stock on the date issued. These transactions
      were exempt from registration requirements in reliance on Section 4(2) of the
      Securities Act of 1933. There was no form of general solicitation or general
      advertising undertaken and the investor is accredited.





During
      July 2004, the Company issued 96,500 (19,300
      shares after givingeffect
      for the 5:1 reverse stock split on October 17, 2006)shares of common
      stock to consultants for consulting services valued $0.07 per share or $6,755,
      which was the fair value of common stock on the date issued.    These
      transactions were exempt from registration requirements in reliance on Section
      4(2) of the Securities Act of 1933. There was no form of general solicitation
      or
      general advertising undertaken and the investor is accredited.








**ITEM
      6. MANAGEMENT'S DISCUSSION AND ANALYSIS**





**Introduction**





As
      explained more fully above under the section “Explanatory Note” at the beginning
      of this Form 10-KSB, a lthough
      this annual report includes descriptions of the Share Exchange and the business
      of the combined entity after the Closing of the Share Exchange, the financial
      statements included are only those of Endo, the legal acquirer. The financial
      statements for Hangson for the years ended December 31, 2004 and December 31,
      2005 were included with the Form 8-K filed on October 26, 2006 (along with
      unaudited combined Pro Forma financial statements of the combined entities)
      in
      connection with the Exchange. The Company has decided to adopt the December
      31
      fiscal year end of Hangson and thus the Company will also file an annual report
      on Form 10-KSB for the combined entities commencing with the annual report
      for
      the year ending December 31, 2006.





**Overview**





China
      West Coal Energy Inc. (formerly Endo Networks, Inc.) (the “Company”) was
      originally incorporated in Texas as “Discount Mortgage Services, Inc.” on July
      11, 2000 and in September 2001, the Company purchased Endo Networks, Inc.,
      a
      corporation incorporated in Ontario, Canada on January 11, 2001 (“Endo Canada”).
      In November 2001, the Company changed its name to Endo Networks, Inc. and was
      redomiciled to the State of Nevada in December 2002. Prior to the Share Exchange
      transaction described below, the Company conducted through, and all of the
      Company ’s assets were contained within, Endo Canada, in which conceptual and
      software development was ongoing for approximately two years by the Company
      founders, through ongoing contract relationships with software development
      companies.





On
      October 18, 2006, we entered into a definitive Share Exchange Agreement with
      Hangson Limited (“Hangson”), whereby we would acquire all of the outstanding
      common stock of Hangson in exchange for newly-issued shares of our common stock
      to the Hangson shareholders (the “Share Exchange”). On October 20, 2006 (the
“Closing Date”), Hangson became our wholly-owned subsidiary and Hangson’s
      shareholders became owners of the majority of our voting stock. The acquisition
      of Hangson by us was accounted for as a reverse merger because on a post-merger
      basis, the former shareholders of Hangson held a majority of our outstanding
      common stock on a voting and fully-diluted basis. As a result, Hangson is deemed
      to be the acquirer for accounting purposes. From and after the Closing Date
      of
      the Share Exchange, the Registrant’s primary operations will now consist of the
      operations of Hangson.





Additionally,
      on August 18, 2006, Hangson entered various agreements with Shaanxi Suo’ang
      Biological Science & Technology Co., Ltd. (“Shaanxi Suoang”). Through these
      contractual arrangements, we have the ability to substantially influence Shaanxi
      Suoang’s daily operations and financial affairs, appoint its senior executives
      and approve all matters requiring shareholder approval. As a result of these
      contractual arrangements, which obligates Hangson to absorb a majority of the
      risk of loss from Shaanxi Suoang activities, enables Hangson to control Shaanxi
      Suoang, and enables Hangson to receive a majority of Shaanxi Suoang’s expected
      residual returns, Hangson is considered the primary beneficiary of Shaanxi
      Suoang. Accordingly, we consolidate Shaanxi Suoang’s results, assets and
      liabilities in our financial statements. For a description of these contractual
      arrangements, see the section above titled “Contractual Arrangements with
      Shaanxi Suoang and its Shareholders.” The Company’s consolidated assets do not
      include any collateral for Shannxi Suoang’s obligations. The creditors of
      Shannxi Suoang do not have recourse to the general credit of the Company.





11


Hangson
      was incorporated under the laws of the British Virgin Islands on June 2, 2006.
      Hangson does not conduct any substantive operations of its own and conducts
      its
      primary business operations through Shaanxi Suoang. Shaanxi Suoang is engaged
      in
      the research, development, production, marketing and sales of coal-polymer
      (“COPO”) resin products including but not limited to, degradable mulch used for
      the conservation of moisture and warmth of soil and protection of the roots
      of
      plants, and materials used for plastic injection molding, electric wire
      covering, and garbage bags. Shaanxi Suoang is also engaged in the research,
      development, production and sale of “coal-water mixture,” which is a potential
      fuel substitute for coal, oil or gas. Our primary business operations are
      conducted through our wholly-owned subsidiary Hangson Limited (“Hangson”).
      Hangson does not conduct any substantive operations of its own but conducts
      its
      primary business operations through its variable interest entity (“VIE”),
      Shaanxi Suo’ang Biological Science & Technology Co., Ltd. (“Shaanxi
      Suoang”).





**Significant
      Accounting Policies**





*Cash
      and equivalents*





We
      consider all highly liquid investment instruments purchased with original
      maturities of three months or less when acquired to be cash
      equivalents.





*Intangible
      assets*





Intangible
      assets are recorded at cost.  Cost is amortized over the estimated useful
      life of the asset unless that life is determined to be indefinite.





Intangible
      assets not subject to amortization are tested for impairment on at least an
      annual basis.  If the fair value of the intangible asset is determined to
      be less than the carrying amount, an impairment loss is recognized in the amount
      of that difference.





Intangible
      assets subject to amortization are reviewed for impairment in accordance with
      the provisions applying to long-live assets.





*Property
      and equipment*





Property
      and equipment are stated at cost.  Depreciation of property and equipment
      is calculated on straight-line method over the estimated useful lives of the
      assets.  Impairment losses are recorded on long-lived assets used in
      operations when indicators of impairment are present and the undiscounted cash
      flows estimated to be generated by those assets are less than the assets'
      carrying amount.  No impairment losses have been recorded since
      inception.





*Impairment
      of long-lived assets*





The
      Company monitors the recoverability of long-lived assets, including property
      and
      equipment and intangible assets, based upon estimates using factors such as
      expected future asset utilization, business climate, and undiscounted cash
      flows
      resulting from the use of the related assets or to be realized on sale. The
      Company’s policy
      is to write down assets to the estimated net recoverable amount, in the period
      in which it is determined likely that the carrying amount of the asset wilt
      not
      he recoverable.





*Income
      taxes*





Income
      taxes are computed using the asset and liability method.  Under the asset
      and liability method, deferred income tax assets and liabilities are determined
      based on the differences between the financial reporting and tax basis of assets
      and liabilities and are measured using the currently enacted tax rates and
      laws.
      A valuation allowance is provided for the amount of deferred tax assets that,
      based on available evidence, are not expected to be realized.





12


*Revenue
      recognition*





The
      Company recognizes revenue when persuasive evidence of an arrangement exists,
      delivery has occurred, the sales price is fixed or determinable and
      collectibility is probable.  The Company recognizes revenue from the sale
      of advertising related products and services like interactive advertising,
      studio promotion, and event management as the services are performed.





Revenue
      derived from professional services provided on a time and materials basis is
      recognized as services are performed.





For
      time
      and material contracts, revenue is recognized and billed by multiplying the
      number of hours expended by our professionals in the performance of the contract
      by the established billing rates.  For fixed fee projects, revenue is
      generally recognized using the proportionate performance method.
 Provisions for estimated losses on uncompleted contracts are made on a
      contract-by-contract basis and are recognized in the period in which such losses
      are determined.





*Foreign
      exchange*





As
      nearly
      all operations are conducted in Canada, the Canadian dollar is the functional
      currency. All balance sheet accounts have been translated at the current
      exchange rate as of September 30, 2006. Statement of operations items have
      been
      translated at average currency exchange rates during the years ended September
      30, 2006 and 2005. The resulting translation adjustment is recorded as a
      separate component of comprehensive loss within stockholders plain
      deficit.





*Use
      of estimates*





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




FISCAL
      YEAR END





Prior
      to
      our acquisition, Hangson’s reporting fiscal year end was December 31. However,
      our reporting year end was September 30. The Company has decided to adopt the
      fiscal year end of Hangson, its operating business after the share exchange
      transaction described above, and thus the Company will be filing an annual
      report on Form 10-KSB for its new fiscal year ending December 31, commencing
      with the Company’s annual report for the year ending December 31, 2006.





GOING
      CONCERN


The
        Company has incurred losses and has had substantial difficulties in maintaining
        necessary cash flows for proper operations for years. For
        the
        year ended September 30, 2006, the Company had an accumulated deficit totaling
        $1,271,176. Because of these recurring losses, the Company encountered
        difficulties in acquiring additional working capital to develop and/or renew
        its
        business operations. These factors raise substantial doubt about the Company’s
        ability to continue as a going concern. In addition to discontinuing the
        unprofitable operations, Management has entered into a Share Exchange Agreement
        as disclosed below which they believe will ultimately reverse these negative
        trends. No assurances can be given that Management’s Plans will be successful.
        The consolidated financial statements do not include any adjustments that
        might
        result from the outcome of this uncertainity.
  The
        Company had entered into a definitive Share Exchange Agreement to acquire
        Hangson Limited, a British Virgin Islands corporation after it sold all of
        its
        assets and liabilities to Mr. Peter B. Day, the Company’s President, CEO and
        director under an Asset and Share Purchase Agreement signed between the Company
        and Mr. Day on June 26, 2006. On October 20, 2006, the Company completed
        a share
        exchange transaction with Hangson Limited, a British Virgin Islands company
        (“Hangson”) and Hangson’s shareholders (the “Exchange”) that resulted in Hangson
        becoming a wholly owned subsidiary of Endo and also resulted in a change
        of
        control of the Company. The Exchange was accounted for as a reverse acquisition
        and recapitalization and, as a result, Endo’s (the legal acquirer) consolidated
        financial statements will, in substance, be those of Hangson (the accounting
        acquirer). This event may eventually mitigate the Company’s going concern
        problem.


13


These
      conditions raise substantial doubt about our ability to continue as a going
      concern.  The financial statements do not include any adjustments relating
      to the recoverability and classification of asset carrying amounts or the amount
      and classification of liabilities that might be necessary should we be unable
      to
      continue as a going concern.





**SUMMARY
      OF FISCAL YEAR ENDED SEPTEMBER 30, 2006**





RESULTS
      OF OPERATIONS





Revenues
      for the year ended September 30, 2006 were $923,129 compared with $1,289,498
      for
      the previous year and cost of sales for the same periods were $468,926 and
      $599,483 respectively. Sales decreased by 28%, and our gross profit increased
      by
      2%, which reflects an increase in our gross profit to 49 % of sales
      from 54 % of sales in the prior year. In the year ended September 30, 2006,
      we ceased to work some projects with low profit margin and our revenues
      consisted of service and product deployments and the increase in gross profit
      being due to doing similar deployments with less custom programming and less
      new
      hardware requirements.





Our
      general and administrative expenses increased to $950,869 from $808,552 the
      prior fiscal year which resulted in the company posting a loss, after
      depreciation and amortization expenses, of $602,399 compared to a loss of
      $214,221 the prior fiscal year.





LIQUIDITY





For
      the
      year ended September 30, 2006, we generated cash from operating activities
      of
      $223,218, as compared to $152,752 for the year ended September 30, 2005. This
      substantial change was because on September 30, 2006, we completed the sale
      of
      all the Company's stock of Endo Canada to Mr. Peter Day as fully described
      in
      notes 1 and 9 of Notes to Financial Statements. Thus, our operations were
      discontinued as of September 30, 2006 and gain on assets and liabilities
      transaction with related parties of $703,260 was included in additional paid-in
      capital.





**Contractual
      Obligations and Off-Balance Sheet Arrangements**





***Contractual
      Obligations***





We
      have
      certain commitments that include future payments. We have presented below a
      summary in order to assist in the review of this information within the context
      of our consolidated financial position, results of operations, and cash flows.





**Payments
                Due by Period****Total**
            
            **Less
                than 1 year**
            
            **1-3
                Years**
            
            **3-5
                Years**
            
            **5
                Years +****In
                Thousands**Contractual
                Obligations:Capital
                Lease Obligations
            
            $
            4,814,929
            
            
            4,814,929
            
            
            --
            
            
            --
            
            
            --Operating
                Leases
            
            $
            305,309
            
            
            53,106
            
            
            73,444
            
            
            75,358
            
            
            103,401Total
                Contractual Obligations:
            
            $
            5,120,238
            
            
            4,868,035
            
            
            73,444
            
            
            75,358
            
            
            103,401








Operating
      lease amounts include minimum lease payments under our non-cancelable operating
      leases for office premises and production plants of Hangson. The amounts
      presented are consistent with contractual terms and are not expected to differ
      significantly, unless a substantial change in our headcount needs requires
      us to
      exit an office facility early or expand our occupied space.




Capital
      commitments include capital contribution to a subsidiary and purchase of
      machines for our production of “coal-water mixture” of Hangson.





**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements that have or are reasonably likely
      to
      have a current or future effect on our financial condition, changes in financial
      condition, revenues or expenses, results of operations, liquidity, capital
      expenditures or capital resources that is material to our
      investors.





14


**Related
      Party Transactions**





For
      a
      description of our related party transactions see the section of this Current
      Report entitled “Certain Relationships and Related Transactions.”





**Quantitative
      and Qualitative Disclosures about Market Risk**





***Exchange
      Rates***





Shaanxi
      Suoang maintains its books and records in Renminbi (“RMB”), the lawful currency
      of the PRC. In general, for consolidation purposes, the Company translates
      Shaanxi Suoang’s assets and liabilities into US Dollars using the applicable
      exchange rates prevailing at the balance sheet date, and the statement of income
      is translated at average exchange rates during the reporting period. Adjustments
      resulting from the translation of Shaanxi Suoang’s financial statements are
      recorded as accumulated other comprehensive income.





Until
      July 21, 2005, RMB had been pegged to US$ at the rate of RMB8.30: US$1.00.
      On
      July 21, 2005, the PRC government reformed the exchange rate system into a
      managed floating exchange rate system based on market supply and demand with
      reference to a basket of currencies. In addition, the exchange rate of RMB
      to
      US$ was adjusted to RMB8.11: US$1.00 as of July 21, 2005. The People’s Bank of
      China announces the closing price of a foreign currency such as US$ traded
      against RMB in the inter-bank foreign exchange market after the closing of
      the
      market on each working day, which will become the unified exchange rate for
      the
      trading against RMB on the following working day. The daily trading price of
      US$
      against RMB in the inter-bank foreign exchange market is allowed to float within
      a band of ± 0.3%
      around the unified exchange rate published by the People’s Bank of China. This
      quotation of exchange rates does not imply free convertibility of RMB to other
      foreign currencies. All foreign exchange transactions continue to take place
      either through the Bank of China or other banks authorized to buy and sell
      foreign currencies at the exchange rates quoted by the People’s Bank of China.
      Approval of foreign currency payments by the Bank of China or other institutions
      required submitting a payment application form together with invoices, shipping
      documents and signed contracts.





The
      exchange rates used to translate amounts in RMB into US Dollars for the purposes
      of preparing the consolidated financial statements or otherwise stated in this
      MD&A were as follows:





**September
                30, 2006**
            
            **December
                31, 2005**
            
            **September
                30, 2005**Balance
                sheet items, except for the registered and paid-up capital, as of
                end of
                period/year
            
            
            USD0.127:RMB1
            
            
            USD0.124:RMB1
            
            
            USD0.123:RMB1Amounts
                included in the statement of operations, statement of changes in
                stockholders’ equity and statement of cash flows for the period/ year
                ended
            
            
            USD0.123:RMB1
            
            
            USD0.122:RMB1
            
            
            USD0.122:RMB1






**RISK
      FACTORS**





**Factors
      Affecting Business, Operating Results and Financial
      Condition**





*An
      investment in our securities is very speculative and involves a high degree
      of
      risk. You should carefully consider the following risk factors, along with
      the
      other matters referred to in this Annual Report, before you decide to buy our
      securities. If you decide to buy our securities, you should be able to afford
      a
      complete loss of your investment.*





**Risks
      Associated With Our Business**





***FACTORS
      THAT MAY AFFECT FUTURE PERFORMANCE***




Before
      investing in our common stock you should carefully consider the following risk
      factors, the other information included herein and the information included
      in
      our other reports and filings.  Our business, financial condition, and the
      trading price of our common stock could be adversely affected by these and
      other
      risks.




15


***Our
      limited operating history makes it difficult to evaluate our future prospects
      and results of operations.***




We
      have a
      limited operating history. Shaanxi Suoang commenced operations in 2002 and
      first
      achieved profitability in the year ended 2004. Accordingly, you should consider
      our future prospects in light of the risks and uncertainties experienced by
      early stage companies in evolving industries such as the coal products and
      alternative energy industry in China. Some of these risks and uncertainties
      relate to our ability to:




●  maintain
      our position as one of the market leaders in China;




●  offer
      new
      and innovative products to attract and retain a larger customer
      base;




●  attract
      additional customers and increase spending per customer;




●  increase
      awareness of our brand and continue to develop user and customer
      loyalty;





●  respond
      to competitive market conditions;




●  respond
      to changes in our regulatory environment;





●  manage
      risks associated with intellectual property rights;





●  maintain
      effective control of our costs and expenses;





●  raise
      sufficient capital to sustain and expand our business;




●  attract,
      retain and motivate qualified personnel; and




●  upgrade
      our technology to support additional research and development of new
      products.




If
      we are
      unsuccessful in addressing any of these risks and uncertainties, our business
      may be materially and adversely affected.





***We
      Must Obtain Additional Financing to Execute Our Business
      Plan***




The
      revenues from the production and sale of our coal polymer (“COPO”) resin
      products and the projected revenues from our coal water mixture product are
      not
      adequate to support our expansion and product development programs.  We
      will need substantial additional funds to build and maintain our new production
      facilities, pursue further research and development, obtain regulatory
      approvals; file, prosecute, defend and enforce our intellectual property rights
      and market our products.  We will seek additional funds through public or
      private equity or debt financing, strategic transactions and/or from other
      sources.  We could enter into collaborative arrangements for the
      development of particular products that would lead to our relinquishing some
      or
      all rights to the related technology or products.




There
      are
      no assurances that future funding will be available on favorable terms or at
      all.  If additional funding is not obtained, we will need to reduce, defer
      or cancel development programs, planned initiatives or overhead expenditures,
      to
      the extent necessary.  The failure to fund our capital requirements would
      have a material adverse effect on our business, financial condition and results
      of operations.




***Our
      business and results of operations are dependent on coal markets, which may
      be
      cyclical.***





As
      the
      majority of our revenue is currently derived from sales of coal-based products,
      our business and operating results are substantially dependent on the domestic
      supply for coal. The domestic and international coal markets are cyclical and
      exhibit fluctuation in supply and demand from year to year and are subject
      to
      numerous factors beyond our control, including, but not limited to, the economic
      conditions in the PRC, the global economic conditions and fluctuations in
      industries with high demand for coal, such as the power and steel industries.
      Fluctuations in supply and demand for coal have effects on coal prices which
      in
      turn affect our operating and financial performance. We have experienced
      substantial price fluctuations in the past and believe that such fluctuations
      will continue. The demand for coal is primarily affected by the overall economic
      development and the demand for coal from the electricity generation, steel
      and
      construction industries. The supply of coal on the other hand, is primarily
      affected by the geographical location of the coal supplies, the volume of coal
      produced by the domestic and international coal suppliers, and the quality
      and
      price of competing sources of coal. Alternative fuels such as natural gas,
      oil
      and nuclear power, alternative energy sources such as hydroelectric power,
      and
      international shipping costs also have effects on the market demand for coal.
      Excess demand for coal may have an adverse effect on coal prices which
      would in turn cause a decline in our profitability. A
      significant increase in domestic coal prices could also materially and
      adversely affect our business and result of operations.





16


***Our
      business relies on our major customers.***





For
      the
      years ended December 31, 2004 and 2005, Xinjiang Changji Autonomous
      Prefecture Runze Agricultural Materials Co., Ltd. (“Xingjiang Changji”) and
      Xijiang Akesu Hengfeng Agricultural Development Co., Ltd. (“Xijiang Akesu”) were
      our largest customers, respectively. For the year ended December 31, 2004,
      sales to Xinjiang Changji was $770,889, which represented 16.7% of our total
      net
      sales in 2004. For the year ended December 31, 2005, sales to Xijiang Akesu
      was $610,000, which represented 11% of our total net sales in 2005. Given the
      large percentage of our revenues derived from our sales to these two major
      customers, any adverse developments to Xinjiang Changji’s and Xijiang Akesu’s
      business operations could have an adverse impact on our results of operations.




***Competition
      in the PRC and the international coal industry is increasing and our business
      and prospects will be adversely affected if we are not able to compete
      effectively.***





We
      face
      competition in all areas of our business. Competition in the coal energy
      industry is based on many factors, including price, production capacity, quality
      and characteristics, transportation capability and costs, blending capability
      and brand name. Our coal-based products business competes in the domestic and
      international markets with other large domestic coal-based products companies
      and we will also have to compete with other competitors in the coal water
      mixture product industry. Some of our competitors may have greater financial,
      marketing, distribution and other resources than we do, and more well-known
      brand names in the markets. We currently compete favorably on the quality of
      our
      coal-based products. However, there can be no assurance that we will continue
      to
      compete favorably due to quality improvements by our competitors and this may
      have a material adverse impact on our results of operations.





***We
      may suffer losses resulting from industry-related accidents and lack of
      insurance.***





We
      operate manufacturing facilities that may be affected by water, gas, fire or
      structural problems. As a result, we, like other coal-based products companies,
      may experience accidents that will cause property damage and personal injuries.
      Although we have implemented safety measures for our production facilities
      and
      provided on-the-job training for our employees, there can be no assurance that
      industry-related accidents will not occur in the future.





We
      do not
      currently maintain fire, casualty or other property insurance covering our
      properties, equipment or inventories, other than with respect to vehicles.
      In
      addition, we do not maintain any business interruption insurance or any third
      party liability insurance to cover claims in respect of personal injury,
      property or environmental damage arising from accidents on our properties,
      other
      than third party liability insurance with respect to vehicles. Any uninsured
      losses and liabilities incurred by us could have a material adverse effect
      on
      our financial condition and results of operations.




***Our
      business operations may be adversely affected by present or future environmental
      regulations.***





As
      a
      producer of coal products, we are subject to significant, extensive, and
      increasingly stringent environmental protection laws and regulations in China.
      These laws and regulations:





●  impose
      fees for the discharge of waste substances;





●  require
      the establishment of reserves for reclamation and rehabilitation;





●  require
      the payment of fines for serious environmental offenses; and





● allow
          the
          PRC Government, at its discretion, to close any facility that fails to
          comply
          with orders requiring it to correct or stop operations causing environmental
          damage.





Our
      operations may produce significant amounts of waste water, gas and solid waste
      materials. Currently, the PRC Government is moving toward more rigorous
      enforcement of applicable laws and regulations as well as the adoption and
      enforcement of more stringent environmental standards. Our budgeted amounts
      of
      capital expenditure for environmental regulatory compliance may not be
      sufficient and we may need to allocate additional funds for such purpose. If
      we
      fail to comply with current or future environmental laws and regulations, we
      may
      be required to pay penalties or fines or take corrective actions, any of which
      may have a material adverse effect on our business operations and financial
      condition.





17


In
      addition, China is a signatory to the 1992 United Nations Framework Convention
      on Climate Change and the 1997 Kyoto Protocol, which are intended to limit
      emissions of greenhouse gases. Efforts to control greenhouse gas emission in
      China could result in reduced use of coal if power generators switch to sources
      of fuel with lower carbon dioxide emissions, which in turn could reduce the
      revenues of our coal business and have a material adverse effect on our results
      of operations.




***Our
      operations are subject to a number of risks relating to the
      PRC.***





We
      are
      also subject to a number of risks relating to the PRC, including the following:





●
            The
                central and local PRC governments continue to support the development
                and
                operation of coal industry in China. If the PRC Government changes
                its
                current policies that are currently beneficial to us, we may face
                significant constraints on our flexibility and ability to expand
                our
                business operations or to maximize our
                profitability.





●
            Under
                current PRC regulatory requirements, our projects for the development
                of
                our coal water mixture fuel substitute require PRC Government approval.
                If
                any of our important projects required for our growth or cost reduction
                are not approved, or are not approved on a timely basis, our financial
                condition and operating performances could be adversely
                affected.





●
            The
                PRC Government has been reforming, and is expected to continue to
                reform
                its economic system. Many of the reforms are unprecedented or
                experimental, and are expected to be refined and improved. Other
                political, economic and social factors can also lead to further
                readjustment of the reform measures. This refining and readjustment
                process may not always have a positive effect on our operations.
                Our
                operating results may be adversely affected by changes in the PRC’s
                economic and social conditions and by changes in policies of the
                PRC
                Government such as changes in laws and regulations (or the interpretation
                thereof), imposition of additional restrictions on currency conversion
                and
                reduction in tariff protection and other import
                restrictions.





●
            Since
                1994, the conversion of Renminbi into foreign currencies, including
                Hong
                Kong and U.S. dollars, has been based on rates set by the People’s Bank of
                China, or PBOC, which are set daily based on the previous day’s PRC
                interbank foreign exchange market rate and current exchange rates
                on the
                world financial markets. Since 1994, the official exchange rate for
                the
                conversion of Renminbi to U.S. dollars has generally been stable.
                On
                July 21, 2005, however, PBOC announced a reform of its exchange rate
                system. Under the reform, Renminbi is no longer effectively linked
                to US
                dollars but instead is allowed to trade in a tight 0.3% band against
                a
                basket of foreign currencies. Any further appreciation of Renminbi
                in the
                future will increase the cost of our export sales, reduce our account
                receivables denominated in foreign currencies and adversely affect
                our
                financial condition and results of operations. On the other hand,
                any
                devaluation of the Renminbi may adversely affect the value of, and
                dividends payable on our shares we receive our revenues and denominate
                our
                profits in Renminbi. Our financial condition and operating performance
                may
                also be affected by changes in the value of certain currencies other
                than
                Renminbi in which our earnings and obligations are denominated. In
                particular, a devaluation of the Renminbi is likely to increase the
                portion of our cash flow required to satisfy our foreign
                currency-denominated obligations.





●
            Since
                1997, many new laws and regulations covering general economic matters
                have
                been promulgated in the PRC. Despite this activity to develop the
                legal
                system, PRC’s system of laws is not yet complete. Even where adequate law
                exists, enforcement of existing laws or contracts based on existing
                law
                may be uncertain and sporadic, and it may be difficult to obtain
                swift and
                equitable enforcement or to obtain enforcement of a judgment by a
                court of
                another jurisdiction. The relative inexperience of PRC’s judiciary in many
                cases creates additional uncertainty as to the outcome of any litigation.
                In addition, interpretation of statutes and regulations may be subject
                to
                government policies reflecting domestic political
                changes.





***Our
      coal water mixture production facilities will be subject to extensive regulation
      by the PRC Government and government regulations may limit our activities and
      adversely affect our business operations.***





Our
      coal
      water mixture operations, like those of other PRC energy companies, will be
      subject to extensive regulation established by the PRC Government. Central
      governmental authorities, such as the National Development and Reform
      Commission, the State Environmental Protection Administration, the Ministry
      of
      Land and Resources, the State Administration of Coal Mine Safety, the and the
      State Bureau of Taxation, and provincial and local authorities and agencies
      exercise extensive control over various aspects of China’s coal industry and
      transportation (including rail and sea transport). These controls affect the
      following material aspects of our operations:





●  pricing
      of our transport services;





●  industry-specific
      taxes and fees;





18


●  target
      of
      our capital investments;





●  pension
      funds appropriation; and





●  environmental
      and safety standards.





We
      may
      face significant constraints on our ability to implement our business strategies
      or to carry out or expand our business operations. Our business may also be
      materially and adversely affected by future changes in certain regulations
      and
      policies of the PRC Government in respect of the coal industry. New legislation
      or regulations may be adopted that may materially and adversely affect our
      coal
      water mixture operations, our cost structure or the demand for our products.
      In
      addition, new legislation or regulations or different or more stringent
      interpretation of existing laws and regulations may also require us to
      substantially change our existing operations or incur significant
      costs.





***The
      Profitability of Our Products Depend on Our Ability to Operate Without
      Infringing the Proprietary Rights of Others and to Protect Proprietary
      Rights***




We
      must
      operate without infringing the proprietary rights of third parties and without
      third parties circumventing our rights. The patent positions of coal and
      biotechnology enterprises, including ours, are uncertain and involve complex
      legal and factual questions for which important legal principles are largely
      unresolved.  For example, no consistent policy has emerged regarding the
      breadth of bio-technology patent claims that are granted by the U.S. Patent
      and
      Trademark Office or enforced by the U.S. federal courts.  In addition, the
      scope of the originally claimed subject matter in a patent application can
      be
      significantly reduced before a patent is issued.  The biotechnology patent
      situation outside the U.S. is even more uncertain and is currently undergoing
      review and revision in many countries.  For our products, which have or in
      the future may have, obtained patent protection, their profitability may depend
      in part on our ability to obtain and maintain patents and licenses and preserve
      trade secrets, and the period our intellectual property remains exclusive. 
Because patent applications are maintained in secrecy in some cases, we cannot
      be certain that we or our licensors are the first creators of inventions
      described in our pending patent applications or patents or the first to file
      patent applications for such inventions.




***Other
      companies may independently develop similar products and design around any
      patented products we develop.***





We
      cannot
      assure you that:





●  any
      of
      our patent applications will result in the issuance of patents





●  we
      will
      develop additional patentable products





●  the
      patents we have been issued will provide us with any competitive
      advantages





●  the
      patents of others will not impede our ability to do business; or





●  third
      parties will not be able to circumvent our patents.





A
      number
      of coal-based products companies, bio-technology companies, research and
      academic companies and institutions have developed technologies, filed patent
      applications or received patents on technologies that may relate to our
      business.  If these technologies, applications or patents conflict with
      ours, our ability to sell our products may be curtailed.   If patents
      that cover our activities are issued to other companies, we may not be able
      to
      obtain licenses at a reasonable cost, or at all. We may also be unable to
      develop our technology; or introduce, manufacture or sell current or future
      products we have planned.




Patent
      litigation is becoming widespread in the bio-technology industry.  Such
      litigation may affect our efforts to form collaborations, to conduct research
      or
      development, to conduct clinical testing or to manufacture or market any
      products under development.  There are no assurances that our patents would
      be held valid or enforceable by a court or that a competitor’s technology or
      product would be found to infringe our patents in the event of patent
      litigation.  Our business could be materially affected by an adverse
      outcome to such litigation.   We could incur substantial costs and
      devote significant management resources to defend our patent position or to
      seek
      a declaration that another company’s patents are invalid.




Much
      of
      our know-how and technology may not be patentable, though it may constitute
      trade secrets. There are no assurances that we will be able to meaningfully
      protect our trade secrets.  We cannot assure you that any of our existing
      confidentiality agreements with employees, consultants, advisors or
      collaborators will provide meaningful protection for our trade secrets, know-how
      or other proprietary information in the event of any unauthorized use or
      disclosure.  Collaborators, advisors or consultants may dispute the
      ownership of proprietary rights to our technology, for example by asserting
      that
      they developed the technology independently.




19


***We
      May Encounter Difficulties in Manufacturing our
      Products***




Before
      our products can be profitable, they must be produced in commercial quantities
      in a cost-effective manufacturing process that complies with regulatory
      requirements, including GMP, production and quality control regulations. 
If we cannot arrange for or maintain commercial-scale manufacturing on
      acceptable terms, or if there are delays or difficulties in the manufacturing
      process, we may not be able to conduct clinical testing, obtain regulatory
      approval or meet demand for our products. Production of our products could
      require raw materials which are scarce or which can be obtained only from a
      limited number of sources.  If we are unable to obtain adequate supplies of
      such raw materials, the development, regulatory approval and marketing of our
      products could be delayed.




***We
      May Not Be Able to Obtain the Regulatory Approvals or Clearances That Are
      Necessary to Commercialize Our Products***





The
      PRC
      imposes significant statutory and regulatory obligations upon the manufacture
      and sale of our products.  Each regulatory authority typically has a
      lengthy approval process in which it examines product testing data and the
      facilities in which the product is manufactured.  Regulatory submissions
      must meet complex criteria to demonstrate the safety and efficacy of the
      ultimate products.  Addressing these criteria requires considerable data
      collection, verification and analysis.  We may spend time and money
      preparing regulatory submissions or applications without assurances as to
      whether they will be approved on a timely basis or at all.




Our
      product candidates, some of which are currently in the early stages of
      development, will require additional development prior to their
      commercialization. These steps and the process of obtaining required approvals
      and clearances can be costly and time-consuming.  If our potential products
      are not successfully developed, cannot be proven to be safe and effective
      through product testing, or do not receive applicable regulatory approvals
      and
      clearances, or if there are delays in the process:





●  the
      commercialization of our products could be adversely affected;





●  any
      competitive advantages of the products could be diminished; and





●  revenues
      or collaborative milestones from the products could be reduced or
      delayed.





Governmental
      and regulatory authorities may approve a product candidate for fewer indications
      or narrower circumstances than requested or may condition approval on the
      performance of post-marketing studies for a product candidate.  Even if a
      product receives regulatory approval and clearance, it may later exhibit adverse
      side effects that limit or prevent its widespread use or that force us to
      withdraw the product from the market.




Any
      marketed product and its manufacturer will continue to be subject to strict
      regulation after approval.  Results of post-marketing programs may limit or
      expand the further marketing of products.  Unforeseen problems with an
      approved product or any violation of regulations could result in restrictions
      on
      the product, including its withdrawal from the market and possible civil
      actions.




In
      manufacturing our products we will be required to comply with applicable good
      manufacturing practices regulations, which include requirements relating to
      quality control and quality assurance, as well as the maintenance of records
      and
      documentation.  if we cannot comply with regulatory requirements, including
      applicable good manufacturing practice requirements, we may not be allowed
      to
      develop or market the product candidates.  If we or our manufacturers fail
      to comply with applicable regulatory requirements at any stage during the
      regulatory process, we may be subject to sanctions, including fines, product
      recalls or seizures, injunctions, refusal of regulatory agencies to review
      pending market approval applications or supplements to approve applications,
      total or partial suspension of production, civil penalties, withdrawals of
      previously approved marketing applications and criminal
      prosecution.




***Competitors
      May Develop and Market Products That Are Less Expensive, More Effective or
      Safer, Making Our Products Obsolete or Uncompetitive***




Some
      of
      our competitors and potential competitors have greater product development
      capabilities and financial, scientific, marketing and human resources than
      we
      do.  Technological competition from other alternative energy, coal-based
      product and bio-technology companies is intense and is expected to
      increase.  Other companies have developed technologies that could be the
      basis for competitive products.  Some of these products have an entirely
      different approach or means of accomplishing the desired curative effect than
      products we are developing.  Alternative products may be developed that are
      more effective, work faster and are less costly than our products. 
Competitors may succeed in developing products earlier than us, obtaining
      approvals and clearances for such products more rapidly than us, or developing
      products that are more effective than ours.  In addition, other forms of
      treatment may be competitive with our products. Over time, our technology or
      products may become obsolete or uncompetitive.




20


***Our
      Products May Not Gain Market Acceptance***




Our
      products may not gain market acceptance in the coal-based products and
      bio-technology community.  The degree of market acceptance of any product
      depends on a number of factors, including establishment and demonstration of
      clinical efficacy and safety, cost-effectiveness, clinical advantages over
      alternative products, and marketing and distribution support for the
      products.  Limited information regarding these factors is available in
      connection with our products or products that may compete with
      ours.




To
      directly market and distribute our products, we or our collaborators require
      a
      marketing and sales force with appropriate technical expertise and supporting
      distribution capabilities.  We may not be able to further establish sales,
      marketing and distribution capabilities or enter into arrangements with third
      parties on acceptable terms.  If we or our partners cannot successfully
      market and sell our products, our ability to generate revenue will be
      limited.




***Our
      Operations and the Use of Our Products Could Subject Us to Damages Relating
      to
      Injuries or Accidental Contamination.***




Our
      research and development processes involve the controlled use of hazardous
      materials.  We are subject to federal, provincial and local PRC laws and
      regulations governing the use, manufacture, storage, handling and disposal
      of
      such materials and waste products.  The risk of accidental contamination or
      injury from handling and disposing of such materials cannot be completely
      eliminated. In the event of an accident involving hazardous materials, we could
      be held liable for resulting damages.  We are not insured with respect to
      this liability. Such liability could exceed our resources.  In the future
      we could incur significant costs to comply with PRC environmental laws and
      regulations.





***If
      We Were Successfully Sued for Product Liability, We Could Face Substantial
      liabilities That May Exceed Our Resources.***




We
      may be
      held liable if any product we develop, or any product which is made using our
      technologies, causes injury or is found unsuitable during product testing,
      manufacturing, marketing, sale or use. We currently do not have product
      liability insurance. We are not insured with respect to this liability. If
      we
      choose to obtain product liability insurance but cannot obtain sufficient
      insurance coverage at an acceptable cost or otherwise protect against potential
      product liability claims, the commercialization of products that we develop
      may
      be prevented or inhibited. If we are sued for any injury caused by our products,
      our liability could exceed our total assets.




***We
      Have Limited Business Insurance Coverage.***




The
      insurance industry in China is still at an early stage of development. Insurance
      companies in China offer limited business insurance products. We do not have
      any
      business liability or disruption insurance coverage for our operations in China.
      Any business disruption, litigation or natural disaster may result in our
      incurring substantial costs and the diversion of our resources.





***Our
      Success Depends on Attracting and Retaining Qualified
      Personnel***




We
      depend
      on a core management and scientific team.  The loss of any of these
      individuals could prevent us from achieving our business objective of
      commercializing our product candidates.  Our future success will depend in
      large part on our continued ability to attract and retain other highly qualified
      scientific, technical and management personnel, as well as personnel with
      expertise in clinical testing and government regulation.  We face
      competition for personnel from other companies, universities, public and private
      research institutions, government entities and other organizations.  If our
      recruitment and retention efforts are unsuccessful, our business operations
      could suffer.





**Risk
      Related to the Alternative Energy Industry**





***A
      drop in the retail price of conventional energy or other alternative energy
      may
      have a negative effect on our business.***




A
      customer's decision to purchase our Coal Water Mixture product will be primarily
      driven by the return on investment resulting from the energy savings from our
      Coal Water Mixture product. Any fluctuations in economic and market conditions
      that impact the viability of conventional and other alternative energy sources,
      such as decreases in the prices of oil and other fossil fuels could cause the
      demand for our Coal Water Mixture product to decline. Although we believe that
      current levels of retail energy prices support a reasonable return on investment
      for our Coal Water Mixture product, there can be no assurance that future retail
      pricing of conventional energy and other alternative energy will remain at
      such levels.





21


***Existing
      regulations and changes to such regulations may present technical, regulatory
      and economic barriers to the purchase and use of coal water mixture product,
      which may significantly affect the demand for our
      products.***




Our
      Coal
      Water Mixture product will be subject to oversight and regulation in accordance
      with national and local ordinances or regulations relating to safety,
      environmental protection, and related matters. We are responsible for knowing
      such ordinances and requirements must design our Coal Water Mixture product
      to
      comply with varying standards. Any new government regulations or utility
      policies pertaining to our products may result in significant additional
      expenses to us, our resellers and their customers and, as a result, could cause
      a significant reduction in demand for our product.





If
      our
      Coal Water Mixture product is not suitable for widespread adoption or sufficient
      demand for our Coal Water Mixture product does not develop or takes longer
      to
      develop than we anticipate, our sales would not significantly increase and
      we
      would be unable to achieve or sustain profitability.




The
      market for Coal Water Mixture products is emerging and rapidly evolving, and
      its
      future success is uncertain. If Coal Water Mixture and clean coal technology
      prove unsuitable for widespread commercial deployment or if demand for our
      Coal
      Water Mixture product fails to develop sufficiently, we may be unable to
      generate enough revenues to achieve and sustain profitability. In addition,
      demand for Coal Water Mixture product in the markets and geographic regions
      we
      target may not develop or may develop more slowly than we anticipate. Many
      factors will influence the widespread adoption of coal water
      mixture technology and demand for our products,
      including:





● cost-effectiveness
          of coal water mixture technologies as compared with conventional and other
          alternative energy technologies;





● performance
          and reliability of our coal water mixture product as compared with conventional
          and other alternative energy products;





●  capital
      expenditures by customers that tend to decrease if the PRC or global economy
      slows down; and





●  availability
      of government subsidies and incentives.





**Risks
      Related to Our Corporate Structure**




***PRC
      laws and regulations governing our businesses and the validity of certain of
      our
      contractual arrangements are uncertain. If we are found to be in violation,
      we
      could be subject to sanctions. In addition, changes in such PRC laws and
      regulations may materially and adversely affect our business.***




There
      are
      substantial uncertainties regarding the interpretation and application of PRC
      laws and regulations, including, but not limited to, the laws and regulations
      governing our business, or the enforcement and performance of our contractual
      arrangements with our affiliated Chinese entity, Shaanxi Suoang, and its
      shareholders. We are considered a foreign person or foreign invested enterprise
      under PRC law. As a result, we are subject to PRC law limitations on foreign
      ownership of Chinese companies. These laws and regulations are relatively new
      and may be subject to change, and their official interpretation and enforcement
      may involve substantial uncertainty. The effectiveness of newly enacted laws,
      regulations or amendments may be delayed, resulting in detrimental reliance
      by
      foreign investors. New laws and regulations that affect existing and proposed
      future businesses may also be applied retroactively.




The
      PRC
      government has broad discretion in dealing with violations of laws and
      regulations, including levying fines, revoking business and other licenses
      and
      requiring actions necessary for compliance. In particular, licenses and permits
      issued or granted to us by relevant governmental bodies may be revoked at a
      later time by higher regulatory bodies. We cannot predict the effect of the
      interpretation of existing or new PRC laws or regulations on our businesses.
      We
      cannot assure you that our current ownership and operating structure would
      not
      be found in violation of any current or future PRC laws or regulations. As
      a
      result, we may be subject to sanctions, including fines, and could be required
      to restructure our operations or cease to provide certain services. Any of
      these
      or similar actions could significantly disrupt our business operations or
      restrict us from conducting a substantial portion of our business operations,
      which could materially and adversely affect our business, financial condition
      and results of operations.





***We
      may be adversely affected by complexity, uncertainties and changes in PRC
      regulation of our business and companies, including limitations on our ability
      to own key assets.***




The
      PRC
      government regulates the coal and bio-technology industries including foreign
      ownership of, and the licensing and permit requirements pertaining to, companies
      in these industry. These laws and regulations are relatively new and evolving,
      and their interpretation and enforcement involve significant uncertainty. As
      a
      result, in certain circumstances it may be difficult to determine what actions
      or omissions may be deemed to be a violation of applicable laws and regulations.
      Issues, risks and uncertainties relating to PRC government regulation of our
      industry include the following:




22




●
            we
                only have contractual control over Shaanxi Suoang. We do not own
                it due to
                the restriction of foreign investment in Chinese businesses;
                and





●
            uncertainties
                relating to the regulation of the coal product and alternative energy
                business in China, including evolving licensing practices, means
                that
                permits, licenses or operations at our company may be subject to
                challenge. This may disrupt our business, or subject us to sanctions,
                requirements to increase capital or other conditions or enforcement,
                or
                compromise enforceability of related contractual arrangements, or
                have
                other harmful effects on us.




The
      interpretation and application of existing PRC laws, regulations and policies
      and possible new laws, regulations or policies have created substantial
      uncertainties regarding the legality of existing and future foreign investments
      in, and the businesses and activities of, alternative energy and bio-technology
      businesses in China, including our business.




***In
      order to comply with PRC laws limiting foreign ownership of Chinese companies,
      we conduct our business through Shaanxi Suoang by means of contractual
      arrangements. If the PRC government determines that these contractual
      arrangements do not comply with applicable regulations, our business could
      be
      adversely affected.***




The
      PRC
      government restricts foreign investment in businesses in China. Accordingly,
      we
      operate our business in China through Shaanxi Suoang. Shaanxi Suoang holds
      the
      licenses and approvals necessary to operate our coal-based products business
      in
      China. We have contractual arrangements with Shaanxi Suoang and its shareholders
      that allow us to substantially control Shaanxi Suoang. We cannot assure you,
      however, that we will be able to enforce these contracts.




Although
      we believe we comply with current PRC regulations, we cannot assure you that
      the
      PRC government would agree that these operating arrangements comply with PRC
      licensing, registration or other regulatory requirements, with existing policies
      or with requirements or policies that may be adopted in the future. If the
      PRC
      government determines that we do not comply with applicable law, it could revoke
      our business and operating licenses, require us to discontinue or restrict
      our
      operations, restrict our right to collect revenues, require us to restructure
      our operations, impose additional conditions or requirements with which we
      may
      not be able to comply, impose restrictions on our business operations or on
      our
      customers, or take other regulatory or enforcement actions against us that
      could
      be harmful to our business.




***Our
      contractual arrangements with Shaanxi Suoang and its shareholders may not be
      as
      effective in providing control over these entities as direct ownership.***




Since
      PRC
      law limits foreign equity ownership in companies in China, we operate our
      business through an affiliated Chinese company, referred to herein as Shaanxi
      Suoang. We have no equity ownership interest in Shaanxi Suoang and rely on
      contractual arrangements to control and operate such business. These contractual
      arrangements may not be as effective in providing control over Shaanxi Suoang
      as
      direct ownership. For example, Shaanxi Suoang could fail to take actions
      required for our business despite its contractual obligation to do so. If
      Shaanxi Suoang fails to perform under their agreements with us, we may have
      to
      rely on legal remedies under PRC law, which may not be effective. In addition,
      we cannot assure you that Shaanxi Suoang’s shareholders would always act in our
      best interests.





***The
      Chairman of the Board of Directors of Shaanxi Suoang has potential conflicts
      of
      interest with us, which may adversely affect our business.***




Baowen
      Ren, our Chief Executive Officer, is also the Chairman of the Board of Directors
      of Shaanxi Suoang. Conflicts of interests between his duties to our company
      and
      Shaanxi Suoang may arise. As Mr. Ren is a director and executive officer of
      our
      company, he has a duty of loyalty and care to us under Nevada law when there
      are
      any potential conflicts of interests between our company and Shaanxi Suoang.
      We
      cannot assure you, however, that when conflicts of interest arise, Mr. Ren
      will
      act completely in our interests or that conflicts of interests will be resolved
      in our favor. In addition, Mr. Ren could violate his legal duties by diverting
      business opportunities from us to others. If we cannot resolve any conflicts
      of
      interest between us and Mr. Ren, we would have to rely on legal proceedings,
      which could result in the disruption of our business.




23


**Risks
      Related to Doing Business in China**




***Adverse
      changes in economic and political policies of the PRC government could have
      a
      material adverse effect on the overall economic growth of China, which could
      adversely affect our business.***




Substantially
      all of our business operations are conducted in China. Accordingly, our results
      of operations, financial condition and prospects are subject to a significant
      degree to economic, political and legal developments in China. China’s economy
      differs from the economies of most developed countries in many respects,
      including with respect to the amount of government involvement, level of
      development, growth rate, control of foreign exchange and allocation of
      resources. While the PRC economy has experienced significant growth in the
      past
      20 years, growth has been uneven across different regions and among various
      economic sectors of China. The PRC government has implemented various measures
      to encourage economic development and guide the allocation of resources. Some
      of
      these measures benefit the overall PRC economy, but may also have a negative
      effect on us. For example, our financial condition and results of operations
      may
      be adversely affected by government control over capital investments or changes
      in tax regulations that are applicable to us. Since early 2004, the PRC
      government has implemented certain measures to control the pace of economic
      growth. Such measures may cause a decrease in the level of economic activity
      in
      China, which in turn could adversely affect our results of operations and
      financial condition.




***If
      PRC law were to phase out the preferential tax benefits currently being extended
      to foreign invested enterprises and “new or high-technology enterprises” located
      in a high-tech zone, we would have to pay more taxes, which could have a
      material and adverse effect on our financial condition and results of
      operations.***




Under
      PRC
      laws and regulations, a foreign invested enterprise may enjoy preferential
      tax
      benefits if it is registered in a high-tech zone and also qualifies as “new or
      high-technology enterprise”. As a foreign invested enterprise as well as a
      certified “new or high-technology enterprise” located in a high-tech zone in
      Beijing, Shaanxi Suoang is entitled to a two-year exemption from enterprise
      income tax beginning from its first year of operation, followed by a 15% tax
      rate so long as it continues to qualify as a “new or high-technology
      enterprise.” Shaanxi Suoang is currently subject to a 15% enterprise income tax
      rate for so long as its status as a “new or high-technology enterprise” remains
      unchanged. If the PRC law were to phase out preferential tax benefits currently
      granted to “new or high-technology enterprises” and technology consulting
      services, we would be subject to the standard statutory tax rate, which
      currently is 33%, and we would be unable to obtain business tax refunds for
      our
      provision of technology consulting services. Loss of these preferential tax
      treatments could have a material and adverse effect on our financial condition
      and results of operations.




***Shaanxi
      Suoang is subject to restrictions on making payments to us.***




We
      are a
      holding company incorporated in the British Virgin Islands and do not have
      any
      assets or conduct any business operations other than our investments in our
      affiliated entity in China, Shaanxi Suoang. As a result of our holding company
      structure, we rely entirely on payments from Shaanxi Suoang under our
      contractual arrangements. The PRC government also imposes controls on the
      conversion of RMB into foreign currencies and the remittance of currencies
      out
      of China. We may experience difficulties in completing the administrative
      procedures necessary to obtain and remit foreign currency. See “Government
      control of currency conversion may affect the value of your investment.”
Furthermore, if our affiliated entity in China incurs debt on its own in the
      future, the instruments governing the debt may restrict its ability to make
      payments. If we are unable to receive all of the revenues from our operations
      through these contractual or dividend arrangements, we may be unable to pay
      dividends on our ordinary shares.





***Uncertainties
      with respect to the PRC legal system could adversely affect us.***




We
      conduct our business primarily through our affiliated Chinese entity, Shaanxi
      Suoang. Our operations in China are governed by PRC laws and regulations. We
      are
      generally subject to laws and regulations applicable to foreign investments
      in
      China and, in particular, laws applicable to wholly foreign-owned enterprises.
      The PRC legal system is based on written statutes. Prior court decisions may
      be
      cited for reference but have limited precedential value.




Since
      1979, PRC legislation and regulations have significantly enhanced the
      protections afforded to various forms of foreign investments in China. However,
      China has not developed a fully integrated legal system and recently enacted
      laws and regulations may not sufficiently cover all aspects of economic
      activities in China. In particular, because these laws and regulations are
      relatively new, and because of the limited volume of published decisions and
      their nonbinding nature, the interpretation and enforcement of these laws and
      regulations involve uncertainties. In addition, the PRC legal system is based
      in
      part on government policies and internal rules (some of which are not published
      on a timely basis or at all) that may have a retroactive effect. As a result,
      we
      may not be aware of our violation of these policies and rules until some time
      after the violation. In addition, any litigation in China may be protracted
      and
      result in substantial costs and diversion of resources and management attention.




24


***You
      may experience difficulties in effecting service of legal process, enforcing
      foreign judgments or bringing original actions in China based on United States
      or other foreign laws against us, our management or the experts named in the
      prospectus.***




We
      conduct substantially all of our operations in China and substantially all
      of
      our assets are located in China. In addition, most of our senior executive
      officers reside within China. As a result, it may not be possible to effect
      service of process within the United States or elsewhere outside China upon
      our
      senior executive officers, including with respect to matters arising under
      U.S.
      federal securities laws or applicable state securities laws. Moreover, our
      PRC
      counsel has advised us that the PRC does not have treaties with the United
      States or many other countries providing for the reciprocal recognition and
      enforcement of judgment of courts.





***Governmental
      control of currency conversion may affect the value of your investment.***




The
      PRC
      government imposes controls on the convertibility of RMB into foreign currencies
      and, in certain cases, the remittance of currency out of China. We receive
      substantially all of our revenues in RMB. Under our current structure, our
      income is primarily derived from payments from Shaanxi Suoang. Shortages in
      the
      availability of foreign currency may restrict the ability of our PRC
      subsidiaries and our affiliated entity to remit sufficient foreign currency
      to
      pay dividends or other payments to us, or otherwise satisfy their foreign
      currency denominated obligations. Under existing PRC foreign exchange
      regulations, payments of current account items, including profit distributions,
      interest payments and expenditures from trade-related transactions, can be
      made
      in foreign currencies without prior approval from the PRC State Administration
      of Foreign Exchange by complying with certain procedural requirements. However,
      approval from appropriate government authorities is required where RMB is to
      be
      converted into foreign currency and remitted out of China to pay capital
      expenses such as the repayment of bank loans denominated in foreign currencies.
      The PRC government may also at its discretion restrict access in the future
      to
      foreign currencies for current account transactions. If the foreign exchange
      control system prevents us from obtaining sufficient foreign currency to satisfy
      our currency demands, we may not be able to pay dividends in foreign currencies
      to our shareholders.




***Fluctuation
      in the value of RMB may have a material adverse effect on your investment.***




The
      value
      of RMB against the U.S. dollar and other currencies may fluctuate and is
      affected by, among other things, changes in political and economic conditions.
      Our revenues and costs are mostly denominated in RMB, while a significant
      portion of our financial assets are denominated in U.S. dollars. We rely
      entirely on fees paid to us by our affiliated entity in China. Any significant
      fluctuation in value of RMB may materially and adversely affect our cash flows,
      revenues, earnings and financial position, and the value of, and any dividends
      payable on, our stock in U.S. dollars. For example, an appreciation of RMB
      against the U.S. dollar would make any new RMB denominated investments or
      expenditures more costly to us, to the extent that we need to convert U.S.
      dollars into RMB for such purposes. An appreciation of RMB against the U.S.
      dollar would also result in foreign currency translation losses for financial
      reporting purposes when we translate our U.S. dollar denominated financial
      assets into RMB, as RMB is our reporting currency.





***We
      face risks related to health epidemics and other outbreaks.***




Our
      business could be adversely affected by the effects of SARS or another epidemic
      or outbreak. China reported a number of cases of SARS in April 2004. Any
      prolonged recurrence of SARS or other adverse public health developments in
      China may have a material adverse effect on our business operations. For
      instance, health or other government regulations adopted in response may require
      temporary closure of our production facilities or of our offices. Such closures
      would severely disrupt our business operations and adversely affect our results
      of operations. We have not adopted any written preventive measures or
      contingency plans to combat any future outbreak of SARS or any other epidemic.




**Risks
      Related to an Investment in Our Securities**




***To
      Date, We Have Not Paid Any Cash Dividends and No Cash Dividends Will be Paid
      in
      the Foreseeable Future.***





We
      do not
      anticipate paying cash dividends on our common stock in the foreseeable future
      and we may not have sufficient funds legally available to pay dividends. Even
      if
      the funds are legally available for distribution, we may nevertheless decide
      not
      to pay any dividends. We intend to retain all earnings for the company's
      operations.





***The
      Application of the "Penny Stock" Rules Could Adversely Affect the Market Price
      of Our Common Stock and Increase Your Transaction Costs to Sell Those Shares.***





As
      long
      as the trading price of our common shares is below $5 per share, the open-market
      trading of our common shares will be subject to the "penny stock" rules. The
      "penny stock" rules impose additional sales practice requirements on
      broker-dealers who sell securities to persons other than established customers
      and accredited investors (generally those with assets in excess of $1,000,000
      or
      annual income exceeding $200,000 or $300,000 together with their spouse). For
      transactions covered by these rules, the broker-dealer must make a special
      suitability determination for the purchase of securities and have received
      the
      purchaser's written consent to the transaction before the purchase.
      Additionally, for any transaction involving a penny stock, unless exempt, the
      broker-dealer must deliver, before the transaction, a disclosure schedule
      prescribed by the Securities and Exchange Commission relating to the penny
      stock
      market. The broker-dealer also must disclose the commissions payable to both
      the
      broker-dealer and the registered representative and current quotations for
      the
      securities. Finally, monthly statements must be sent disclosing recent price
      information on the limited market in penny stocks. These additional burdens
      imposed on broker-dealers may restrict the ability or decrease the willingness
      of broker-dealers to sell our common shares, and may result in decreased
      liquidity for our common shares and increased transaction costs for sales and
      purchases of our common shares as compared to other securities.





25


***Our
      Common Shares are Thinly Traded and, You May be Unable to Sell at or Near Ask
      Prices or at All if You Need to Sell Your Shares to Raise Money or Otherwise
      Desire to Liquidate Your Shares.***





The
      Company cannot predict the extent to which an active public market for its
      common stock will develop or be sustained. However, the Company does not rule
      out the possibility of applying for listing on the Nasdaq National Market or
      other exchanges.




Our
      common shares have historically been sporadically or "thinly-traded" on the
      “Over-the-Counter Bulletin Board”, meaning that the number of persons interested
      in purchasing our common shares at or near bid prices at any given time may
      be
      relatively small or non-existent. This situation is attributable to a number
      of
      factors, including the fact that we are a small company which is relatively
      unknown to stock analysts, stock brokers, institutional investors and others
      in
      the investment community that generate or influence sales volume, and that
      even
      if we came to the attention of such persons, they tend to be risk-averse and
      would be reluctant to follow an unproven company such as ours or purchase or
      recommend the purchase of our shares until such time as we became more seasoned
      and viable. As a consequence, there may be periods of several days or more
      when
      trading activity in our shares is minimal or non-existent, as compared to a
      seasoned issuer which has a large and steady volume of trading activity that
      will generally support continuous sales without an adverse effect on share
      price. We cannot give you any assurance that a broader or more active public
      trading market for our common stock will develop or be sustained, or that
      current trading levels will be sustained.




The
      market price for our common stock is particularly volatile given our status
      as a
      relatively small company with a small and thinly traded “float” and lack of
      current revenues that could lead to wide fluctuations in our share price. The
      price at which you purchase our common stock may not be indicative of the price
      that will prevail in the trading market. You may be unable to sell your common
      stock at or above your purchase price if at all, which may result in substantial
      losses to you.





The
      market for our common shares is characterized by significant price volatility
      when compared to seasoned issuers, and we expect that our share price will
      continue to be more volatile than a seasoned issuer for the indefinite future.
      The volatility in our share price is attributable to a number of factors. First,
      as noted above, our common shares are sporadically and/or thinly traded. As
      a
      consequence of this lack of liquidity, the trading of relatively small
      quantities of shares by our shareholders may disproportionately influence the
      price of those shares in either direction. The price for our shares could,
      for
      example, decline precipitously in the event that a large number of our common
      shares are sold on the market without commensurate demand, as compared to a
      seasoned issuer which could better absorb those sales without adverse impact
      on
      its share price. Secondly, we are a speculative or "risky" investment due to
      our
      lack of revenues or profits to date and uncertainty of future market acceptance
      for our current and potential products. As a consequence of this enhanced risk,
      more risk-adverse investors may, under the fear of losing all or most of their
      investment in the event of negative news or lack of progress, be more inclined
      to sell their shares on the market more quickly and at greater discounts than
      would be the case with the stock of a seasoned issuer. The following factors
      may
      add to the volatility in the price of our common shares: actual or anticipated
      variations in our quarterly or annual operating results; adverse outcomes;
      the
      termination of our contractual agreements with Shaanxi Suoang; and additions
      or
      departures of our key personnel, as well as other items discussed under this
      "Risk Factors" section, as well as elsewhere in this Current Report. Many of
      these factors are beyond our control and may decrease the market price of our
      common shares, regardless of our operating performance. We cannot make any
      predictions or projections as to what the prevailing market price for our common
      shares will be at any time, including as to whether our common shares will
      sustain their current market prices, or as to what effect that the sale of
      shares or the availability of common shares for sale at any time will have
      on
      the prevailing market price. However, the Company does not rule out the
      possibility of applying for listing on the Nasdaq National Market or other
      exchanges.





Shareholders
      should be aware that, according to SEC Release No. 34-29093, the market for
      penny stocks has suffered in recent years from patterns of fraud and abuse.
      Such
      patterns include (1) control of the market for the security by one or a few
      broker-dealers that are often related to the promoter or issuer; (2)
      manipulation of prices through prearranged matching of purchases and sales
      and
      false and misleading press releases; (3) boiler room practices involving
      high-pressure sales tactics and unrealistic price projections by inexperienced
      sales persons; (4) excessive and undisclosed bid-ask differential and markups
      by
      selling broker-dealers; and (5) the wholesale dumping of the same securities
      by
      promoters and broker-dealers after prices have been manipulated to a desired
      level, along with the resulting inevitable collapse of those prices and with
      consequent investor losses. Our management is aware of the abuses that have
      occurred historically in the penny stock market. Although we do not expect
      to be
      in a position to dictate the behavior of the market or of broker-dealers who
      participate in the market, management will strive within the confines of
      practical limitations to prevent the described patterns from being established
      with respect to our securities. The occurrence of these patterns or practices
      could increase the volatility of our share price.




26


***Volatility
      in Our Common Share Price May Subject Us to Securities Litigation.***





The
      market for our common stock is characterized by significant price volatility
      when compared to seasoned issuers, and we expect that our share price will
      continue to be more volatile than a seasoned issuer for the indefinite future.
      In the past, plaintiffs have often initiated securities class action litigation
      against a company following periods of volatility in the market price of its
      securities. We may, in the future, be the target of similar litigation.
      Securities litigation could result in substantial costs and liabilities and
      could divert management's attention and resources.





***Our
      corporate actions are substantially controlled by our principal shareholders
      and
      affiliated entities.***




Our
      principal shareholders and their affiliated entities will own approximately
      85%
      of our outstanding ordinary shares, representing approximately 85% of our voting
      power. These shareholders, acting individually or as a group, could exert
      substantial influence over matters such as electing directors and approving
      mergers or other business combination transactions. In addition, because of
      the
      percentage of ownership and voting concentration in these principal shareholders
      and their affiliated entities, elections of our board of directors will
      generally be within the control of these shareholders and their affiliated
      entities. While all of our shareholders are entitled to vote on matters
      submitted to our shareholders for approval, the concentration of shares and
      voting control presently lies with these principal shareholders and their
      affiliated entities. As such, it would be difficult for shareholders to propose
      and have approved proposals not supported by management. There can be no
      assurances that matters voted upon by our officers and directors in their
      capacity as shareholders will be viewed favorably by all shareholders of the
      company.





***The
      Elimination of Monetary Liability Against our Directors, Officers and Employees
      under Nevada law and the Existence of Indemnification Rights to our Directors,
      Officers and Employees may Result in Substantial Expenditures by our Company
      and
      may Discourage Lawsuits Against our Directors, Officers and Employees.***





Our
      articles of incorporation contains a provision that eliminates the liability
      of
      our directors for monetary damages to our company and shareholders to the extent
      allowed under Nevada law and we are prepared to give such indemnification to
      our
      directors and officers to the extent provided by Nevada law. We may also have
      contractual indemnification obligations under our employment agreements with
      our
      officers. The foregoing indemnification obligations could result in our company
      incurring substantial expenditures to cover the cost of settlement or damage
      awards against directors and officers, which we may be unable to recoup. These
      provisions and resultant costs may also discourage our company from bringing
      a
      lawsuit against directors and officers for breaches of their fiduciary duties,
      and may similarly discourage the filing of derivative litigation by our
      shareholders against our directors and officers even though such actions, if
      successful, might otherwise benefit our company and shareholders.




***Legislative
      Actions, Higher Insurance Costs and Potential New Accounting Pronouncements
      may
      Impact our Future Financial Position and Results of
      Operations.***





There
      have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and
      there may potentially be new accounting pronouncements or additional regulatory
      rulings that will have an impact on our future financial position and results
      of
      operations. The Sarbanes-Oxley Act of 2002 and other rule changes as well as
      proposed legislative initiatives following the Enron bankruptcy are likely
      to
      increase general and administrative costs and expenses. In addition, insurers
      are likely to increase premiums as a result of high claims rates over the past
      several years, which we expect will increase our premiums for insurance
      policies. Further, there could be changes in certain accounting rules. These
      and
      other potential changes could materially increase the expenses we report under
      generally accepted accounting principles, and adversely affect our operating
      results.





***Past
      Activities Of The Company And Its Affiliates May Lead To Future Liability For
      The Company.***





Prior
      to
      our entry into the Exchange Agreement with Hangson on October 20, 2006, the
      Company engaged in businesses unrelated to its current operations. Although
      the
      Endo Shareholders are providing certain indemnifications against any loss,
      liability, claim, damage or expense arising out of or based on any breach of
      or
      inaccuracy in any of their representations and warranties made regarding such
      acquisition, any liabilities relating to such prior business against which
      Hangson is not completely indemnified may have a material adverse effect on
      the
      Company.




27


***The
      market price for our stock may be volatile.***




The
      market price for our stock may be volatile and subject to wide fluctuations
      in
      response to factors including the following:





●  actual
      or
      anticipated fluctuations in our quarterly operating results;





●  changes
      in financial estimates by securities research analysts;





●  conditions
      in bio-technology and coal-based product markets;





●  changes
      in the economic performance or market valuations of other alternative energy
      and
      coal-based products companies;





● announcements
          by us or our competitors of new products, acquisitions, strategic partnerships,
          joint ventures or capital commitments;





●  addition
      or departure of key personnel;





●  fluctuations
      of exchange rates between RMB and the U.S. dollar;





●  intellectual
      property litigation; and





●  general
      economic or political conditions in China.




In
      addition, the securities market has from time to time experienced significant
      price and volume fluctuations that are not related to the operating performance
      of particular companies. These market fluctuations may also materially and
      adversely affect the market price of our stock.




***We
      may need additional capital, and the sale of additional shares or other equity
      securities could result in additional dilution to our shareholders.***




We
      believe that our current cash and cash equivalents, anticipated cash flow from
      operations and the net proceeds from this offering will be sufficient to meet
      our anticipated cash needs for the near future. We may, however, require
      additional cash resources due to changed business conditions or other future
      developments, including any investments or acquisitions we may decide to pursue.
      If our resources are insufficient to satisfy our cash requirements, we may
      seek
      to sell additional equity or debt securities or obtain a credit facility. The
      sale of additional equity securities could result in additional dilution to
      our
      shareholders. The incurrence of indebtedness would result in increased debt
      service obligations and could result in operating and financing covenants that
      would restrict our operations. We cannot assure you that financing will be
      available in amounts or on terms acceptable to us, if at all.





***If
      we fail to maintain an effective system of internal controls, we may not be
      able
      to accurately report our financial results or prevent fraud.***




We
      will
      be subject to reporting obligations under the U.S. securities laws. The
      Securities and Exchange Commission, or the SEC, as required by Section 404
      of
      the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company
      to
      include a management report on such company’s internal controls over financial
      reporting in its annual report, which contains management’s assessment of the
      effectiveness of the company’s internal controls over financial reporting. In
      addition, an independent registered public accounting firm must attest to and
      report on management’s assessment of the effectiveness of the company’s internal
      controls over financial reporting. Our management may conclude that our internal
      controls over our financial reporting are not effective. Moreover, even if
      our
      management concludes that our internal controls over financial reporting are
      effective, our independent registered public accounting firm may still decline
      to attest to our management’s assessment or may issue a report that is qualified
      if it is not satisfied with our controls or the level at which our controls
      are
      documented, designed, operated or reviewed, or if it interprets the relevant
      requirements differently from us. Our reporting obligations as a public company
      will place a significant strain on our management, operational and financial
      resources and systems for the foreseeable future. Effective internal controls,
      particularly those related to revenue recognition, are necessary for us to
      produce reliable financial reports and are important to help prevent fraud.
      As a
      result, our failure to achieve and maintain effective internal controls over
      financial reporting could result in the loss of investor confidence in the
      reliability of our financial statements, which in turn could harm our business
      and negatively impact the trading price of our stock. Furthermore, we anticipate
      that we will incur considerable costs and use significant management time and
      other resources in an effort to comply with Section 404 and other requirements
      of the Sarbanes-Oxley Act.




28


***We
      will incur increased costs as a result of being a public company.***




As
      a
      public company, we will incur significant legal, accounting and other expenses
      that we did not incur as a private company. In addition, the Sarbanes-Oxley
      Act,
      as well as new rules subsequently implemented by SEC have required changes
      in
      corporate governance practices of public companies. We expect these new rules
      and regulations to increase our legal, accounting and financial compliance
      costs
      and to make certain corporate activities more time-consuming and costly. In
      addition, we will incur additional costs associated with our public company
      reporting requirements. We are currently evaluating and monitoring developments
      with respect to these new rules, and we cannot predict or estimate the amount
      of
      additional costs we may incur or the timing of such costs.








29


**ITEM
      7. FINANCIAL STATEMENTS**





**CHINA
          WEST COAL ENERGY INC.**
 **(FORMERLY
        ENDO NETWORKS, INC.)**
  
  **CONSOLIDATED
        FINANCIAL STATEMENTS**
  
  **SEPTEMBER
        30, 2006 and 2005**
  
   30
   **INDEX
        TO CONSOLIDATED FINANCIAL STATEMENTS**
  
  
  
  
  **Page****REPORT
                  OF INDEPENDENT REGISTERED PUBLIC****ACCOUNTING
                  FIRM**
              **F-1A****REPORT
                  OF PREVIOUS INDEPENDENT REGISTERED**
                **PUBLIC
                  ACCOUNTING FIRM**
              **F-1B****CONSOLIDATED
                  BALANCE SHEET**
              **F-2****CONSOLIDATED
                  STATEMENTS OF OPERATIONS**
              **F-3****CONSOLIDATED
                  STATEMENT OF STOCKHOLDERS’ DEFICIT**
              **F-4****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS**
              **F-5****NOTES
                  TO CONSOLIDATED FINANCIAL STATEMENTS**
              **F-6
                  to F-18**
 
   31
 REPORT
              OF
              INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To
              the
              Board of Directors and Stockholders of China West Coal Energy Inc.
              (formerly
              Endo Networks, Inc.)
  We
              have
              audited the accompanying consolidated balance sheet of China West Coal
              Energy
              Inc. (formerly Endo Networks, Inc.) as at September 30, 2006 and the
              related
              consolidated statements of operations, cash flows and changes in stockholders’
deficit for the year ended September 30, 2006.  These consolidated
              financial statements are the responsibility of the management of China
              West Coal
              Energy Inc. (formerly Endo Networks, Inc.) Our responsibility is to
              express an
              opinion on these consolidated financial statements based on our
              audit . The
              consolidated balance sheet, statements of operations, cash flows and
              changes in
              stockholder deficit as of and for the year ended September 30, 2005
              were audited
              by other auditors, whose report dated December 29, 2005 expressed an
              opinion
              without reservation.
  We
              conducted our audit in accordance with the standards of the Public
              Company
              Accounting Oversight Board (United States). Those standards require
              that we plan
              and perform the audit to obtain reasonable assurance about whether
              the
              consolidated financial statements are free of material misstatement.
              An audit
              includes examining, on a test basis, evidence supporting the amounts
              and
              disclosures in the consolidated financial statements. An audit also
              includes
              assessing the accounting principles used and significant estimates
              made by
              management, as well as evaluating the overall financial statement presentation.
              We believe that our audit provides a reasonable basis for our
              opinion.
  In
              our
              opinion, the consolidated financial statements referred to above present
              fairly,
              in all material respects, the financial position of China West Coal
              Energy Inc.
              (formerly Endo Networks, Inc.) as of September 30, 2006 and the results
              of its
              operations and its cash flows for the year ended September 30, 2006
              in
              conformity with United States generally accepted accounting.
  The
              accompanying consolidated financial statements have been prepared assuming
              that
              the Company will continue as a going concern. As discussed in note
              3 to the
              consolidated financial statements, the Company has sustained recurring
              losses,
              has no source of revenue and has limited working capital. These conditions
              raise
              substantial 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 10. The
              consolidated financial statements do not include any adjustments that
              might
              result from the outcome of this uncertainty.
  Toronto,
              Ontario, Canada
  January
              8, 2007
  /s/
                        Schwartz Levitsky Feldman LLP_____________________________Schwartz
                        Levitsky Feldman LLPChartered
                        AccountantsLicensed
                        Public Accountants
 F-1A
 REPORT
              OF
              INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To
              the
              Board of Directors
 China
              West Coal Energy, Inc
 (formerly
              known as Endo Networks, Inc.)
 Xi’an
              Shaanxi Province, People’s Republic of China
 
 We
              have
              audited the accompanying balance sheet of China West Coal Energy, Inc.
              (formerly
              known as Endo Networks, Inc.) (the “Company”) as of September 30, 2005, and the
              related statements of operations, stockholders’ deficit, and cash flows for the
              year then ended. These financial statements are the responsibility
              of the
              Company’s management. Our responsibility is to express an opinion of these
              financial statements based on our audit.
 
 We
              conducted our audit in accordance with the standards of the Public
              Company
              Accounting Oversight Board (United States). Those standards require
              that we 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. We believe that our audit provides
              a
              reasonable basis for our opinion.
 
 In
              our
              opinion, the financial statement referred to above present fairly,
              in all
              material respects, the financial position of Endo Networks, Inc. as
              of September
              30, 2005, and the results of its operations and its cash flows for
              the year then
              ended, in conformity with the accounting principles generally accepted
              in the
              United States of America.
 
 The
              accompanying financial statements have been prepared assuming that
              the Company
              will continue as a going concern. As discussed in Note 3 to the financial
              statements, the Company has incurred losses from operations for the
              year ended
              September 30, 2005 totaling approximately $214,000 and has negative
              net worth
              approximating $215,000 and current liabilities exceed current assets
              by
              approximately $512,000. The Company will require additional working
              capital to
              develop its business until it either (1) achieves a level of revenues
              adequate
              to generate sufficient cash flows from operations; or (2) obtains additional
              financing necessary to support its working capital requirements. These
              conditions raise substantial doubt about the Company’s ability to continue as a
              going concern. Management’s plans regard to this matter are described in Note 3.
              The accompanying financial statements do not include any adjustments
              that might
              results from the outcome of these uncertainties.
 
 /s/
              LBB
& Associates, Ltd., LLP
 LBB
&
              Associates, Ltd., LLP (formerly Lopez, Blevins, Bork & Associates,
              LLP)
 Houston,
              Texas
 December
              29, 2005 (except for Note 10a. which is dated January 17, 2007)
 F-1B
   **CHINA
              WEST COAL ENERGY INC.**
 **(FORMERLY
              **ENDO
              NETWORKS, INC.**)**
 **CONSOLIDATED
          BALANCE SHEETS**
 **As
          at September 30, 2006 and 2005**
 2006
                  
                  2005ASSETSCURRENT
                      ASSETSAccounts
                      receivable, net of allowance for doubtfulaccounts
                      of $Nil (2005: $Nil)
                  
                  $
                  —
                  
                  $
                  83,209Prepaid
                      expenses
                  
                  
                  —
                  
                  
                  59,728Total
                      current assets
                  
                  
                  —
                  
                  
                  142,937Property
                      and equipment, net of accumulated depreciation (note 4)
                  
                  
                  —
                  
                  
                  441,170TOTAL
                      ASSETS
                  
                  $
                  —
                  
                  $
                  584,107LIABILITIES
                      AND STOCKHOLDERS’ DEFINCIENCYLIABILITIESCurrent
                      Liabilities:Current
                      maturities of capital leases payable
                  
                  $
                  —
                  
                  $
                  54,028Accounts
                      payable
                  
                  
                  —
                  
                  
                  196,092Accrued
                      expenses related party
                  
                  
                  —
                  
                  
                  251,120Accrued
                      expenses - other
                  
                  
                  10,000
                  
                  
                  153,244Total
                      current liabilities
                  
                  
                  10,000
                  
                  
                  654,484Capital
                      leases payable
                  
                  
                  —
                  
                  
                  144,13210,000
                  
                  
                  798,616COMMITMENTS
                      (note 5)STOCKHOLDERS’
                      DEFICITCommon
                      stock, $0.001 par value, 50,000,000 shares authorized,2,712,000
                      shares (2005: 2,544,073) issued and outstanding (note 7)
                  
                  
                  2,712
                  
                  
                  2,544Additional
                      paid-in capital
                  
                  
                  1,143,368
                  
                  
                  314,726Accumulated
                      deficit
                  
                  
                  (1,271,176
                  )
                  
                  (668,777
                  )Accumulated
                      other comprehensive income
                  
                  
                  115,096
                  
                  
                  136,998Total
                      Stockholders’ Deficit
                  
                  
                  (10,000
                  )
                  
                  (214,509
                  )TOTAL
                      LIABILITIES AND STOCKHOLDERS’ DEFICIT
                  
                  $
                  —
                  
                  $
                  584,107
  **The
            accompanying notes are an integral part of these consolidated financial
            statements.**
  F-2
  **CHINA
            WEST COAL ENERGY INC.**
 **(FORMERLY
            **ENDO
            NETWORKS, INC.**)**
  **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
 Years
          Ended September 30, 2006 and 2005
  2006
                  
                  
                  2005Revenue
                  
                  $
                  923,129
                  
                  $
                  1,289,498Cost
                      of goods sold
                  
                  
                  468,926
                  
                  
                  599,483Gross
                      profit
                  
                  
                  454,203
                  
                  
                  690,015Operating
                      expensesDepreciation
                      and amortization
                  
                  
                  105,733
                  
                  
                  95,684General
                      and administrative
                  
                  
                  950,869
                  
                  
                  808,552Total
                      operating expenses
                  
                  
                  1,056,602
                  
                  
                  904,236Net
                      loss
                  
                  
                  (602,399
                  )
                  
                  (214,221
                  )Other
                      comprehensive incomeForeign
                      currency translation adjustment
                  
                  
                  (21,902
                  )
                  
                  92,883Comprehensive
                      loss
                  
                  $
                  (624,301
                  )
                  $
                  (121,338
                  )Net
                      loss per share (basic and diluted)
                  
                  $
                  (0.23
                  )
                  $
                  (0.08
                  )Weighted
                      average shares of common stock outstandingBasic
                      and diluted
                  
                  
                  2,588,101
                  
                  
                  2,538,618
 The
          accompanying notes are an integral
          part of these consolidated financial statements.
  F-3
  ****CHINA
          WEST COAL ENERGY INC.**** **(FORMERLY
            **ENDO
            NETWORKS, INC.**)**
  **CONSOLIDATED
          STATEMENTS OF STOCKHOLDERS’ DEFICIT**
 Years
          Ended September 30, 2006 and 2005
 Common
                      StockShare
                  
                  
                  Amount
                  
                  
                  Additional
                    Paid-in
                      Capital
                  
                  
                  Accumulated 
Deficit
                  
                  
                  Accumulated
                    Other
                    Comprehensive
                    Income
                  
                  
                  TotalBalance,
                      September 30, 2004
                  
                  
                  2,533,073
                  
                  $
                  2,533
                  
                  $
                  309,237
                  
                  $
                  (454,556
                  )
                  $
                  44,115
                  
                  $
                  (98,671
                  )Common
                      stock issued for services
                  
                  
                  11,000
                  
                  
                  11
                  
                  
                  5,489
                  
                  
                  —
                  
                  
                  —
                  
                  
                  5,500Net
                      loss for the year endedSeptember
                      30, 2005
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (214,221
                  )
                  
                  —
                  
                  
                  (214,221
                  )Foreign
                      currency translation adjustment
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  92,883
                  
                  
                  92,883Balance,
                      September 30, 2005
                  
                  
                  2,544,073
                  
                  
                  2,544
                  
                  
                  314,726
                  
                  
                  (668,777
                  )
                  
                  136,998
                  
                  
                  (214,509
                  )Common
                      stock issued for services
                  
                  
                  167,400
                  
                  
                  168
                  
                  
                  125,382
                  
                  
                  —
                  
                  
                  —
                  
                  
                  125,550Corrective
                      issuance of common stock
                  
                  
                  527
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —Net
                      loss for the year endedSeptember
                      30, 2006
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (602,399
                  )
                  
                  —
                  
                  
                  (602,399
                  )Gain
                    on assets and liabilities transaction with related parties
                  
                  
                  
                  
                  
                  
                  
                  
                  703,260
                  
                  
                  
                  
                  
                  
                  
                  
                  703,260Foreign
                      currency translation adjustment
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (21,902
                  )
                  
                  (21,902
                  )Balance,
                      September 30, 2006
                  
                  
                  2,712,000
                  
                  $
                  2,712
                  
                  $
                  1,143,368
                  
                  $
                  (1,271,176
                  )
                  $
                  115,096
                  
                  $
                  (10,000
                  )
  The
          accompanying notes are an integral part of
          these consolidated financial statements.
 
 F-4
 **CHINA
          WEST COAL ENERGY INC.**
 **(FORMERLY
            **ENDO
            NETWORKS, INC.**)**
  **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 Years
          Ended September 30, 2006 and 2005
 2006
                  
                  
                  2005CASH
                      FLOWS USED IN FROM DISCONTINUED OPERATIONSNet
                      loss
                  
                  $
                  (602,399
                  )
                  $
                  (214,221
                  )Adjustments
                      to reconcile net income (loss) to netcash
                      used in operating activities:Bad
                      debts
                  
                  
                  —
                  
                  
                  20,717Depreciation
                      and amortization
                  
                  
                  170,463
                  
                  
                  254,029Common
                      stock issued for services
                  
                  
                  125,550
                  
                  
                  5,500Changes
                      in:Accounts
                      receivable
                  
                  
                  (120,453
                  )
                  
                  —Prepaid
                      expenses
                  
                  
                  (23,582
                  )
                  
                  —Accounts
                      payable
                  
                  
                  65,024
                  
                  
                  (88,336
                  )Accrued
                      expenses to related party
                  
                  
                  273,093
                  
                  
                  —Accrued
                      expenses
                  
                  
                  10,000
                  
                  
                  121,175Other
                      current liabilities
                  
                  
                  325,522
                  
                  
                  —Net
                      cash from operating activities
                  
                  
                  223,218
                  
                  
                  152,752CASH
                      FLOWS FROM INVESTING ACTITIES:Purchase
                      of property and equipment
                  
                  
                  (17,650
                  )
                  
                  (202,242
                  )Net
                      cash used in investing activities
                  
                  
                  (17,650
                  )
                  
                  (202,242
                  )CASH
                      FLOWS FROM FINANCING ACTIVITIESLease
                      financing payments
                  
                  
                  (202,130
                  )
                  
                  (14,616
                  )Net
                      cash used in financing activities
                  
                  
                  (202,130
                  )
                  
                  (14,616
                  )Effect
                      of foreign exchange rate changes on cash
                  
                  
                  (3,438
                  )
                  
                  52,494Net
                      change in cash
                  
                  
                  —
                  
                  
                  (11,612
                  )Cash,
                      beginning of period
                  
                  
                  —
                  
                  
                  11,612Cash,
                      end of period
                  
                  $
                  —
                  
                  $
                  —
  The
          accompanying notes are an integral part of
          these consolidated financial statements.
  F-5
 **CHINA
            WEST COAL ENERGY INC.**
 **(FORMERLY
              **ENDO
              NETWORKS, INC.**)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
          30, 2006 AND 2005**
 
 
 1.****
                DESCRIPTION
                    OF BUSINESS AND COMPANY STRUCTURE
 
 China
          West Coal Energy Inc., formerly known as Endo Networks, Inc. (the “Company”),
          was originally incorporated in Texas as “Discount Mortgage Services, Inc.” on
          July 11, 2000. The Company purchased Endo Networks, Inc., a corporation
          incorporated in Ontario, Canada on January 11, 2001 (“Endo Canada”). In November
          2001, the Company changed its name to Endo Networks, Inc. and was redomiciled
          to
          the State of Nevada in December 2002. The Company conducted business through
          Endo Canada and all of its assets were contained within Endo Canada, which
          engaged in conceptual and software development business for approximately
          two
          years through ongoing contract relationships with software development
          companies.
  The
          Company has incurred losses and has had substantial difficulty in maintaining
          necessary cash flows for proper operation for years. The Company also required
          additional investment in infrastructure to sustain and develop its business.
          The
          need could not be met by its current cash flows. In view of the foregoing
          lack
          of growth and the limited platform for its future growth, the Company’s Board
          determined that it would be in the stockholders’ best interests to sell its
          investment in Endo Canada to Mr. Peter B. Day, the Company’s President, CEO and
          director.  The Company’s Board believed that Mr. Day’s knowledge of their
          operations would lead to an efficient and expeditious sale process.  An
          Asset and Share Purchase Agreement (the “Purchase Agreement”) by and between the
          Company and Mr. Day was approved by the Board and executed on June 26,
          2006. The
          Company thus discontinued its operations as a result of this sale with
          effect
          from September 30, 2006. The Company then entered into a definitive Share
          Exchange Agreement to acquire Hangson Limited, a British Virgin Islands
          corporation on October 18, 2006. The transaction was closed on October
          20, 2006
          and Hangson became the Company’s wholly owned subsidiary after this event. For
          details of the event, please refer to note 10.
 
 
 2.
                SUMMARY
                    OF SIGNIFICANT ACCOUNTING POLICES
  Cash
          Equivalents
  The
          Company considers all highly liquid investment instruments purchased with
          original maturities of three months or less when acquired to be cash
          equivalents.
  Revenue
          Recognition
  The
          Company recognizes revenue when persuasive evidence of an arrangement exists,
          delivery has occurred, the sales price is fixed or determinable and collect
          ability is probable.  The Company recognizes revenue from the sale of
          advertising related products and services like interactive advertising,
          studio
          promotion, and event management as the services are performed.
  F-6
  2.
                SUMMARY
                    OF SIGNIFICANT ACCOUNTING POLICES
                    (CONTINUED)
  Revenue
          Recognition (Cont’d)
  Revenue
          derived from professional services provided on a time and materials basis
          is
          recognized as services are performed.
  For
          time
          and material contracts, revenue is recognized and billed by multiplying
          the
          number of hours expended by our professionals in the performance of the
          contract
          by the established billing rates.  For fixed fee projects, revenue is
          generally recognized using the proportionate performance method.
 Provisions for estimated losses on uncompleted contracts are made on a
          contract-by-contract basis and are recognized in the period in which such
          losses
          are determined.
  Accounts
          Receivable
  The
          Company maintains allowances for doubtful accounts on all its accounts
          receivable for estimated losses resulting from the inability of its customers
          and others to make required payments.  If the financial condition of the
          Company's customers and others were to deteriorate, resulting in an impairment
          of their ability to make payments, additional allowances may be
          required.
  Use
          of
          Estimates
  The
          preparation of financial statements in conformity with accounting principles
          generally accepted in the United States of America requires management
          to make
          estimates and assumptions that affect the reported amounts of assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date of
          the financial statements and the reported amounts of revenues and expenses
          during the reporting period. Actual results could differ from these
          estimates.
  Property
          and equipment
  Property
          and equipment are stated at cost.  Depreciation of property and equipment
          is calculated on straight-line method over the estimated useful lives of
          the
          assets.  Impairment losses are recorded on long-lived assets used in
          operations when indicators of impairment are present and the undiscounted
          cash
          flows estimated to be generated by those assets are less than the assets'
          carrying amount.  No impairment losses have been recorded since
          inception.
  Comprehensive
          income
  SFAS
          No.
          130, “Reporting Comprehensive Income”, requires disclosure of all components of
          comprehensive income and loss on an annual and interim basis. Comprehensive
          income and loss is defined as the change in equity of a business enterprise
          during a period from transactions and other events and circumstances from
          non-owner sources. Accumulated other comprehensive income arose from the
          changes
          in foreign currency exchange rates.
 Stock
            Based Compensation
  The
            Company has adopted the fair value accounting for employee stock options
            as per
            SFAS 123(R) using the modified retrospective application method, effective
            April
            1, 2005. The fair value of the stock options are amortized into income
            over the
            vesting period of the options.
  F-7
  2.
                SUMMARY
                    OF SIGNIFICANT ACCOUNTING POLICES
                    (CONTINUED)
  Impairment
          of long-lived assets
  The
          Company monitors the recoverability of long-lived assets, including property
          and
          equipment and intangible assets, based upon estimates using factors such
          as
          expected future asset utilization, business climate, and undiscounted cash
          flows
          resulting from the use of the related assets or to be realized on sale.
          The
          Company policy is to write down assets to the estimated net recoverable
          amount,
          in the period in which it is determined likely that the carrying amount
          of the
          asset will not be recoverable.
  Income
          Taxes
  Income
          taxes are computed using the asset and liability method.  Under the asset
          and liability method, deferred income tax assets and liabilities are determined
          based on the differences between the financial reporting and tax basis
          of assets
          and liabilities and are measured using the currently enacted tax rates
          and laws.
          A valuation allowance is provided for the amount of deferred tax assets
          that,
          based on available evidence, are not expected to be realized.
  Net
          income (loss) per share
  The
          basic
          net income (loss) per common share is computed by dividing the net income
          (loss)
          applicable to common stockholders by the weighted average number of common
          shares outstanding.
  Diluted
          net income (loss) per common share is computed by dividing the net income
          (loss)
          applicable to common stockholders, adjusted on an "as if converted" basis,
          by
          the weighted average number of common shares outstanding plus potential
          dilutive
          securities.
  For
          the
          year ended September 30, 2005 potential dilutive securities had an anti-dilutive
          effect and were not included in the calculation of diluted net profit loss
          per
          common share.  These securities consisted of Nil and 126,800 of stock
          options at September 30, 2006 and 2005 respectively.
  Software
          Capitalization
  The
          Company adopted Statement of Position (SOP) 98-1, "Accounting for the Costs
          of Computer Software Developed or Obtained for Internal Use". In accordance
          with
          this standard, certain direct development costs associated with internal-use
          software are capitalized, including external direct costs of material and
          services, and payroll costs for employees devoting time to the software
          projects.  These costs are amortized over a period not to exceed five years
          beginning when the asset is substantially ready for use. Costs incurred
          during
          the preliminary project stage, as well as maintenance and training, are
          expensed
          as incurred.
  F-8
  2.
                SUMMARY
                    OF SIGNIFICANT ACCOUNTING POLICES
                    (CONTINUED)
  Advertising
  Advertising
          and promotional costs are expensed when incurred. These expenses were $18,062
          and $2,822 for the years ended September 30, 2006 and 2005
          respectively.
  Financial
          instruments
  The
          carrying amount of the Company financial instruments, which include accounts
          receivable, accounts payable and accrued liabilities, capital leases payable
          approximate fair value. It is management opinion that the Company is not
          exposed to significant interest, currency or credit risk arising from these
          financial instruments unless otherwise noted.
  Foreign
            Currency Translation
  As
            nearly
            all operations of the Company are conducted in Canada, the Canadian dollar
            is
            the functional currency. All balance sheet accounts have been translated
            at the
            current exchange rate as of September 30, 2006. Statement of operations
            items
            have been translated at average currency exchange rates during the years
            ended
            September 30, 2006 and 2005. The resulting translation adjustment is
            recorded as
            a separate component of comprehensive loss within stockholders’
deficit.
 Recently
          Issued Accounting Pronouncements
  In
          February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
          Financial Instruments”. SFAS No. 155 amends SFAS No 133, “Accounting for
          Derivative Instruments and Hedging Activities”, and SFAF No. 140, “Accounting
          for Transfers and Servicing of Financial Assets and Extinguishments of
          Liabilities”. SFAS No. 155, permits fair value remeasurement for any hybrid
          financial instrument that contains an embedded derivative that otherwise
          would
          require bifurcation, clarifies which interest-only strips and principal-only
          strips are not subject to the requirements of SFAS No. 133, establishes
          a
          requirement to evaluate interest in securitized financial assets to identify
          interests that are freestanding derivatives or that are hybrid financial
          instruments that contain an embedded derivative requiring bifurcation,
          clarifies
          that concentrations of credit risk in the form of subordination are not
          embedded
          derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
          qualifying special-purpose entity from holding a derivative financial instrument
          that pertains to a beneficial interest other than another derivative financial
          instrument. This statement is effective for all financial instruments acquired
          or issued after the beginning of the Company’s first fiscal year that begins
          after September 15, 2006. The Company’s management has not evaluated the impact
          of this pronouncement on the Company’s consolidated financial statements.
  In
          June
          2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
          Income Taxes - an interpretation of FASB Statement No. 109” (“FIN 48”) which
          prescribes a recognition threshold and measurement attribute, as well as
          criteria for subsequently recognizing, derecognizing and measuring uncertain
          tax
          positions for financial statement purposes. FIN 48 also requires expanded
          disclosure with respect to the uncertainty in income tax assets and liabilities.
          FIN 48 is effective for fiscal years beginning after December 15, 2006,
          which
          will be the Company’s fiscal 2008, and is required to be recognized as a change
          in accounting principle through a cumulative-effect adjustment to retained
          earnings as of the beginning of the year of adoption. The adoption of FIN
          48 is
          not expected to have a material impact on the Company’s consolidated results of
          operations or financial position.
  F-9
  2.
                SUMMARY
                    OF SIGNIFICANT ACCOUNTING POLICES
                    (CONTINUED)
  Recently
          Issued Accounting Pronouncements (Cont’d)
  In
          June
          2006, the Financial Accounting Standards Board (“FASB”) ratified the provisions
          of Emerging Issues Task Force (“EITF”) Issue No. 06-3, “How Taxes Collected from
          Customers and Remitted to Governmental Authorities Should Be Presented
          in the
          Income Statement (That Is, Gross versus Net Presentation).” EITF Issue No. 06-3
          requires that the presentation of taxes within revenue-producing transactions
          between a seller and a customer, including but not limited to sales, use,
          value
          added, and some excise taxes, should be on either a gross (included in
          revenue
          and cost) or a net (excluded from revenue) basis. In addition, for any
          such
          taxes that are reported on a gross basis, a company should disclose the
          amounts
          of those taxes in interim and annual financial statements for each period
          for
          which an income statement is presented if those amounts are significant.
          The
          disclosure of those taxes can be done on an aggregate basis. EITF Issue
          No. 06-3
          is effective for fiscal years beginning after December 15, 2006, which
          will be
          the Company’s fiscal year 2008. The adoption of EITF Issue No. 06-3 is not
          expected to have a material impact on the Company’s consolidated results of
          operations or financial position.
  In
          September 2006, the Securities and Exchange Commission issued Staff Accounting
          Bulletin No.108 (“SAB No. 108”), “Considering the Effects of Prior Year
          Misstatements when Quantifying Current Year Misstatements”. SAB No. 108 requires
          analysis of misstatements using both an income statement (rollover) approach
          and
          a balance sheet (iron curtain) approach in assessing materiality and provides
          for a one-time cumulative effect transition adjustment. SAB No. 108 is
          effective
          for the fiscal year beginning November 15, 2006. The Company is reviewing
          SAB
          No. 108 to determine what effect, if any, its adoption will have on the
          Company’s consolidated financial statement presentation and
          disclosures.
  In
          March
          2006, the FASB issued SFAS No. 156. This Statement amends FASB Statement
          No.
          140, Accounting for Transfers and Servicing of Financial Assets and
          Extinguishments of Liabilities, with respect to the accounting for separately
          recognized servicing assets and servicing liabilities. This Statement is
          effective as of the beginning of its first fiscal year that begins after
          September 15, 2006.
  An
          entity
          should apply the requirements for recognition and initial measurement of
          servicing assets and servicing liabilities prospectively to all transactions
          after the effective date of this Statement.
  In
          September 2006, the FASB issued SFAS No. 157 and No. 158. Statement No.
          157
          defines fair value, establishes a framework for measuring fair value in
          generally accepted accounting principles (GAAP), and expands disclosures
          about
          fair value measurements. This Statement applies under other accounting
          pronouncements that require or permit fair value measurements, the Board
          having
          previously concluded in those accounting pronouncements that fair value
          is the
          relevant measurement attribute. Accordingly, this Statement does not require
          any
          new fair value measurements. However, for some entities, the application
          of this
          Statement will change current practice.
  F-10
  2.
                SUMMARY
                    OF SIGNIFICANT ACCOUNTING POLICES
                    (CONTINUED)
  Recently
          Issued Accounting Pronouncements (Cont’d)
  Statement
          No. 158 is an amendment of FASB Statements No. 87, 88, 106, and 132(R).
          It
          improves financial reporting by requiring an employer to recognize the
          over
          funded or under funded status of a defined benefit postretirement plan
          (other
          than a multiemployer plan) as an asset or liability in its statement of
          financial position and to recognize changes in that funded status in the
          year in
          which the changes occur through comprehensive income of a business entity
          or
          changes in unrestricted net assets of a not-for-profit organization. This
          Statement also improves financial reporting by requiring an employer to
          measure
          the funded status of a plan as of the date of its year-end statement of
          financial position, with limited exceptions.
  The
          Company does not expect application of SFAS No. 156, 157 and 158 to have
          a
          material affect on its consolidated financial statements.
  3.
                GOING
                    CONCERN
 The
            Company has incurred losses and has had substantial difficulties in maintaining
            necessary cash flows for proper operations for years. For the year ended
            September 30, 2006 and 2005, the Company incurred losses totaling $602,399
            and
            $214,221, and at September 30, 2005 had a working capital deficit of
            $511,547.
            The Company’s accumulated deficit as of September 30, 2006 and 2005 are totaling
            $1,271,176 and $668,777 respectively. Because of these recurring losses,
            the
            Company encountered difficulties in acquiring additional working capital
            to
            develop and/or renew its business operations.  These factors raise
            substantial doubt about the Company’s ability to continue as a going concern. In
            addition to discontinuing the unprofitable operations, Management has
            entered
            into Share Exchange Agreement as disclosed below which they believe will
            ultimately reverse these negative trends. No assurances can be given
            that
            Management’s plans will be successful. The consolidated financial statements do
            not include any adjustments that might result from the outcome of this
            uncertainty.
  The
            Company had entered into a definitive Share Exchange Agreement to acquire
            Hangson Limited, a British Virgin Islands corporation after it sold all
            of its
            assets and liabilities to Mr. Peter B. Day, the Company’s President, CEO and
            director under an Asset and Share Purchase Agreement signed between the
            Company
            and Mr. Day on June 26, 2006. On October 20, 2006, the Company completed
            a share
            exchange transaction with Hangson Limited, a British Virgin Islands company
            (“Hangson”) and Hangson’s shareholders (the “Exchange”) that resulted in Hangson
            becoming a wholly owned subsidiary of Endo and also resulted in a change
            of
            control of the Company. The Exchange was accounted for as a reverse acquisition
            and recapitalization and, as a result, Endo’s (the legal acquirer) consolidated
            financial statements will, in substance, be those of Hangson (the accounting
            acquirer). This event may eventually mitigate the Company’s going concern
            problem.
  F-11
 4.
                  FURNITURE
                      AND EQUIPMENT
  Furniture
          and equipment consisted of the following as of September 30, 2006 and
          2005:
 
 Estimated
                  Useful
                  Life
                  (in
                    years)
                
                2006
                
                2005Automobiles
                
                
                3
                
                
                —
                
                $
                3,337Kiosk
                    equipment
                
                
                3
                
                
                —
                
                
                229,671Furniture
                    and
                    equipment
                
                
                5-7
                
                
                —
                
                
                664,095Computer
                    equipment and software
                
                
                3-5
                
                
                —
                
                
                33,664Intellectual
                    property
                
                
                2
                
                
                —
                
                
                344,160Application
                    development (software)
                
                
                3
                
                
                —
                
                
                36,043—
                
                
                1,310,970Less:
                    accumulated depreciation and Amortization
                
                
                
                
                
                —
                
                
                (869,800
                )—
                
                $
                441,170
 
  Depreciation
          and amortization expense was $170,463 and $254,029 for the year ended September
          30, 2006 and 2005, respectively.
  As
          of
          September 30, 2006, all the assets were sold in accordance with the Asset
          and
          Share Purchase Agreement.
  F-12
  5.
                  COMMITMENTS
  Capital
          Leases
  The
          Company leased equipment under long-term lease agreements.  Property and
          equipment includes equipment under capital leases as of September 30, 2006
          and
          2005 were $Nil and $659,514 respectively. The monthly payments for this
          note are
          $5,890 with the final payment due in August 2008.  The balance outstanding
          on the capital lease payable at September 30, 2006 and 2005 was $ Nil and
          $198,160 respectively.
  Future
          maturities of these capital leases payable are as follows:
  Year
                    Ending September 30,
                
                2006
                
                20052006
                
                
                —
                
                $
                54,0282007
                
                
                —
                
                
                60,2802008
                
                
                —
                
                
                83,852—
                
                
                198,160Less:
                    current portion
                
                
                —
                
                
                (54,028
                )Total
                    non-current portion
                
                
                —
                
                $
                144,132
  Operating
          Lease
  The
          Company leases its office space on a month-to-month basis. The Company
          had no
          other operating leases for the years ended September 30, 2006 and 2005.
          Rent
          expense was $23,849 and $23,675 for the years ended September 30, 2006
          and 2005
          respectively.
 6.
                    INCOME
                        TAXES
  For
          the
          years ended September 30, 2006 and 2005, the Company has incurred net losses
          and, therefore, has no tax liability.  The net deferred tax asset generated
          by the loss carry-forward has been fully reserved.  The cumulative net
          operating loss carry-forward is approximately $1,271,000 and $669,000 at
          September 30, 2006 and 2005 respectively, and will expire in the years
          2021
          through 2025.The provision for refundable Federal income tax for the years
          ended
          September 30 consists of the following:
  September
                    30,
                  2006
                
                September
                    30,
                  2005Refundable
                    Federal income tax attributable to:Current
                    operations
                
                
                —
                
                $
                (72,800
                )Less,
                    Change in valuation allowance
                
                
                —
                
                
                72,800Net
                    refundable amount
                
                
                —
                
                
                —
  F-13
 6.
                      INCOME
                          TAXES  (CONTINUED)
 The
          cumulative tax effect at the expected rate of 34% of significant items
          comprising the Company net deferred tax amounts are as follows:
  September
                    30,
                  2006
                
                September
                    30,
                  2005Deferred
                    tax asset attributable to:Net
                    operating loss carryover
                
                $
                (197,900
                )
                $
                (227,400
                )Less,
                    Valuation allowance
                
                
                197,900
                
                
                227,400Net
                    deferred tax asset
                
                
                —
                
                
                —
 
 7.
                        STOCKHOLDERS'
                            DEFICIT
  Common
          Stock:
  The
          Company is authorized to issue 50,000,000 common shares of stock at a par
          value
          of $0.001 per share. These shares have full voting rights.  At September
          30, 2006 and 2005, there were 2,712,000 and 2,544,073 shares outstanding
after
          givingeffect
          for the 5:1 reverse stock split on October 17, 2006.  The Company
          has not paid a dividend to its shareholders.
  During
          June 2006, the Company issued 167,400 shares of common stock in return
          for
          consulting services provided by two consultants. Based on the last trading
          price
          prior to the issuance of the stock a non-cash consulting expense of $125,550
          was
          recorded for the issuance of these shares.
  During
          July 2005, the Company issued 11,000 shares of common stock for services
          valued
          at $0.50 per share or $5,500 which was the fair value of common stock on
          the
          date issued.
  Stock
          Options:
  No stock
          options were issued in 2006 and 2005.
  F-14
  7.
                        STOCKHOLDERS'
                            DEFICIT
                            (CONTINUED)
  Stock
          Options: (Cont’d)
  The
          following table summarizes stock option activity:
  2006
                
                2005Outstanding,
                    beginning of the year
                
                
                126,800
                
                
                126,800Granted
                
                
                —
                
                
                —Canceled
                
                
                —
                
                
                —Exercised
                
                
                —
                    —
                
                
                —Expired
                
                
                (126,800
                )Outstanding,
                    end of year
                
                
                —
                
                
                126,800Exercisable
                    at end of year
                
                
                —
                
                
                126,800Weighted-average
                    grant-date fair
                  Value
                    of options, granted during the year
                
                $
                0.00
                
                $
                0.00Weighted-average
                    remaining, years
                  Of
                    contractual life
                
                $
                0.00
                
                $
                0.25
  The
          fair
          value of each option granted is estimated on the date of grant using the
          Black-Scholes option-pricing model with the following weighted average
          assumptions used for grants in fiscal 2004:  zero dividend yield, expected
          volatility of 195%, risk-free interest rate of 2.75% and expected lives
          of 2
          years.
  The
          options granted have an exercise price of $2.50 per share and vest at the
          date
          of issuance. The maximum exercise term of the options is two
          years.
  F-15
  8.
                CONCENTRATIONS
                    OF CREDIT RISK
  As
          of
          September 30, 2005, amounts due from two customers individually amounted
          to 48%
          and 14% of total trade accounts receivable.
  For
          the
          year ended September 30, 2006 two customers individually accounted for 50%
          and 10% of total revenues. For the year ended September 30, 2005, the Company
          had four customers that individually accounted for 31%, 20%, 13%, and 12%
          of
          total revenues.
  9.
                RELATED
                    PARTY TRANSACTIONS
 According
            to a verbal agreement the Company pays its President approximately $8,600
            per
            month in consulting fees for the years ended September 30, 2005 and 2006.
            the
            Company has accrued consulting fees due to its President in the amount
            of
            $238,787 at September 30, 2005. At September 30, 2005, an additional
            $12,333 was
            owed to the President for an advance he made to the Company. These amounts
            were
            recorded under accrued expenses - related parties in the financial statements.
  On
            June
            26, 2006, the Company signed an Asset Purchase Agreement with its President,
            Peter B. Day, to sell all of the Company’s assets and 100% of the stock of Endo
            Canada, a wholly owned subsidiary of the Company. All of the Company’s assets
            and virtually all of its liabilities are held in Endo Canada. As consideration
            for the sale, Mr. Day agreed to assume substantially all of the Company’s
            liabilities including above-mentioned accrued expenses.
  The
            Company also pays for the President’s home office rent. For the year ended
            September 30, 2005 and 2006, the total rent paid by the Company for the
            President’s home office was $17,900 and $15,064.
 10.
                      SUBSEQUENT
                          EVENTS
 a)
                Reverse
                    split on outstanding shares and name change:
 The
              Company affected a 1 for 5 reverse split of its common stock, which
              is effective
              as of October 17, 2006.  The Company’s Board of Directors approved the
              Reverse Split in June 2006 and a majority of its stockholders approved
              it at the
              annual shareholder meeting on September 5, 2006. The Company had a total of
              2,712,000 shares of common stock outstanding after the reverse split.
 
 Effective
              on January 4, 2007, the Company changed its name from “Endo Networks, Inc.” to
“China West Coal Energy Inc.” and increased the number of its authorized shares
              of capital stock to 250,000,000 shares, which includes 200,000,000
              shares of
              common stock and 50,000,000 shares of preferred stock, by filing a
              Certificate
              of Amendment to amend its Articles of Incorporation.
 
 On
              November 27, 2006, holders of a majority of the Company’s outstanding common
              stock approved the name change and the Authorized Shares Amendment
              to the
              Company’s Articles of Incorporation.
 
 On
              December 8, 2006, the Company filed a definitive information statement
              on
              Schedule 14C with the SEC, which was delivered to its stockholders
              of record to
              notify them that the stockholders had approved the above name change
              and the
              authorized shares amendment to the Company’s Articles of Incorporation.
  b)
                    Share
                        exchange and reverse merger transaction:
 
 On
              October 18, 2006, the Company executed a Share Exchange Agreement (“Exchange
              Agreement”) by and among Hangson Limited, a business company incorporated under
              the laws of the British Virgin Islands (“Hangson”), and the stockholders of 100%
              of Hangson’s common stock (the “Hangson Stockholders”), on the one hand, and the
              Company and a majority of the Registrant’s stockholders (“the Company
              Stockholders”), on the other hand. This transaction was closed on October 20,
              2006.
 
 Under
              the
              Exchange Agreement, on the Closing Date, the Company issued a total
              of
              26,000,000 shares of Common Stock (the “ENDO Shares”) to the Hangson
              Stockholders and to Viking Partners, Inc., a consultant in this transaction,
              in
              exchange for 100% of the common stock of Hangson. Additionally, immediately
              prior to the Closing Date, Peter B. Day, the Company’s then President, CEO and
              sole director voluntarily cancelled 715,500 (post-reverse split) shares
              of the
              915,500 (post 1 for 5 reverse split) shares of the Company’s common
              stock that he owns; and three of the Company’s other shareholders also
              voluntarily cancelled a total of 438,850 (post 1 for 5 reverse split
              as
              mentioned above) shares of the Company’s common stock that they own, and the
              Company issued an additional 669,600 shares pursuant to certain anti-dilution
              provisions contained in agreements the Company had with two
              consultants. After the reverse split mentioned above, the cancellations
              and the
              consultant anti-dilution share issuances, the Company had a total of
              28,227,250 shares of common stock outstanding. In addition, at Closing,
              Hangson paid the Company’s creditors a total of US $500,000 for services
              rendered, in order to satisfy certain obligations as set forth in the
              Exchange
              Agreement. The Company accounted for this Share Exchange as a reverse
              acquisition and recapitalization and, as a result, the Company’s consolidated
              financial statements are in substance those of Hangson, with the assets
              and
              liabilities, and revenues and expenses, of the Company being included
              effective
              from the date of the Share Exchange.
 F-16
  10.
                SUBSEQUENT
                    EVENTS(CONTINUED)
  Hangson
          is a company incorporated under the laws of the British Virgin Islands
          on June
          2, 2006.  The Company is engaged in the production and sale of coal-polymer
          (“COPO”) resin products, including but not limited to, degradable mulch used for
          the conservation of moisture and warmth of soil and protection of the roots
          of
          plants, and materials used for plastic injection molding, electric wire
          covering, and garbage bags. Hangson is also engaged in the research,
          development, and production and sale of “coal-water mixture,” which is a
          potential fuel substitute for coal, oil or gas. Hangson does not conduct
          any
          substantive operations of its own and conducts its primary business operations
          through its variable interest entity (“VIE”), Shaanxi Suo’ang Biological Science
& Technology Co., Ltd. (“Shaanxi Suoang”).
  Shaanxi
          Suoang is a limited liability company headquartered in Xian, China and
          organized
          under the laws of PRC. Shaanxi Suoang was organized in May 2002. Shaanxi
          Suoang
          is engaged in research, development, marketing and sales of coal polymer
          resin
          products, and is also engaged in research, development, marketing and the
          sales
          of “coal water mixture”, which can potentially be used as a fuel substitute
          for oil, gas or coal.
  Under
          PRC
          laws, each of Hangson, and Shaanxi Suoang is an independent legal person
          and
          none of them is exposed to liabilities incurred by the other party. Other
          than
          pursuant to the contractual arrangements between Hangson and Shaanxi Suoang,
          Shaanxi Suoang does not transfer any other funds generated from its operations
          to Hangson. Presently Hangson maintains its relationship with Shaanix Suoang
          and
          its shareholders by a series of contractual arrangements through which
          Hangson
          actually has control on Shaanxi Suoang’s operation and Shaanxi Suoang becomes
          one of Hangson's VIE.
 From
            and
            after the Closing Date of the Share Exchange, the Company’s primary operations
            consisted of the operations of Hangson and its VIE Shaanxi
            Suoang.
  F-17
  **ITEM
          8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
          DISCLOSURE.**
 
 As
          described in full detail in our Current Report on Form 8-K filed on November
          17,
          2006, which is incorporated herein by reference, on November 9, 2006, the
          Company's Board of Directors elected to dismiss LBB & Associates Ltd., LLP
          as the Company’s independent registered public accounting firm (“Independent
          Accountant”) and also elected to retain Schwartz
          Levitsky Feldman LLP, Chartered Accountants ,
          as its
          new Independent Accountant.
 
 **ITEM
          8A.** **CONTROLS
          AND PROCEDURE**
 
 (a)
                *Evaluation
                    of disclosure controls and procedures*.
                    As of the end of the period covered by this report, we carried
                    out an
                    evaluation, under the supervision and with the participation
                    of our
                    management, including our Chief Executive Officer and Director
                    of Finance,
                    of the effectiveness of the design and operation of our disclosure
                    controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
                    under
                    the Securities Exchange Act of 1934, as amended. Based upon that
                    evaluation, our Chief Executive Officer and Chief Financial Officer
                    concluded that our disclosure controls and procedures were effective
                    as of
                    the end of the applicable period to ensure that the information
                    required
                    to be disclosed by the Company in reports that it files or submits
                    under
                    the Exchange Act (i) is recorded, processed, summarized and reported
                    within the time periods specified in Securities and Exchange
                    Commission
                    rules and forms and (ii) is accumulated and communicated to our
                    management, including our Chief Executive Officer and Chief Financial
                    Officer, as appropriate to allow timely decisions regarding required
                    disclosures.
  (b)
                *Changes
                    in internal controls over financial reporting*.
                    There was no change in our internal control over financial reporting
                    during our most recent fiscal quarter that has materially affected,
                    or is
                    reasonably likely to materially affect, our internal control
                    over
                    financial reporting.
 
 
 **ITEM
          8B.** **OTHER
          INFORMATION**
  Not
          Applicable.
 
 
  32
  **PART
          III**
 
 
 **ITEM
          9. DIRECTORS, EXECUTIVE OFFICERS OF REGISTRANT**
 
 **DIRECTORS
          AND EXECUTIVE OFFICERS**
 
 **Previous
          Executive Officers and Directors**
 
 As
          of
          September 30, 2006, Peter B. Day was the CEO, President, CFO and sole Director
          of the Company.
 
 **Name**
                
                **Age**
                
                **Positions**Peter
                    B. Day
                
                
                35
                
                CEO,
                  President, and Director
 
 **Peter
          B. Day** Mr.
          Day attended the University of Toronto from 1989 to 1992 studying English,
          History and Psychology and attended Humber College in 2000 studying
          Telecommunications. Mr. Day's relevant work experience follows: General
          Manager
          and Partner in Down Home Satellite Programming, Inc. from 1996 to 1998;
          Marketing Director and General Manager for Galaxy Satellite Programming,
          Inc.
          from 1998 to 2000; Vice President Streamline Media, Inc., a computer software
          and web design company from 2000 to 2002; Vice President and General Manager
          for
          Endo Networks, Inc. from 2000 to 2002, President for Endo Networks, Inc.
          2002 to
          present.
 
 **Current
          Executive Officers and Directors**
 
 The
          following tables set forth information regarding the Company’s current executive
          officers and directors of the Company. The Board of Directors is comprised
          of
          only one class. Except as otherwise described below, all of the directors
          will
          serve until the next annual meeting of stockholders or until their successors
          are elected and qualified, or until their earlier death, retirement, resignation
          or removal. Also provided herein are brief descriptions of the business
          experience of each director and executive officer during the past five
          years and
          an indication of directorships held by each director in other companies
          subject
          to the reporting requirements under the federal securities laws.
  **Name**
                
                **Age**
                
                **Positions**Baowen
                    Ren
                
                
                36
                
                CEO,
                  President and Chairman of the BoardWenjie
                    Zhang
                
                
                33
                
                DirectorPeng
                    Zhou
                
                
                37
                
                DirectorCaixia
                    Peng
                
                
                27
                
                Chief
                  Financial Officer and Treasurer
  **Baowen
          Ren** ,
          36, is
          the Director of Hangson Limited and has been Chairman of the Board of
          Shaanxi Suo’ang Biological Science & Technology, Co., Ltd. (“Shaanxi
          Suo’ang”), Hangson’s Chinese operational variable interest business entity,
          since January 2003 **.** Mr. Ren
          is a senior economic engineer who graduated from the Business Management
          Department of Hanzhong Normal University in 1992 **.** He had
          been the president of Shaanxi Lanchao Group Clothe Group Co.
          Ltd. from January 2001 to December 2002 and had been conferred
          honorable titles of “Pacemaker in the New Long March”, “Shaanxi Outstanding
          Young Entrepreneur”, “Shaanxi Top 100 Entrepreneur”, and “National Model
          Township Entrepreneur of Ministry of Agriculture”. Under his leadership, Shaanxi
          Suo’ang has convened a batch of excellent management personnel for products
          technology development, market strategy and sales, and capital operations
          for
          the expansion and development of Shaanxi Suo’ang’s business.
 
 **Peng
          Zhou** ,
          37, is the General Manager of Shaanxi Suo’ang, Hangson’s Chinese
          operational variable interest business entity. Mr. Zhou is an accountant
          who
          graduated from the Statistics Department of Shaanxi Institute of Finance
          in
          1992. Mr. Zhou started at Shaanxi Suo’ang as a Project Manager in May 2002
          and was promoted to his current position as General Manager in May 2005. 
Mr. Zhou has also been engaged in industries such as finance, media,
          foreign trade, real estate and had held the posts of manager of credit
          department, editor, financial supervisor, and deputy manager.  From June
          1997 until March 2002, Mr. Zhou was the Vice President of Hanzhong
          Ruisen Real Estate Company.  Mr. Zhou was also in charge of compiling and
          reporting work for a number of projects such as Industrial Park Project
          of
          3,000-thousand Sets of Clothes, New Construction Material Project-Shale
          Brick
          Manufacturing Demonstration Base with Annual Output of 6000-Thousand Pieces,
          and
          Erlang Dam Downstream Hydropower Station Cascade Development
          Project.
 
 33
 **Wenjie
          Zhang** ,
          33, has
          been the General Manager of Hanzhong Minsheng Guomao Department Store since
          January 2004. Mr. Zhang graduated with a degree in administration from
          the Xi’an
          Science Institution in 1995. From January 2001 until December 2003, Mr.
          Zhang
          was the Sales Manager at Shaanxi Jingyi Wood Group Company.
  **Caixia
          Peng** ,
          27, is
          the Finance Director of Shaanxi Suo’ang, Hangson’s Chinese operational variable
          interest business entity. Ms. Peng started as Shaanxi Suo’ang’s Finance Manager
          in April 2005 and has been Shaanxi Suo’ang’s Finance Director since February
          2006. Ms. Peng is an accountant who graduated from the Xi’an Finance &
Economy Institution in 1992. From July 2003 until March 2005, Ms. Peng
          was the
          Finance Manager at Yangling Bodisen Co., Ltd. Prior to that, from July
          2001
          until June 2003, Ms. Peng was the Finance Director at Yangling Tianwei
          Pharmaceutical Co., Ltd.
 
 **Audit,
          Nominating and Compensation Committees**
 
 Due
          to
          our lack of operations and size, we have not designated an Audit Committee.
          Furthermore, we are currently quoted on the OTC Bulletin Board, which is
          sponsored by the NASD, under the symbol “CWCE ” and the OTCBB does not have any
          listing requirements mandating the establishment of any particular committees.
           Our board of directors acts as our Audit Committee and performs equivalent
          functions, such as: recommending a firm of independent certified public
          accountants to audit the annual financial statements; reviewing the independent
          auditors independence, the financial statements and their audit report;
          and
          reviewing management's administration of the system of internal accounting
          controls.  For these same reasons, we did not have any other committees
          during fiscal 2005.
 
 Our
          Board
          believes that, considering our size and the members of our Board, decisions
          relating to director nominations can be made on a case-by-case basis by
          all
          members of the board without the formality of a nominating committee or
          a
          nominating committee charter.  To date, we have not engaged third parties
          to identify or evaluate or assist in identifying potential nominees, although
          we
          reserve the right in the future to retain a third party search firm, if
          necessary.
 
 The
          Board
          does not have an express policy with regard to the consideration of any
          director
          candidates recommended by shareholders since the Board believes that it
          can
          adequately evaluate any such nominees on a case-by-case basis. The Board
          will
          evaluate shareholder-recommended candidates under the same criteria as
          internally generated candidates.  Although the Board does not currently
          have any formal minimum criteria for nominees, substantial relevant business
          and
          industry experience would generally be considered important, as would the
          ability to attend and prepare for board, committee and shareholder meetings.
          Any
          candidate must state in advance his or her willingness and interest in
          serving
          on the board of directors.
 
 We
          have
          not received any recommendations for a director nominee from any
          shareholder.
 
 **Family
          Relationships**
 
 There
          are
          no family relationships between or among any of the current directors,
          executive
          officers or persons nominated or charged by the Company to become directors
          or
          executive officers.
 
 **Involvement
          in Certain Legal Proceedings**
 
 There
          are
          no orders, judgments, or decrees of any governmental agency or administrator,
          or
          of any court of competent jurisdiction, revoking or suspending for cause
          any
          license, permit or other authority to engage in the securities business
          or in
          the sale of a particular security or temporarily or permanently restraining
          any
          of our officers or directors from engaging in or continuing any conduct,
          practice or employment in connection with the purchase or sale of securities,
          or
          convicting such person of any felony or misdemeanor involving a security,
          or any
          aspect of the securities business or of theft or of any felony. Nor are
          any of
          the officers or directors of any corporation or entity affiliated with
          us so
          enjoined.
 
 **ITEM
          10.** **EXECUTIVE
          COMPENSATION**
 
 None
          of
          current executive officers received compensation in excess of $100,000
          for the
          fiscal years ended September 30, 2006 or 2005, respectively. The following
          table
          summarizes all compensation received by our previous Chief Executive Officer,
          President and Chief Financial Officer in fiscal years 2006 and
          2005.
 
 34
 **SUMMARY
          COMPENSATION TABLE**
  **LONG
                    TERM COMPENSATION****ANNUAL
                    COMPENSATION**
                
                **AWARDS**
                
                **PAYOUTS****Name
                    and Principal Position**
                
                **Year**
                
                **Salary**
                  **($)**
                
                
                
                **Bonus**
                  **($)**
                
                **Other**
                  **Annual
                    Compensation**
                  **($)**
                
                **Restricted**
                  **Stock
                    Awards**
                  **($)**
                
                **Securities
                    Underlying Options/SARs**
                
                **LTIP
                    Payout**
                  **($)**
                
                **All
                    Other Compen-**
                  **sation**
                  **($)**Peter
                    B. Day
                
                
                2006
                
                $
                105,500
                
                
                (1)
                
                
                N/A
                
                
                N/A
                
                
                N/A
                
                
                N/A
                
                
                N/A
                
                
                N/AFormer
                    CEO
                
                
                2005
                
                $
                103,200
                
                
                
                
                
                N/A
                
                
                N/A
                
                
                N/A
                
                
                N/A
                
                
                N/A
                
                
                N/Aand
                    CFO
                
                
                2004
                
                $
                100,000
                
                
                
                
                
                N/A
                
                
                N/A
                
                
                N/A
                
                
                N/A
                
                
                N/A
                
                
                N/A
  
 (1)
                As
                    of September 30, 2006, Mr. Day was the Chief Executive Officer,
                    President,
                    and Chief Financial Officer of the Company. Mr. Day had not received
                    any
                    payment for his position and as a result his salary was accrued
                    as an
                    expense. This liability was purchased from the Company by Mr.
                    Day together
                    with the assets of Endo Canada pursuant to the June 26, 2006
                    Asset and
                    Share Purchase Agreement.
 
 The
          following summary compensation table indicates the cash and non-cash
          compensation earned during Hangson’s fiscal year ended December 31, 2006 by
          the Chief Executive Officer and each of our other four highest paid executives
          of our predecessor, Hangson, whose total compensation exceeded $100,000
          during
          the fiscal year ended December 31, 2006.
 
 **Summary
          compensation table**
 
 Long
                    Term CompensationAnnual
                    Compensation
                
                Awards
                
                PayoutsName
                    and Principal Position
                
                Year
                
                Salary
                  ($)
                    (1)
                
                Bonus
                    ($)
                
                Other
                  Annual
                    Compensation ($)
                
                Restricted
                  Stock
                    Award(s)
                  ($)
                
                Securities
                  Underlying
                    Options/
                  SARs
                    (#) (#)
                
                LTIP
                  Payouts
                    ($)
                
                All
                    Other
                  Compensation
                  ($)Baowen
                    Ren, CEO and Chairman
                
                
                2006
                  2005
                  2004
                
                $
                  $
                  $
                36,000
                  36,000
                  46,000
                
                
                N/A
                  N/A
                  N/A
                
                
                N/A
                  N/A
                  N/A
                
                
                N/A
                  N/A
                  N/A
                
                
                N/A
                  N/A
                  N/A
                
                
                N/A
                  N/A
                  N/A
                
                
                N/A
                  N/A
                  N/A
 
 (1)
                Salary
                    paid to Mr. Ren is expressed in U.S. Dollars based on the interbank
                    exchange rate of RMB 7.90 for each 1.00 U.S. Dollar, on
                    October 20, 2006.
 
 **STOCK
          OPTION GRANTS AND EXERCISES**
 
 For
          the
          fiscal years ended September 30, 2006 and 2005, the Company did not issue
          any
          options or Stock Appreciation Rights to any officers, employees or directors.
          For the fiscal year ended 2004, the Company issued options for the purchase
          a
          total of 634,000 shares of the Company’s common stock to consultants of the
          Company’s. All of these options expired as of September 30, 2006.
 
 **EMPLOYMENT
          AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
          FOR
          HANGSON**
 
 We
          currently have no employment agreements with any of our executive officers,
          nor
          any compensatory plans or arrangements resulting from the resignation,
          retirement or any other termination of any of our executive officers, from
          a
          change-in-control, or from a change in any executive officer's responsibilities
          following a change-in-control.
 
 **COMPENSATION
          OF DIRECTORS AND OFFICERS**
 
 During
          the most recent fiscal year, no compensation was paid or accrued for Endo’s
          directors. The Company has no retirement or stock option or bonus plan for
          the executive officers.
 
 35
 **ITEM
          11.** **SECURITY
          OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**
 
 The
          following table sets forth information regarding the beneficial ownership
          of our
          common stock as of November 30, 2006, for each of the following persons:
 
 •  each
          of
          our directors and named executive officers;
 
 •  all
          directors and named executive officers as a group; and
 
 •  each
          person who is known by us to own beneficially five percent or more of our
          common
          stock.
  Beneficial
          ownership is determined in accordance with the rules of the Securities
          and
          Exchange Commission. Unless otherwise indicated in the table, the persons
          and
          entities named in the table have sole voting and sole investment power
          with
          respect to the shares set forth opposite the stockholder’s name. Unless
          otherwise indicated, the address of each beneficial owner listed below
          is Room
          2205, Suite A, Zhengxin Bldg., No.5, Gaoxin 1st Road, Gao Xin District,
          Xi’an,
          Shaanxi Province, People’s Republic of China. The percentage of class
          beneficially owned set forth below is based on 28,227,250 shares of common
          stock
          outstanding on January 15, 2007.
 
 Named
                    executive officers and directors:
                
                Number
                    of
                  Shares
                  beneficially
                  owned
                
                Percentage of
                  class beneficially
                  owned
                    (1)Baowen
                    Ren, CEO, President, and Chairman
                
                
                9,597,232
                
                
                34.00
                %Wenjie
                    Zhang, Director
                
                
                1,269,234
                
                
                4.50
                %Peng
                    Zhou, Director
                
                
                0
                
                
                0.0
                %Caixia
                    Peng, CFO and Treasurer
                
                
                0
                
                
                0.0
                %Peter
                    B. Day, former CEO, CFO and Sole Director
                
                
                200,000
                
                
                *All
                    directors and executive officers as a group as of September 30,
                    2006 (Mr.
                    Day only)
                
                
                200,000
                
                
                *All
                    directors and executive officers as a group (4 persons)
                
                
                10,866,466
                
                
                38.5
                %
  *
          less
          than 1%
 
 (1)  Based
          on
          28,227,250 shares outstanding.
 
 
 **ITEM
          12.** **CERTAIN
          RELATIONSHIPS AND RELATED TRANSACTIONS**
 
 **HANGSON’S
          CONTRACTUAL ARRANGEMENTS WITH SHAANXI SUOANG AND ITS SHAREHOLDERS**
  PRC
          law
          currently limits foreign equity ownership of Chinese companies. To comply
          with
          these foreign ownership restrictions, we operate our business in China
          through a
          series of contractual arrangements with Shaanxi Suoang and its majority
          shareholders that were executed on August 18, 2006. For a description of
          these
          contractual arrangements, see “Contractual Arrangements with Shaanxi Suoang and
          Its Shareholders.”
 
 **RELATED
          PARTY TRANSACTIONS OF HANGSON LIMITED**
 
 Set
          forth
          below are the related party transactions between Shaanxi Suoang’s shareholders,
          officers and/or directors, and Shaanxi Suoang, with whom Hangson has contractual
          arrangements which give Hangson the ability to substantially influence
          Shaanxi
          Suoang’s daily operations and financial affairs, appoint its senior executives
          and approve all matters requiring shareholder approval.
 
 (a)
                *Related
                    party receivables and
                    payables*
 
 Amounts
          receivable from and payable to directors as of December 31, are summarized
          as
          follows:
 
 36
 2005
                
                2004Long-term
                    loan to a related partyShaanxi
                    Hanzhong New Century Real Estate Company Limited
                
                $
                372,000
                
                $
                362,472Amount
                    due from a directorMr.
                    Baowen Ren, also a shareholder of the Company
                
                $
                119,397
                
                $
                130,063
  
 Balance
          with Shaanxi Hanzhong New Century Real Estate Company Limited represents
          a
          long-term interest bearing loan paid to a company, Shaanxi Hanzhong New
          Century
          Real Estate Company Limited controlled by the shareholder, Mr. Yang Feng.
          The
          loan is for a term of five years from November 5, 2002 to November 5, 2007
          and
          bears interest at 7.2% per annum. A majority shareholder of the Company,
          Shaanxi
          Hanzhong Blue Tide Costumes Group Corporation Limited guarantees the repayment
          of this loan. The loan is repayable in one lump sum at the maturity
          date. The
          b alance
          with Mr. Baowen Ren represents cash advances by the Company. This balance
          is
          interest free and unsecured and has no fixed repayment date. It is expected
          that
          the balance will be received or repaid within one year.
 
 (b) **  *Guarantee
          given by a shareholder*
 
 A
          majority shareholder of the Company, Shaanxi Hanzhong Blue Tide Costumes
          Group
          Corporation Limited, guarantees the repayment of a long-term interest bearing
          loan advanced to a company, Shaanxi Hanzhong New Century Real Estate Company
          Limited, controlled by Mr. Yang Feng.
  **OTHER
          RELATED PARTY TRANSACTIONS**
 
 Per
          the
          terms of a verbal agreement the Company paid its former President Mr. Day
          approximately $8,600 per month in consulting fees. The Company accrued
          consulting fees due to Mr. Day in the amount of $251,120 at September 30,
          2005. These amounts were recorded under “Accrued expenses - related
          parties” in the financial statements and was purchased by Mr. Day together with
          assets according to the Purchase Agreement he signed with the company on
          June
          26, 2006.
 
 The
          Company also paid for the President’s home office rent.  For the year ended
          September 30, 2005, the total rent paid by the Company for the President’s home
          office was $17,900.
 
 On
          September 30, 2006, Peter Day, the Company’s former CEO, President, CFO and sole
          director, purchased all of our assets and shares in Endo Networks, Inc.,
          a
          corporation incorporated under the laws of Canada from us pursuant to that
          certain Asset and Share Purchase Agreement dated as of June 26, 2006. As
          consideration for all of the assets, which currently total $553,015, and
          all of
          the shares of Endo Canada, Mr. Day assumed all of our liabilities prior
          to the
          Share Exchange, which currently total $919,389 (such number includes our
          assets
          of $553,015 and our excess liabilities of $366,374), except for certain
          excluded
          liabilities.
 
 
 37
 **ITEM
          13. EXHIBITS AND REPORTS ON FORM 8-K**
 
 **(a)**  **Exhibits
          to the Form 10-KSB** :
 
 **Exhibit
                    Number**
                
                **Description**2.1
                
                Share
                    Exchange Agreement between Endo Networks, Inc., Endo Majority
                    Shareholders, Hangson Ltd. and the Hangson Shareholders dated
                    October 18,
                    2006 (1)3.1
                
                Articles
                    of Incorporation of Endo Networks, Inc., a Nevada corporation,
                    as
                    amended.3.2
                
                Bylaws
                    of Endo Networks, Inc.10.1
                
                Asset
                    and Share Purchase Agreement between Registrant and Peter B.
                    Day (for Endo
                    Canada) (2)17.1
                
                Letter
                    of Resignation by Mr. Peter B. Day to the Board of Directors
                    of Endo
                    Networks, Inc.99.1
                
                Consulting
                    Services Agreement by and between Hangson Limited and Shaanxi
                    Suo’ang
                    Biological Science & Technology Co., Ltd. dated August 18, 2006
                    (3)99.2
                
                Equity
                    Pledge Agreement by and between Hangson Limited and Shaanxi Suo’ang
                    Biological Science & Technology Co., Ltd. (“Shaanxi Suoang”) and
                    Shaanxi Suoang’s Majority Shareholders dated August 18, 2006
                    (3)99.3
                
                Operating
                    Agreement by and between Hangson Limited and Shaanxi Suo’ang Biological
                    Science & Technology Co., Ltd. (“Shaanxi Suoang”) and Shaanxi Suoang’s
                    Majority Shareholders dated August 18, 2006 (3)99.4
                
                Proxy
                    Agreement by and between Hangson Limited and Shaanxi Suo’ang Biological
                    Science & Technology Co., Ltd. (“Shaanxi Suoang”) and Shaanxi Suoang’s
                    Majority Shareholders dated August 18, 2006 (3)99.5
                
                Option
                    Agreement between Hangson Limited and Shaanxi Suo’ang Biological Science
                    & Technology Co., Ltd. (“Shaanxi Suoang”) and Shaanxi Suoang’s
                    Majority Shareholders dated August 18, 2006 (3)99.6
                
                Agreement
                    by and between Shaanxi****Suo’ang
                    Biological Science and Technology Co. Ltd. and Hanzhong Si Xiong
                    Ke Chuang
                    Business Co. Ltd. (3)99.7
                
                Consolidated
                    Financial statements of Hangson Limited for the years ended December
                    31,
                    2005 and December 31, 2004 (3)99.8
                
                Consolidated
                    Financial statements of Hangson Limited for the six months ended
                    June 30,
                    2006 and 2005 (unaudited) (3)99.9
                
                Unaudited
                    pro forma condensed financial statements of the Registrant, as
                    of and for
                    the six months ended June 30, 2006 and unaudited pro forma Statement
                    of
                    Operations for the six months ended June 30, 2006 (3)31.1
                
                Section 302
                    Certification by the Corporation’s Chief Executive Officer
                    *31.2
                
                Section 302
                    Certification by the Corporation’s Chief Financial
                    Officer*32.1
                
                Section 906
                    Certification by the Corporation’s Chief Executive
                    Officer*32.2
                
                Section 906
                    Certification by the Corporation’s Chief Financial
                    Officer*
  *
          Filed
          herewith.
 _______________
 
 (1)
                Filed
                    as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with
                    the SEC on October 18, 2006 and incorporated herein by
                    reference.
 
 (2)
                Filed
                    as Exhibit A of Registrant’s Schedule 14A filed with the SEC on August 8,
                    2006 and incorporated herein by
                    reference.
 
 (3)
                Filed
                    as Exhibits to the Registrant’s Current Report on Form 8-K filed with the
                    SEC on October 26, 2006 and incorporated herein by
                    reference.
 
 
 **ITEM
          14.** **PRINCIPAL
          ACCOUNTANT FEES AND SERVICES**
 
 AUDIT
          FEES
 
 The
          aggregate fees billed by Lopez,
          Blevins, Bork & Associates, LLP for
          professional services rendered for the review of the Company’s unaudited
          financial statements through the quarter ended June 30, 2006 and the audit
          of
          the Company’s annual financial statements for the year ended September 30, 2005
          or services that are normally provided by the accountant in connection
          with
          statutory and regulatory filing or engagements for those periods/years
          was
          $17,100.
 
 The
          aggregate fees billed by GC Alliance Limited for professional services
          rendered
          for the audit of the Company in connection with the Share Exchange Transaction
          was $105,000.
 
 The
          aggregate fees billed by the newly appointed auditor, Schwartz Levitsky
          Feldman
          LLP, was $10,000 for professional services rendered for the audit of the
          Company’s annual consolidated financial statements for the fiscal year ended
          September 30, 2006.
 
 AUDIT
          RELATED FEES
 
 There
          were no fees billed for services reasonably related to the performance
          of the
          audit or review of the financial statements outside of those fees disclosed
          above under “Audit Fees” for the year ended September 30, 2006.
 
 TAX
          FEES
 
 For
          the
          years ended September 30, 2006 and September 30, 2006, there were no fees
          billed
          for services for tax compliance, tax advice and tax planning work to the
          Company.
 
 38
 ALL
          OTHER
          FEES
 
 There
          were no other fees billed by LBB or SLF during the last two fiscal years
          for
          products and services provided by LBB or SLF.
 
 PRE-APPROVAL
          POLICIES AND PROCEDURES
 
 Prior
          to
          engaging its accountants to perform particular services, our board of directors
          obtains an estimate for the service to be performed. All of the services
          described above were approved by the board of directors in accordance with
          its
          procedure.
 
  
 **[SIGNATURES
          PAGE FOLLOWS]**
 
 
 
  39
  **SIGNATURES**
 
 In
          accordance with Section 13 or 15(d) of the Exchange Act, the registrant
          caused this report to be signed on its behalf by the undersigned, thereunto
          duly
          authorized.
 
 Dated:
                    January 19, 2007
                
                
                **CHINA
                    WEST COAL ENERGY INC.**(Registrant)By:
                /s/
                  Baowen RenBaowen
                    Ren
                  Chief
                    Executive Officer
 
 
 KNOW
          ALL
          THESE PERSONS BY THESE PRESENTS, that each person whose signature appears
          below
          constitutes and appoints Baowen Ren and Caixia Peng, and each of them,
          jointly
          and severally, his attorneys in fact, each with full power of substitution,
          for
          him in any and all capacities, to sign any and all amendments to this Report
          on
          Form 10-KSB, and to file the same, with exhibits thereto and other
          documents in connection therewith, with the Securities and Exchange Commission,
          hereby ratifying and confirming all that each said attorneys-in-fact or
          his
          substitute or substitutes, may do or cause to be done by virtue hereof.
 
 In
          accordance with the Exchange Act, this report has been signed below by
          the
          following persons on behalf of the registrant and in the capacities and
          on the
          dates indicated.
  **Signature**
                
                **Title**
                
                **Date**/s/
                    Baowen
                    RenBaowen
                    Ren
                
                Chief
                    Executive Officer, President and Chairman of the Board
                
                January
                    19, 2007/s/
                    Caixia
                    PengCaixia
                    Peng
                
                Chief
                    Financial Officer and Treasurer
                
                January
                    19, 2007/s/
                    Wenjie
                    ZhangWenjie
                    Zhang
                
                Director
                
                January
                    19, 2007/s/
                    Peng
                    ZhouPeng
                    Zhou
                
                Director
                
                January
                    19, 2007
 
   40