**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 June 30, 2007.




|_|
      Transition report under Section 13 or 15(d) of the Securities Exchange Act of
      1934




For
      the
      transition period from _____ to ______




*Commission
      File Number: 000-09283*


**flexSCAN,
        INC.**
 (Name
        of
        Small Business Issuer in its Charter)
 
  **NEVADA**
              **20-8085447**(State
                  or other jurisdiction of
              (I.R.S.
                  Employerincorporation
                  or organization)
              Identification
                  No.)


**27201
      Puerta Real, Suite 350, Mission Viejo, California 92691**


(Address
      of principal executive offices)




**(949)
      609-1966**


(Issuer's
      telephone number)




Securities
      registered under Section 12(b) of the Exchange Act


None




Securities
      registered under Section 12(g) of the Exchange Act: **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
      |_|




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. |_|




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




Issuer's
      revenues for the year ended June 30, 2007 were $57,178.




The
      aggregate market value for the Issuer's voting stock held by non-affiliates
      of
      the Issuer based upon the $0.11 per share closing sale price of the Common
      Stock
      on September 25, 2007 as reported on the Over-the-Counter Bulletin Board, was
      approximately $9,098,992. Shares of Common Stock held by each officer and
      director and by each person who owns 5% or more of the outstanding common stock
      have been excluded in that such persons may be deemed to be affiliates. This
      determination of affiliate status is not necessarily a conclusive determination
      for other purposes.




As
      of
      September 25, 2007, Registrant had 82,718,108 shares of Common Stock issued
      and
      outstanding.




Transitional
      Small Business Disclosure Format (check one): Yes |_| No |X|











**flexSCAN,
      INC.**




**FORM
      10-KSB ANNUAL REPORT**




**PART
                I**
            **1****ITEM
                1. DESCRIPTION OF BUSINESS**
            **1****ITEM
                2. DESCRIPTION OF PROPERTIES**
            **7****ITEM
                3. LEGAL PROCEEDINGS**
            **7****ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**
            **7****PART
                II**
            **7****ITEM
                5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS**
            **7****ITEM
                6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATIONS**
            **9****ITEM
                7. CONSOLIDATED FINANCIAL STATEMENTS**
            **20****ITEM
                8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                FINANCIAL DISCLOSURE**
            **20****ITEM
                8A. CONTROLS AND PROCEDURES**
            **21****ITEM
                8B. OTHER INFORMATION**
            **22****PART
                III**
            **22****ITEM
                9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT**
            **22****ITEM
                10. EXECUTIVE COMPENSATION AND OTHER INFORMATION**
            **25****ITEM
                11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                AND
                RELATED STOCKHOLDERS**
            **27****ITEM
                12. CERTAIN RELATIONSHIPS AND RELATED
                TRANSACTIONS**
            **27****ITEM
                13. EXHIBITS**
            **30****ITEM
                14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**
            **31**











**FORWARD
      LOOKING STATEMENTS**




Statements
      contained in this Report that are not historical facts or that discuss our
      expectations or beliefs regarding our future operations or future financial
      performance, or financial or other trends in our business, constitute
      "forward-looking statements" within the meaning of Section 27A of the Securities
      Act of 1933, as amended (the 1933 Act) and Section 21E of the Securities
      Exchange Act of 1934, as amended (the 1934 Act). Forward-looking statements
      can
      be identified by the fact that they do not relate strictly to historical or
      current facts. Often, they include the words "believe," "expect," "anticipate,"
      "intend," "plan," "estimate," "project," or words of similar meaning, or future
      or conditional verbs such as "will," "would," "should," "could," or "may."
      The
      achievement or realization of the expectations or beliefs set forth in
      forward-looking statements are subject to a number of risks and uncertainties
      that could cause our financial condition or operating results in the future
      to
      differ significantly from those expected at the current time. Those risks and
      uncertainties are described in this Item 1 "Business," Item 6 "Management's
      Discussion and Analysis and Plan of Operation--Factors That May Affect Our
      Future Results" as well as those discussed in any documents incorporated by
      reference herein or therein. Due to these uncertainties and risks, readers
      are
      cautioned not to place undue reliance on forward-looking statements contained
      in
      the Report, which speak only as of the date of this Annual Report. We undertake
      no obligation to update or revise any forward-looking statements, whether as
      a
      result of new information, future events or otherwise.




**PART
      I**




**ITEM
      1. DESCRIPTION OF BUSINESS**




**Introduction**




flexSCAN,
      Inc. was originally incorporated under the laws of the State of Nevada on
      February 21, 1991, as Fuel Corporation of America (“Fuel Corporation”). On July
      15, 2005, Fuel Corporation entered into an Agreement and Plan of Merger (the
      “Merger Agreement”) by and among FCA Acquisition Corp., a Delaware corporation
      and wholly owned subsidiary of Fuel Corporation (“FCA”), and flexSCAN, Inc., a
      Delaware corporation. Pursuant to the Merger Agreement, FCA was merged with
      and
      into flexSCAN (Delaware), with flexSCAN (Delaware) surviving as a wholly-owned
      subsidiary of Fuel Corporation. As a result of the merger, the operations of
      flexSCAN (Delaware) become the sole operations of Fuel Corporation. Upon
      completion of the merger, flexSCAN (Delaware) changed its name to
      flexPLUS.




On
      September 19, 2005, Fuel Corporation merged with and into flexSCAN, Inc., a
      Nevada corporation for the sole purpose of effecting a name change from Fuel
      Corporation to flexSCAN, Inc. (“flexSCAN” or the “Company” or “our” or “we”).
      flexSCAN is currently headquartered in Orange County, California, with its
      principal executive offices located at 27201 Puerta Real, Suite 350, Mission
      Viejo, 92691.





1





**General**




flexSCAN
      is a healthcare information and services organization focusing on providing
      high
      technology medical information management to the healthcare consumer, along
      with
      a unique incentive program designed to abate the rising costs of healthcare
      to
      both employers and employees. We believe that our patent-pending and proprietary
      program wellness360 is an industry-first for corporate health and wellness
      management. wellness360 packages advertising and marketing research
      opportunities with 'no-cost' corporate health and wellness services, then
      rewards employers and employees for using the services. The program leverages
      innovative technology to provide participants with free comprehensive health
      and
      wellness services, an online personal health record system, online lifestyle
      guides for fitness and nutrition, and online progress tracking. Employers and
      employees receive economic rewards for using the free services and for
      participating in advertiser-sponsored activities.




Another
      component of our wellness360 program that differentiates us from the competition
      is the ability of our members’ healthcare professionals to quickly and easily
      upload copies of their “paper” records by simply using their office fax machine.
      In turn, wellness360’s software identifies the patient and provider though a
      simple and reliable character recognition strategy and automatically updates
      the
      individual’s medical record. flexSCAN’s online medical record not only provides
      a workable solution to the pressing need for access to a patient’s medical
      information, it does so at no cost to the participants. Our solution is provided
      free of charge to both healthcare providers and our wellness360
      members.




All
      information provided to us by our members is aggregated into an electronic
      medical record system, which allows us to develop a Member Profile for each
      member based on every element of their life including diet, exercise, medical
      records, ethnicity, socioeconomic status, risky behaviors, medications, family
      history, diseases, and interests. In exchange for allowing wellness360 members
      to participate in our program free of charge, we allow marketers, advertisers
      and researchers to submit information in the form of advertisements, surveys,
      questionnaires, educational material and offers, collectively referred to as
      Messages, to a specified Member Profile. The Messages are submitted to us and
      upon review and acceptance by us are made available to members matching the
      specified Member Profile once the member logs into the wellness360 portal.
      All
      identifying member information is completely confidential and Health Insurance
      Portability and Accountability Act, referred to as HIPAA, compliant. The
      economic benefits of these activities are not exclusively received by flexSCAN.
      Fundamental to our business model is our mission to contribute to the reduction
      and overall control of healthcare costs. In this spirit, we used the revenues
      received from marketers, advertisers and researchers to fund our economic
      rewards programs for members and their employers in an attempt to offset
      burdensome healthcare costs, such as premiums, co-payments and deductibles.
      For
      a detailed description on how our wellness360 program works please see the
      section below entitled “The Wellness360 Process”.





2





**The
      Healthcare Problem**




The
      problems plaguing healthcare are numerous and well appreciated by civic leaders,
      corporate executives and most importantly, every American. Costs are spiraling
      out of control and equal-access is currently only a dream, and difficult to
      imagine. The answer, however, cannot be found in Congress and, unfortunately,
      will not be revealed by the winner of our upcoming presidential election. The
      good news is, an answer is within reach and it lies in the hands of free
      enterprise -- not because capitalists long for more money but because private
      enterprise has been and continues to be the engine for change and innovation.
      An
      alliance between wellness360 and a major national or multinational business
      (from healthcare, dot com realm, non-government organizations) is fundamental
      to
      establishing just such a foundation for change, a foundation upon which a new
      perspective on health and wellness can be forged ensuring equal access to
      healthcare and a legacy we will be honored to leave for our
      children.




**The
      Wellness360TM Process**




The
      wellness360 model, to our knowledge, is the first of its kind on the Internet
      that knits together all the relevant services necessary to facilitate good
      health and wellness while providing a repository for valuable and critical
      personal health information in a secure and HIPAA-compliant manner. More
      significantly, wellness360 galvanizes the wellness proposition with an incentive
      system rewarding members for participation while injecting business with
      much-needed capital to assist in lowering the rising costs of providing
      healthcare to their employees.





flexSCAN’s
      wellness360 program incentivizes employees to manage their own on-line personal
      health record and motivates them to pursue a healthier lifestyle. The program
      enables flexSCAN to create a number of potentially lucrative revenue channels
      by
      leveraging opportunities in the multi-trillion dollar health care industry.
      The
      unique formula for our wellness360 model is illustrated in the following
      flowchart:










3




1.
            The
                employer (1) provides
                healthcare benefits to its employees (2) either by engaging an insurance
                company or self-insuring the
                benefits.




2.
            Employees
                (2) enjoy the health benefits provided by the employer (1). Employees
                interact with flexSCAN’s wellness360 web portal providing critical health,
                wellness and lifestyle information that is stored in a centralized
                structured/secure HIPAA compliant database
                (3).




3.
            flexSCAN’s
                Marketing Alliances (7) provide promotional messages, educational
                content
                and potential research and survey opportunities (4) to a selected
                body of
                wellness360 members. This information is routed to the members via
                flexSCAN’s HIPAA Compliant Firewall (6) and delivered to wellness360
                members that meet the Marketing Alliances’ defined
                profile.




4.
            wellness360TM
                members may, at their
                election, communicate with the Marketing Alliances to divulge their
                identity.




5.
            Marketing
                Alliances (7) pay flexSCAN for marketing, advertising, sponsorship,
                licensing or research (8).




6.
            flexSCAN
                routes a percentage of the marketing revenue to both participating
                employees (2) and employers (1) based on the earned rewards of each
                participant (10).




7.
            The
                revenue sharing (9) enjoyed by the employees (2) is based on the
                total
                rewards points earned. Rewards points are earned for every banner
                ad view
                click-throughs, database additions, etc. Each reward point is worth
                one
                point five cents ($0.015) and is eligible for conversion into cash
                or
                non-cash rewards on a quarterly basis (10), subject to the terms
                and
                conditions of the rewards program and reaching a minimum payout threshold
                of $25.




8.
            Employers
                (1) receive up to twenty-five percent (25%) (11) of the total dollars
                (10)
                earned by the employees participating in wellness360. Additionally,
                where
                applicable, an amount equal to five percent (5%) of the participant’s
                rebates (11) is paid to flexSCAN’s broker/agents (12) representing
                wellness360.




Our
      wellness360 model not only stimulates attention to lifestyle changes and disease
      management, it provides our members the ability to directly effect change and
      more importantly, lower both member and employer costs of
      healthcare.




As
      illustrated in the accompanying figure, our wellness360TM service is an
      individual’s hub for every aspect of their medical and lifestyle activities. The
      fuel for our wellness360 proposition comes from marketers, including both
      commercial enterprises and pure research organizations such as universities
      and
      medical schools. Marketers provide flexSCAN both their messages and dollars.
      In
      turn, the messages are distributed to our members based on their unique
      demographic, lifestyle and medical database. Based on member activity, employers
      are provided incentive dollars to stimulate their employees’ activities and more
      importantly, provide additional working capital which may be used to directly
      offset out of control healthcare costs.










4





As
      an
      added benefit, wellness360 is each member’s safe, secure and private medical
      record kept online for easy access and, in the event of a medical emergency
      available to physicians and emergency medical personnel 24-hours a day year
      around.




**Customers**




To
      date,
      we have primarily focused on employer groups in the southern California area
      for
      purposes of our wellness360 program. We believe, however, that our electronic
      medical record system will not only allow us to expand our customer base from
      employers and employees to include marketers, advertisers, and researchers
      but
      will also allow us to penetrate markets outside of Southern
      California.




**Online
      Advertising**




wellness360
      represents a unique solution for advertisers because it provides extensive
      targeting capabilities. And wellness360 is not limited to simplistic behavioral
      drivers as is the case with competitor’s web advertising programs. wellness360
      advertising, by contrast, is driven by its members’ data (e.g., demographics,
      lifestyle, health risks, medical history, conditions, allergies, medications,
      interests, family history, genetic tendencies and much more). In essence,
      wellness360 creates a unique opportunity for advertisers to reach high value
      targets.




**Target
      Market**




Our
      target is defined into three categories: 1) individuals desiring access to
      their
      medical records and personalized wellness solutions; 2) sponsors, such as
      employers, unions and associations, that shoulder the burden of providing
      healthcare benefits to their employees or members and seek lower costs; and
      3)
      marketers, such as advertisers, pharmaceutical manufactures, research
      institutions and fitness equipment manufactures, desiring access to a highly
      defined population selected via wellness360’s database-driven selection
      criteria.




Based
      on
      the above definition of our target market, wellness360 is a solution for every
      form of business and organization (sectors including private, local, state
      and
      federal) seeking to reduce the cost of healthcare and create a healthier
      workforce. Since wellness360 is an information-based business model, our market
      spans state and national boundaries allowing us to define flexSCAN’s market as
      truly international.




The
      wellness360 community provides our marketing alliances a powerful and cost
      effective conduit to a truly unique, motivated and highly defined
      population.




**Competition**




Wellness
      and healthcare issues are broadly addressed on the Internet in a multitude
      of
      ways, the most common of which is simply the dissemination of information
      accessed through search portals or information aggregators such as WebMD.
      Unfortunately, information alone does little to stem the tide of a declining
      healthcare system.





Management
      believes the principal competitive factors for companies seeking to succeed
      in
      the Company’s markets are: 1) available capital sources, 2) affordable capital
      sources, 3) awareness of the Company’s offerings, 4) supplemental business
      guidance and advice, and 5) continued economic growth. Some other companies
      that
      are primarily focused on offering competitive products are Blue Cross, Aetna,
      Beechstreet, WellPoint, WebMD and, in the future, new companies that may enter
      the Company’s marketplace.





5





Many
      of
      our existing competitors, as well as potential new competitors, have longer
      operating histories, greater name recognition, substantial track records, and
      significantly greater financial, technical and marketing resources than us.
      This
      may allow our competitors to devote greater resources to the development and
      promotion of their services. Many of these competitors offer a wider range
      of
      services, and may attract business partners consequently resulting in a decrease
      of our business opportunities. These competitors may also engage in more
      extensive research and development, adopt more aggressive strategies and make
      more attractive offers to existing and potential employees, and partners.
      Furthermore, competitors may develop products and services that are equal or
      superior to that of the Company’s and achieve greater market acceptance. In
      addition, current and potential competitors have established or may establish
      cooperative relationships among themselves or with third parties to better
      address the needs of the Company’s target market. As a result, it is possible
      that new competitors may emerge and rapidly acquire significant market
      share.




**Intellectual
      Property**




flexSCAN
      has applied for a patent of the wellness360 economic model.  The
      patent is currently pending approval. The Company has also submitted trademark
      applications for “It Pays to be Healthy”, and “wellness360”.




**Government
      Regulation**




We
      are
      subject to federal, state and local regulations concerning the environment
      and
      occupational safety and health standards. We have not experienced significant
      difficulty in complying with such regulations and compliance has not had a
      material effect on our business or our financial results.




**Research
      and Development**




We
      have
      focused primarily on developing foundational and core technologies. We have
      spent a substantial amount of time developing our core web-based technologies,
      advertising management and tracking system, member activity and rewards tracking
      and accounting system, integrated electronic health risk assessment system,
      and
      optical character recognition technology for processing health records, a
      multifaceted Client Management System, and systems for internal
      controls.




**Employees**




As
      of
      June 30, 2007, we had ten (10) full-time employees and no part-time employees.
      Of these employees, three were engaged in providing business development
      services, two were engaged in information technology, and five were engaged
      in
      general and administrative activities. None of our employees are represented
      by
      a labor union or a collective bargaining agreement. We have not experienced
      any
      work stoppages and have established positive employee
      relationships.







6





**ITEM
      2. DESCRIPTION OF PROPERTIES**




We
      currently lease approximately 7,297 square feet of office space in one building
      located in Mission Viejo, California.  The lease terminates on June
      30, 2009. The Company expects that the current leased premises will be
      satisfactory until the future growth of its business operations necessitates
      an
      increase in office space.  There is an ample supply of office space in
      the Orange County, California area and we do not anticipate a problem in
      securing additional space if necessary.




**ITEM
      3. LEGAL PROCEEDINGS**




From
      time
      to time, we may become involved in litigation relating to claims arising from
      our ordinary course of business. We are aware of no claims or actions pending
      or
      threatened against us, the ultimate disposition of which would have a material
      adverse effect on us.




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




No
      matters were submitted to a vote of the Company's security holders during the
      fourth quarter of its fiscal year ended June 30, 2006.






**PART
      II**




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




The
      Company’s common stock currently trades on the Over-the-Counter Bulletin Board,
      under the trading symbol of “FXSC”.  Because we are listed on the
      Over-the-Counter Bulletin Board, our securities may be less liquid, receive
      less
      coverage by security analysts and news media, and generate lower prices than
      might otherwise be obtained if they were listed on a NASDAQ market or other
      exchange.




The
      following table sets forth for each the high and low bid quotations for the
      common stock as reported by OTC Bulletin Board.




**Low**
            
            
            **High****Fiscal
                2006**July
                1, 2005—September 30, 2005
            
            $
            0.35
            
            
            $
            0.35October
                1, 2005—December 31, 2005
            
            $
            0.35
            
            
            $
            0.35January
                1, 2006—March 31, 2006
            
            $
            0.35
            
            
            $
            0.35April
                1, 2006—June 30, 2006
            
            $
            0.35
            
            
            $
            1.92**Fiscal
                2007**July
                1, 2006—October 31, 2006
            
            $
            0.13
            
            
            $
            1.70November
                1, 2006—December 31, 2006
            
            $
            0.12
            
            
            $
            0.40January
                1, 2007—March 31, 2007
            
            $
            0.11
            
            
            $
            0.16April
                1, 2007—June 30, 2007
            
            $
            0.08
            
            
            $
            0.25July
                1, 2007—September 30, 2007
            
            $
            0.08
            
            
            $
            0.20




Source:
      Yahoo Finance





7





On
      September 28, 2007, the Company had approximately 881 stockholders of record.
      The Company has not paid any dividends on its Common Stock and does not expect
      to do so in the foreseeable future. The Company intends to apply its earnings,
      if any, in expanding its operations and related activities. The payment of
      cash
      dividends in the future will be at the discretion of the Board of Directors
      and
      will depend upon such factors as earnings levels, capital requirements, the
      Company's financial condition and other factors deemed relevant by the Board
      of
      Directors. In addition, the Company's ability to pay dividends may be limited
      under future loan agreements of the Company which restrict or prohibit the
      payment of dividends.




**EQUITY
      COMPENSATION PLAN INFORMATION**




The
      following table sets forth information concerning options to purchase shares
      of
      our common stock granted to our named executive officers in the fiscal year
      ended June 30, 2007.




**Executive
                Officer**
            **Shares
                of Common**
              **Stock
                Underlying**
              **Warrants
                (1)**
            **Shares
                of Common**
              **Stock
                Underlying**
              **Stock
                Options**
            **%
                of Total**
              **Options
                and Warrants Granted**
              **to
                Company Employees**
            **Exercise
                Price**
              **Per
                Share (2)**
            **Expiration**
              **Date**
            **Grant
                Date**
              **Present
                Value (3)**Kenneth
                Westbrook
            1,000,002
                (4)
            -
            33%
            $0.10
            6/30/2009
            $1,686,810Kenneth
                Westbrook
            900,000
                (5)
            -
            29%
            $1.45
            6/30/2009
            $1,474,903





(1)
            The
                warrants have a term of no more than three years, subject to earlier
                termination in certain events related to termination of employment.
                The
                warrants begin to vest on the first month subsequent to the grant
                date. To
                the extent not already exercisable, the warrants shall become exercisable
                in full in connection with, and immediately prior to the consummation
                of,
                any liquidity event.




(2)
            All
                options were granted at a value determined and approved by the Chief
                Executive Officer and the Board of
                Directors.




(3)
            As
                suggested by the SEC’s rules on executive compensation disclosure, the
                Company used the Black-Scholes model of option valuation to determine
                grant date pre-tax present value. The calculation is based on a three-year
                term and upon the following assumptions: annual dividend growth of
                zero
                percent, volatility of approximately 235%, and a bond equivalent
                yield
                (i.e., risk free rate) of 5.125%. There can be no assurance that
                the
                amounts reflected in this column will be
                achieved.




(4)
            This
                warrant was issued to Mr. Westbrook’s in lieu of salary for services
                rendered as President and as a member of the Board of
                Directors.




(5)
            This
                warrant was issued to Mr. Westbrook in consideration for his services
                to
                the Company as the Company’s President and member of the Board of
                Directors.




8





**ITEM
      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATIONS**




**FORWARD
      LOOKING STATEMENTS**




This
      discussion contains statements regarding operating trends and our beliefs and
      expectations regarding our future financial performance and future financial
      condition (which are referred to as "forward looking statements"). The
      consequences of those operating trends on our business and the realization
      of
      our expected future financial results, which are discussed in those statements,
      are subject to the uncertainties and risks described below in this Section
      of
      this Report under the caption "Factors That May Affect Future Results." Due
      to
      those uncertainties and risks, the duration and effects of those operating
      trends on our business and our future financial performance may differ, possibly
      significantly, from those that are currently expected as set forth in the
      forward looking statements. As a result, you should not place undue reliance
      on
      those forward looking statements.




**Introduction**




The
      following discussion presents information about our consolidated results of
      operations, financial condition, liquidity and capital resources and should
      be
      read in conjunction with our consolidated financial statements and the notes
      thereto included elsewhere in this Report.




**Overview**




flexSCAN,
      Inc. was originally incorporated under the laws of the State of Nevada on
      February 21, 1991, as Fuel Corporation of America (“Fuel
      Corporation”).  On July 15, 2005, Fuel Corporation entered into an
      Agreement and Plan of Merger (the “Merger Agreement”) by and among FCA
      Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Fuel
      Corporation (“FCA”), and flexSCAN, Inc., a Delaware
      corporation.  Pursuant to the Merger Agreement, FCA was merged with
      and into flexSCAN (Delaware), with flexSCAN (Delaware) surviving as a
      wholly-owned subsidiary of Fuel Corporation. As a result of the merger, the
      operations of flexSCAN become the sole operations of Fuel Corporation. Upon
      completion of the merger, flexSCAN (Delaware) changed its name to
      flexPLUS.




On
      September 19, 2005, Fuel Corporation merged with and into flexSCAN, Inc., a
      Nevada corporation for the sole purpose of effecting a name changed of Fuel
      Corporation to flexSCAN, Inc. (“flexSCAN” or the “Company” or “our” or “we”).
      flexSCAN is currently headquartered in Orange County, California, with its
      principal executive offices located at 27201 Puerta Real, Suite 350, Mission
      Viejo, 92691.




flexSCAN
      is a healthcare information and services organization focusing on providing
      high
      technology medical information management to the healthcare consumer, along
      with
      a unique incentive program designed to abate the rising costs of healthcare
      to
      both employers and employees. We believe that our patent-pending and proprietary
      program wellness360TM is an industry-first for corporate health and wellness
      management. wellness360TM packages advertising and marketing research
      opportunities with 'no-cost' corporate health and wellness services, then
      rewards employers and employees for using the services. The program leverages
      innovative technology to provide participants with free comprehensive health
      and
      wellness services, an online personal health record system, online lifestyle
      guides for fitness and nutrition, and online progress tracking. Employers and
      employees receive economic rewards for using the free services and for
      participating in advertiser-sponsored activities.





9





We
      have a
      limited operating history and as a start-up company in the early stage of
      development, there are substantial risks, uncertainties, expenses and
      difficulties that we are subject to. The market for wellness programs is
      generally highly competitive. Our ability to compete depends on many factors,
      many of which are outside of our control. These factors include: timing and
      market acceptance, introduction of competitive services, price and customer’s
      interest in incorporating mywellness360 into its suite of employee
      benefits.  For additional uncertainties and risks that may affect our
      business please see the section entitled "Factors That May Affect Future
      Results."




**Application
      of Critical Accounting Policies**




The
      Company’s consolidated financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States. The
      preparation of these consolidated financial statements requires the Company
      to
      make estimates and judgments that affect the reported amounts of assets,
      liabilities, revenues and expenses, and related disclosure of contingent assets
      and liabilities. The Company bases its estimates on historical experience and
      on
      various other assumptions that are believed to be reasonable under the
      circumstances, the results of which form the basis of making judgments about
      the
      carrying values of assets and liabilities that are not readily apparent from
      other sources. Actual results may differ from these estimates under different
      assumptions or conditions.




The
      Company believes the following critical accounting policies, among others,
      affect more significant judgments and estimates used in the preparation of
      the
      consolidated financial statements:




Allowance
      for Doubtful Accounts. The Company does not maintain allowances for doubtful
      accounts for estimated losses resulting from the inability of customers to
      make
      required payments as the company has not experienced any material losses through
      June 30, 2006. The allowance for doubtful accounts, when necessary, will be
      based on specific identification of customer accounts and a best estimate of
      the
      likelihood of potential loss, taking into account such factors as the financial
      condition and payment history of major customers. The Company evaluates the
      collectibility of receivables at least quarterly. If the financial condition
      of
      the customers were to deteriorate, resulting in an impairment of their ability
      to make payments, an allowance may be required. The differences could be
      material and could significantly impact cash flows from operating
      activities.




Deferred
      Taxes. The Company records a valuation allowance to reduce the deferred tax
      assets to the amount that is more likely than not to be realized. The Company
      has considered estimated future taxable income and ongoing tax planning
      strategies in assessing the amount needed for the valuation allowance. Based
      on
      these estimates, all of the deferred tax assets have been reserved. If actual
      results differ favorably from those estimates used, the Company may be able
      to
      realize all or part of net deferred tax assets. Such realization could
      positively impact operating results and cash flows from operating
      activities.




Revenue
      Recognition. The Company’s advertising revenue is generally recognized when
      the advertisements are displayed to flexSCAN’s online members. Revenue from the
      Company’s discontinued disease screening services is recognized upon delivery of
      the services. Monies collected in advance of the service being provided are
      recorded as deferred revenue.





10





In
      the
      past, the Company has acted in a manner similar to a medical equipment lease
      broker. As a broker, the Company earned a commission or fee for medical
      equipment leases referred to third parties on a non-recourse
      basis.  The commission or fee was earned upon funding of the lease by
      the third party. The commission was recorded net of any related expenses and
      was
      included in equipment financing income, net.




Derivative
      Instruments.  From time to time, the Company issues debt
      securities that contain features that are considered embedded derivative
      instruments pursuant to Statement of Financial Accounting Standards No. 133,
      Accounting for Derivative Instruments and Hedging Activities, as amended. The
      accounting treatment of these derivative financial instruments requires that
      the
      Company record the derivatives and related warrants at their fair values as
      of
      the inception date of the debt agreements and at fair value as of each
      subsequent balance sheet date. In addition, under the provisions of Emerging
      Issues Task Force Issue No. 00-19, Accounting for Derivative Financial
      Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, as a
      result of entering into the debt agreements, the Company may be required to
      classify all other non-employee warrants as derivative liabilities and record
      them at their fair values at each balance sheet date. Any change in fair value
      is recorded as non-operating, non-cash income or expense at each balance sheet
      date. If the fair value of the derivatives is higher at the subsequent balance
      sheet date, the Company records a non-operating, non-cash charge. If the fair
      value of the derivatives is lower at the subsequent balance sheet date, the
      Company records non-operating, non-cash income. From time to time, the Company
      issues common stock with attached warrants, which is not subject to derivative
      accounting. The Company also issues warrants from time to time as incentive
      compensation for employees, officers, members of the board of directors, and
      consultants. In event of issuing a warrant for this purpose, derivative
      accounting applies. Accordingly, the Company conducts a Black Scholes
      calculation to determine the fair value of the warrant instrument. If the
      warrants are fully vested at issuance, then the full expense (fair value) is
      booked at issuance. However, if the warrants vest over time, then the expense
      associated with the warrant instrument is amortized on a pro-rata basis over
      the
      vesting period. Another scenario adopted periodically by the Company is the
      issuance of a debt instrument with attached warrants. In this final scenario,
      the Company accounts for the expense following a two step process as prescribed
      under APB14: First, we adjust the carrying value of the debt and reflect the
      value calculation under Black Scholes as interest expense, with a debit to
      interest expense and a credit to debt discount. Secondly, pursuant to the rules
      under APB14, a debit entry is made to debt discount and credited to additional
      paid in capital. All of our warrants, which are attached to debt, fully vest
      at
      issuance. Accordingly, the debt discount entries described above offset one
      another and the net entry is a charge to interest expense for the derivative
      cost and a credit to additional paid in capital. Should the warrants vest over
      time, then the interest expense and credit to debt discount would follow an
      amortization schedule. In this event, the debt discount entries would not offset
      and there would be a debit balance for the debt discount account, which reduces
      over time in a direct relationship with the amortization of the interest
      expense.





11





**Results
      of Operations**




**Year
      Ended June 30, 2007 Compared to the Year Ended June 30,
      2006**




Sales


Sales
      for
      the twelve months ended June 30, 2007 and 2006 were $57,178 and $134,708
      respectively. The decrease of $77,530 resulted from management’s decision in the
      third quarter of the fiscal year ended June 30, 2006 to discontinue its disease
      screening services, which represented a majority of the sales over both fiscal
      years. The Company wound down its disease screening operations during the first
      half of the current fiscal year. Over the current fiscal year, the Company
      has
      directed its entire focus to the wellness360 services described in ITEM 1.
      DESCRIPTION OF BUSINESS, above. The wellness360 suite of services has not
      generated a material level of revenues to date. Management expects to
      significantly increase its customer base during fiscal year 2008, which it
      believes will provide an attractive venue for marketers, advertisers and
      researchers.




Cost
      of Sales


Cost
      of
      sales consists of radiologist reading fees, technology fees, CT scan and vitals
      related supplies, as well as salaries and expenses of field service personnel.
      Cost of sales decreased to $24,670 during the year ended June 30, 2007 from
      $73,419 for the same period in 2006. This decrease of $48,749 is due to the
      significant decrease in sales volume from the winding down of mywellness360
      scanning and diagnostic services, which occurred during the first half of the
      current fiscal year.




Selling,
      general and administrative expenses


Selling,
      general and administrative expenses, which include personnel costs for
      administration, information systems, and general management, as well as facility
      expenses, professional fees, legal expenses, and other administrative costs,
      decreased to $5,771,501 during the twelve months ended June 30, 2007 from
      $8,790,439 for the same period in 2006. This decrease of $3,018,938 is primarily
      attributed to the overall reduction fair value of incentive warrants, conversion
      options, and amortization of debt discount, all of which are non-cash expenses.
      For the fiscal year ended June 30, 2007, derivative expenses, excluding debt
      discount, were equal to $3,842,691 compared to $5,994,118 for the same period
      in
      2006, representing an expense reduction of $2,151,427. Legal and accounting
      expenses were also significantly reduced in fiscal year ended 6-30-07 versus
      the
      prior fiscal year. The reduction occurred because, in the prior year, there
      were
      extraordinary professional costs associated with the merger between flexSCAN
      and
      Fuel Corp as well as various non-recurring compliance and reporting
      expenses.




Interest
      Expense


Interest
      expense for the year ended June 30, 2007 was $662,413 compared to $1,163,057
      during the year ended June 30, 2006. The decrease of $500,644 was primarily
      due
      to reduced amortization of the debt discount related to notes issued during
      the
      year. Debt discount amortization in the current fiscal year was $351,797, which
      compares favorably with $898,802 of debt discount amortization recorded during
      the fiscal year ended June 30, 2006.





12





Net
      Loss


Net
      loss
      for the years ended June 30, 2007 and 2006 were $6,017,273 and $9,878,471,
      respectively. The decrease in net loss is primarily due to a decrease in
      non-cash expenses from stock and warrant issuances and a decrease in
      professional (i.e., legal and accounting) expenses as discussed
      above.




Liquidity
      and Capital Resources




During
      the year ended June 30, 2007, the Company issued an aggregate of $219,200 in
      unsecured notes payable to officers, directors, and shareholders of the Company
      and $628,183 from third parties for working capital purposes.




During
      the year ended June 30, 2007, the Company issued an aggregate of 35,076,824
      shares of common stock in exchange for cash and services. Through the issuance
      of common stock, the Company raised $1,134,572 of cash for working capital
      purposes. In addition, the Company converted employee liabilities to equity
      for
      such items as deferred compensation, accrued interest on related party notes,
      and advances, having a total value at $417,364. Moreover, the Company issued
      common stock in exchange for services and an asset held for sale in the amount
      of $289,617. The Company also converted related party and third party debt
      to
      equity having a total value of $851,276. The debt conversion transactions for
      the current year were completed over two programs: (i) $324,532 during the
      second quarter of the fiscal year; and, (ii) a $526,744 conversion that occurred
      effective 6-29-2007. Finally, the Company raised $12,557 during the current
      fiscal year from the exercise of warrants.




The
      Company also strengthened its balance sheet through forgiveness of indebtedness
      transactions during the year ended June 30, 2007 in the amount of $399,586.
      Approximately 90% of the forgiveness of indebtedness resulted from the
      forgiveness of an accrued liability that was booked in connection with the
      terms
      a promissory note, as amended, between the Company and the seller of Fuel
      Corporation.




At
      June
      30, 2007, the Company had total assets of $597,907 compared to total assets
      of
      $338,525 at June 30, 2006.  Cash was $181,879 as of June 30, 2007, an
      increase of $29,581 from the $152,298 cash on hand as of June 30,
      2006.




Accounts
      receivable was nil at June 30, 2007 as compared to accounts receivable of $9,588
      at June 30, 2006. The accounts receivable were collected or written-off and
      the
      Company has not transacted any credit sales since it transitioned its business
      model to its current suite of on-line wellness products and
      services.




Net
      fixed
      assets totaled $58,759 at June 30, 2007 compared to $127,625 at June 30, 2006,
      a
      decrease of $68,866.  The decrease in net fixed assets is attributable
      to depreciation of the assets and the termination of capital
      leases.





13





Total
      liabilities at June 30, 2007 were $1,731,559, a decrease of $406,814 (19%)
      from
      the $2,138,373 at June 30, 2006. Accounts payable and accrued expenses were
      $452,548 at June 30, 2007, a decrease of $35,952 (7%) from the $488,500 at
      June
      30, 2006. The decrease is due to settling, converting, and paying our older
      accounts payable as we position the company financially for the future. Deferred
      Compensation totaled $255,511; a decrease of $174,198 compared to $429,709
      at
      June 30, 2006. The Company converted $371,250 of deferred compensation to equity
      at $0.10 per share, which more than offset the additions to the deferred
      compensation account for the benefit of the President and the CFO.




The
      accompanying consolidated financial statements have been prepared in conformity
      with accounting principles generally accepted in the United States of America,
      which contemplate continuation of the Company as a going concern. The Company
      has not generated significant revenues from operations and has no assurance
      of
      any future revenues. The Company incurred a net loss of $6,017,273 during the
      year ended June 30, 2007. Also, the Company has a working capital deficit of
      $1,062,860 and a stockholders’ deficit of $1,133,652 at June 30, 2007. These
      factors, among others, raise substantial doubt about the Company’s ability to
      continue as a going concern.




The
      Company’s working capital requirements will depend upon numerous factors
      including but not limited to the nature, cost and timing of: product
      distribution and sales; technological advances and the Company’s ability to
      establish collaborative arrangements with potential distribution and service
      relationships to expand flexSCAN’s market reach. The Company’s capital resources
      will be focused primarily on the marketing of its wellness360 services and
      development of revenue relationships with sponsors (e.g., large employers),
      advertisers, clinical researchers and marketers. Currently the Company’s
      existing capital resources are insufficient to fund operations for the next
      12
      months. The Company is currently working to raise additional capital to
      subsidize operations until at such time that the Company achieves breakeven
      operations.




To
      date,
      the Company’s sources of cash have been primarily limited to the sale of equity
      securities, issuance of convertible debt, and borrowing. The Company cannot
      guarantee that revenue from wellness360 activities will increase adequately
      to
      sustain operations in the near term, nor can the Company be certain that
      additional funding will be available on acceptable terms, or at all. Any debt
      financing, if available, may involve restrictive covenants that could impact
      the
      Company’s ability to conduct business. If the Company is unable to raise
      additional capital when required or on acceptable terms, the Company may have
      to
      significantly delay, scale back or discontinue the development and/or
      commercialization of one or more of the Company’s products and or
      services.




**Contractual
      Obligations and Contingent Liabilities and Commitments**




The
      Company leases its facility and certain equipment under non-cancelable operating
      lease arrangements that expire at various dates through 2010. The following
      table summarizes future minimum payments for these leases as of June 30,
      2007:




**FY
                2008**
            **FY
                2009**
            **FY
                2010**
            **FY
                2011**
            **Total
                Due over**
              **next
                5 Years**Operating
                Leases
            $219,898
            $226,903
            nil
            nil
            $446,801




14





**FACTORS
      THAT MAY AFFECT FUTURE RESULTS**




This
      Report, including the discussion and analysis of our financial condition and
      results of operations set forth above, contains certain forward-looking
      statements. Forward-looking statements set forth estimates of, or our
      expectations or beliefs regarding, our future financial performance. Those
      estimates, expectations and beliefs are based on current information and are
      subject to a number of risks and uncertainties that could cause our actual
      operating results and financial performance in the future to differ, possibly
      significantly, from those set forth in the forward-looking statements contained
      in this Report and, for that reason, you should not place undue reliance on
      those forward-looking statements. Those risks and uncertainties include,
      although they are not limited to, the following:




**We
      are an early stage company and have a limited operating
      history.**




We
      have a
      limited operating history upon which you can base an evaluation of our business
      and prospects. As a start-up company in the early stage of development, there
      are substantial risks, uncertainties, expenses and difficulties that we are
      subject to. You should consider an investment in the Company in light of these
      risks, uncertainties, expenses and difficulties. To address these risks and
      uncertainties, the Company must do the following:




·
            Successfully
                execute its business strategy;




·
            Continue
                to enhance its services to meet the needs of a changing
                market;




·
            Continue
                to raise debt and equity to fund working
                capital;




·
            Respond
                to competitive developments; and




·
            Attract,
                integrate, retain and motivate qualified
                personnel




We
      may be
      unable to accomplish one or more of these objectives, which could cause the
      business to suffer. In addition, accomplishing one or more of these objectives
      might be very costly, which could harm our financial results.




**We
      have incurred significant losses since inception and anticipate that we will
      continue to incur losses for the foreseeable future.**




As
      of
      June 30, 2007, the Company had an accumulated deficit of $23,645,119. We plan
      to
      maintain or increase our marketing expenses and general overhead, subject to
      meeting certain funding goals. We believe that our business proposition will
      be
      appealing to both the healthcare and corporate benefits communities. There
      is no
      assurance, however, that we will be able to successfully market our services
      in
      a profitable manner. If the market acceptance for our services slows, its
      margins and profitability will suffer. The Company is unable to predict whether
      its operating results will be profitable.




Management
      believes that long-term profitability and growth will depend on its ability
      to:




·
            Develop
                brand name awareness;




·
            Successfully
                identify viable market
                opportunities;




·
            Provide
                healthcare consumers with valuable and interesting
                services;




·
            Develop
                viable strategic alliances; and




·
            Maintain
                sufficient transaction volume.




15





**We
      will need to raise substantial additional capital to fund our operations, and
      failure to obtain funding when needed may force us to delay, reduce or eliminate
      its products and services.**




Our
      operations have consumed substantial amounts of cash since inception. We
      anticipate having to make significant capital expenditures to:




·
            Increase
                marketing and promotion of its products and
                services;




·
            Increase
                staffing;




·
            Increase
                IT technology research and development;
                and




·
            Explore
                new markets for its products and
                services




We
      expect
      that the amount of cash used in our operations will increase significantly
      over
      the next several years. If we are unable to fund these increased expenditures
      through increased revenues we will be required to raise additional capital.
      Our
      future funding requirements will depend on many factors, including, but not
      limited to:




·
            Market
                acceptance of our products and
                services;




·
            Research
                and development costs;




·
            Marketing
                costs; and,




·
            Costs
                of increased staffing.




To
      date,
      our sources of cash have been primarily limited to the sale of equity and
      convertible debt securities. We cannot be certain that additional funding will
      be available on acceptable terms, or at all. To the extent we raise additional
      funds by issuing equity securities, our stockholders may experience significant
      dilution. Any debt financing, if available, may involve restrictive covenants
      that impact our ability to conduct its business. If we are unable to raise
      additional capital, when required, or on acceptable terms, we may have to
      significantly delay, scale back or discontinue certain products and
      services.





**We
      may be subject to professional liability risks which could be costly and
      negatively impact our business and financial results.**




We
      may be
      subject to professional liability claims. To protect against possible
      professional liability, our vendors maintain professional liability insurance
      with coverage that is consistent and appropriate for industry risks. However,
      if
      the our vendors are unable to maintain insurance in the future at an acceptable
      cost or if our vendors’ insurance coverage does not fully cover a potential
      liability, and a successful claim was made against us and/or a vendor we could
      be exposed to liability. Any claim made against us that is not fully covered
      by
      insurance could be costly to defend against, and divert the attention from
      our
      operations.




**Loss
      of key executives and failure to attract qualified managers, technologists
      and
      sales persons could limit our growth and negatively impact our
      operations.**




We
      depend
      upon our management team to a substantial extent. In particular, we depend
      upon
      Mr. Thomas Banks, Chief Executive Officer and Chairman of the Board of
      Directors, for his skills, experience, and knowledge of the company and industry
      contacts. Currently, we do not have an employment agreement with Mr. Banks.
      The
      loss of Mr. Banks, or other members of our management team, could have a
      material adverse effect on our business, results of operations or financial
      condition.





16





**Complying
      with federal and state regulations is an expensive and time-consuming process,
      and any failure to comply could result in substantial
      penalties.**




We
      are
      directly or indirectly subject to extensive regulation by both the federal
      government and the states in which it conducts its business, including the
      federal Anti-Kickback Law and similar state anti-kickback laws, the Stark Law
      and similar state laws affecting physician referrals, the federal False Claims
      Act, the Health Insurance Portability and Accountability Act of 1996 and similar
      state laws addressing privacy and security, state unlawful practice of medicine
      and fee splitting laws, state certificate of need laws, the Medicare and
      Medicaid regulations, the Medicare Prescription Drug, Improvement and
      Modernization Act of 2003, and requirements for handling biohazardous and
      radioactive materials and wastes.




If
      our
      operations are found to be in violation of any of the laws and regulations
      to
      which it or its clients are subject, it may be subject to the applicable penalty
      associated with the violation, including civil and criminal penalties, damages,
      fines and the curtailment of its operations. Any penalties, damages, fines
      or
      curtailment of the Company’s operations, individually or in the aggregate, could
      adversely affect its ability to operate its business and its financial results.
      The risk of us being found in violation of these laws and regulations is
      increased by the fact that many of these laws have not been fully interpreted
      by
      the regulatory authorities or the courts, and their provisions are open to
      a
      variety of interpretations. Any action against us for violation of these laws
      or
      regulations, even if we successfully defend against it, could cause us to incur
      significant legal expenses and divert management’s attention from the operation
      of its business.




**If
      we are unable to protect our intellectual property effectively, we may be unable
      to prevent third parties from using our technologies, which would impair our
      competitive advantage.**




We
      possess a broad range of propriety technologies and processes which may or
      may
      not be subject to protection under copyright, trademark and or patent law.
      We
      intend to make every effort to protect its proprietary technologies with all
      applicable copyright, trademark and patent law available at that
      time.




We
      do not
      believe that our operations or products infringe on the intellectual property
      rights of others. However, there can be no assurance that others will not assert
      infringement or trade secret claims against us with respect to our current
      or
      future products or that any such assertion will not require us to enter into
      a
      license agreement or royalty arrangement with the party asserting the claim.
      Responding to and defending any such claims may distract the attention of our
      management and have an adverse effect on our business, financial condition
      and
      results of operations.




Others
      may claim in the future that we have infringed their past, current or future
      technologies. We expect that participants in its markets increasingly will
      be
      subject to infringement claims as the number of services and competitors grow.
      Any claim like this, whether meritorious or not, could be time-consuming, and
      result in costly litigation and possibly result in royalty or licensing
      agreements. These royalty or licensing agreements might not be available on
      acceptable terms or at all. As a result, any claim like this could harm our
      business.





17





We
      regard
      the protection of our copyrights, service marks, trademarks, and trade secrets
      as critical to our success. We rely on a combination of patent, copyright,
      trademark, service mark and trade secret laws and contractual restrictions
      to
      protect its proprietary rights in products and services. When applicable, we
      will enter into confidentiality and invention assignment agreements with
      employees and contractors, and nondisclosure agreements with parties we conducts
      business with in order to limit access to and disclosure of our proprietary
      information. These contractual arrangements and the other steps taken to protect
      our intellectual property may not prevent misappropriation of our technology
      or
      deter independent third-party development of similar technologies. We intend
      to
      pursue the registration of trademarks and service marks in the U.S. and
      internationally. Effective trademark, service mark, copyright and trade secret
      protection may not be available in every country in which its services are
      made
      available.




**We
      will need to increase the size of its organization, and may experience
      difficulties in managing growth.**




We
      are a small company with ten (10) full-time employees and no part-time employees
      as of June 30, 2007. We expect to experience a period of significant expansion
      in headcount, facilities and infrastructure and anticipate that further
      expansion will be required to address potential growth in customers and market
      opportunities. Future growth will impose significant added responsibilities
      on
      members of management, including the need to identify, recruit, maintain and
      integrate additional employees. Our future financial performance and our ability
      to compete effectively will depend, in part, on our ability to manage any future
      growth effectively.




**The
      ownership interests of our officers and directors could conflict with the
      interests of our other stockholders.**




As
      of
      June 30, 2007, our officers and directors beneficially owned approximately
      31.3% of its common stock. As a result, these stockholders, acting together,
      will be able to significantly influence all matters requiring approval by our
      stockholders, including the election of directors and the approval of mergers
      or
      other business combination transactions. The interests of this group of
      stockholders may not always coincide with our interests or the interests of
      other stockholders.




**It
      may be difficult for a third party to acquire us even if doing so would be
      beneficial to our shareholders.**




Some
      provisions of our Articles of Incorporation, as amended, and Bylaws, as well
      as
      some provisions of Nevada or California law, may discourage, delay or prevent
      third parties from acquiring us, even if doing so would be beneficial to our
      shareholders.




**There
      is no existing market for our common stock.**




Our
      common stock is quoted on the Over the Counter Bulletin Board under the symbol
      "FXSC." The volume of trading of our common stock and the number of shares
      in
      the public float are small. Sales of a substantial number of shares of common
      stock into the public market in the future could materially adversely affect
      the
      prevailing market price of our common stock.





18





**The
      market price of our common stock may be adversely affected by several
      factors.**




The
      market price of our common stock could fluctuate significantly in response
      to
      various factors and events, including:




·
            Our
                ability to execute our business
                plan,




·
            Operating
                results below expectations;




·
            Announcements
                of technological innovations or new products by us or our
                competitors;




·
            Loss
                of any strategic relationship;




·
            Industry
                developments;




·
            Economic
                and other external factors; and




·
            Period-to-period
                fluctuations in financial results.




In
      addition, the securities markets have from time to time experienced significant
      price and volume fluctuations that are unrelated to the operating performance
      of
      particular companies. These market fluctuations may also materially and
      adversely affect the market price of our common stock.




**Our
      common stock may be deemed penny stock with a limited trading
      market.**




Our
      common stock is currently listed for trading on the OTC Bulletin Board which
      is
      generally considered to be a less efficient market than markets such as NASDAQ
      or other national exchanges, and which may cause difficulty in obtaining future
      financing. Further, our securities are subject to the "penny stock rules"
      adopted pursuant to Section 15(g) of the Securities Exchange Act of the 1934,
      as
      amended, or Exchange Act. The penny stock rules apply to Non-NASDAQ companies
      whose common stock trades at less than $5.00 per share or which have a tangible
      net worth less then $5,000,000 ($2,000,000 if the company has been operating
      for
      three or more years). Such rules require, among other things, that brokers
      who
      trade "penny stock" to persons other than "established customers" complete
      certain documentation, make suitable inquiries of investors and provide
      investors with certain information concerning trading in the security, including
      a risk disclosure document and quote information under certain circumstances.
      Many brokers have decided not to trade "penny stock" because of the requirements
      of the penny stock rules and, as a result, the number of broker-dealers willing
      to act as market makers in such securities is limited. In the event that we
      remain subject to the "penny stock rules" for any significant period of time,
      there may develop an adverse impact on the market, if any, for our securities.
      Because our securities are subject to the "penny stock rules", investors will
      find it more difficult to dispose of our securities. Further, for companies
      whose securities are traded on the OTC Bulletin Board, it is more difficult:
      (1)
      to obtain accurate quotations, (ii) to obtain coverage for significant new
      events because major wire services, such as the Dow Jones News Service,
      generally do not publish press releases about such companies, and (iii) to
      obtain needed capital.





19





**We
      do not expect to pay dividends in the future. Any return on investment may
      be
      limited to the value of the Company’s stock.**




We
      do not
      anticipate paying cash dividends on its stock in the foreseeable future. The
      payment of dividends on shares of common stock will depend on our earnings,
      financial condition and other business and economic factors affecting us at
      such
      time as the board of directors may consider relevant. If we do not pay
      dividends, our common stock may be less valuable because a return on your
      investment will only occur if our stock price appreciates.




**A
      sale of a substantial number of shares of the Company’s common stock may cause
      the price of its common stock to decline.**




If
      stockholders sell substantial amounts of our common stock in the public market,
      including shares issued upon the exercise of outstanding options or warrants,
      the market price of its common stock could fall. These sales also may make
      it
      more difficult for us to sell equity or equity-related securities in the future
      at a time and price that we deem reasonable or appropriate. Stockholders who
      have been issued shares in the Merger will be able to sell their shares pursuant
      to Rule 144 under the Securities Act of 1933, beginning one year after the
      stockholders acquired their shares.




**ITEM
      7. CONSOLIDATED FINANCIAL STATEMENTS**




See
      the
      consolidated financial statements attached to and made a part of this report
      on
      pages F-2 through F-5.




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




On
      June
      25, 2007, the Company engaged a new auditing firm, Rotenberg & Co. LLP, as
      its independent public accounting firm to audit `its financial statements.
      The
      Company’s management and Audit Committee recommended and approved the change of
      accountants. Accordingly, Cacciamatta Accountancy Corporation (“Cacciamatta”),
      was dismissed on July 17, 2007.  The decision to change accountants
      was determined by the Board of Directors to be in the Company’s best interests
      at the time.




From
      August 30, 2006, the date of its appointment, through the date of its dismissal
      on July 17, 2007, there were no disagreements between the Company and
      Cacciamatta on any matter of accounting principles or practices, financial
      statement disclosure of auditing scope or procedure with disagreements, if
      not
      resolved to the satisfaction of Cacciamatta would have caused Cacciamatta to
      make reference to the matter in its reports on the company’s financial
      statements.




From
      August 30, 2006, the date of appointment, to the present, Cacciamatta did not
      issue a report with respect to the Company’s financial statements that contained
      an adverse opinion or a disclaimer of opinion, or was qualified in respect
      of
      uncertainty, audit scope or accounting principals; however, their opinion was
      modified for going-concern uncertainty. In addition, from the date of its
      appointment until the present, Cacciamatta did not advise the Company with
      respect to any of the matters described in paragraphs (a)(1)(iv)(B) of Item
      304
      of Regulation S-B.





20





The
      Company has engaged the firm of Rotenberg & Co. LLP, as of June 25, 2007.
      Rotenberg & Co. LLP was not consulted on any matter relating to accounting
      principles to a specific transaction, either completed or proposed, or the
      type
      of audit opinion that might be rendered on the Company’s financial
      statements.




A
      Form
      8-K was filed with the SEC on August 6, 2007, as amended September 10, 2007,
      regarding this matter.




**ITEM
      8A. CONTROLS AND PROCEDURES**




We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our Securities Exchange Act reports
      is
      recorded, processed, summarized and reported within the time periods specified
      in the SEC's rules and forms, and that such information is accumulated and
      communicated to our management, including our chief executive officer and chief
      financial officer, to allow timely decisions regarding required disclosure.
      In
      designing and evaluating the disclosure controls and procedures, management
      recognized that any controls and procedures, no matter how well designed and
      operated, can provide only reasonable assurance of achieving the desired control
      objectives, as ours are designed to do, and management necessarily was required
      to apply its judgment in evaluating the cost-benefit relationship of possible
      controls and procedures.




As
      of
      June 30, 2007, the Company carried out an evaluation, under the supervision
      and
      with the participation of our management, including our chief executive officer
      and chief financial officer, of the effectiveness of the design and operation
      of
      our disclosure controls and procedures pursuant to Rule 13a-15b of the U.S.
      Securities Exchange Act of 1934 (the “Exchange Act”). Based on this evaluation,
      our chief executive officer and chief financial officer have concluded that,
      as
      of June 30, 2007, our disclosure controls and procedures, related to internal
      control over financial reporting and the recording of certain equity
      transactions, were not effective in light of the material weaknesses described
      below.




We
      are
      committed to improving our financial organization. However, the Company does
      not
      possess the financial resources to address other than rudimentary accounting
      and
      reporting requirements, and therefore relies on outside advisors.




The
      Company’s inability to independently prepare its financial reports to the
      standards of Generally Accepted Accounting Principals (“GAAP”) and the rules and
      Regulations of the Securities and Exchange Commission rise to the level of
      a
      material weakness in internal control.




Management
      of the Company intends to promptly remediate this deficiency by:




(i)           acquiring
      the appropriate level of internal financial support;




(ii)          access
      development training programs for financial employees;




(iii) provide
      financial employees with adequate technical resources to research financial
      accounting and reporting requirements; and,




(iiii)         implement
      more structured financial controls and reporting.





21





We
      currently believe we will need to take additional steps to remediate the above
      referenced material weaknesses, and we will continue to evaluate the
      effectiveness of our design on an ongoing basis, and will take further action
      as
      appropriate. We are implementing a better system of controls and review process
      by our management to avoid similar problems in the future. This is being
      accomplished by a periodic review of our day to day financial entries by
      management to avoid any improper entries or issues that need to be resolved
      in
      accordance with proper GAAP accounting.




Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projection of any evaluation of
      effectiveness to future periods is subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.




**ITEM
      8B. OTHER INFORMATION**




Not
      applicable.




**PART
      III**




**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE
      WITH
      SECTION 16(a) OF THE EXCHANGE ACT**




The
      following sets forth the name, age and position of each of our directors and
      executive officers as of June 30, 2007:




**Name**
            
            **Age**
            
            **Position
                with the Company**Thomas
                Banks
            
            54
            
            Chief
                Executive Officer, Director and Chairman of the BoardKenneth
                Westbrook
            
            57
            
            President
                and DirectorFrancis
                X. Pisano
            
            52
            
            Chief
                Financial Officer, Director, Member of Compensation
                CommitteeMichael
                Cranford
            
            44
            
            Chief
                Technology OfficerMaurice
                J. DeWald
            
            67
            
            Director
                and Chairman of the Audit CommitteeJonathan
                Javitt
            
            51
            
            DirectorHeidi
                Patterson
            
            53
            
            Director,
                Member of the Audit Committee and Compensation Committee
                Chairperson




All
      directors are elected annually by the Company’s shareholders and hold office
      until their successors are elected and assume their respective positions.
      Executive officers of the Company are elected by the board of Directors to
      serve
      at the pleasure of the board of Directors. Additional information regarding
      the
      company’s directors and executive officers is set forth below. The company’s
      board is comprised of the following persons:





22





**Thomas
      Banks, 54.**Mr. Banks is flexSCAN’s founder and is in charge of the
      day-to-day operations of the Company. Prior to the founding of flexSCAN Mr.
      Banks founded guideSMART.com, a world class Internet portal and
      business-2-business Web community and Application Service Provider employing
      a
      franchise distribution model. Before guideSMART, Mr. Banks was the founder
      of
      Santiago Data Systems, Inc., which he ran from February 1980 until March 1997.
      While Santiago’s CEO, Mr. Banks specialized in the development, sales and
      marketing of health care practice management software. Before Santiago, Mr.
      Banks was with the Radio Shack division of Tandy Corporation where he was
      integral in the training and coordinating of the company’s Computer Center
      retail operations in Southern California, Nevada, and Arizona.




**Kenneth
      Westbrook, 57.** Mr. Westbrook has held senior executive positions with
      many well-known names in healthcare. While at Tenet from 1997 to 2004, he was
      the senior vice president of operations responsible for up to 16 acute care
      hospitals in the Southwest generating in excess of $130 million EBITDA annually.
      In 1996, he was the senior vice president of operations for over a third of
      OrNda Healthcorp’s hospitals generating $1 billion in gross revenues. From 1988
      to 1995 he served as the Chief Operating Officer for HCA Healthcare
      Corporation’s Pacific division and later as the CEO for four community hospitals
      located in California. Most recently, Mr. Westbrook retired from his role as
      CEO
      of CareMore Medical Enterprises, where he oversaw three divisions and led the
      management team programs, which increased CareMore’s HMO enrollments from 250 to
      1,800 per month. During this period, CareMore’s EBITDA rose from $19 million
      (2004) to $39 million in 2005. CareMore was recently sold to JPMorgan Partners
      for $235 million. Mr. Westbrook has an MBA and MA in Healthcare Management
      from
      University of Redlands and was honored with a Legacy of Life Award from the
      American Heart Association.




**Francis
      X. Pisano, 52.**  Francis X. Pisano is a founding partner and
      currently heads the Marketing and Financial and Business Services Departments
      of
      Hoffski Pisano. Mr. Pisano earned a Bachelor of Science in both Accounting
      and Marketing at Fordham University.  He earned his Juris Doctor Degree at
      Western State University. Mr. Pisano is a Certified Public Accountant,
      attorney, and a registered representative with the NASD with over 25 years
      of
      professional experience. Prior to co-founding the firm, Mr. Pisano held
      positions at national firms in Orange County and was an instructor in taxation
      at Orange Coast College.  He presently lectures on tax planning, financial
      planning and estate planning.




**Maurice
      J. DeWald, 66, Director, Audit Committee Chairman.**Mr. DeWald brings
      30-years of audit experience to flexSCAN having been the managing partner of
      KPMG’s Los Angeles, Orange County, and Chicago offices. He is currently the CEO
      of Verity Financial Group, Inc., a private equity firm, and serves on the board
      of Integrated Healthcare Holding, Inc., Advanced Materials Group, Inc., and
      Clearant, Inc. Mr. DeWald has a BBA degree from the University of Notre
      Dame.





23





**Jonathan
      C. Javitt, 51, M.D., M.P.H., Director.**Dr. Javitt is a physician with a
      background in information technology, health economics, and public health.
      Dr.
      Javitt is a “Senior Fellow of the Potomac Institute for Policy Studies, in
      addition to serving as Vice chairman of Health Directions, LLC a Bethesda-based
      investment grou0p that focuses on developing computer solutions to improve
      the
      delivery of health care. He has been a founder of health information technology
      companies that have become part of Siemens, Inc., United Health Group, Inc.,
      and
      Aetna, Inc. Dr. Javitt was appointed by President George W. Bush to the
      President’s Information Technology Advisory Committee, where he chaired the
      Health Subcommittee. Dr. Javitt graduated in 1978 with honors in Biochemistry
      from Princeton University and earned his M.D. at Cornell University Medical
      College. He was awarded a Kellogg Foundation Fellowship to attend the Harvard
      School of Public Health, from which he graduated with an M.P.H. in Health Policy
      and Management.




**Michael
      Cranford, 44.**  Mr. Cranford has over 20 years of application
      and internet development experience. Starting his career in Berkeley, California
      as a video game/interactive graphics programmer, Michael developed the
      international top-selling PC games The Bard's Tale I & II, as well as
      AtariSoft's Donkey Kong. He has in the years since developed proprietary
      client-server technologies for various vertical markets and has worked as an
      internet marketing consultant for such companies as Sanyo, Experian and Accor.
      Michael has an M.A. and Ph.D. (ABD) in Social Ethics from the University of
      Southern California, with a dissertation focus on ethics and
      technology.




**Heidi
      Patterson, 53**.  Ms. Patterson, formerly the Chief Executive
      Officer of the Pacific Northwest Region of the American Red Cross from 1994
      through 1999 and recently retired as the National Director of the Red Cross
      Umbilical Cord Blood Banking program. Ms. Patterson holds degrees in Business,
      Biology, and Medical Technology. Ms. Patterson received an MBA from Edinburgh
      Business School; Edinburgh, Scotland, UK. Ms. Patterson’s executive experience
      with the Red Cross makes Ms. Patterson a uniquely gifted member of flexSCAN’s
      board of directors and is committed to fulfilling flexSCAN’s charter to be a
      fundamentally sound and responsible member of the healthcare
      community.




**Code
      of Ethics**




On
      September 12, 2005, the board of directors adopted a code of business conduct
      and ethics.  The Company has posted the code of ethics on its internet
      website www.wellness360.com/codeofconduct.aspx.




**Compliance
      with Section 16(a) of the Securities Exchange Act of 1934**




Section
      16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s
      executive officers, directors and greater than 10% stockholders to file with
      the
      SEC certain reports of ownership and changes in ownership. Based on a review
      of
      the copies of such forms received and written representations from certain
      reporting persons, the Company believes that during the year ended June 30,
      2007
      all Section 16(a) reports applicable to its executive officers, directors and
      greater than 10% stockholders were filed on a timely basis, except for the
      following: a General Statement of Beneficial Ownership has not been filed by
      the
      Barbakow Living Trust. On April 25, 2007, the Trust acquired 10,000,000 shares
      of common stock pursuant to a share purchase agreement, which shareholding
      represented a greater than 10% ownership interest in Company.





24





**Audit
      Committee**





The
      Company has a standing audit committee established in accordance with section
      3(a)(58)(A) of the Exchange Act. The permanent members are Maurice J. DeWald
      and
      Heidi Patterson, both directors. Mr. DeWald fulfills the function of financial
      expert and is independent pursuant to Item 402 (a) of Reg. S-B.





**ITEM
      10. EXECUTIVE COMPENSATION AND OTHER INFORMATION**




**Summary
      Executive Compensation Table**




The
      following table discloses the annual and long-term compensation received in
      each
      of the last three fiscal years by (i) our Chief Executive Officer of the Company
      during the last fiscal year, (ii) the Company’s four most highly compensated
      executive officers, in addition to the Chief Executive Officer, serving at
      the
      end of the last fiscal year whose salary and incentive compensation exceeded
      $100,000 in the last fiscal year, and (iii)  any executive officer of the
      Company who resigned during the last fiscal year whose salary and incentive
      compensation exceeded $100,000 in the last fiscal year.





**Annual
                Compensation**
            **Long
                Term Compensation****Name
                and Principal Executive Officer Position**
            **Fiscal**
              **Year**
            **Salary**
            **Bonus**
            **Shares
                of Common**
              **Stock
                Underlying**
              **Stock
                Options and Warrants**
            **(5)
                All Other**
              **Compensation**Thomas
                Banks (1)
              Chairman
                and Chief Executive Officer
            2007
              2006
              2005
            $245,000
              $240,000
              $240,000
            $          -
              $          -
              $          -
            -
              -
              -
            -
              -
              -Kenneth
                Westbrook (2)
              Director,
                President
            2007
            $100,000
            $          -
            1,900,002
            -Francis
                X. Pisano (3)
              Chief
                Financial Officer
            2007
              2006
              2005
            $  37,500
              $  30,000
              $  
                         -
            $          -
              $          -
              $          -
            -
              1,484,437
              -
            -
              -
              -Michael
                Cranford (4)
              Chief
                Technology Officer
            2007
              2006
              2005
            $171,840
              $171,840
              $171,840
            $          -
              $          -
              $          -
            -
              -
              -
            -
              -
              -





(1)
            Mr.
                Banks founded the Company in February 2001 as Chief Executive
                Officer.


(2)
            Mr.
                Westbrook joined the Company on July 1, 2006. As of June 30, 2007
                he
                accrued six (6) months of deferred
                compensation.


(3)
            Mr.
                Pisano joined the Company in January 2006 as part-time Chief Financial
                Officer. As of June 30, 2007 he accrued three (3) months of deferred
                compensation.


(4)
            Mr.
                Cranford joined the Company in September 2002 as Chief Technology
                Officer.


(5)
            There
                was no other compensation granted to the Executive Officers. More
                specifically, there were no stock awards, option awards, non-equity
                incentive plan compensation, or non-qualified deferred compensation
                earnings.




25





**Director
      Compensation**




flexSCAN
      does not currently compensate its non-employee directors for their services
      on
      the Board of Directors with a standard option to purchase shares of common
      stock. Each outside director receives stock options for services on a
      case-by-case basis to be determined by the Company’s Chief Executive Officer and
      the board of directors.




**Option
      Grants Table**




There
      were 1,900,002 options to purchase shares of our common stock granted to our
      named executive officers in the fiscal year ended June 30,
      2007.





**Executive
                Officer**
            
            **Shares
                of Common**
              **Stock
                Underlying**
              **Stock
                Options (1)**
            
            **%
                of Total**
              **Options
                and Warrants Granted**
              **to
                Company Employees**
            
            **Exercise
                Price**
              **Per
                Share**
            
            **Expiration**
              **Date**
            
            **Grant
                Date**
              **Present
                Value (2,3)**Thomas
                Banks
            
            -
            
            -
            
            -
            
            -
            
            -Kenneth
                Westbrook
            
            1,000,002
            
            29%
            
            $0.10
            
            6-30-09
            
            $1,686,810Kenneth
                Westbrook
            
            900,000
            
            26%
            
            $1.445
            
            6-30-09
            
            $1,474,903Francis
                X. Pisano
            
            -
            
            -
            
            -
            
            -
            
            -Francis
                X. Pisano
            
            -
            
            -
            
            -
            
            -
            
            -Michael
                Cranford
            
            -
            
            -
            
            -
            
            -
            
            -







(1)
            The
                warrants have a term of no more than three years, subject to earlier
                termination in certain events related to termination of employment.
                The
                warrants begin to vest on the first month subsequent to the grant
                date. To
                the extent not already exercisable, the warrants shall become exercisable
                in full in connection with, and immediately prior to the consummation
                of,
                any liquidity event.





(2)
            All
                options were granted at a value determined and approved by the Chief
                Executive Officer and the Board of
                Directors.





(3)
            As
                suggested by the SEC’s rules on executive compensation disclosure, the
                Company used the Black-Scholes model of option valuation to determine
                grant date pre-tax present value. The calculation is based on a three-year
                term and upon the following assumptions: annual dividend growth of
                zero
                percent, volatility of approximately 250%, and a risk free bond equivalent
                yield of approximately 4.8%. There can be no assurance that the amounts
                reflected in this column will be
                achieved.





26





**Aggregated
      Options and Warrants Exercised in Last Fiscal Year and Fiscal Year-End Option
      Values**




The
      following table sets forth information regarding the exercisable and
      unexercisable options to acquire common stock granted to executive
      officers.




**Value
                of Unexercised****Number
                of Unexercised**
              **Options
                and Warrants at**
            **In-the-Money
                Options**
              **and
                Warrants at (1)****June
                30, 2007**
            
            **June
                30, 2007****Name**
            **Shares
                Acquired on Exercise**
            **Value
                Realized**
            **Exercisable**
            **Unexercisable**
            **Exercisable**
            **Unexercisable**Thomas
                Banks
            -
            -
            -
            -
            -
            -Kenneth
                Westbrook
            -
            -
            1,300,002
            600,000
            $    50,000
            -Michael
                Cranford
            -
            -
            1,768,874
            -
            -
            -Francis
                X. Pisano
            -
            -
            600,000
            -
            $    60,000
            -




(1)
            Represents
                the difference between the fair market value of the shares underlying
                such
                options at fiscal year-end and the exercise price of such options.
                The
                Company traded at $0.15 per share on June 30,
                2007.




**Employment
      and Separation Agreements and Change in Control
      Arrangements**




No
      new
      employment or separation agreements were executed subsequent to those reported
      in the prior Report.




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




The
      following table indicates beneficial ownership of Company common stock as of
      June 30, 2006 by:




·
            By
                each person or entity known by the Company to beneficially own more
                than
                5% of the outstanding shares of the Company’s common
                stock;




·
            By
                each executive officer and director of the Company as a
                group;




·
            By
                all executive officers and directors of the Company as a
                group.




Unless
      otherwise indicated, the address of each beneficial owner listed below is c/o
      flexSCAN, Inc., 27201 Puerta Real, Suite 350, Mission Viejo, CA
      92691.





27





Beneficial
      ownership is determined in accordance with the rules of the Securities and
      Exchange Commission and generally includes voting or investment power with
      respect to securities. Percentage of beneficial ownership is calculated on
      the
      basis of 82,718,108 shares of Company common stock issued and outstanding as
      of
      June 30, 2007, provided that any additional shares of common stock that a
      stockholder has the right to acquire within 60 days after June 30, 2007, are
      deemed to be outstanding for the purpose of calculating that stockholder’s
      percentage of beneficial ownership.




**Common**
            
            
            **Total**
            
            
            **Shares
                Beneficially Owned****Name
                of Beneficial Owner**
            
            **Stock**
            
            
            **Warrants**
            
            
            **Total**
            
            
            **Percent**Thomas
                Banks (1)
            
            
            20,944,486
            
            
            
            3,095,000
            
            
            
            24,039,486
            
            
            
            29.1%Francis
                X. Pisano
            
            
            625,984
            
            
            
            1,710,276
            
            
            
            2,336,260
            
            
            
            2.2%Kenneth
                Westbrook
            
            
            254,193
            
            
            
            2,527,098
            
            
            
            2,781,291
            
            
            
            2.7%Heidi
                Patterson
            
            
            9,587,159
            
            
            
            5,780,435
            
            
            
            15,367,594
            
            
            
            18.3%Maurice
                J. DeWald
            
            
            125,000
            
            
            
            1,707,750
            
            
            
            1,832,750
            
            
            
            *Jonathan
                Javitt
            
            
            125,000
            
            
            
            1,106,500
            
            
            
            1,231,500
            
            
            
            *Michael
                Cranford
            
            
            -
            
            
            
            1,768,874
            
            
            
            1,768,874
            
            
            
            *All
                directors and exec. officers, as a group
            
            
            31,661,822
            
            
            
            17,695,933
            
            
            
            49,357,755
            
            
            
            55.8%**5%
                or Greater Shareholders**Jeffrey
                C. Barbakow
            
            
            20,000,000
            
            
            
            10,000,000
            
            
            
            30,000,000
            
            
            
            36.3%




*
      Less
      than 1% of the outstanding shares of common stock.




(1)
            Thomas
                Banks and J. Melinda Richards own 13,325,339 of such shares as tenants
                in
                common. Thomas Banks owns 2,977,567 shares of common
                stock.




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




During
      the year ended June 30, 2007, the Company incurred $60,178 of expenses for
      Public and Investor Relations services performed by Michael Nason, a stockholder
      of the Company.




During
      the year ended June 30, 2007, the Company recorded a total of $42,000 in
      accounts payable in connection with accounting services performed by a company
      owned by Francis Pisano, the CFO and a Director of flexSCAN.




During
      the years ended June 30, 2007 and 2006, the Company issued an aggregate of
      $269,200 in unsecured notes payable and 1,491,250 warrants and $2,035,500
      in notes payable and 9,753,908 warrants to related parties, respectively, as
      outlined in the table below.  The notes bear interest at 10% per
      annum.





28







**Name**
            **Relationship**
            **Origination
                Date**
            **Maturity
                Date**
            **Loan
                Amount**
            **Warrants**
            **Exercise
                Price**
            **Grant
                Date**
            **Expiration
                Date**
            **Notes****FISCAL
                YEAR 2006**Thomas
                Banks
            CEO
            7/13/2005
            9/30/2006
            $20,000
            -
            n/a
            n/a
            n/aHAP
                Investments
            Director
            7/28/2005
            9/30/2006
            $30,000
            -
            n/a
            n/a
            n/aRosfor
                International
            Stockholder
            8/3/2005
            9/30/2006
            $1,000,000
            2,008,908
            $0.50
            9/30/2005
            9/30/2010Tryant,
                LLC.
            Stockholder
            8/12/2005
            9/30/2006
            $225,000
            2,000,000
            $0.01
            9/30/2005
            8/12/2008Michael
                Reynolds
            COO
            10/27/2005
            9/30/2006
            $15,000
            -
            n/a
            n/a
            n/aThomas
                Banks
            CEO
            10/27/2005
            9/30/2006
            $15,000
            -
            n/a
            n/a
            n/aMichael
                Reynolds
            COO
            12/28/2005
            9/30/2006
            $6,000
            -
            n/a
            n/a
            n/aHAP
                Investments
            Director
            12/29/2005
            12/31/2006
            $40,000
            400,000
            $0.10
            12/29/2005
            12/29/2008HAP
                Investments
            Director
            1/30/2006
            12/31/2006
            $50,000
            500,000
            $0.10
            1/30/2006
            1/30/2009HAP
                Investments
            Director
            2/10/2006
            12/31/2006
            $60,000
            600,000
            $0.10
            2/10/2006
            2/10/2009HAP
                Investments
            Director
            2/28/2006
            12/31/2006
            $60,000
            600,000
            $0.10
            2/28/2006
            2/28/2009HAP
                Investments
            Director
            4/4/2006
            12/31/2006
            $35,000
            350,000
            $0.10
            4/4/2006
            4/4/2009HAP
                Investments
            Director
            5/1/2006
            12/31/2006
            $40,000
            400,000
            $0.10
            5/1/2006
            5/1/2009HAP
                Investments
            Director
            5/12/2006
            12/31/2006
            $150,000
            1,500,000
            $0.10
            5/12/2006
            5/12/2009HAP
                Investments
            Director
            6/16/2006
            12/31/2006
            $70,000
            700,000
            $0.10
            6/16/2006
            6/16/2009Thomas
                Banks
            CEO
            1/13/2006
            9/30/2006
            $28,000
            280,000
            $0.10
            1/13/2006
            1/13/2009Thomas
                Banks
            CEO
            1/24/2006
            9/30/2006
            $12,000
            120,000
            $0.10
            1/24/2006
            1/24/2009Thomas
                Banks
            CEO
            2/7/2006
            9/30/2006
            $4,500
            45,000
            $0.10
            2/27/2006
            2/27/2009David
                Wilson
            Director
            11/9/2005
            9/30/2006
            $150,000
            -
            n/a
            n/a
            n/aAllison
            Stockholder
            6/29/2006
            9/30/2006
            $25,000
            250,000
            $0.10
            6/29/06
            6/29/09TOTAL
            
            $2,035,500
            9,753,908**FISCAL
                YEAR 2007**Kenneth
                Westbrook
            Dir./Pres.
            7/06/2006
            9/30/2006
            $50,000
            500,000
            $0.10
            6/21/2006
            6/21/2009
            (1)Francis
                Pisano
            CFO
            7/02/2006
            9/30/2006
            $20,000
            200,000
            $0.10
            6/21/2006
            6/21/2009
            (1)O’Reilly
                Fam. Trust
            Stockholder
            7/06/2006
            9/30/2006
            $50,000
            500,000
            $0.10
            6/30/2006
            6/30/2009
            (1)Martha
                Higgins
            Employee
            7/05/2006
            9/30/2006
            $10,000
            100,000
            $0.10
            7/05/2006
            7/05/2009
            (1)Chantelle
                Simoes
            Employee
            7/05/2006
            9/30/2006
            $1,000
            10,000
            $0.10
            7/05/2006
            7/05/2009
            (1)HAP
                Investments
            Director
            10/10/2006
            10/10/2006
            $50,000
            100,000
            $0.25
            10/10/2006
            10/10/2009
            (1)Thomas
                Banks
            CEO
            11/03/2006
            12/31/2006
            $5,000
            50,000
            $0.25
            11/03/2006
            11/03/2009Maurice
                J. DeWald
            Director
            2/01/2007
            1/31/2010
            $50,000
            31,250
            $0.20
            2/01/2007
            01/31/2008Kenneth
                Westbrook
            Dir./Pres.
            2/15/2007
            6/30/2007
            $8,200
            -
            n/a
            n/a
            n/a
            (1)HAP
                Investments
            Director
            2/21/2006
            3/20/2007
            $25,000
            -
            n/a
            n/a
            n/aTOTAL
            
            $269,200
            1,491,250


(1)
            These
                notes along with applicable accrued interest were paid in full to
                the
                related party lenders prior to June 30,
                2007.




29





**ITEM
      13. EXHIBITS**




2.1
            Agreement
                and Plan of Merger by and among Fuel Corporation of America, flexSCAN,
                Inc. and FCA Acquisition Corp., dated as of July 15, 2005 (incorporated
                by
                reference to Exhibit 2.1 to the Registrant’s Form 8-K, filed on July 19,
                2005)




3.1
            Articles
                of Incorporation of flexSCAN, Inc. (incorporated by reference to
                Exhibit 2
                to the Registrant’s Form 8-K, filed on May 23,
                2005.)




3.2
            Bylaws
                of the flexSCAN, Inc. (incorporated by reference to Exhibit 3 to
                the
                Registrant’s Form 8-K, filed on August 1,
                2005)




3.3
            Certificate
                of Amendment to the Articles of Incorporation of flexSCAN, Inc.
                (incorporated by reference to Exhibit A to the Registrant’s Form DEF 14-C,
                filed on February 2, 2006)




10.1
            flexSCAN,
                Inc. 2005 Equity Compensation Incentive Plan (incorporated by reference
                to
                Exhibit 4.1 to the Registrant’s Form 8-K, filed on August 18,
                2005)




10.2
            Convertible
                Promissory Note of Fuel Corporation of America dated August 12, 2005
                (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8-K,
                filed on August 18, 2005)




10.3
            Common
                Stock Warrant of Fuel Corporation of America dated August 12, 2005
                (incorporated by reference to Exhibit 4.3 to the Registrant’s Form 8-K,
                filed on August 18, 2005)




10.4
            Lock-Up/Leak-Out
                and Registration Rights Agreement between Fuel Corporation of America
                and
                Tryant, LLC., dated August 12, 2005 (incorporated by reference to
                Exhibit
                10.1 to the Registrant’s Form 8-K, filed on August 18,
                2005)




10.5
            Indemnity
                Agreement among Fuel Corporation of America, Tryant, LLC., and flexSCAN,
                Inc., dated as of August 12, 2005 (incorporated by reference to Exhibit
                10.2 to the Registrant’s Form 8-K, filed on August 18,
                2005)




10.6
            Amendment
                to the Convertible Promissory Note by and between flexSCAN, Inc.
                and
                Tryant, LLC., (incorporated by reference to Exhibit 4.1 to the
                Registrant’s Form 8-K, filed on November 22,
                2005)




10.7
            Amendment
                No. 2 to the Convertible Promissory Note by and between flexSCAN,
                Inc. and
                Tryant, LLC., dated November 15, 2005 (incorporated by reference
                to
                Exhibit 10.1 to the Registrant’s Form 8-K, filed on March 29,
                2006)




10.8
            Amendment
                to Warrant dated March 23, 2006 (incorporated by reference to Exhibit
                10.2
                to the Registrant’s Form 8-K, filed on March 29,
                2006)




10.9
            Amendment
                No. 3 to the Convertible Promissory Note by and between flexSCAN,
                Inc. and
                Tryant, LLC., dated April 30, 2006 (incorporated by reference to
                Exhibit
                10.1 to the Registrant’s Form 8-K, filed on May 4,
                2006)




31.1
            Certification
                of Chief Executive Officer required under Rule 13a-14(a)/15d-14(a)
                under
                the Exchange Act.




31.2
            Certification
                of Principal Financial Officer required under Rule 13a-14(a)/15d-14(a)
                under the Exchange Act.




32.1
            Certification
                of Chief Executive Officer and Principal Executive Officer pursuant
                to 18
                U.S.C Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxely Act of 2002.




30





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




Following
      is a summary of the aggregate fees billed for professional service by the
      Company’s principal accountants.




**2007**
            
            
            **2006**Audit
                fees
            
            $
            73,750
            
            
            $
            96,495Audit
                related fees
            
            $
            34,813
            
            
            
            -Tax
                fees
            
            
            -
            
            
            
            -All
                other fees
            
            
            -
            
            
            
            -**Total**
            
            **$**
            **108,563**
            
            
            **$**
            **96,495**




The
      audit
      related fees listed above pertain to the costs associated with the preparation
      of the audits of the years specified. The “Audit fees” amounts shown above were
      approved by the audit committee.





31




**SIGNATURES**




In
      accordance with section 13 or 15(d) with the Securities Exchange Act of 1934,
      the Company has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized, on the 15th day of October,
      2007.




**flexSCAN,
      Inc.**







*By:
      /s/ Thomas
      Banks*


*Thomas
      Banks*


*Chief
      Executive Officer*





*By:
      /s/ Francis X.
      Pisano*


*Francis
      X. Pisano*


*Chief
      Financial Officer*







In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the Company and in the capacities and on the
      dates indicated.




*SIGNATURE*
            
            *TITLE*
            
            *DATE**/s/
                Thomas Banks**Thomas
                Banks*
            
            *Principal
                Executive Officer and Director*
            
            *October
                15, 2007**/s/
                Francis X. Pisano**Francis
                X. Pisano*
            
            *Principal
                Financial Officer and Director*
            
            *October
                15, 2007**/s/
                Heidi A. Patterson**Heidi
                A. Patterson*
            
            *Director*
            
            *October
                15, 2007**/s/
                Maurice J. Dewald**Maurice
                J. DeWald*
            
            *Director*
            
            *October
                15, 2007**/s/
                Jonathon Javitt**Jonathan
                Javitt, M.D.*
            
            *Director*
            
            *October
                15, 2007**/s/
                Kenneth Westbrook**Kenneth
                Westbrook*
            
            *Director,
                President*
            
            *October
                15, 2007*


32


**flexSCAN,
      INC.**




**CONSOLIDATED
      FINANCIAL STATEMENTS**




**YEARS
      ENDED JUNE 30, 2007 AND 2006**




**WITH
      REPORTS OF INDEPENDENT REGISTERED**




**PUBLIC
      ACCOUNTING FIRMS**




**CONTENTS**




**Page**Report
                of Independent Registered Public Accounting Firm
            **F-1****FINANCIAL
                STATEMENTS**Consolidated
                Balance Sheet
            **F-2**Consolidated
                Statement of Operations
            **F-3**Consolidated
                Statements of Stockholders’ Deficit
            **F-4**Consolidated
                Statements of Cash Flows
            **F-5**Notes
                to the Consolidated Financial Statements
            **F-6
                to F-21**










REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To
      the
      Board of Directors


and
      Stockholders


flexSCAN,
      Inc.


Nevada





We
      have audited the accompanying
      consolidated balance sheets of flexSCAN, Inc. as of June 30, 2007 and 2006
      and
      the related consolidated statements of operations, changes in stockholders'
      equity (deficit), and cash flows for the years then ended.  These
      consolidated financial statements are the responsibility of the Company's
      management.  Our responsibility is to express an opinion on these
      consolidated financial statements based on our audit.





We
      conducted our audits in accordance
      with the standards of the Public Company Accounting Oversight Board (United
      States).  Those standards require that we plan and perform 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 consolidated financial statement
      presentation.  We believe that our audits provide 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 the Company as of June 30, 2007 and 2006, and the
      results of its operations and its cash flows for the years then ended, in
      conformity with accounting principles generally accepted in the United States
      of
      America.





The
      accompanying consolidated financial
      statements have been prepared assuming flexSCAN, Inc. will continue as a going
      concern.  As discussed in Note 1 to the consolidated financial
      statements, the Company has incurred losses that have resulted in an accumulated
      deficit.  This condition raises substantial doubt about the Company’s
      ability to continue as a going concern.  Management’s plans regarding
      this matter are described in Note 1.  The consolidated financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.





/s/
      Rotenberg & Co., LLP


Rotenberg
      & Co., LLP


Rochester,
      New York


October
      9, 2007





F-1





**flexSCAN,
      Inc.**


**CONSOLIDATED
      BALANCE SHEET**






**June
                30, 2007****Assets****Current
                Assets**Cash
            
            $
            181,879Accounts
                receivable
            
            
            -Prepaid
                expenses and other
            
            
            7,926Total
                current assets
            
            
            189,805Fixed
                assets, net
            
            
            58,759Other
                assets held for investment
            
            
            311,358Deposits,
                net
            
            
            37,985Intangibles,
                net
            
            
            -Total
                assets
            
            $
            597,907**Liabilities
                and Stockholders’ Deficit****Liabilities**Accounts
                payable
            
            $
            313,238Accrued
                expenses
            
            
            139,310Deferred
                compensation
            
            
            255,511Deferred
                Revenue
            
            
            49,980Current
                portion of related party notes
            
            
            306,000Short
                term notes
            
            
            165,353Current
                portion of deferred rent
            
            
            23,273Total
                current liabilities
            
            
            1,252,665Related
                party notes, net of current portion
            
            
            50,000Long
                term notes
            
            
            396,099Deferred
                rent, net of current portion
            
            
            32,795Total
                long-term liabilities
            
            
            478,894Total
                liabilities
            
            
            1,731,559**Stockholders'
                Deficit**Preferred
                stock, $0.001 par value, 10,000,000 shares authorized, none
                issued
            
            
            -Common
                stock, $0.001 par value, 150,000,000 shares authorized, 82,718,108
                shares
                issued and outstanding
            
            
            72,719Additional
                paid in capital
            
            
            22,438,748Accumulated
                deficit
            
            
            (23,645,119
            )Total
                stockholders' deficit
            
            
            (1,133,652
            )Total
                liabilities and stockholders’ deficit
            
            $
            597,907






*The
      accompanying notes are an integral part of these
      consolidated financial statements*


F-2




**flexSCAN,
      Inc.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**For
      the years ended June 30,**







**2007**
            
            
            **2006**Sales
            
            $
            57,178
            
            
            $
            134,708Cost
                of sales
            
            
            24,670
            
            
            
            73,419Gross
                profit
            
            
            32,508
            
            
            
            61,289Selling
                general and administrative
            
            
            5,771,501
            
            
            
            8,790,439Loss
                from operations
            
            
            (5,738,993
            )
            
            
            (8,729,150
            )Other
                income (expense)Interest
                expense
            
            
            (662,413
            )
            
            
            (1,163,057
            )Interest
                income
            
            
            1,500
            
            
            
            -Reversal
                of contingent liability
            
            
            360,833
            
            
            
            -Forgiveness
                of Indebtedness
            
            
            38,754
            
            
            
            -Other
                Expense
            
            
            (16,954
            )
            
            
            13,736Total
                other income (expense)
            
            
            (278,280
            )
            
            
            (1,149,321
            )Loss
                before income taxes
            
            
            (6,017,273
            )
            
            
            (9,878,471
            )Income
                tax expense
            
            
            -
            
            
            
            -Net
                loss
            
            $
            (6,017,273
            )
            
            $
            (9,878,471
            )Basic
                and diluted loss per share:Loss
                per common share
            
            $
            (0.11
            )
            
            $
            (0.30
            )Weighted
                average shares outstanding:
            
            
            53,334,439
            
            
            
            32,848,793






*The
      accompanying notes are an integral part of these consolidated financial
      statements*


F-3


**flexSCAN,
      INC.**


**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' DEFICIT**


**For
      the years ended June 30, 2007 and 2006**




Additional
            
            
            
            
            
            TotalPreferred
                Series A
            
            
            Preferred
                Series B
            
            
            Common
                Stock
            
            
            Paid
                  in
            
            
            Accumulated
            
            
            Stockholders'Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            Deficit
            
            
            DeficitBalance,
                June 30, 2005
            
            
            194,899
            
            
            $
            195
            
            
            
            646,334
            
            
            $
            646
            
            
            
            25,596,239
            
            
            $
            25,596
            
            
            $
            7,400,032
            
            
            $
            (7,749,375
            )
            
            $
            (322,906
            )Common
                shares issued for:Preferred
                stock conversions
            
            
            (194,899
            )
            
            
            (195
            )
            
            
            (646,334
            )
            
            
            (646
            )
            
            
            4,920,753
            
            
            
            4,921
            
            
            
            (4,080
            )
            
            
            -
            
            
            
            -Merger
                with Fuel Corporation of America
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,435,848
            
            
            
            2,436
            
            
            
            (2,436
            )
            
            
            -
            
            
            
            -Cash
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            314,286
            
            
            
            314
            
            
            
            109,686
            
            
            
            -
            
            
            
            110,000Debt
                and interest conversions
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            4,078,690
            
            
            
            4,079
            
            
            
            1,349,709
            
            
            
            -
            
            
            
            1,353,788Warrants
                exercised
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            9,485,468
            
            
            
            9,486
            
            
            
            121,670
            
            
            
            -
            
            
            
            131,156Services
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            810,000
            
            
            
            810
            
            
            
            251,190
            
            
            
            -
            
            
            
            252,000Estimated
                fair value of beneficial conversion:To
                settle officer deferred compensation
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,870,394
            
            
            
            -
            
            
            
            3,870,394Estimated
                fair value of warrants:Granted
                to employees
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            227,421
            
            
            
            -
            
            
            
            227,421Issued
                for consulting services
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,644,303
            
            
            
            -
            
            
            
            1,644,303Issued
                with debt
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            812,467
            
            
            
            -
            
            
            
            812,467Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (9,878,471
            )
            
            
            (9,878,471
            )Balance,
                June 30, 2006
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            
            47,641,284
            
            
            $
            47,642
            
            
            $
            15,780,356
            
            
            $
            (17,627,846
            )
            
            $
            (1,799,848
            )Common
                shares issued for:Cash
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            21,262,500
            
            
            
            1,263
            
            
            
            1,013,738
            
            
            
            -
            
            
            
            1,025,000Debt
                and interest conversions
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            6,795,371
            
            
            
            6,795
            
            
            
            931,141
            
            
            
            -
            
            
            
            937,936Warrants
                exercised
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            169,792
            
            
            
            170
            
            
            
            12,388
            
            
            
            -
            
            
            
            12,558Services
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,934,536
            
            
            
            1,935
            
            
            
            203,208
            
            
            
            -
            
            
            
            205,142Deferred
                compensation conversions
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,712,500
            
            
            
            3,713
            
            
            
            367,538
            
            
            
            -
            
            
            
            371,250Assets
                held for sale
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,300,000
            
            
            
            1,300
            
            
            
            153,700
            
            
            
            -
            
            
            
            155,000Estimated
                fair value of warrants:Granted
                to employees
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,147,729
            
            
            
            -
            
            
            
            2,147,729Issued
                for consulting services
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,681,462
            
            
            
            -
            
            
            
            1,681,462Debt
                discount adjustments
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            177,392
            
            
            
            -
            
            
            
            177,392Tryant
                default adjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (30,000
            )
            
            
            -
            
            
            
            (30,000
            )Corrections
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            (97,875
            )
            
            
            (98
            )
            
            
            98
            
            
            
            -
            
            
            
            -Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (6,017,273
            )
            
            
            (6,017,273
            )Balance,
                June 30, 2007
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            
            82,718,108
            
            
            $
            72,719
            
            
            $
            22,438,748
            
            
            $
            (23,645,119
            )
            
            $
            (1,133,652
            )




*The
      accompanying notes are an integral part of these consolidated financial
      statements*


F-4





**flexSCAN,
      Inc.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**For
      the years ended June 30**






**2007**
            
            
            **2006****Cash
                from operating activities**Net
                loss
            
            $
            (6,017,273
            )
            
            $
            (9,878,471
            )Adjustments
                to reconcile net loss to net cash from operating
                activitiesDepreciation
                and amortization
            
            
            45,321
            
            
            
            48,312Gain
                on disposal of fixed assets to settle accounts payable
            
            
            -
            
            
            
            (3,736
            )Amortization
                of debt discount
            
            
            351,797
            
            
            
            898,802Acquisition
                costs expensed - financed with note payable
            
            
            -
            
            
            
            225,000Estimated
                fair value of common stock issued for services
            
            
            245,689
            
            
            
            252,000Estimated
                fair value of common stock issued for assets held for
                investment
            
            
            155,000
            
            
            
            -Estimated
                fair value of common stock issued to employees
            
            
            417,364
            
            
            
            -Estimated
                fair value of warrants issued for services
            
            
            1,672,114
            
            
            
            1,644,303Estimated
                fair value of warrants issued to employees
            
            
            2,269,663
            
            
            
            227,421Estimated
                fair value of deferred compensation conversion option
            
            
            -
            
            
            
            3,870,394Forgiveness
                of debt
            
            
            (399,586
            )
            
            
            -Changes
                in operating assets and liabilitiesAccounts
                receivable, net
            
            
            9,588
            
            
            
            (99,766
            )Prepaid
                expenses and other assets
            
            
            292
            
            
            
            (36,868
            )Accounts
                payable
            
            
            (62,595
            )
            
            
            188,885Accrued
                expenses and deferred
            
            
            (127,691
            )
            
            
            473,011Registration
                rights obligation
            
            
            171,875
            
            
            
            188,958Net
                cash flows from operating activities
            
            
            (1,268,442
            )
            
            
            (2,001,755
            )**Cash
                from investing activities**Other
                assets held for investment
            
            
            (311,358
            )Purchases
                of fixed assets
            
            
            (5,292
            )
            
            
            (17,119
            )Net
                cash flows from investing activities
            
            
            (316,650
            )
            
            
            (17,119
            )**Cash
                from financing activities**Proceeds
                for issuing common stock
            
            
            1,025,000
            
            
            
            241,156Proceeds
                from exercise of common stock warrants
            
            
            12,557
            
            
            
            -Additional
                loan obligations
            
            
            847,383
            
            
            
            2,165,500Repayment
                of notes
            
            
            (210,931
            )
            
            
            (241,317
            )Repayment
                of captial lease obligations
            
            
            (59,335
            )
            
            
            (1,530
            )Net
                cash flows from financing activities
            
            
            1,614,674
            
            
            
            2,163,809Net
                change in cash for the year
            
            
            29,582
            
            
            
            144,935Cash,
                beginning of year
            
            
            152,297
            
            
            
            7,362Cash,
                end of year
            
            $
            181,879
            
            
            $
            152,297Supplemental
                disclosures:Cash
                paid for interest
            
            $
            9,495
            
            
            $
            17,711Cash
                paid for income taxes
            
            
            -
            
            
            
            800Non-cash
                investing and financing activitiesDebt
                to equity swap
            
            
            1,207,725
            
            
            
            -Debt
                discount recorded for warrants and beneficial conversions
            
            
            158,652
            
            
            
            812,467Debt
                and accrued interest converted to common shares
            
            
            345,661
            
            
            
            1,353,788






*The
      accompanying notes are an integral part of these consolidated financial
      statements*


F-5





**NOTE
      1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**




Organization




Since
      its
      original incorporation on February 13, 2001, flexSCAN, Inc.’s efforts have been
      principally devoted to research and development, software development, securing
      and protecting its intellectual property, and raising capital. >From inception
      through June 30, 2007, flexSCAN has established its marketing strategy,
      developed its foundation technology, established a scalable infrastructure,
      defined its products and services, established its brand identity, and assembled
      its executive team. flexSCAN’s business model is designed to provide access to
      leading-edge medical technology and services to the largest number of
      individuals in a unique and unprecedented corporate benefit program known as
      wellness360. wellness360 is a health, wellness and lifestyle program enabling
      empoyers the ability to lower their cost of health insurance by: (i) working
      to
      improve the general health and wellness of their employees, and (ii) enjoing
      tangible economic rewards as a result of their employees participation in
      flexSCAN’s online diet, fitness, online medical records, health risk assessment
      and internet health, wellness and lifestyle online services.




On
      July
      15, 2005, flexSCAN (Delaware) entered into a Merger Agreement with Fuel
      Corporation of America, and FCA Acquisition Corp. a Delaware corporation and
      wholly owned subsidiary. As a result of the merger, the operations of flexSCAN
      (Delaware) became the sole operations of Fuel Corporation. Upon completion
      of
      the merger, flexSCAN (Delaware) become the sole operations of Fuel Corporation.
      Upon completion of the mereger, flexSCAN (Delaware) changed its name to
      flexPLUS. On September 19, 2005, Fuel Corporation merged with and into flexSCAN,
      Inc., a Nevada corporation for the sole purpose of effecting a name change
      from
      Fuel Corporation to flexSCAN, Inc. Per the Merger Agreement, Fuel Corporation
      of
      America issued 30,671,207 shares of its common stock to holders of the flexSCAN
      (Delaware) common stock (collectively, the “flexSCAN Shareholders”) so that upon
      consummation of the Merger, 33,107,055 shares of common stock of the Company
      were issued and outstanding. Approximately 92.61% of the Company’s issued and
      outstanding common stock is owned by the former flexSCAN’s Shareholders and the
      remainder is held by the Fuel Corporation of America’s legacy stockholders.
      Subsequent to the Merger, Fuel Corporation of America executed a short-form
      merger into a Nevada corporation in order to become a Nevada corporation and
      effect a name change to flexSCAN, Inc. The Merger was accounted for as a reverse
      acquisition as the former flexSCAN shareholders controlled the combined entity
      after the Merger. As a result, the prior consolidated financial statements
      were
      restated present the historical results of the former flexSCAN in conformity
      with USGAAP and all share information was adjusted to reflect the merger
      conversion factor (i.e., 5.8494525).





F-6





In
      connection with the Merger, the Company entered into an Indemnity Agreement
      with
      Tryant, LLC, a principal stockholder of Fuel Corporation (“Tryant”), whereby,
      among other things, Tryant agreed to pay and indemnify the Company with respect
      to any and all past liabilities of any type or nature of the Company existing
      at
      or arising out of any act or occurrence prior to the closing of the Merger
      Agreement and all other related agreements.  As consideration for
      Tryant entering into the Indemnity Agreement, the Company agreed to pay Tryant
      $550,000, which was expensed during the six months ended December 31, 2005.
      Pursuant to the terms of the Indemnity Agreement, the Company paid $325,000
      on
      the closing of the Merger Agreement. The Company issued a convertible promissory
      note for the remaining $225,000 (see Note 5).




Basis
      of Presentation




The
      accompanying financial statements include the results of flexSCAN, Inc. and
      are
      presented in compliance with USGAAP.




Liquidity
      and Management’s Plans




The
      accompanying consolidated financial statements have been prepared in conformity
      with accounting principles generally accepted in the United States of America,
      which contemplate continuation of the Company as a going concern. The Company
      has not generated significant revenues from operations and has no assurance
      of
      any future revenues. The Company incurred a net loss of $6,017,273 during the
      year ended June 30, 2007. Also, the Company has a cash balance of $181,879,
      a
      working capital deficit of $1,062,860 and a stockholders’ deficit of $1,133,652
      at June 30, 2007. These factors, among others, raise substantial doubt about
      the
      Company’s ability to continue as a going concern.




The
      Company’s success is dependent upon numerous items, certain of which are the
      successful growth of revenues from its services, its ability to obtain new
      customers in order to achieve levels of revenue adequate to support the
      Company’s current and future cost structure, and its success in obtaining
      financing for operations, for which there is no assurance. Unanticipated
      problems, expenses, and delays are frequently encountered in establishing and
      maintaining profitable operations. These include, but are not limited to,
      technical difficulties, market acceptance, and sales and marketing. The failure
      of the Company to meet any of these conditions could have a materially adverse
      effect on the Company and may force the Company to reduce or curtail operations.
      No assurance can be given that the Company can achieve or maintain profitable
      operations. The Company’s management recognizes that the Company must obtain
      additional capital for the eventual achievement of sustained profitable
      operations. Management’s plans include obtaining additional capital through
      equity financing sources. However, no assurance can be given that additional
      capital, if needed, will be available when required or upon terms acceptable
      to
      the Company or that the Company will be successful in its efforts to negotiate
      the extension of its existing debt.  The accompanying consolidated
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.





F-7





Use
      of
      Estimates




The
      preparation of consolidated 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 periods.  Significant estimates made by
      management include, among others, realization of accounts receivable,
      recoverability of long-lived assets, deferred tax asset valuations and valuation
      of derivative instruments. Actual results could differ from those
      estimates.




Cash




The
      Company maintains its cash accounts in financial
      institutions.  Accounts at these financial institutions are insured by
      the Federal Deposit Insurance Corporation (“FDIC”) up to $100,000. At June 30,
      2007, the Company had no deposits which were in excess of the FDIC insurance
      limit. The Company performs ongoing evaluations of its banking institution
      to
      manage its concentration risk exposure.




Customers




The
      Company performs ongoing credit evaluations of its customers and generally
      does
      not require collateral. The Company regularly monitors its customer collections
      and payments and will record a provision for estimated credit losses based upon
      the Company’s historical experience and any specific customer collection issues
      that have been identified. At June 30, 2007, there were no accounts receivable
      and, therefore, no reserve against accounts receivable was
      required.




Fair
      Value of Financial Instruments




The
      Company’s consolidated financial instruments consist of cash, accounts
      receivable, accounts payable and accrued expenses, and related party notes
      payable. The carrying values for all such instruments, except the related party
      notes payable, approximate fair value at June 30, 2007 due to the short
      maturities of such financial instruments. The fair value of related party notes
      payable approximates their carrying value and was determined based on the
      current rates at which similar loans would be made to borrowers with similar
      credit ratings and for the same remaining maturities.




Fixed
      Assets




Fixed
      assets are stated at cost, net of accumulated depreciation and amortization.
      Depreciation and amortization of fixed assets are provided using the
      straight-line method over estimated useful lives ranging from three to five
      years. Betterments, renewals and extraordinary repairs that extend the lives
      of
      the assets are capitalized; other repairs and maintenance charges are expensed
      as incurred. The cost and related accumulated depreciation and amortization
      applicable to assets retired are removed from the accounts, and the gain or
      loss
      on disposition is recognized in current operations.





F-8





Other
      assets held for investment




Comprised
      of non-operating assets that were acquired with the intention to sell for a
      gain. The assets include a parcel of unimproved land in Apple Valley, California
      and a van. The assets are stated at cost.




Intangible
      Asset




The
      intangible asset is a domain name which is amortized using the straight-line
      method over its estimated useful life of five years. This asset was fully
      amortized as at June 30, 2007 with a carrying value of nil.




Long-Lived
      Assets




The
      Company’s management assesses the recoverability of its long-lived assets upon
      the occurrence of a triggering event by determining whether the depreciation
      and
      amortization of long-lived assets over their remaining useful lives can be
      recovered through projected undiscounted future cash flows. The amount of
      long-lived asset impairment, if any, is measured based on fair value and is
      charged to operations in the period in which long-lived asset impairment is
      determined by management. At June 30, 2007, the Company’s management believes
      there is no impairment of its long-lived assets.




There
      can
      be no assurance however, that market conditions will not change or demand for
      the Company’s services will continue, which could result in impairment of its
      long-lived assets in the future.




Derivative
      Financial Instruments




From
      time
      to time, the Company issues debt securities that contain features, that are
      considered embedded derivative instruments pursuant to Statement of Financial
      Accounting Standards (“SFAS”) No. 133, *Accounting for Derivative Instruments
      and Hedging Activities*, as amended. The accounting treatment of these
      derivative financial instruments requires that the Company record the
      derivatives and related warrants at their fair values as of the inception date
      of the debt agreements and at fair value as of each subsequent balance sheet
      date. In addition, under the provisions of Emerging Issues Task Force (“EITF”)
      Issue No. 00-19, *Accounting for Derivative Financial Instruments Indexed to,
      and Potentially Settled in, a Company’s Own Stock,*if the Company enters
      into certain non-conventional convertible debt agreements, the Company may
      be
      required to classify all other non-employee warrants as derivative liabilities
      and record them at their fair values at each balance sheet date. At June 30,
      2007, no such classification requirement existed.




Convertible
      Debentures




The
      convertible feature of certain of the Company’s notes payable provides for a
      rate of conversion that is below market value (see Note 5). This feature is
      characterized as a beneficial conversion feature (“BCF”), which is recorded by
      the Company pursuant to EITF Issue No. 98-5, Accounting*for Convertible
      Securities with Beneficial Conversion Features or Contingently Adjustable
      Conversion Ratios,* and EITF Issue No. 00-27, *Application of EITF Issue
      No. 98-5 to Certain Convertible Instruments.*





F-9





Revenue
      Recognition




The
      Company’s pre-symptomatic disease screening services (“mywellness360 plan”)
      revenue is recognized when the service is provided. Monies collected in advance
      of the service being provided are recorded as deferred revenue. Unbilled
      receivables relate to revenues earned, but not billed prior to period
      end.




From
      time
      to time, the Company has acted in a manner similar to a medical equipment lease
      broker. As a broker, the Company earns a commission or fee for medical equipment
      leases referred to third parties on a non-recourse basis. The commission or
      fee
      is earned upon funding of the lease by the third party. The commission is
      recorded net of any related expenses and is included in equipment financing
      income, net.




Advertising
      Costs




The
      Company expenses advertising costs when incurred.  Advertising costs
      for the years ended June 30, 2007 and 2006 were $4,023 and $45,748,
      respectively.




Share-Based
      Payments




Our
      share-based employee compensation arrangements are described in Note 7. Prior
      to
      April 1, 2006, we accounted for these share-based employee compensation
      arrangements under the measurement and recognition provisions of Accounting
      Principles Board (APB) Opinion No. 25, *“Accounting for Stock
      Issued to Employees,”*and related Interpretations, as permitted by SFAS
      123, *“Accounting for Stock-Based Compensation.”*Accordingly, we only
      recorded share-based employee compensation expense for warrants granted with
      an
      exercise price less than the market price on the date of grant during the twelve
      months ended June 30, 2005, and for the period from July 1, 2005 through March
      31, 2006. In accordance with SFAS 123 and SFAS 148, *“Accounting for
      Stock-Based Compensation – Transition and Disclosure,”*we provided pro
      forma net income or loss and net income or loss per share disclosures for each
      period prior to the adoption of SFAS 123(R) as if we had applied the fair
      value-based method in measuring compensation expense for our share-based
      compensation plans.




Effective
      April 1, 2006, we adopted the fair value recognition provisions of SFAS
      123(R), *“Share-Based Payment,”*using the modified prospective
      transition method. Under that transition method, compensation expense that
      we
      recognized for the twelve months ended June 30, 2006 included: (a) period
      compensation expense for all share-based payments granted prior to, but not
      yet
      vested as of, April 1, 2006, based on the grant date fair value estimated
      in accordance with the original provisions of SFAS 123, adjusted for
      forfeitures, and (b) period compensation expense for all share-based
      payments granted on or after April 1, 2006, based on the grant date fair value
      estimated in accordance with the provisions of SFAS 123(R). For warrants granted
      before April 1, 2006, we amortize the fair value on a straight-line basis.
      This
      is the same basis on which we amortized warrants granted before April 1, 2006
      for our pro forma disclosures under SFAS 123. For warrants granted on or after
      April 1, 2006, we amortize the fair value on a straight-line basis. All warrants
      are amortized over the requisite service periods of the awards, which are
      generally the vesting periods. Because we used the modified prospective
      transition method, results for prior periods have not been restated. In
      March 2005 the Securities and Exchange Commission issued Staff Accounting
      Bulletin (SAB) No. 107, which provides supplemental implementation
      guidance for SFAS 123(R). We have applied the provisions of SAB 107 in our
      adoption of SFAS 123(R).





F-10





Income
      Taxes




The
      Company accounts for income taxes in accordance with SFAS No. 109,
*Accounting for Income Taxes*. Under the asset and liability method of
      SFAS No. 109, deferred tax assets and liabilities are recognized for the future
      tax consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective tax
      bases. Deferred tax assets and liabilities are measured using enacted tax rates
      expected to apply to taxable income in the years in which those temporary
      differences are expected to be recovered or settled. Under SFAS No. 109, the
      effect on deferred tax assets and liabilities of a change in tax rates is
      recognized in income in the period that includes the enactment date. A valuation
      allowance is provided for certain deferred tax assets if it is more likely
      than
      not that the Company will not realize tax assets through future
      operations.




Basic
      and Diluted Loss Per Share




Basic
      loss per common share is computed based on the weighted average number of shares
      outstanding for the period. Diluted loss per share is computed by dividing
      net
      loss by the weighted average shares outstanding assuming all potential dilutive
      common shares were issued. Basic and diluted loss per share are the same as
      the
      effect of convertible notes, stock options and warrants on loss per share are
      anti-dilutive and thus not included in the diluted loss per share
      calculation.




Recent
      Accounting Pronouncements




FASB
      159
      - In February 2007, the Financial Accounting Standards Board (*"FASB"*)
      issued Statement of Financial Accounting Standard (*"SFAS"*) No. 159,
*"The Fair Value Option for Financial Assets and Financial Liabilities,
      including an amendment of FASB Statement No. 115"*.  SFAS 159 permits
      entities to choose to measure many financial instruments and certain other
      items
      at fair value at specified election dates. This Statement applies to all
      entities, including not-for-profit organizations. SFAS 159 is effective as
      of
      the beginning of an entity's first fiscal year that begins after November 15,
      2007.  As such, the Company is required to adopt these provisions at the
      beginning of the fiscal year ended June 30, 2009. The Company is currently
      evaluating the impact of SFAS 159 on its consolidated financial
      statements.




FASB
      158
      - In September 2006, the Financial Accounting Standards Board (*“FASB”*)
      issued Statement of Financial Accounting Standard (*“SFAS”*) No. 158,
*"Employers’ Accounting for Defined Benefit Pension and Other Postretirement
      Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R)"*
      (*“SFAS 158”*). SFAS 158 requires 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. SFAS 158 is effective
      for
      an employer with publicly traded equity securities as of the end of the first
      fiscal year ending after December 15, 2006.  SFAS 158 also requires an
      employer to measure the funded status of a plan as of the date of its year-end
      statement of financial position, effective for fiscal years ending after
      December 15, 2008. As such, the Company is required to recognize the funded
      status of its defined benefit postretirement plan and to provide the required
      disclosures at the beginning of the fiscal year ended June 30, 2009. The Company
      is currently evaluating the impact of SFAS 158 on its consolidated financial
      statements.





F-11





In
      September 2006, the Financial Accounting Standards Board, ("FASB") issued FAS
      157 (SFAS 157), Fair Value Measurements. This standard defines fair value,
      establishes a framework for measuring fair value in generally accepted
      accounting principles, and expands disclosures about fair value measurements.
      This statement is effective for financial statements issued for fiscal years
      beginning after November 15, 2007. Earlier application is encouraged. The
      adoption of this accounting pronouncement is not expected to have a material
      effect on the consolidated financial statements.




In
      July
      2006, the FASB issued Interpretation No. 48 (FIN No. 48), Accounting for
      Uncertainty in Income Taxes. This interpretation requires recognition and
      measurement of uncertain income tax positions using a "more-likely-than-not"
      approach. The provisions of FIN 48 are effective for fiscal years beginning
      after December 15, 2006. The adoption of this accounting pronouncement is not
      expected to have a material effect on the consolidated financial
      statements.







**NOTE
      3 - FIXED ASSETS**




Property
      and equipment consist of the following:




Furniture
                and fixtures
            
            $
            59,317Computer
                hardware
            
            
            100,402Telephone
                system
            
            
            11,549Computer
                software
            
            
            7,513178,781Less
                accumulated depreciation and amortization
            
            
            (120,022
            )$
            58,759




Depreciation
      of fixed assets was $42,510and $43,431for the years ended June 30, 2007 and
      2006, respectively.







**NOTE
      4 - INTANGIBLE ASSET**




The
      intangible asset consists of the following at June 30, 2007:




Domain
                name
            
            $
            14,055Less
                accumulated amortization
            
            
            (14,055
            )$
            -




Amortization
      expense for the intangible asset for the years ended June 30, 2007 and 2006
      was
      $2,811 in both years. The intangigle asset was fully amortized at June 30,
      2007
      with a net book value of nil on that date.





F-12





**NOTE
      5 - NOTES PAYABLE**




On
      August
      12, 2005, the Company issued a convertible promissory note (the “Note
      Agreement”) to Tryant in the principal amount of $225,000. Pursuant to the terms
      of the Note Agreement, a principal payment of $175,000 was due on September
      30,
      2005 and the remaining balance was due on December 31, 2005. The note is
      non-interest bearing. In the event of default, interest will accrue on the
      entire unpaid balance of the note thereafter at a rate of 10% per annum until
      paid. The terms of the Note Agreement also give Tryant the right to convert
      the
      unpaid principal and interest of the note into shares of the Company’s common
      stock at a conversion rate of $0.1125 per share. In addition, the Company issued
      a warrant to Tryant for the purchase of 2,000,000 shares of the Company’s common
      stock at an exercise price of $0.01 per share. The 2,000,000 warrants have
      vested and 1,555,556 of the warrants were exercised at an exercise price of
      $0.01 per share for aggregate price of $15,556. The 1,555,556 warrants vested
      because the Company didn’t make a timely payment of $175,000 by September 30,
      2005 and the remaining 444,444 shares vested once the Company failed to make
      a
      timely payment of $50,000 by December 31, 2005. The 444,444 warrants are
      exercisable until the earlier of (i) repayment of the note or (ii) August 12,
      2008. On September 30, 2005, the Company defaulted on the Note Agreement by
      failing to make the scheduled principal payment of $175,000 required under
      the
      Note Agreement.




On
      November 15, 2005, the Company entered into an Amendment to the Convertible
      Promissory Note (the “Amended Note”). The Amended Note provided for a waiver of
      the default until December 31, 2005. In consideration of the waiver, the Company
      agreed to pay to Tryant the sum of $1,000 per day commencing October 15, 2005,
      up to a cap of $30,000, in addition to the principal amount due under the Note
      Agreement plus accrued interest, on the earlier of (i) the Company’s receipt of
      funding, or (ii) December 31, 2005. The Company recorded the $30,000 as interest
      expense and has included such amount in accrued interest in the accompanying
      consolidated balance sheet as of June 30, 2007. As of October 5, 2007, Tryant
      has not exercised its warrant for 444,444 shares of the Company’s common
      stock.




Effective
      March 23, 2006, the Company entered into Amendment No. 2 to the Note. Pursuant
      to the amendment, the Company is required to file a registration statement
      within 60 days from the earlier of (i) the closing of the next financing by
      the
      Company, or (ii) April 30, 2006. Such registration statement shall include
      the
      shares of common stock held by Tryant, including the 1,555,556 shares issued
      to
      Tryant upon its exercise of the warrant dated August 12, 2005 and any other
      shares which are issuable to Tryant. To date, the Company has failed to meet
      the
      registration requirements specified in the Amended Note. The Company has
      previously recorded a contingent liability in the amount of $399,586. After
      further consideration of the facts and circumstances, the Company believes
      that
      the conditions which initially gave rise to the contingency no longer exist
      and
      accordingly, the contingent liability has been reversed and recorded as a
      reverse of contingent liability in the accompanying financial
      statements.





F-13





On
      April
      30, 2006, the Company entered into Amendment No. 3 to the Convertible Promissory
      Note (the “Third Amended Note’). The Third Amended Note requires, among other
      things, for the Company to make a payment of $120,000 not later than May 16,
      2006, with additional minimum monthly payments of $10,000, thereafter, on the
      15th day of each month until the outstanding amount owed pursuant to the Note
      Agreement are paid in full. The Third Amended Note also provides that in the
      event the Company receives capital in excess of $750,000 in one transaction,
      the
      Company shall pay the entire outstanding balance of the Note within five days
      of
      its receipt of funding. At June 30, 2007, the outstanding balance of the note
      was $75,000 and a subsequent payment of $5,000 was made on August 3,
      2007.




**Unsecured
      Promissory Notes**




During
      the year ended June 30, 2007, the Company issued an aggregate of $219,200 in
      unsecured notes payables to related parties and $628,183 in unsecured notes
      to
      third parties.  In connection with certain of these note issuances,
      the Company issued a total of 1,756,875 warrants to purchase common shares
      at an
      exercise price in the range of $0.10 to $0.25. The warrants vest immediately
      and
      were valued using the Black-Scholes valuation model using the assumptions listed
      in Note 7 below. In connection with these warrants, the Company recorded a
      debt
      discount of $351,797, the full amount of which was amortized to interest expense
      during the year ended June 30, 2007.




Related
      party notes payable consist of the following at June 30, 2007:




10%
                unsecured convertible note payable to shareholder, issued August
                12, 2005,
                matured December 31, 2005; shares underlying the note have registration
                rights that accrue penalties as defined, currently accruing approximately
                $9,200 per month, until underlying shares are registered or note
                is paid
                off.
            
            $
            75,00010%
                unsecured notes payable to prior officer, issued from May 12, 2005
                through
                December 28, 2005; matured September 30, 2006
            
            
            31,00010%
                unsecured notes payable to a company director; issued on November
                9, 2005;
                matures December 31, 2006
            
            
            150,00010%
                unsecured notes payable to company controlled by company director;
                issued
                on January 30, 2006; matures November 30, 2007
            
            
            50,00010%
                unsecured convertible debenture payable to shareholder; issued February
                1,
                2007; matures January 31, 2010
            
            
            50,000Related
                party notes payable
            
            $
            356,000




F-14





Notes
      payable to third parties consist of the following at June 30, 2006:




19%
                secured First Deed of Trust; issued October 19, 2006; matures October
                19,
                2021
            
            $
            151,86512%
                secured notes payable; issued November 21, 2006; matures May 21,
                2007
            
            
            100,0005%
                secured promissory note for accounting services, principal monthly
                payment
                of $5,000 plus interest, secured by 133,333
              registered
                shares of common stock
            
            
            47,00010%
                convertible debenture issued March 19, 2007; matures March 18,
                2010
            
            
            100,00010%
                convertible debenture issued March 8, 2007; matures March 7,
                2010
            
            
            25,00010%
                convertible debenture issued April 9, 2007; matures March 7,
                2010
            
            
            25,000Short-term
                promissory note having a capitalized finance charge of $733; matures
                January 25, 2008
            
            
            12,58710%
                convertible debenture issued June 25, 2007; matures March 7,
                2010
            
            $
            100,000Total
                third party notes payable
            
            $
            561,452Current
                portion and short-term
            
            $
            (165,353
            )Long
                term portion
            
            $
            396,099




Total
      interest expense on related party notes payable was $257,228 and $968,133 and
      for the years ended June 30, 2007 and 2006, respectively.






**NOTE
      6 - COMMITMENTS AND CONTINGENCIES**




Capital
      Leases




The
      Company had $50,051 in capital leases as at June 30, 2006. During the current
      fiscal year ended June 30, 2007, Company returned equipment to lessors and
      undertook a campaign to negotiate settlements of the outstanding obligations.
      The Company successfully paid-off or reached settlement arrangements will all
      of
      the lessors with the exception of Generator Services Co., Inc., which obligation
      is currently in litigation. In respect of this litigation, the Company
      anticipates reaching an accord to pay $13,577 in the second quarter of fiscal
      year ended June 30, 2008. Company has fully provided for this anticipated
      outcome.





F-15





Operating
      Leases




The
      Company leases its office facilities under a non-cancelable operating lease
      which requires initial base monthly rent of $16,345 and provides for fixed
      based
      rent escalations over the term of the lease which expires in June 2009. Future
      annual minimum rents under non-cancelable operating leases at June 30, 2007
      are
      as follows:




**FY
                2008**
            **FY
                2009**
            **FY
                2010**
            **FY
                2011**
            **Total
                Due over**
              **next
                5 Years**Office
                Facilities
            $219,898
            $226,903
            $            -
            $            -
            $           446,801




Rent
      expense was $214,640 and $231,089 for the years ended June 30, 2007 and 2006,
      respectively.




Indemnities
      and Guarantees




The
      Company has made certain indemnities and guarantees, under which it may be
      required to make payments to a guaranteed or indemnified party, in relation
      to
      certain transactions. The Company indemnifies its directors, officers, employees
      and agents to the maximum extent permitted under the laws of the State of
      Nevada. In connection with its office facility lease, the Company has
      indemnified its lessor for certain claims arising from the use of the
      facilities. The duration of the guarantees and indemnities varies, and in many
      cases is indefinite. These guarantees and indemnities do not provide for any
      limitation of the maximum potential future payments the Company could be
      obligated to make. Historically, the Company has not been obligated to make
      any
      payments for these obligations and no liabilities have been recorded for these
      indemnities and guarantees in the accompanying consolidated balance
      sheet.







**NOTE
      7 - STOCKHOLDERS' DEFICIT**




Preferred
      Stock




On
      August
      12, 2005, Series B and Series A Preferred shares, totaling 1,140,053 and
      3,780,700 (adjusted for merger conversion factor of 5.8494), respectively,
      were
      converted into 4,920,753 shares of common stock.




On
      January 24, 2006, the Company’s Board of Directors approved an increase in the
      authorized capital stock of the Company to 160,000,000 shares, of which
      150,000,000 will be common stock, par value $0.001, and 10,000,000 will be
      preferred stock, par value $0.001.




The
      Preferred Stock will be “blank check” preferred stock, giving the board of
      directors the authorization, without further stockholder approval, to issue
      up
      to 10,000,000 shares of preferred stock from time to time in one or more series
      and to fix the number of shares and the relative dividend rights, conversion
      rights, voting rights and other rights and qualifications of any such series.
      The authorized shares of Preferred Stock issued will be available for issuance
      for those purposes as the board of directors may deem advisable without further
      action by the stockholders, except as may be required by the Company’s Articles
      of Incorporation and applicable laws and regulations. At June 30, 2007, the
      Company has no outstanding Preferred Stock.





F-16





Common
      Stock




The
      Company is authorized to issue 150,000,000 shares of common stock, $0.001 par
      value per share, of which 82,718,108 shares are issued and
      outstanding.




On
      August
      12, 2005 all preferred stock was converted to common stock in connection with
      the Fuel Corporation of America merger. Per the Merger Agreement, Fuel
      Corporation of America issued 30,671,207 shares of its common stock to holders
      of the flexSCAN (Delaware) common. Approximately 92.61% of the Company’s issued
      and outstanding common stock is owned by the flexSCAN (Delaware) Shareholders
      and the remainder is held by the Fuel Corporation of America’s
      stockholders.




During
      the year ended June 30, 2007, the Company issued an aggregate of 169,792 shares
      of common stock related to the exercise of warrants for total proceeds of
      $12,558.




During
      the year ended June 30, 2007, the Company issued an aggregate of 1,934,536
      shares of common stock for services rendered with a fair value of
      $205,143.




During
      the year ended June 30, 2007, the Company issued an aggregate of 21,262,500
      shares of common stock for $1,025,000 in cash.




During
      the year ended June 30, 2007, the Company issued an aggregate of 6,795,371
      shares of common stock for $937,936 in the conversion of interest and debt
      conversions to equity.




During
      the year ended June 30, 2007, the Company issued an aggregate of 3,712,500
      shares for $371,251 in the conversion of deferred compensation liabilities
      to
      equity.




During
      the year ended June 30, 2007, the Company issued an aggregate of 1,300,000
      shares of common stock in respect of assets held for investment. This was
      comprised of an acquisition of a mobile van that was valued at $60,000 and
      as a
      component of the consideration for the acquisition of vacant land with a
      carrying value of $251,357.




Finally,
      there were various corrections made, which had a net impact of reducing total
      shares outstanding by 97,875.





F-17





Warrants




Share-based
      compensation expense recognized during the period is based on the value of
      the
      portion of share-based payment awards that is ultimately expected to vest during
      the period. Share-based compensation expense recognized in our consolidated
      statement of operations beginning April 1, 2006 included compensation expense
      for share-based payment awards granted prior to, but not yet vested as of,
      March 31, 2006 based on the grant date fair value estimated in accordance
      with the pro forma provisions of SFAS 123 and share-based payment awards granted
      subsequent to March 31, 2006 based on the grant date fair value estimated in
      accordance with SFAS 123(R). For share awards granted April 1, 2006 and later,
      expenses are amortized under the straight-line method. For share awards granted
      prior to April 1, 2006, expenses are amortized under the straight-line method
      prescribed by SFAS 123. As share-based compensation expense recognized in the
      consolidated statement of operations for the year ended June 30, 2006 is based
      on awards ultimately expected to vest, it has been reduced for estimated
      forfeitures. SFAS 123(R) requires forfeitures to be estimated at the time of
      grant and revised, if necessary, in subsequent periods if actual forfeitures
      differ from those estimates.




In
      our
      pro forma information required under SFAS 123 for the periods prior to April
      1,
      2006, we accounted for forfeitures as they occurred.




Total
      estimated share-based compensation expense, related to all of our share-based
      awards, recognized under SFAS 123(R) for the year ended June 30, 2007 was
      comprised of the following:




**Year
                Ended****June
                30, 2007**Fair
                value of warrants issued for services
            
            $
            1,672,114Fair
                value of warrants issued to employees
            
            
            2,269,663Share-based
                compensation expense before taxes
            
            
            3,941,777Related
                income tax benefits
            
            
            -Share-based
                compensation expense
            
            $
            3,941,777Net
                share-based compensation expense per basic and diluted common
                share
            
            $
            0.07




Share-based
      compensation expense recognized under SFAS 123(R) for the year ended June 30,
      2007 included $3,941,777 from the issuance of stock warrants. Since the Company
      had a net operating loss carryforward as of June 30, 2007, it did not recognize
      excess tax benefits for the tax deductions related to share-based awards in
      the
      consolidated statement of operations. Additionally, no incremental tax benefits
      were recognized from stock warrants exercised in the year ended June 30, 2007
      which would have resulted in a reclassification to reduce net cash provided
      by
      operating activities with an offsetting increase in net cash provided by
      financing activities. As of June 30, 2007, there is no unrecognized compensation
      costs related to non-vested awards.





F-18





The
      Company grants employee warrants from authorized and un-issued shares of common
      stock. Employee warrants are granted by the Company subject to terms and
      conditions established by the Chief Executive Officer. Warrants generally have
      term of three to five years and vest over three years. At the present time,
      we
      intend to issue new common shares upon the exercise of stock
      warrants.




The
      fair
      value of each warrant award is estimated on the date of grant using a
      Black-Scholes-Merton option pricing model (“Black-Scholes model”) that uses the
      assumptions noted in the following table. Expected volatilities are based on
      historical volatility of our common stock and other factors. The expected term
      of warrants granted is based on analyses of historical employee termination
      rates and warrant exercises. The risk-free interest rates are based on the
      U.S.
      Treasury yield for a period consistent with the expected term of the option
      in
      effect at the time of the grant. Assumptions used in the Black-Scholes model
      for
      the year ended June 30, 2007 and 2006, were as follows:




**2007**
            
            
            **2006**Expected
                volatility
            
            235%
                to 309%
            
            
            
            245%Average
                expected term in years
            
            
            3.0
            
            
            
            3.0Risk-free
                interest rate
            
            4.606%
                to 5.0%
            
            
            
            4.625%Expected
                dividend yield
            
            
            0%
            
            
            
            0%







A
      summary
      of warrant activity as of June 30, 2006 and changes during the year then ended
      is presented below.




**Number
                of Warrants with Post-Merger Conversion Applied**
            
            
            **Weighted
                Average Exercise Price Per Share**Warrants
                outstanding, June 30, 2005
            
            
            18,573,521
            
            
            $
            0.22Granted
            
            
            17,015,471
            
            
            
            0.25Cancelled
            
            
            (6,890,350
            )
            
            
            0.43Exercised
            
            
            (11,900,528
            )
            
            $
            0.09Warrants
                outstanding, June 30, 2006
            
            
            16,798,114
            
            
            $
            0.27Granted
            
            
            24,215,376
            
            
            
            0.37Cancelled
            
            
            (4,954,883
            )
            
            
            0.35Exercised
            
            
            (1,004,437
            )
            
            $
            0.16Warrants
                outstanding, June 30, 2007
            
            
            35,054,170
            
            
            $
            0.33Warrants
                exercisable, June 30, 2006
            
            
            15,143,152
            
            
            $
            0.28Warrants
                exercisable, June 30, 2007
            
            
            30,648,180
            
            
            $
            0.32










F-19





The
      following table summarizes information about warrants outstanding at June 30,
      2007:




**Number
                of Warrants O/S**
            **Number
                of Warrants Exercisable**
            **Wtd
                Avg Remaining Contractual Life (Years)**$0.01-$0.10
            10,349,446
            10,349,446
            1.93$0.15-$0.35
            8,136,786
            5,167,797
            4.96$0.40-$0.60
            14,792,454
            13,980,454
            4.71$1.20-$1.50
            1,775,484
            1,150,484
            2.46TOTALS
            35,054,170
            30,648,180




We
      account for stock options granted to non-employees in accordance with Emerging
      Issues Task Force No. 96-18, “Accounting for Equity Instruments That Are
      Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
      Goods or Services,” (“EITF 96-18”). Under EITF 96-18, we determine the fair
      value of the stock options granted as either the fair value of the consideration
      received or the fair value of the equity instruments issued, whichever is more
      reliably measurable.







**NOTE
      8 - INCOME TAXES**




As
      of
      June 30, 2007, the Company had net operating loss carryforwards of approximately
      $9,256,000 for federal and state income tax reporting purposes, which expire
      at
      various dates through 2026 and 2016, respectively.




The
      utilization of the net operating loss carry forwards might be limited due to
      restrictions imposed under federal and state laws upon a change in ownership.
      The amount of the limitation, if any, has not been determined at this
      time




No
      current provision for income taxes for the year ended June 30, 2007 is required,
      except for minimum state taxes, since the Company incurred taxable losses during
      such year. The provision for income taxes for fiscal 2007 and 2006 was
      $800.







**NOTE
      9 – RELATED PARTY TRANSACTIONS**




During
      the year ended June 30, 2007, the Company incurred a total of $103,190 in
      expenses, primarily for consulting services, that were provided by certain
      of
      the Company’s shareholders and a director.




At
      June
      30, 2007, the Company had $44,704 in accounts payables to officers, directors,
      and shareholders.





F-20





**NOTE
      10 - SUBSEQUENT EVENTS**




On
      August 20, 2007, the Company issued an unsecured promissory note in the amount
      of $100,000 to a shareholder. The note bears interest at 10% per annum. All
      unpaid principal and accrued interest are due November 1, 2007.




On
      September 6, 2007, the Company issued an unsecured promissory note in the amount
      of $100,000 to a shareholder. The note bears interest at 10% per annum. All
      unpaid principal and accrued interest are due November 1, 2007.




On
      October 8, 2007, the Company issued an unsecured promissory note in the amount
      of $50,000 to a shareholder. The note bears interest at 10% per annum. All
      unpaid principal and accrued interest are due November 1, 2007.




On
      September 18, 2007, the Company issued a warrant to purchase one hundred four
      thousand and four hundred (104,400) shares of the corporation’s common stock in
      connection with the employment agreement of its Editorial Director. The options
      will vest over 36 months on terms and conditions set forth in the warrant
      agreement.






F-21