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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-KSB

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

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

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

For the transition period from ____________ to ____________

Commission file number:000-28305

SYNGAS INTERNATIONAL CORP.(Name of small business issuer in its charter)

|Nevada                                           | 91-1880015                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     
|                                                 |                                     
|78 Belleville Avenue                             |                                     
|Spruce Grove, Alberta                            | T7A 1H8                             
|(Address of principal executive offices)         | (Zip Code)                          

Issuer's telephone number 780-980-0028

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

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

Common Stock(Title of class)

Check whether the issuer is not required to file reports pursuant
  to Section 13 or Section 15(d) of 
  the Exchange Act. [   ]

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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 is not 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]

The issuer recorded no revenues for its fiscal year ended
December 31, 2006.

The aggregate market value of the voting stock held by
non-affiliates of the issuer was approximately $8,243,735 as of March 27,
2007.

The number of shares outstanding of the issuer's class of common
stock as of March 27, 2007: 39,850,364

Transitional Small Business Disclosure Format (Check one): Yes
[   ] No [X]

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TABLE OF CONTENTS

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

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PART I

FORWARD-LOOKING STATEMENTS

This annual report on Form 10-KSB contains predictions,
projections and other statements about the future that are intended to be
"forward-looking statements", Forward-looking statements involve risks and
uncertainties. A number of important factors could cause actual results to
differ materially from those in the forward-looking statements. In assessing
forward-looking statements contained in this annual report on Form 10-KSB,
readers are urged to read carefully all cautionary statements, including those
contained in other sections of this annual report on Form 10-KSB. Among such
risks and uncertainties is the risk that we will not complete our proposed
business plan and that there will be adequate capital. Since we are a 'penny
stock' company, the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act, as amended, does not apply to us.

All dollar amounts in the report refer to US dollars unless
otherwise indicated.

Item
1.           Description of
Business

Business Development

Syngas International Corp. (Syngas, the "Company", "we",
our) was incorporated on June 20, 1997 under the laws of the State of Nevada.
On June 24, 1999 we changed our name to Fairchild International Corporation. On
December 29, 2005, after obtaining approval from our shareholders at the Annual
General Meeting held on December 29, 2005 we changed our name to Syngas
International Corp.

On April 8, 2005 we completed the acquisition through a reverse
merger of all of the shares of Syngas Energy Corp. (Syngas Energy), a
developer of advanced integrated gasification production system technologies
that produce energy in the form of synthetic gas as well as electricity.
Concurrent with the acquisition, we disposed of all of our active oil and gas
interests and their associated liabilities.

Prior to the reverse merger, Syngas Energy had been a private
company in the business of the development and commercialization of methods to
produce energy such as electricity, and synthetic gas. Since the reverse merger
completed on June 30, 2005, we have adopted Syngas Energy's business plan as our
own. Since that time, our underlying strategy has been to provide a viable
alternative to burying or sea dumping our waste and consequently poisoning our
land, lakes and oceans. Our business strategy is to produce, sell, lease and
maintain energy generators that we have developed. It is also our strategy to
retain an ownership portion of the co-generated energy, electricity, and
synthesized gases, such as methane, being produced.

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On November 1, 2005 Syngas Energy acquired rights to a process
and apparatus for low cost hydrogen generation through assignment of an
agreement from 975110 Alberta Ltd. to Syngas Energy. 975110 Alberta Ltd. is
owned and controlled by Wilf Ouellette, who is Chief Executive Officer of Syngas
Energy and is also our President, Chief Executive Officer and is also a member
of our Board of Directors.

All right and title in and to the low cost hydrogen production
technology had been transferred by the inventor, Richard Sadowski, to 975110
Alberta Ltd. on February 14, 2005, in consideration for an initial fee of
$25,000 plus a one time royalty fee per generator of $214.83 per million BTU
(GCV) heat input per hour for hydrogen production and 2% of gross sales for
non-hydrogen producing apparatus pursuant to the licensing or use of the
technology by third parties. On November 1, 2005, 975110 Alberta Ltd. assigned
all of its rights and interests in the agreement and to the hydrogen production
technology to Syngas Energy. Syngas Energy agreed to pay to 975110 Alberta Ltd.
$25,000 plus royalties to purchase the technology. Syngas Energy also agreed to
perform and be liable for all obligations 975110 Alberta Ltd. owed to Richard
Sadowski under the original agreement. Syngas Energy has agreed to begin
construction on a demonstration sized installation of the hydrogen technology no
later than February 14, 2008. Also, Syngas Energy is obligated to sell at least
one commercial installation using the hydrogen technology by the end of 2008. If
Syngas Energy fails to carry out either of these obligations, all rights and
interests in the hydrogen technology will revert back to Mr. Sadowski at the end
of 2008.

In June 2006, we commenced negotiations to enter into a formal
agreement with the Salmon Arm Plastics Ltd. (SAPL). We entered into a
non-binding letter of intent which sets out the possible key terms of an
acquisition by us of SAPL and we have been negotiating with SAPL in an attempt
to reach a definitive agreement since then. If we are successful in reaching an
agreement, SAPL's facility will act as a co-generation plant to start, with
further expansion capacity to sell energy (electricity) directly to electricity
suppliers. We are currently preparing a sealed tender offer for purchase of
SAPL, which would involve taking over its bank debts of approximately
$500,000.

Our Business

Our principal business involves the development and production
of hydrogen enriched alternative fuels. Our two main technologies are our
gasification unit we acquired from Syngas Energy and our PyStR technology that
was developed by Richard Sadowski.

Gasification Technology

During Fiscal 2005, we acquired Syngas Energy along with all
rights and title to its advanced gasification process and gasification
production system technology that combines modern gasification with gas turbine
technologies to produce synthetic gas, hydrogen or electricity.

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Our technology uses gasification processes to convert any
carbon based material into a synthetic gas. Gasification uses heat and pressure
which converts any carbon containing materials into synthetic gas composed
primarily of carbon monoxide and hydrogen which has a large number of uses.
Gasification can add value to low or negative value feed stocks by converting
them to marketable fuels. The feed stocks used to create synthetic gas depend on
what is readily available. For example, in Alberta, tar sands provide an
abundant fuel source. An application in India under consideration utilizes cane
stock from farming waste. Urban applications can include garbage and tires.
Throughout North America, forestry, pulp and paper waste and biomass can be
converted into a synthetic gas and fed back into power plants. Various other
industrial wastes can be fed back into plants to recycle lost energy that
would otherwise go to landfills.

Although it must be further developed, gasification may be one
of the ways to produce clean-burning hydrogen for automobiles and
power-generating fuel cells. Hydrogen can also be used to fuel power-generating
turbines or as the chemical "building blocks" for a wide range of commercial
products.

Since our acquisition of Syngas Energy we have completed a
prototype of the gasification technology. During fiscal 2007 we plan to
commercialize our advanced gasification unit.

PyStR Process  Hydrogen Production

In 2005, through our wholly owned subsidiary Syngas Energy, we
acquired a worldwide exclusive licenses to develop, produce and market PyStR
(pronounced, Pie Star), a low cost hydrogen production technology. We are in
discussions to put together a project which would use the PyStR technology to
convert low-value farm wastes to high-value products such as Hydrogen, Methanol
and fertilizers. In February 2006 we unveiled the PyStR technology at the Big
Hydrogen Show in Calgary, Alberta.

In February 2006 we completed the carbon dioxide capture unit
for our PyStR technology. The captured carbon dioxide (CO2) can be injected into
coal seams to recover methane in a similar fashion to injecting CO2 into
depleted oil wells to enhance oil recovery. Traditional gasification technology
lets the CO2 escape into the air, but the PyStR technology captures this green
house gas that is commonly accepted to be responsible for global warming.

Carbon dioxide sequestration in coal beds can be more efficient
than sequestering it in oil wells because CO2 injected into a coal bed seam
displaces adsorbed methane (CH4) from the coal surface. Coal beds in North
America represent a widely dispersed potential geological sink for CO2 storage
while offering an opportunity to recover commercial quantities of methane for
field uses or marketing in nearby natural gas pipelines. The U.S. Department of
Energy and Canadian Government (Alberta Research Council) has been researching
development of this sequestration concept for disposal of CO2 emissions.

CO2 is now being used throughout the oil patch to revive oil
wells thought to be dry. Typical oil production leaves 70% of the resource in
the earth.

- 6 -

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The process is used in wells that have already passed through
primary production, where natural pressure in the well pushes out the oil, and
in wells that have passed secondary production, using water or natural gas
flooding. In primary and secondary production well pressure eventually falls to
levels where output is so thin it is not profitable. Use of CO2 allows an
opportunity to take a third run at the reservoir to tap a potentially large
amount of remaining oil.

The CO2 is pumped deep below the earth's surface into thick,
stubborn oil deposits, and significantly decreases the oil's viscosity easing
its flow to the surface. CO2 is expected to double or triple previous oil
production levels from wells once thought unfeasible. Once in the ground, the
carbon dioxide takes the petroleum's place, becoming trapped beneath an
impermeable stack of limestone, sandstone, and shale.

Syngas, through its PyStR hydrogen production process, can
capture CO2 that is produced either as a primary or bi-product. Some coal
resources in North America cannot be mined by today's mining standards, but
carbon dioxide sequestration technology has the potential to change that.
Surface coal can now be mined and gasified in our advanced gasification and
PyStR systems, with the CO2 injected (sequestered) into coal beds to bring out
the methane. Through our PyStR hydrogen production process we can capture CO2
that is produced either as a primary or bi-product.

We intend to focus on developing and marketing our current
technologies while researching new methods of clean energy production. We intend
to subcontract fabrication to outside sources that have a proven track record of
efficiency, reliability and competitive quality and pricing. During the past
year, we have upgraded a model unit that demonstrates the application of the
PyStR technology.

Employees

Currently we have two employees, Wilf Ouellette, our President
and Chief Executive Officer, and Gloria Porter, who provides us with
administrative services.

Over the next twelve months, we anticipate an increase in the
number of employees, only if we complete our prototype gasification unit and
begin the sales cycle. Such an increase on the number of employees may
significantly increase our monthly expenses and such increase in our monthly
expenses depends on the number of employees we ultimately retain, if any. To
facilitate our growth we anticipate hiring independent sales and marketing
consultants. We currently engage people as outside contractors and consultants
for bookkeeping, legal, accounting, website development and audit functions.

Subsidiaries

We currently own one wholly owned subsidiary, Syngas Energy
Corp.

- 7 -

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Patents and Trademarks

Our wholly owned subsidiary Syngas Energy Corp. currently owns
proprietary technology, processes and products that management may consider for
patent and trademark protection.

Competition

Although relatively new, the alternative energy industry will
likely face increasing competition in the future due to the natural decline in
fossil fuel discovery rates and depletion of known reserves. Numerous
individuals and companies, including many major oil and gas companies, which
have substantially greater technical, financial and operational resources and
staffs than us will pose a competitive threat should they decide to enter the
market.

Fluctuating Price and Demand

The marketability of alternative energy resources which may be
acquired or discovered by us will be affected by numerous factors beyond our
control. These factors include market fluctuations in energy pricing and demand,
the proximity and availability of raw fuel markets and processing equipment,
governmental regulations, land tenure, land use, regulation concerning the
importing and exporting of oil and gas and environmental protection regulations.
The exact effect of these factors cannot be accurately predicted, but the
combination of these factors may result in us not receiving an adequate return
on invested capital to be profitable or viable.

Government Regulations

Although alternative energy is not currently a regulated
industry, there is precedent set that once an energy source becomes more readily
available, more demanded by the consumer and more acceptable to the public,
operations could become subject to federal, state, and local laws relating to
the protection of the environment. Alternative energy operations could also
become subject to federal, state, and local laws and regulations which seek to
maintain health and safety standards by regulating the design and use of
drilling methods and equipment.

Environmental Regulations

In general, the energy industry is subject to certain federal,
state and local laws and regulations relating to environmental quality and
pollution control. Such laws and regulations increase the costs of these
activities and may prevent or delay the commencement or continuance of a given
operation. Compliance with these laws and regulations has not had a material
effect on our operations or financial condition to date, nor do we expect it to
as our processes meet and exceed all current environmental regulation.
Generally, environmental requirements do not appear to affect us any differently
or to any greater extent than other companies in the industry.

We believe that our operations comply, in all material
respects, with all applicable environmental regulations.

- 8 -

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Risk Factors

Our shares of common stock are considered speculative while we
proceed with our commitments to develop and market our proprietary gasification
process and our commitment to expand our product offering or while we continue
our search for new business opportunities. Prospective investors should consider
carefully the risk factors set out below.

Limited Operating History and History of Losses

We have no operating history in the energy markets and
therefore have no history of earnings in the sector of developing alternative
fuel sources. To date, we have incurred substantial net losses as a result of
our operations to date. As of December 31, 2006, we had a cumulative deficit of
$2,878,040. Our ability to generate significant revenues is uncertain. In order
for us to make a profit, our revenues will need to increase significantly.

Lack of Financial Resources

Our ability to continue research and development and, if
warranted, manufacture of our proprietary processes and products will be
dependent upon our ability to raise significant additional financing. If we are
unable to obtain such financing, a portion of our interest in our proprietary
processes and products may be lost due to the necessity of taking on partners or
licensing out the fruits of our research and development efforts. We have
limited financial resources and currently no cash flow from operations and we
are dependent for funds on our ability to sell our common shares, primarily on a
private placement basis. There can be no assurance that we will be able to
obtain financing on that basis in light of factors such as the market demand for
our securities, the state of financial markets generally and other relevant
factors. The method of financing employed by us to date results in increased
dilution to the existing shareholders each time a private placement is
conducted.

There can be no assurance that additional funding will be
available to us for research and development of our projects or to fulfill our
obligations under any applicable agreements. There can be no assurance that we
will be able to obtain adequate financing in the future or that the terms of
such financing will be favorable. Failure to obtain such additional financing
could result in delay or indefinite postponement of further research and
development of our projects with the possible loss of the opportunity to
commercialize our projects.

Currency Fluctuations

We maintain our accounts in US and Canadian currencies and are
therefore subject to currency fluctuations and such fluctuations may materially
affect our financial position and results. We do not engage in currency hedging
activities.

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Need to Manage Growth

In the event our processes and products are sold on a
commercial basis, we could experience rapid growth in revenues, personnel,
complexity of administration and in other areas. There can be no assurance that
we will be able to manage the significant strains that future growth may place
on our administrative infrastructure, systems, and controls. If we are unable to
manage future growth effectively, our business, operating results and financial
condition may be materially adversely affected.

Dependence on Key Personnel/Employees

We are dependent on our ability to hire and retain highly
skilled and qualified personnel. We face competition for qualified personnel
from numerous industry sources, and there can be no assurance that we will be
able to attract and retain qualified personnel on acceptable terms. We do not
have key man insurance on any of our employees. The loss of service of any of
our key personnel could have a material adverse effect on our operations or
financial condition.

Due to the fact that our processes are proprietary, it is
uncertain at this time whether we will sell outright the processes or products
with the purchaser of the energy responsible for operations or retain ownership
and operate the processes and/or product offerings responsible for their
operation. In either case, we will be dependent upon training new staff to
monitor and maintain the processes and products.

"Penny Stock" Rules May Restrict the Market for the
Company's Shares

Our shares of common stock are subject to rules promulgated by
the Securities and Exchange Commission relating to "penny stocks," which apply
to companies whose shares are not traded on a national stock exchange or on the
NASDAQ system, trade at less than $5.00 per share, or who do not meet certain
other financial requirements specified by the Securities and Exchange
Commission. These rules require brokers who sell "penny stocks" to persons other
than established customers and "accredited investors" to complete certain
documentation, make suitability inquiries of investors, and provide investors
with certain information concerning the risks of trading in such penny stocks.
These rules may discourage or restrict the ability of brokers to sell our shares
of common stock and may affect the secondary market for our shares of common
stock. These rules could also hamper our ability to raise funds in the primary
market for our shares of common stock.

Possible Volatility of Share Prices

Our shares of common stock are currently publicly traded on the
Over-the-Counter Bulletin Board service of the National Association of
Securities Dealers, Inc. The trading price of our shares of common stock has
been subject to wide fluctuations. Trading prices of our shares of common stock
may fluctuate in response to a number of factors, many of which will be beyond
our control. The stock market has generally experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to the operating
performance of companies with no current business operation. There can be no
assurance that trading prices and price earnings ratios previously experienced
by our shares of common stock will be matched or maintained.

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These broad market and industry factors may adversely affect
the market price of our shares of common stock, regardless of our operating
performance.

In the past, following periods of volatility in the market
price of a company's securities, securities class-action litigation has often
been instituted. Such litigation, if instituted, could result in substantial
costs for us and a diversion of management's attention and resources.

Indemnification of Directors, Officers and Others

Our by-laws contain provisions with respect to the
indemnification of our officers and directors against all expenses (including,
without limitation, attorneys' fees, judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with any proceeding
arising by reason of the fact that the person is one of our officers or
directors) incurred by an officer or director in defending any such proceeding
to the maximum extent permitted by Nevada law.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of our company under Nevada law or otherwise, we have been
advised the opinion of the Securities and Exchange Commission is that such
indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable.

Future Dilution

Our constating documents authorize the issuance of 100,000,000
shares of common stock, each with a par value of $0.001 and 1,000,000 shares of
preferred stock, par value $0.01. In the event that we are required to issue any
additional shares or enter into private placements to raise financing through
the sale of equity securities, investors' interests in our company will be
diluted and investors may suffer dilution in their net book value per share
depending on the price at which such securities are sold. If we issue any such
additional shares, such issuances also will cause a reduction in the
proportionate ownership and voting power of all other shareholders. Further, any
such issuance may result in a change in our control.

Anti-Takeover Provisions

We do not currently have a shareholder rights plan or any
anti-takeover provisions in our by-laws. Without any anti-takeover provisions,
there is no deterrent for a take-over of our company, which may result in a
change in our management and directors.

Item
2.           Description of
Property.

Our principal executive office is located at 78 Belleville
Avenue, Spruce Grove, Alberta.

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Item
3.           Legal
Proceedings.

We know of no material, active or pending legal proceedings
against us, nor are we involved as a plaintiff in any material proceedings or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial shareholders are an
adverse party or has a material interest adverse to us.

Item
4.           Submissions of
Matters to a Vote of Security Holders.

Not applicable.

PART II

Item
5.           Market for Common
Equity and Related Stockholder Matters.

Our common stock is quoted on the OTC Bulletin Board under the
symbol "SYNI". Our common stock began quotation on the OTC Bulletin Board on
July 8, 1998 to December 2, 1999 and since November 30, 2000. On January 9, 2006
our trading symbol changed from FCHL to SYNI. On February 10, 2005 our
trading symbol changed from FRCD to FCHL. From December 2, 1999 to November
30, 2000 our common stock was quoted on the "pink sheets". The following
quotations reflect the high and low bids for our common stock based on
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions. The high and low prices of our common stock
(obtained from Canada Stockwatch and the OTC Bulletin Board) for the periods
indicated below are as follows:

Quarter Ended
    High
    LowMarch 31, 2005
    $0.57
    $0.008 (1)June 30, 2005
    $0.53
    $0.26September 30, 2005
    $0.72
    $0.30December 31, 2005
    $0.79
    $0.44March 31, 2006
    $0.799
    $0.35June 30, 2006
    $0.77
    $0.42September 30, 2006
    $0.63
    $0.39December 31, 2006
    $0.55
    $0.31


|(1) | On January 27, 2005 we effected a 25:1 share
      consolidation, prior to the reverse acquisition of Syngas
  Energy.
|--- | ----------------------------------------------------------------------------------------------------------------------

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Our shares of common stock are issued in registered form.
American Registrar and Transfer Co., 342 East 900 South, Salt Lake City, Utah
84111 (Telephone: 801.363.9065, facsimile 801.363.9066) is the registrar and
transfer agent for our shares of common stock.

As of March 27, 2007, we had 39,850,364, shares of common stock
outstanding and approximately 116 stockholders of record. This number of
stockholders does not include stockholders who hold our securities in street
name.

Equity Compensation Plans

On February 25, 2005 we adopted the 2005 Stock Option Plan
under which we are authorized to grant options to acquire up to a total of
4,000,000 common shares. The term of any stock options granted under the plan is
limited to ten years. The option plan was registered on Form S-8 on March 9,
2005.

On March 9, 2005, we registered on Form S-8 a total of
4,200,000 shares issued pursuant to four consulting agreements as follows:

- 100,000 post consolidation common shares to be issued to George Tsafalas,
  our former director, pursuant to an agreement dated November 15, 2004
- 100,000 post consolidation common shares to be issued to David Stadnyk,
  pursuant to an agreement dated November 15, 2004
- 2,000,000 common shares to be issued to Robert Jarva pursuant to a
  consulting agreement dated January 1, 2005
- 2,000,000 common shares to be issued to Aarif Jamani pursuant to a
  consulting agreement dated January 1, 2005

On July 19, 2005 we adopted the 2005 Non-Qualified Stock
Compensation Plan under which we are authorized to issue up to 1,000,000 shares
of common stock. On September 26, 2005 we registered this plan on a Form S-8
registration.

On September 16, 2005 we adopted the September 2005
Non-Qualified Stock Compensation Plan under which we are authorized to issue up
to 2,000,000 shares of common stock. On September 26, 2005, these shares were
registered on a Form S-8 registration.

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Equity Compensation Plan Information

Year Ended December 31, 2006Number of Shares to be Issued
        Upon Exercise of Outstanding Options,
        Warrants and Rights
      Weighted- Average Exercise
        Price of Outstanding Options, Warrants
        and Rights
      Number of Shares Remaining
        Available for Future Issuance Under Equity
        Compensation PlansEquity compensation plans not approved by shareholders
      2,079,667
      0.40
      3,305,500 (1)Equity compensation plans approved by shareholders
      N/A
      N/A
      N/ATotal
      2,079,667
      0.40
      3,305,500


| | (1) | Includes 2,355,500 shares available on stock compensation
      plans and 950,000 shares available on stock option
plans.
| | --- | -------------------------------------------------------------------------------------------------------------------------

Dividend Policy

We have not declared or paid any cash dividends since
inception. We intend to retain future earnings, if any, for use in the operation
and expansion of our business and do not intend to pay any cash dividends in the
foreseeable future. Although there are no restrictions that limit our ability to
pay dividends on our shares of common stock, we intend to retain future earnings
for use in our operations and the expansion of our business.

Item
6.           Management's
Discussions and Analysis or Plan of Operation.

The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this annual
report. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this annual report, particularly in the
section entitled "Risk Factors" found under "Item 1. Description of Business".

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General

On January 28, 2005 we entered into two share exchange
agreements to acquire all of the issued stock in Syngas Energy Corp. ("Syngas
Energy"). Syngas Energy was incorporated on December 14, 2004 and its principal
business involves an integrated gasification production system technology that
combines modern gasification with turbine technologies to produce synthetic gas,
hydrogen or electricity. On June 30, 2005, we completed the acquisition of
Syngas Energy by issuing one common share to each share of Syngas Energy
outstanding. We issued 30,047,500 shares of our common stock to the shareholders
of Syngas Energy and as a result the former Syngas Energy shareholders own
approximately 82% of our outstanding common stock.

Our acquisition of Syngas Energy is considered a reverse
acquisition and Syngas Energy is considered the acquirer for accounting and
financial reporting purposes.

Accordingly our consolidated financial statements for the years
ended December 31, 2006 and December 31, 2005 include our accounts since the
effective date of the reverse acquisition (June 30, 2005), and the historical
accounts of its Syngas Energy since its inception on December 14, 2004.

Our continuation as a going concern is dependent upon our
ability to attain profitable operations and generate revenues or raise equity
capital or borrowings sufficient to meet current and future obligations. Our
management plan to raise equity financings of approximately $1,000,000 over the
next twelve months to finance operations. There is no guarantee that we will be
able to complete any of these objectives. We incurred losses from operations of
$2,878,040 since inception and we have a working capital deficiency of $298,404
and these conditions, among others, give rise to substantial doubt about our
ability to continue as a going concern.

Results of Operations

Year Ended December 31, 2006 and Year Ended December 31,
2005

We incurred a net loss of $1,695,703 for the fiscal year ended
  December 31, 2006 compared to a net loss of $1,095,384 for the fiscal year ended
  December 31, 2005. The increase in the loss was due primarily to an increase
  in consulting expenses, general and administrative expenses and professional
  fees. We have generated a total comprehensive loss since inception of $2,802,199.
  Due to our continued losses and lack of revenues there is substantial doubt
  about our ability to continue as a going concern.

Lack of Revenues

We have not yet generated any revenues. At this time, our
ability to generate any significant revenues continues to be uncertain. The
auditor's report on our December 31, 2006 financial statements contains an
additional explanatory paragraph which identifies issues that raise substantial
doubt about our ability to continue as a going concern. The financial statements
do not include any adjustment that might result from the outcome of this
uncertainty.

- 15 -

---

Expenses

Total expenses for the year ended December 31, 2006 were
$1,507,607 compared to total expenses of $1,095,384 for the year ended December
31, 2005. The expenses for the year ended December 31, 2006 included $1,353,449
in consulting and management fees, an increase of $336,600 from the year ended
December 31, 2005. These consulting fees related mainly to the development of
our marketing strategies, and fees related to assisting us in locating and
acquiring new technologies. In Fiscal 2006 we also incurred general and
administrative expenses of $86,733 and professional fees of $67,425.

Limited Operating History; Need for Additional Capital

There is limited historical financial information about us upon
which to base an evaluation of our performance. We are in development stage
operations and have generated no revenues. We cannot guarantee we will be
successful in our business operations. Our business is subject to risks inherent
in the establishment of a new business enterprise, including limited capital
resources.

To become profitable and competitive, we have to license our
technologies. We are seeking equity financing to provide for the capital
required to fully develop and market our technology.

We have no assurance that future financing will be available to
us on acceptable terms. If financing is not available on satisfactory terms, we
may be unable to continue, develop or expand our operations. Equity financing
could result in additional dilution to existing shareholders.

Plan of Operation

We intend to maintain our current model of commercializing our
proprietary processes to produce energy using environmentally friendly methods.
We also intend to expand our product offerings in terms of the type of energy
produced and the methodologies used to produce these energies.

Gasification Technology

In Fiscal 2005 we acquired Syngas Energy along with all rights
and title to its advanced gasification process. Subsequently, we completed a
prototype of the gasification technology. During the next twenty-four months we
plan to commercialize our advanced gasification unit. We plan to joint venture
with clients seeking co-generation power sources, or with those that have low
value feed stocks to convert to energy and take a percentage of the proceeds
from energy sales.

PyStR Process  Hydrogen Production

In 2005, through our wholly owned subsidiary Syngas Energy, we
acquired world wide exclusive licenses to develop, produce and market PyStR, a
low cost proprietary hydrogen production technology. We have completed a
prototype and have plans to commercialize the PyStR hydrogen production process
during 2007.

- 16 -

---

We have agreed to begin construction on a demonstration sized
installation of the PyStR technology no later than February 14, 2008. Also, we
are obligated to sell at least one commercial installation using the PyStR
technology by the end of 2008. If we fail to carry out either of these
obligations, all rights and interests in the hydrogen technology will revert
back to the creator of the technology at the end of 2008.

Our plan of operation for the next 12 month period is to
continue implementing our business strategy, including the continued
improvements of our hydrogen gas generator and the commercializing of recently
acquired PyStR low cost hydrogen process. We also intend to expand our
technology base by seeking complementary technologies to our PyStR and other
hydrogen gas generating processes through purchasing or licensing arrangements.
We intend to maintain our current model of commercializing its proprietary
process to produce energy using environmentally friendly methods. We also intend
to expand our product offerings in terms of the type of energy produced and the
methodologies used to produce these energies.

Beiseker Medical Waste Facility

In 2005 we commenced negotiations to enter into a formal
agreement with the Beiseker Medical Waste Facility. If we are successful in
reaching an agreement, this facility will act as a co-generation plant to start,
with further expansion capacity to sell energy (electricity) directly to the
grid. Negotiations are ongoing. In January, 2006, we entered into a non-binding
letter of intent with Beiseker Envirotech, owned by Globaltech Environmental
Inc. to enter into a joint venture. Medical waste products, if misused,
mishandled or not disposed of properly, could cause significant harm.
Gasification not only ensures that expired medical was and used equipment will
not cause harm, but can do it in a way that produces energy, cuts costs and
saves the environment from needless filling. We hope to enter into a joint
venture with Beiseker Envirotech to use our technologies to covert medical waste
to energy.

The Agreement with Globetech Environmental Inc. was
subsequently frustrated due to the previous owner, Cristallo Holdings Inc.,
taking over the facility. Negotiations are now ongoing with Cristallo Holdings
Inc.

Salmon Arm Plastics Limited.

In June 2006, we commenced negotiations to enter into a formal
agreement with the Salmon Arm Plastics Ltd. (SAPL). We entered into a
non-binding letter of intent which sets out the possible key terms of an
acquisition by of SAPL by us, and we have been negotiating with SAPL in an
attempt to reach a definitive agreement since then. If we are successful in
reaching an agreement, SAPL's facility will act as a co-generation plant to
start, with further expansion capacity to sell energy (electricity) directly to
electricity suppliers.

- 17 -

---

SAPL is located in Salmon Arm, British Columbia, Canada, where
there is an active forestry industry. SAPL has extra space in its operating
facility in Salmon Arm. We want to use this operating facility as a showcase for
our PyStR technology. SAPL currently takes flake made from used pop, water and
liquor bottles, and produces plastic sheeting which is then turned into clam
shells used in most popular grocery stores. We would like to take the wood
waste from the forestry industry and use our PyStR technology plant to convert
it into electricity to power the SAPL factory and to sell back to electricity
suppliers. Our management anticipates that if we are able to install a PyStR
plant in the SAPL facility, we will lower SAPL's electricity costs, therefore
reducing its operating expenses. The agreement as contemplated would have SAPL
become one of our wholly owned subsidiaries.

As of December 31, 2006, we had advanced, as a loan,
approximately $193,922 to SAPL. SAPL shall pay interest at a rate of 10% per
annum, payable on the maturity date. In case of an event of default, SAPL shall
pay interest from the date of default at the rate of 2% per month compounded
monthly. The loans maturity date shall be the earlier date of demand or 90 days
following the date of closing of the acquisition of SAPL.

Due to their liabilities and their projection of unstable
future revenues, the shareholders of SAPL placed the company into voluntary
receivership. The SAPL voluntary receivership progressed into a court appointed
receivership which resulted in SAPL being put out to public tender. Because of
this we are doubtful that our loan to SAPL will ever be repaid.

We prepared a sealed tender offer for the purchase of SAPL, but
unfortunately our bid was not successful and we were unable to acquire SAPL.
However, we will continue to look at the possibility of installing a
cogeneration plant in the Salmon Arm area.

Management also anticipates searching out and securing other
uses for PyStR and the advanced gasification offerings across different
industries and geographic locations.

We anticipate that we will generate revenues within the next
eighteen months from licences of our proprietary technologies. If we are
successful in generating such revenues, we plan to apply them towards our
general and administrative expenses. There are no assurances that we will
receive any revenues or that such revenues will be sufficient to cover our
expenses.

To the extent that we consider acquisitions as a means to
expand, or if we decide to commence with the manufacture of applications of our
technology, we will require additional funds. There is no assurance that we will
be able to obtain such additional funds on favorable terms, if at all. Our
inability to raise sufficient funds could prevent us from implementing our
business plan.

- 18 -

---

Liquidity and Capital Resources

We need additional capital to fund our continuing operating
expenses and to fund our interests in the research, development and
commercialization of alternative energy technologies. We intend to sell stock to
finance our capital requirements. We do not expect to generate any revenues over
the next twelve months. To the extent that we obtain sales contracts, we will
require additional funds to fund the manufacture of units for sale. There is no
assurance that we will be able to obtain such additional funds on favorable
terms, if at all.

As of December 31, 2006, our total current assets were $13,348
which was comprised of $4,694 in cash and $8,654 in prepaid expenses. At that
time, our total liabilities were $311,752 for a total working capital deficit of
$298,404. We expect to incur substantial losses over the next two years.

As of December 31, 2006, we had cash and cash equivalents of
$4,694, and we believe that we need approximately an additional $1,000,000 to
meet our capital requirements over the next 12 months for the following
expenses:

|$100,000 | marketing of our gasification
      technology           
|-------- | ---------------------------------------------------------
|$600,000 | development of our PyStR
      technology                
|$25,000  | payment of accounts payable and
      accrued liabilities
|$275,000 | general administrative expenses                          

Research and Development

We anticipate that we will spend $600,000 on research and
development over the next twelve months to upgrade our PyStR technology,
including upgrading a prototype. If we are successful in acquiring other
technologies we may increase our research and development budget.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment through
December 31, 2007, unless we identify a suitable business opportunity or
business combination that may require us to invest in such equipment.

Marketing

We plan on market our gasification unit by hiring consultants
to contact companies with waste facilities, such as lumber waste and municipal
waste. We believe that our PyStR technology is suitable for companies in the oil
and gas business and in the shipping business. We plan on targeting such
companies through sales consultants that we will hire. Our marketing plan
includes attending several oil and gas trade shows during the next year. We are
currently negotiating with several consultants to act as sales persons for our
technologies. We have entered into a representative agreement with Ecogestion
Ltda. of Santiago, Chile to act as our exclusive distributor of our technologies
in Chile.

Our gasification technology was shown and PyStR process
explained to several potential clients during the months of May and June 2006.

- 19 -

---

Employees

Currently we have two employees, Wilf Ouellette, our President
and Chief Executive Officer, and Gloria Porter, who provides us with
administrative services.

Over the next twelve months, we anticipate an increase in the
number of employees, only if we complete our prototype gasification unit and
begin the sales cycle. Such an increase on the number of employees may
significantly increase our monthly expenses and such increase in our monthly
expenses depends on the number of employees we ultimately retain, if any. To
facilitate our growth we anticipate hiring independent sales and marketing
consultants. We currently engage people as outside contractors and consultants
for bookkeeping, legal, accounting, website development and audit functions.

Item
7.           Financial
Statements.

Our Audited Consolidated Financial Statements as of December
31, 2006 and December 31, 2005 and for the years ended December 31, 2006 and
December 31, 2005 follow as pages F-1 through F-13.

Syngas International Corp.(formerly Fairchild
International Corporation) 
  (A Development Stage Company)

December 31, 2006

|                                                        | Index
|------------------------------------------------------- | -----
|                                                        |      
|Report of Independent Registered Public Accounting Firm | F-1  
|                                                        |      
|Consolidated Balance Sheets                             | F-2  
|                                                        |      
|Consolidated Statements of Operations                   | F-3  
|                                                        |      
|Consolidated Statements of Cash Flows                   | F-4  
|                                                        |      
|Consolidated Statement of Stockholders Equity (Deficit) | F-5  
|                                                        |      
|Notes to the Consolidated Financial Statements          | F-6  

- 20 -

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Directors of 
  Syngas International Corp. 
  (A development stage company)

We have audited the accompanying consolidated balance sheets
  of Syngas International Corp. (a development stage company) as at December 31,
  2006 and 2005, and the related consolidated statements of operations, cash flows,
  and stockholders equity (deficiency) for each of the years in the two
  year period ended December 31, 2006, and for the cumulative period from inception,
  December 14, 2004, to December 31, 2006. These consolidated financial statements
  are the responsibility of the Company's management. Our responsibility is to
  express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform an audit to obtain reasonable assurance whether the
  financial statements are free of material misstatement. An audit includes examining,
  on a test basis, evidence supporting the amounts and disclosures in the financial
  statements. An audit also includes assessing the accounting principles used
  and significant estimates made by management, as well as evaluating the overall
  financial statement presentation. We believe that our audits provide a reasonable
  basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  the Company as at December 31, 2006 and 2005, and the results of its operations
  and its cash flows for each of the years in the two years ended December 31,
  2006, and for the cumulative period from inception, December 14, 2004, to December
  31, 2006 in conformity with accounting principles generally accepted in the
  United States of America.

The Company is not required to have, nor were we engaged to perform,
  an audit of its internal control over financial reporting. Our audits included
  consideration of internal control over financial reporting as a basis for designing
  audit procedures that are appropriate in the circumstances, but not for the
  purpose of expressing an opinion on the effectiveness of the Companys
  internal control over financial reporting. Accordingly, we express no such opinion.

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. As discussed
  in Note 1 to the consolidated financial statements, the Company has suffered
  net losses and negative cash flows from operations since its inception that
  raise substantial doubt about its ability to continue as a going concern. Managements
  plans as to this matter are discussed in Note 1. The consolidated financial
  statements do not include any adjustments that might result from the outcome
  of this uncertainty.

|Vancouver, Canada | /s/ Morgan & Company 
|----------------- | ---------------------
|March 26, 2007    | Chartered Accountants

|Tel: (604) 687-5841 |                                     | P.O. Box 10007 Pacific Centre
|------------------- | ----------------------------------- | -----------------------------
|Fax: (604) 687-0075 | Sute 1488 - 700 West Georgia Street
|www.morgan-cas.com  | Vancouver, B.C. V7Y 1A1            

F-1

---

SYNGAS INTERNATIONAL CORP.(A Development Stage Company) 
  Consolidated Balance Sheets 
  (Expressed in US dollars)

|                                                                        |  | December 31, |   |  | December 31, |  
|----------------------------------------------------------------------- |  | ------------ | - |  | ------------ | -
|                                                                        |  | 2006         |   |  | 2005         |  
|                                                                        |  | $            |   |  | $            |  
|Assets                                                                  |  |              |   |  |              |  
|Current Assets                                                          |  |              |   |  |              |  
|Cash and cash equivalents                                               |  | 4,694        |   |  | 2,810        |  
|Prepaid
      expenses and deposits                                     |  | 8,654        |   |  | 8,654        |  
|Total Current Assets                                                    |  | 13,348       |   |  | 11,464       |  
|Intangible Asset (Note
      4)                                         |  | 25,204       |   |  | 25,204       |  
|Total Assets                                                            |  | 38,552       |   |  | 36,668       |  
|                                                                        |  |              |   |  |              |  
|Liabilities and Stockholders' Deficit                                   |  |              |   |  |              |  
|Current Liabilities                                                     |  |              |   |  |              |  
|Accounts payable and accrued liabilities                                |  | 25,105       |   |  | 45,645       |  
|Accounts payable - related parties (Note 5)                             |  | 219,585      |   |  | 30,175       |  
|Loans payable (Note 6)                                                  |  | 67,062       |   |  | 79,972       |  
|Total Liabilities                                                       |  | 311,752      |   |  | 155,792      |  
|Stockholders' Deficit                                                   |  |              |   |  |              |  
|Preferred Stock                                                         |  |              |   |  |              |  
|Authorized: 1,000,000 shares,
      with a $0.01 par value; none issued |  |             |   |  |             |  
|Common Stock (Note 7)                                                   |  |              |   |  |              |  
|Authorized: 100,000,000 shares,
      with a $0.001 par value;          |  |              |   |  |              |  
|Issued: 39,850,364 shares (2005  37,755,050
      shares)              |  | 39,850       |   |  | 37,755       |  
|Additional Paid-in Capital                                              |  | 2,566,087    |   |  | 1,026,477    |  
|Accumulated Other Comprehensive Loss                                    |  | (1,097       | ) |  | (1,019       | )
|Deficit Accumulated During the Development Stage                        |  | (2,878,040   | ) |  | (1,182,337   | )
|Total Stockholders
      Deficit                                       |  | (273,200     | ) |  | (119,124     | )
|Total Liabilities and Stockholders Deficit                             |  | 38,552       |   |  | 36,668       |  

The accompanying notes are an integral part of these consolidated
  financial statements.
  F-2

---

SYNGAS INTERNATIONAL CORP.(A Development Stage Company) 
  Consolidated Statements of Operations 
  (Expressed in US dollars)

|                                                  |  |              |   |  |              |   |  | Accumulated from       |  
|------------------------------------------------- |  | ------------ | - |  | ------------ | - |  | ---------------------- | -
|                                                  |  | For the Year |   |  | For the Year |   |  | December 14, 2004      |  
|                                                  |  | Ended        |   |  | Ended        |   |  | (Date of Inception) to |  
|                                                  |  | December 31, |   |  | December 31, |   |  | December 31,           |  
|                                                  |  | 2006         |   |  | 2005         |   |  | 2006                   |  
|                                                  |  | $            |   |  | $            |   |  | $                      |  
|Revenue                                           |  |             |   |  |             |   |  |                       |  
|                                                  |  |              |   |  |              |   |  |                        |  
|Expenses                                          |  |              |   |  |              |   |  |                        |  
|Consulting and management fees (Note 5(b))        |  | 1,353,449    |   |  | 1,016,849    |   |  | 2,380,313              |  
|General and administrative                        |  | 86,733       |   |  | 21,973       |   |  | 108,706                |  
|Professional
      fees                           |  | 67,425       |   |  | 56,562       |   |  | 123,987                |  
|                                                  |  | 1,507,607    |   |  | 1,095,384    |   |  | 2,613,006              |  
|Loss before the following:                        |  | (1,507,607   | ) |  | (1,095,384   | ) |  | (2,613,006             | )
|Gain on write-off of debt                         |  | 5,826        |   |  |             |   |  | 5,826                  |  
|Loss on write-off
      of receivable (Note 9(b)) |  | (193,922     | ) |  |             |   |  | (193,922               | )
|Net loss                                          |  | (1,695,703   | ) |  | (1,095,384   | ) |  | (2,801,102             | )
|Other comprehensive loss                          |  |              |   |  |              |   |  |                        |  
|Foreign currency translation adjustment           |  | (78          | ) |  | (1,019       | ) |  | (1,097                 | )
|Total Comprehensive
      Loss                    |  | (1,695,781   | ) |  | (1,096,403   | ) |  | (2,802,199             | )
|Net Loss Per Share  Basic and Diluted            |  | (0.04        | ) |  | (0.03        | ) |  |                        |  
|Weighted Average Shares
      Outstanding         |  | 39,076,000   |   |  | 36,711,000   |   |  |                        |  

The accompanying notes are an integral part of these consolidated
  financial statements. 
  F-3

---

SYNGAS INTERNATIONAL CORP.(A Development Stage Company) 
  Consolidated Statements of Cash Flows 
  (Expressed in US dollars)

|                                                            |  |              |   |  |              |   |  | Accumulated from    |  
|----------------------------------------------------------- |  | ------------ | - |  | ------------ | - |  | ------------------- | -
|                                                            |  | For the Year |   |  | For the Year |   |  | December 14, 2004   |  
|                                                            |  | Ended        |   |  | Ended        |   |  | (date of Inception) |  
|                                                            |  | December 31, |   |  | December 31, |   |  | to December 31,     |  
|                                                            |  | 2006         |   |  | 2005         |   |  | 2006                |  
|                                                            |  | $            |   |  | $            |   |  | $                   |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Cash Flows Used In Operating Activities                     |  |              |   |  |              |   |  |                     |  
|Net loss                                                    |  | (1,695,703   | ) |  | (1,095,384   | ) |  | (2,801,102          | )
|                                                            |  |              |   |  |              |   |  |                     |  
|Adjustments to reconcile net loss to net cash
      used in |  |              |   |  |              |   |  |                     |  
|operating activities:                                       |  |              |   |  |              |   |  |                     |  
|Stock-based compensation                                    |  | 654,801      |   |  | 339,762      |   |  | 994,563             |  
|Shares issued for
      expenses                            |  | 685,504      |   |  | 610,000      |   |  | 1,295,504           |  
|Gain on write-off of debt                                   |  | (5,826       | ) |  |             |   |  | (5,826              | )
|Loss on write-off
      of receivable                       |  | 193,922      |   |  |             |   |  | 193,922             |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Changes in operating assets and liabilities:                |  |              |   |  |              |   |  |                     |  
|Accounts payable and accrued liabilities                    |  | (14,714      | ) |  | 23,534       |   |  | 8,820               |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Net Cash Used in Operating
      Activities                 |  | (182,016     | ) |  | (104,845     | ) |  | (314,119            | )
|                                                            |  |              |   |  |              |   |  |                     |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Investing Activities                                        |  |              |   |  |              |   |  |                     |  
|Net cash acquired on business acquisition                   |  |             |   |  | 565          |   |  | 565                 |  
|Purchase of intangible
      asset                          |  |             |   |  | (25,000      | ) |  | (25,000             | )
|Receivable (Note 9(b))                                      |  | (193,922     | ) |  |             |   |  | (193,922            | )
|                                                            |  |              |   |  |              |   |  |                     |  
|Net Cash Used In Investing
      Activities                 |  | (193,922     | ) |  | (24,435      | ) |  | (218,357            | )
|                                                            |  |              |   |  |              |   |  |                     |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Financing Activities                                        |  |              |   |  |              |   |  |                     |  
|Advances from related parties                               |  | 166,500      |   |  | 35,324       |   |  | 224,734             |  
|Loans payable                                               |  | 10,000       |   |  | 17,243       |   |  | 14,389              |  
|Proceeds from issuance of common stock                      |  | 201,400      |   |  | 97,337       |   |  | 299,144             |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Net Cash Provided
      By Financing Activities             |  | 377,900      |   |  | 132,661      |   |  | 538,267             |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Effect of Exchange
      Rate Changes on Cash               |  | (78          | ) |  | (1,019       | ) |  | (1,097              | )
|                                                            |  |              |   |  |              |   |  |                     |  
|Increase (decrease) in Cash and Cash Equivalents            |  | 1,884        |   |  | 2,362        |   |  | 4,694               |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Cash and Cash Equivalents,
      beginning of period        |  | 2,810        |   |  | 448          |   |  |                    |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Cash and Cash Equivalents,
      end of period              |  | 4,694        |   |  | 2,810        |   |  | 4,694               |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Supplemental Disclosures                                    |  |              |   |  |              |   |  |                     |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Cash paid for taxes                                         |  |             |   |  |             |   |  |                    |  
|Cash paid for interest                                      |  |             |   |  |             |   |  |                    |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Non-Cash Financing and Investing Activities                 |  |              |   |  |              |   |  |                     |  
|                                                            |  |              |   |  |              |   |  |                     |  
|Common stock issued for intangible asset                    |  |             |   |  |             |   |  | 204                 |  

The accompanying notes are an integral part of these consolidated
  financial statements.
  F-4

---

SYNGAS INTERNATIONAL CORP.(A Development Stage Company) 
  Consolidated Statement of Stockholders Equity (Deficit) 
  (Expressed in US dollars)

|                                                         |  |             |   |  |         |   |  |            |  |  |               |   |  | Deficit     |   |  |            |  
|-------------------------------------------------------- |  | ----------- | - |  | ------- | - |  | ---------- |  |  | ------------- | - |  | ----------- | - |  | ---------- | -
|                                                         |  |             |   |  |         |   |  |            |  |  | Accumulated   |   |  | Accumulated |   |  |            |  
|                                                         |  |             |   |  |         |   |  | Additional |  |  | Other         |   |  | During the  |   |  |            |  
|                                                         |  | Common      |   |  |         |   |  | Paid-In    |  |  | Comprehensive |   |  | Development |   |  |            |  
|                                                         |  | Stock       |   |  | Amount  |   |  | Capital    |  |  | Income        |   |  | Stage       |   |  | Total      |  
|                                                         |  | #           |   |  | $       |   |  | $          |  |  | $             |   |  | $           |   |  | $          |  
|Balance  December 14, 2004 (Date of                     |  |             |   |  |         |   |  |            |  |  |               |   |  |             |   |  |            |  
|Inception)                                               |  |            |   |  |        |   |  |           |  |  |              |   |  |            |   |  |           |  
|Issue of common stock for cash                           |  | 20,000,000  |   |  | 407     |   |  |           |  |  |              |   |  |            |   |  | 407        |  
|Issue of common stock for intangible asset               |  | 10,000,000  |   |  | 204     |   |  |           |  |  |              |   |  |            |   |  | 204        |  
|Net loss for the period                                  |  |            |   |  |        |   |  |           |  |  |              |   |  | (10,015     | ) |  | (10,015    | )
|Balance  December 31, 2004                              |  | 30,000,000  |   |  | 611     |   |  |           |  |  |              |   |  | (10,015     | ) |  | (9,404     | )
|Issue of common stock for cash                           |  | 47,500      |   |  | 19,337  |   |  |           |  |  |              |   |  |            |   |  | 19,337     |  
|                                                         |  | 30,047,500  |   |  | 19,948  |   |  |           |  |  |              |   |  | (10,015     | ) |  | 9,933      |  
|Adjustment to number of shares issued and                |  |             |   |  |         |   |  |            |  |  |               |   |  |             |   |  |            |  
|outstanding as a result of the reverse takeover          |  |             |   |  |         |   |  |            |  |  |               |   |  |             |   |  |            |  
|transaction:                                             |  |             |   |  |         |   |  |            |  |  |               |   |  |             |   |  |            |  
|- Add issued and outstanding stock of Syngas             |  |             |   |  |         |   |  |            |  |  |               |   |  |             |   |  |            |  
|International Corp. at time of
      reverse acquisition |  | 6,422,550   |   |  | 6,423   |   |  |           |  |  |              |   |  | (66,839     | ) |  | (60,416    | )
|- Deduct issued and outstanding stock of Syngas          |  |             |   |  |         |   |  |            |  |  |               |   |  |             |   |  |            |  
|Energy Corp.                                             |  | (30,047,500 | ) |  | (19,948 | ) |  |           |  |  |              |   |  | 19,948      |   |  |           |  
|Issue of common stock on acquisition of Syngas           |  |             |   |  |         |   |  |            |  |  |               |   |  |             |   |  |            |  
|Energy Corp.                                             |  | 30,047,500  |   |  | 30,047  |   |  |           |  |  |              |   |  | (30,047     | ) |  |           |  
|Issue of common stock for cash on exercise of            |  |             |   |  |         |   |  |            |  |  |               |   |  |             |   |  |            |  
|stock options                                            |  | 260,000     |   |  | 260     |   |  | 77,740     |  |  |              |   |  |            |   |  | 78,000     |  
|Stock-based compensation                                 |  |            |   |  |        |   |  | 339,762    |  |  |              |   |  |            |   |  | 339,762    |  
|Issue of common stock for services                       |  | 1,025,000   |   |  | 1,025   |   |  | 608,975    |  |  |              |   |  |            |   |  | 610,000    |  
|Foreign currency translation adjustment                  |  |            |   |  |        |   |  |           |  |  | (1,019        | ) |  |            |   |  | (1,019     | )
|Net loss for the year                                    |  |            |   |  |        |   |  |           |  |  |              |   |  | (1,095,384  | ) |  | (1,095,384 | )
|Balance  December 31, 2005                              |  | 37,755,050  |   |  | 37,755  |   |  | 1,026,477  |  |  | (1,019        | ) |  | (1,182,337  | ) |  | (119,124   | )
|Issue of common stock for cash on exercise
      of      |  |             |   |  |         |   |  |            |  |  |               |   |  |             |   |  |            |  
|stock options                                            |  | 575,333     |   |  | 575     |   |  | 200,825    |  |  |              |   |  |            |   |  | 201,400    |  
|Stock-based compensation                                 |  |            |   |  |        |   |  | 654,801    |  |  |              |   |  |            |   |  | 654,801    |  
|Issue of common stock for services                       |  | 1,519,981   |   |  | 1,520   |   |  | 683,984    |  |  |              |   |  |            |   |  | 685,504    |  
|Foreign currency translation adjustment                  |  |            |   |  |        |   |  |           |  |  | (78           | ) |  |            |   |  | (78        | )
|Net loss for the year                                    |  |            |   |  |        |   |  |           |  |  |              |   |  | (1,695,703  | ) |  | (1,695,703 | )
|Balance  December 31, 2006                              |  | 39,850,364  |   |  | 39,850  |   |  | 2,566,087  |  |  | (1,097        | ) |  | (2,878,040  | ) |  | (273,200   | )

The accompanying notes are an integral part of these consolidated
  financial statements. 
  F-5

---

SYNGAS INTERNATIONAL CORP.(A Development Stage Company) 
  Notes to the Consolidated Financial Statements 
  (Expressed in US dollars)

|1. | Nature of Operations and Going Concern Considerations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | On January 28, 2005, Syngas International
        Corp. (Syngas International) entered into two Share Exchange
        Agreements to acquire all of the shares of Syngas Energy Corp. (Syngas
        Energy). Syngas Energy was incorporated in the Province of British
        Columbia, Canada, on December 14, 2004, and its principal business involves
        an integrated gasification production system technology that combines
        modern gasification with turbine technologies to produce synthetic gas,
        hydrogen or electricity. Syngas International intends to further develop
        the technology to make it commercially viable and intends to then sell
        or license the technology. Syngas Energy is in the development stage as
        defined under Statement of Financial Accounting Standards (SFAS)
        No. 7 Accounting and Reporting by Development Stage Enterprises.Effective June 30, 2005, the acquisition of Syngas Energy by Syngas
        International was completed through the issuance of one share of Syngas
        International common stock for each share of Syngas Energy outstanding.
        Syngas International issued 30,047,500 shares of common stock to the shareholders
        of Syngas Energy, and as a result, the former Syngas Energy shareholders
        own approximately 82% of the outstanding common stock of Syngas International.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The acquisition of Syngas Energy by Syngas
        International is considered a reverse acquisition and accounted for under
        the purchase method of accounting. Under reverse acquisition accounting,
        Syngas Energy is considered the acquirer for accounting and financial
        reporting purposes, and acquired the assets and assumed the liabilities
        of Syngas International. Assets acquired and liabilities assumed are reported
        at their historical amounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | These consolidated financial statements include
        the accounts of Syngas International since the effective date of the reverse
        acquisition (June 30, 2005) and the historical accounts of its wholly-owned
        subsidiary, Syngas Energy, since inception (collectively, the Company).
        All significant inter-company balances and transactions have been eliminated
        on consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | As of December 31, 2006, the Company had not
        reached a level of operations which would finance day-to-day activities.
        These financial statements have been prepared on the assumption that the
        Company is a going concern, meaning it will continue in operation for
        the foreseeable future and will be able to realize assets and discharge
        liabilities in the ordinary course of operations. Different bases of measurement
        may be appropriate when a company is not expected to continue operations
        for the foreseeable future. The Companys continuation as a going
        concern is dependent upon its ability to attain profitable operations
        and generate funds therefrom and/or raise equity capital or borrowings
        sufficient to meet current and future obligations. Management plans to
        raise equity financings of approximately $1,000,000 over the next twelve
        months to finance operations. There is no guarantee that the Company will
        be able to complete any of these objectives. The Company incurred losses
        from operations of $2,878,040 since inception and at December 31, 2006,
        has a working capital deficiency of $298,404 and these conditions, among
        others, give rise to substantial doubt about the Companys ability
        to continue as a going concern.                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|2. | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

F-6

---

**SYNGAS INTERNATIONAL CORP.**(A Development Stage Company) 
  Notes to the Consolidated Financial Statements 
  (Expressed in US dollars)

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | d)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | e)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | f)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | g)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | h)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | i)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | j)                                                            
|   |                                                               
|   |                                                               

F-7

---

**SYNGAS INTERNATIONAL CORP.**(A Development Stage Company) 
  Notes to the Consolidated Financial Statements 
  (Expressed in US dollars)

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | k)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               

| |                                                                              |  | Year Ended   |  
| | ---------------------------------------------------------------------------- |  | ------------ | -
| |                                                                              |  | December 31, |  
| |                                                                              |  | 2005         |  
| |                                                                              |  | $            |  
| |                                                                              |  |              |  
| | Net loss, as reported                                                        |  | (1,095,384   | )
| |                                                                              |  |              |  
| | Add: Stock-based compensation expense included
      in reported net income, |  |              |  
| | net of related tax effects                                                   |  | 339,762      |  
| |                                                                              |  |              |  
| | Deduct: Total stock-based compensation expense determined under
      fair   |  |              |  
| | value based method for all awards, net of related tax effects                |  | (339,762     | )
| |                                                                              |  |              |  
| | Pro forma net loss                                                           |  | (1,095,384   | )
| |                                                                              |  |              |  
| |                                                                              |  |              |  
| | Loss per share:                                                              |  |              |  
| |                                                                              |  |              |  
| | Basic and Diluted - as reported                                              |  | (0.03        | )
| | Basic and Diluted - pro forma                                                |  | (0.03        | )

|3. | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In February 2007, the Financial Accounting Standards
        Board (FASB) issued SFAS No. 159, The Fair Value Option for Financial
        Assets and Financial Liabilities  Including an Amendment of FASB
        Statement No. 115. This statement permits entities to choose to
        measure many financial instruments and certain other items at fair value.
        Most of the provisions of SFAS No. 159 apply only to entities that elect
        the fair value option. However, the amendment to SFAS No. 115 Accounting
        for Certain Investments in Debt and Equity Securities applies to
        all entities with available-for-sale and trading securities. SFAS No.
        159 is effective as of the beginning of an entitys first fiscal
        year that begins after November 15, 2007. Early adoption is permitted
        as of the beginning of a fiscal year that begins on or before November
        15, 2007, provided the entity also elects to apply the provision of SFAS
        No. 157, Fair Value Measurements. The adoption of this statement
        is not expected to have a material effect on the Company's financial statements.

F-8

---

SYNGAS INTERNATIONAL CORP.(A Development Stage Company) 
  Notes to the Consolidated Financial Statements 
  (Expressed in US dollars)

|3. | Recent Accounting Pronouncements (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In September 2006, the SEC issued Staff Accounting Bulletin
        (SAB) No. 108, Considering the Effects of Prior Year
        Misstatements when Quantifying Misstatements in Current Year Financial
        Statements.SAB No. 108 addresses how the effects of prior year
        uncorrected misstatements should be considered when quantifying misstatements
        in current year financial statements. SAB No. 108 requires companies to
        quantify misstatements using a balance sheet and income statement approach
        and to evaluate whether either approach results in quantifying an error
        that is material in light of relevant quantitative and qualitative factors.
        SAB No. 108 is effective for periods ending after November 15, 2006. The
        adoption of SAB No. 108 did not have a material effect on its financial
        statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In September 2006, the FASB issued 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).This statement requires employers to recognize
        the over-funded or under-funded status of a defined benefit postretirement
        plan (other than a multiemployer plan) as an asset or liability in its
        statement of financial position and to recognize changes in that funded
        status in the year in which the changes occur through comprehensive income
        of a business entity or changes in unrestricted net assets of a not-for-profit
        organization. This statement also requires an employer to measure the
        funded status of a plan as of the date of its year-end statement of financial
        position, with limited exceptions. The provisions of SFAS No. 158 are
        effective for employers with publicly traded equity securities as of the
        end of the fiscal year ending after December 15, 2006. The adoption of
        this statement did not have a material effect on the Company's reported
        financial position or results of operations.                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In September 2006, the FASB issued SFAS No.
        157, Fair Value Measurements.The objective of SFAS
        No. 157 is to increase consistency and comparability in fair value measurements
        and to expand disclosures about fair value measurements. SFAS No. 157
        defines fair value, establishes a framework for measuring fair value in
        generally accepted accounting principles, and expands disclosures about
        fair value measurements. SFAS No. 157 applies under other accounting pronouncements
        that require or permit fair value measurements and does not require any
        new fair value measurements. The provisions of SFAS No. 157 are effective
        for fair value measurements made in fiscal years beginning after November
        15, 2007. The adoption of this statement is not expected to have a material
        effect on the Company's future reported financial position or results
        of operations.                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In June 2006, the FASB issued FASB Interpretation No.
        48, Accounting for Uncertainty in Income Taxes, an interpretation
        of FASB Statements No. 109.FIN 48 clarifies the accounting
        for uncertainty in income taxes by prescribing a two-step method of first
        evaluating whether a tax position has met a more likely than not recognition
        threshold and second, measuring that tax position to determine the amount
        of benefit to be recognized in the financial statements. FIN 48 provides
        guidance on the presentation of such positions within a classified statement
        of financial position as well as on de-recognition, interest and penalties,
        accounting in interim periods, disclosure, and transition. FIN 48 is effective
        for fiscal years beginning after December 15, 2006. The adoption of this
        statement is not expected to have a material effect on the Company's future
        reported financial position or results of operations.                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In March 2006, the FASB issued SFAS No. 156, "Accounting
        for Servicing of Financial Assets, an amendment of FASB Statement No.
        140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments
        of Liabilities".This statement requires all separately recognized
        servicing assets and servicing liabilities be initially measured at fair
        value, if practicable, and permits for subsequent measurement using either
        fair value measurement with changes in fair value reflected in earnings
        or the amortization and impairment requirements of Statement No. 140.
        The subsequent measurement of separately recognized servicing assets and
        servicing liabilities at fair value eliminates the necessity for entities
        that manage the risks inherent in servicing assets and servicing liabilities
        with derivatives to qualify for hedge accounting treatment and eliminates
        the characterization of declines in fair value as impairments or direct
        write-downs. SFAS No. 156 is effective for an entity's first fiscal year
        beginning after September 15, 2006. The adoption of this statement is
        not expected to have a material effect on the Company's future reported
        financial position or results of operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In February 2006, the FASB issued SFAS No. 155, "Accounting
        for Certain Hybrid Financial Instruments-an amendment of FASB Statements
        No. 133 and 140",to simplify and make more consistent the accounting
        for certain financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting
        for Derivative Instruments and Hedging Activities",to permit fair
        value re-measurement for any hybrid financial instrument with an embedded
        derivative that otherwise would require bifurcation, provided that the
        whole instrument is accounted for on a fair value basis. SFAS No. 155
        amends SFAS No. 140, "Accounting for the Impairment or Disposal of
        Long-Lived Assets",to allow a qualifying special-purpose entity to
        hold a derivative financial instrument that pertains to a beneficial interest
        other than another derivative financial instrument. SFAS No. 155 applies
        to all financial instruments acquired or issued after the beginning of
        an entity's first fiscal year that begins after September 15, 2006, with
        earlier application allowed. The adoption of this statement is not expected
        to have a material effect on the Company's future reported financial position
        or results of operations.                        

F-9

---

**SYNGAS INTERNATIONAL CORP.**(A Development Stage Company) 
  Notes to the Consolidated Financial Statements 
  (Expressed in US dollars)

|4. | Intangible Asset                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | On December 24, 2004, the Company
        purchased an integrated gasification production system from the CEO of
        the Company. The technology combines modern gasification with gas turbine
        technologies to produce synthetic gas, hydrogen or electricity. The Company
        intends to further develop the technology to make it commercially viable
        and intends to then sell or license the technology. The Company purchased
        the asset by issuing 10,000,000 common shares of the Company and a $25,000
        payment. If by January 2006 the Company had not raised a minimum of $1,000,000
        by way of equity private placements, it has the option, until June 30,
        2007, of cancelling the 10,000,000 shares issued to 975110 Alberta Ltd.
        and subject to escrow, in consideration for the transfer to 975110 Alberta
        Ltd. of 100% of the interest in all of the enhanced gasification intellectual
        property and a small gasification unit.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5. | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|6. | Loans Payable                                                                   
|-- | --------------------------------------------------------------------------------
|   |                                                                                 
|   | Loans payable are unsecured, non-interest
        bearing and are due on demand.
|   |                                                                                 
|7. | Common Stock                                                                    
|   |                                                                                 
|   | a)                                                                              
|   |                                                                                 
|   | b)                                                                              
|   |                                                                                 
|   | c)                                                                              
|   |                                                                                 
|   | d)                                                                              
|   |                                                                                 
|   | e)                                                                              
|   |                                                                                 
|   | f)                                                                              
|   |                                                                                 
|   | g)                                                                              
|   |                                                                                 
|   | h)                                                                              
|   |                                                                                 
|   | i)                                                                              
|   |                                                                                 
|   | j)                                                                              
|   |                                                                                 
|   | k)                                                                              
|   |                                                                                 
|   | l)                                                                              
|   |                                                                                 
|   | m)                                                                              

F-10

---

**SYNGAS INTERNATIONAL CORP.**(A Development Stage Company) 
  Notes to the Consolidated Financial Statements 
  (Expressed in US dollars)

|7. | Common Stock (continued)                                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | n)                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | o)                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | p)                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | q)                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | r)                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | s)                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | t)                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | u)                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | v)                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | w)                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | x)                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                       
|8. | Stock Options                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | On February 25, 2005, the Company adopted
        a Stock Option Plan (the 2005 Stock Option Plan)under
        which the Company is authorized to grant options to acquire up to a total
        of 4,000,000 common shares. The term of any stock options granted under
        the plan is limited to ten years.                                 
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | On July 19, 2005, the Company adopted the
        2005 Non-Qualified Stock Compensation Plan (the 2005 Non- Qualified
        Plan)under which the Company is authorized to issue up to 1,000,000
        shares of common stock. On September 26, 2005, these shares were registered
        on a Form S - 8 registration.                         
|   |                                                                                                                                                                                                                                                                                                                                                       
|   | On September 16, 2005, the Company adopted
        the September 2005 Non-Qualified Stock Compensation Plan (the September
        2005 Non-Qualified Plan) under which the Company is authorized to
        issue up to 2,000,000 shares of common stock. On September 26, 2005, these
        shares were registered on a Form S - 8 registration.

F-11

---

**SYNGAS INTERNATIONAL CORP.**(A Development Stage Company) 
  Notes to the Consolidated Financial Statements 
  (Expressed in US dollars)

|8. | Stock Options (continued)                                              
|-- | -----------------------------------------------------------------------
|   |                                                                        
|   | A summary of the Companys stock option activity
        is as follows:

| |                                |  | Year Ended        |   |   | Year Ended        | 
| | ------------------------------ |  | ----------------- | - | - | ----------------- | 
| |                                |  | December 31, 2006 |   |   | December 31, 2005 | 
| |                                |  |                   |   |   | Weighted          | 
| |                                |  | Number of         |   |   | Average           | 
| |                                |  | Options           |   |   | Exercise Price    | 
| | Balance  Beginning            |  | 1,205,000         |   | $ | 0.30              | 
| | Outstanding at date of reverse |  |                   |   |   |                   | 
| | acquisition                    |  |                  |   |   |                  | 
| | Granted                        |  | 1,450,000         |   |   | 0.46              | 
| | Cancelled / Forfeited          |  |                  |   |   |                  | 
| | Exercised                      |  | (575,333          | ) |   | 0.35              | 
| | Balance  Ending               |  | 2,079,667         |   | $ | 0.40              | 

The fair value of the options granted
  during the period was estimated at the date of the grant using the Black-Scholes
  option pricing model with the following assumptions.

| |                                 | December 31, | December 31,
| | ------------------------------- | ------------ | ------------
| |                                 | 2006         | 2005        
| |                                 |              |             
| | Expected dividend yield         | 0%           | 0%          
| | Risk-free interest rate         | 4.72%        | 3.57%       
| | Expected volatility             | 298%         | 299%        
| | Expected option life (in years) | 2.50         | 5.00        

|   | During the year ended December 31, 2006, the
        Company recorded stock-based compensation of $654,801 (December 31, 2005
        - $339,762) which is included with consulting and management fees on the
        statement of operations.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                
|9. | Commitments                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                
|   | a)                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                
|   | b)                                                                                                                                                                                                                                             

F-12

---

**SYNGAS INTERNATIONAL CORP.**(A Development Stage Company) 
  Notes to the Consolidated Financial Statements 
  (Expressed in US dollars)

|10. | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company follows the provisions of SFAS 109, Accounting
        for Income Taxes.Pursuant to SFAS 109 the Company is required
        to compute tax asset benefits for net operating losses carried forward.
        The potential benefit of net operating losses has not been recognized
        in the financial statements because the Company cannot be assured that
        it is more likely than not that it will utilize the net operating losses
        carried forward in future years. The Company has approximately $2,868,000
        of net operating loss carry-forwards available to offset taxable income
        in future years which expire through fiscal 2026. At December 31, 2006
        and 2005, the valuation allowance established against the deferred tax
        assets was $1,003,800 and $410,300 respectively.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The components of the net deferred tax asset, the statutory
        tax rate, the effective tax rate and the elected amount of the valuation
        allowance are scheduled below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| |                                   |  | December 31, |   |  | December 31, |  
| | --------------------------------- |  | ------------ | - |  | ------------ | -
| |                                   |  | 2006         |   |  | 2005         |  
| |                                   |  | $            |   |  | $            |  
| |                                   |  |              |   |  |              |  
| | Net Operating Loss Carry-forwards |  | 2,868,000    |   |  | 1,172,000    |  
| | Statutory Tax Rate                |  | 35%          |   |  | 35%          |  
| | Effective Tax Rate                |  |             |   |  |             |  
| | Deferred Tax Asset                |  | 1,003,800    |   |  | 410,300      |  
| | Valuation Allowance               |  | (1,003,800   | ) |  | (410,300     | )
| |                                   |  |              |   |  |              |  
| | Net Deferred Tax Asset            |  |             |   |  |             |  

F-13

---

Item
8.           Changes In and
Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Item
8A.         Controls and
Procedures.

As required by Rule 13a-15 under the Exchange Act, we carried
out an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures as of December 31, 2006, being the date of
our fiscal year end covered by this Annual Report. This evaluation was carried
out under the supervision and with the participation of our Chief Executive
Officer and Chief Financial Officer, Wilf Ouellette, upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective in timely alerting management
to material information relating to us required to be included in our periodic
SEC filings. There have been no significant changes in our internal controls or
in other factors that could significantly affect internal controls subsequent to
the date we carried out our evaluation.

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

During our fiscal year ended December 31, 2006, there were no
changes in our internal control over financial reporting that have materially
affected, or are reasonably likely to affect, our internal control over
financial reporting.

The term "internal control over financial reporting" is defined
as a process designed by, or under the supervision of, the registrant's
principal executive and principal financial officers, or persons performing
similar functions, and effected by the registrant's board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:

| | (1) | Pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      the assets of the registrant;                                                                                                                                                                                                   
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                
| | (2) | Provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that
      receipts and expenditures of the registrant are being made only in
      accordance with authorizations of management and directors of the
      registrant; and
| |     |                                                                                                                                                                                                                                                                                                                                                                                
| | (3) | Provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of the
      registrant's assets that could have a material effect on the financial
      statements.                                                                                                                                              

21

---

PART III

Item
9.           Directors,
Executive Officers, Promoters and Control Persons; Compliance With Section 16(a)
of the Exchange Act.

Directors and Executive Officers

All directors of our company hold office until the next annual
meeting of the shareholders or until their successors have been elected and
qualified. The officers of our company are appointed by our board of directors
and hold office until their death, resignation or removal from office.

As at March 27, 2007 our directors and executive officers,
their ages, positions held, and duration of such, are as follows:

Name
    Age
    TitleWilf Ouellette
    64
    Director, PresidentMargaret Hunt
    59
    Director, Secretary, TreasurerRobert Klein
    58
    Director


Business Experience

The following is a brief account of the education and business
experience during at least the past five years of each director and executive
officer, indicating the principal occupation during that period, and the name
and principal business of the organization in which such occupation and
employment were carried out.

Wilf Ouellette

Mr. Ouellette has been our director since July 1, 2005 and our
President, Chief Executive Officer and Chief Financial Officer since May 5,
2006. Mr. Ouellette has been a director and the Chief Executive Officer of
Syngas Energy Corp., the Companys wholly owned subsidiary, since February 2005.
Mr. Ouellette has over 25 years experience in process combustion. From 2001 to
the present he was worked as a consultant through his own company, Aclade Energy
Corp., offering consulting services in the waste to energy industry, developing
new projects in the energy sector and marketing the fluidized bed gasifier.

Mr. Ouellette has been principally active in the fields of heating,
  ventilating, air conditioning and process combustion systems since 1965. He
  also has extensive experience inthe development and integration of alternate
  energy systems. Mr. Ouellettes technical experience encompasses the following
  areas: instrumentation and control systems design and applications, heating
  and ventilation equipment systems applications, burner management and flame
  safe guard systems, combustion processes, burner design and applications, waste
  gasification processes and air pollution engineering. Previously Mr. Ouellette
  was a Fighter Control Operator and Pilot in the Royal Canadian Air Force.

22

---

Margaret Hunt

Margaret Hunt has been our director and Secretary and Treasurer since November 15, 2004. Ms. Hunt has over 30 years experience in administration and accounting. From July 2001 to the present, she has worked at Coast West Manufacturing as a general
accountant. From 2000 to 2001 she worked at S. Michals as its chief accountant. Ms. Hunt has worked for a defense contractor in the research and development of various technologies that required classified security clearance for the Department of
National Defense. Her work as a defence contractor was done, in part, with Simon Fraser University. Margaret also has extensive management and administrative experience that includes 10 years in real estate management and 11 years in the industrial
manufacturing sector.

Robert Klein

Robert Klein has been a director since August 1, 2005 and also served as President, Chief Executive Officer and Chief Financial Officer until May 5, 2006 at which time Mr. Klein resigned as President, Chief Executive Officer and Chief Financial
Officer. Mr. Kleins experience includes over 30 years in the securities industry handling a wide range of duties including management roles and institutional trading. For the past 15 years he has placed a major emphasis on packaging complex
transactions on behalf of corporate clients resulting in the creation and sale of marketable securities. He has spent the past five years working on public company development, mainly in the energy and mining industries. He has served as a director
for three brokerage firms, including Yorkton Securities. He currently holds directorships in two other public companies, Avalon Energy Corporation and Golden Spirit Gaming Ltd., and acts as President for both companies. Mr. Klein has a degree in
Applied Mathematics from the University of Waterloo and an FCSI (Fellows of Canadian Securities Institute) designation.

Board of Directors and Its Committees

During our fiscal year ended December 31, 2006, our Board of Directors met in person or via telephone regularly. Each member of the Board of Directors attended at least 75% of the meetings. We currently do not have a policy with respect to Board
members attendance at annual meetings. The Board of Directors currently does not have a nominating committee or a compensation committee.

The functions of the Audit Committee are currently carried
  out by the Companys Board of Directors. The Companys Board of Directors
  has determined that the Company does not have an audit committee financial expert
  on its Board of Directors carrying out the duties of the Audit Committee. The
  Board of Directors has determined that the cost of hiring a financial expert
  to act as a director of the Company and to be a member of the Audit Committee
  or otherwise perform Audit Committee functions outweighs the benefits of having
  a financial expert on the Audit Committee.

23

---

Director Nominees

We do not have a nominating committee. The Board of Directors, sitting as a Board, selects those individuals to stand for election as members of our Board. The Board will consider candidates for directors proposed by security holders, although no
formal procedures for submitting candidates have been adopted. Until otherwise determined, not less than 90 days prior to the next annual Board of Directors' meeting at which the slate of Board nominees is adopted, the Board accepts written
submissions that include the name, address and telephone number of the proposed nominee, along with a brief statement of the candidate's qualifications to serve as a director and a statement of why the shareholder submitting the name of the proposed
nominee believes that the nomination would be in the best interests of shareholders. If the proposed nominee is not the security holder submitting the name of the candidate, a letter from the candidate agreeing to the submission of his or her name
for consideration should be provided at the time of submission. The letter should be accompanied by a résumé supporting the nominee's qualifications to serve on the Board of Directors, as well as a list of references.

The Board identifies director nominees through a combination of referrals, including by management, existing Board members and security holders, where warranted. Once a candidate has been identified the Board reviews the individual's experience and
background, and may discuss the proposed nominee with the source of the recommendation. If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed
nominee as a member of management's slate of director nominees submitted to shareholders for election to the Board.

Among the factors that the Board considers when evaluating proposed nominees are their knowledge of and experience in business matters, finance, capital markets and mergers and acquisitions. The Board may request additional information from the
candidate prior to reaching a determination. The Board is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.

The Board received no security holder recommendations for nomination to the Board of Directors in connection with the 2005 Annual Meeting, which took place in December 2005.

Family Relationships

There are no family relationships between any of our directors
  or executive officers.

24

---

Involvement in Certain Legal Proceedings

None of our directors, executive officers, promoters or control
persons have been involved in any of the following events during the past five
years:

1.      any
bankruptcy petition filed by or against any business of which such person was a
general partner or executive officer either at the time of the bankruptcy or
within two years prior to that time;

2.      any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses);

3.      being
subject to any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type
of business, securities or banking activities; or

4.      being
found by a court of competent jurisdiction (in a civil action), the Commission
or the Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed,
suspended, or vacated.

Code of Ethics

We have not adopted a code of conduct. Companies whose equity
securities are listed for trading on the OTCBB are not currently required to do
so.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our executive officers and directors and persons who own more
than 10% of a registered class of our equity securities to file with the
Securities and Exchange Commission initial statements of beneficial ownership,
reports of changes in ownership and annual reports concerning their ownership of
our common stock and other equity securities, on Forms 3, 4 and 5 respectively.
Executive officers, directors and greater than 10% shareholders are required by
the Securities and Exchange Commission regulations to furnish our company with
copies of all Section 16(a) reports they file.

To the best of our knowledge, all executive officers, directors
  and greater than 10% shareholders filed the required reports, although some
  were filed late.

25

---

Item
10.           Executive
Compensation.

Executive Compensation

The following table summarizes the compensation paid to all
persons acting as President or Chief Executive Officer during the past fiscal
year ended December 31, 2006. No other executive officers received annual
compensation in excess of $100,000 during Fiscal 2006.

Name and Principal Position
    Year
    Salary ($)
    Bonus ($)
    Stock Awards ($)
    Option Awards
      ($)
    Non-Equity Incentive
      Plan Compensa- tion ($)
    Change in Pension
      Value and Nonqualified Deferred
      Compensation Earnings ($)
    All Other
      Compensa- tion ($)
    Total ($)Wilf Ouellette President, CEO, CFO (1)
    2006
    15,141
    Nil
    Nil
    Nil
    Nil
    Nil
      23,913 (2)
      39,054Robert Klein, President, CEO (3)
    2006
      4,493
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
      4,4932005
    1,718
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    1,718


|(1) | Wilf Ouellette was appointed as President, Chief
      Executive Officer and Chief Financial Officer on May 5, 2006 and director
      on July 1, 2005.                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                             
|(2) | Payment for consulting services made to 975110 Alberta
      Ltd., a company of which Mr. Ouellette is a director and has voting power
      and investment control.        
|    |                                                                                                                                                                             
|(3) | Robert Klein was President, Chief Executive Officer and
      Chief Financial Officer from August 1, 2005 to May 5, 2006. He has been a
      director since August 1, 2005.

Long-Term Incentive Plans

There are no arrangements or plans in which we provide pension,
  retirement or similar benefits for directors or executive officers, except that
  our directors and executive officers may receive stock options at the discretion
  of our Board of Directors. We do not have any material bonus or profit sharing
  plans pursuant to which cash or non-cash compensation is or may be paid to our
  directors or executive officers, except that stock options may be granted at
  the discretion of our Board of Directors.

26

---

We have no plans or arrangements in respect of remuneration
received or that may be received by our executive officers to compensate such
officers in the event of termination of employment (as a result of resignation,
retirement, or change of control) or a change of responsibilities following a
change of control, where the value of such compensation exceeds $120,000 per
executive officer.

Directors Compensation

We reimburse our directors for expenses incurred in connection
with attending Board meetings. We did not pay director's fees or other cash
compensation for services rendered as a director in the year ended December 31,
2006.

No cash compensation was paid to any of our directors for the
director's services as a director during the fiscal year ended December 31,
2006. We have no standard arrangement pursuant to which our directors are
compensated for their services in their capacity as directors except for the
granting from time to time of incentive stock options. The Board of Directors
may award special remuneration to any director undertaking any special services
on behalf of our Company other than services ordinarily required of a director.
Other than indicated below, no director received and/or accrued any compensation
for his services as a director, including committee participation and/or special
assignments.

Employment/Consulting Agreements

We have not entered into any employment or consulting
agreements with any of our current officers, directors or employees.

There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers, except that
our directors and executive officers may receive stock options at the discretion
of our board of directors. We do not have any material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to our
directors or executive officers, except that stock options may be granted at the
discretion of our board of directors.

Stock Options/SAR Grants

We did not grant any options or stock appreciation rights to
our named executive officers or directors in Fiscal 2006. As of December 31,
2006, none of executive officers or directors owned any of our derivative
securities.

Item
11.           Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.

The following table sets forth, as of March 27, 2007, certain
  information with respect to the beneficial ownership of our common stock by
  each stockholder known by us to be the beneficial owner of more than 5% of our
  common stock, as well as by each of our current directors and executive officers.
  Each person has sole voting and investment power with respect to the shares
  of common stock, except as otherwise indicated.

27

---

Beneficial ownership consists of a direct interest in the
shares of common stock, except as otherwise indicated.

Number ofShares of
      Percent ofName, Position and
      Common
      CommonAddress of Beneficial Owner
      Stock (1)
      Stock (2)(#)
      (%)Directors and OfficersWilf Ouellette, Director, President,CEO and CFO78 Belleville Avenue
    10,000,000 (3)
    25.09Spruce Grove, AlbertaCanada T7A 1H8Margaret Hunt, Director, Secretary,Treasurer18090  58A Avenue, Unit B
    Nil
    NilSurrey, British ColumbiaCanada V3S 1N6Robert Klein, President, Director455 Granville Street, Suite 201
    Nil
    NilVancouver, British ColumbiaCanada V6C 1T1All Officers and Directors as a Group
    10,000,000
    25.09(4
      persons)5% ShareholdersCarolyn Foster120, 2181 Premier Way
    7,570,000
    19.00Sherwood Park, AlbertaCanada T8H 0A2


|1 | The number and percentage of shares beneficially owned is
      determined under rules of the SEC, and the information is not necessarily
      indicative of beneficial ownership for any other purpose. Under such
      rules, beneficial ownership includes any shares as to which the individual
      has sole or shared voting power or investment power and also any shares
      which the individual has the right to acquire within 60 days through the
      exercise of any stock option or other right. The persons named in the
      table have sole voting and investment power with respect to all shares of
      Common Stock shown as beneficially owned by them, subject to community
      property laws where applicable and the information contained in the
      footnotes to this table.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2 | Based on 39,850,364 issued and outstanding shares of
      common stock as of March 27, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|3 | 10,000,000 shares are held by 975110 Alberta Ltd., a
      company of which Mr. Ouellette is a director and has voting power and
      investment control.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

28

---

Item
12.           Certain
Relationships and Related Transactions.

Except as otherwise indicated below, we have not been a party
to any transaction, proposed transaction, or series of transactions in which the
amount involved exceeds $120,000, and in which, to its knowledge, any of its
directors, officers, five percent beneficial security holder, or any member of
the immediate family of the foregoing persons has had or will have a direct or
indirect material interest.

- On December 24, 2004, as amended on July 4, 2005, our wholly owned
  subsidiary, Syngas Energy Corp. purchased from 975110 Alberta Ltd., a company
  controlled by Wilf Ouellette, our President, CEO and a member of our Board of
  Directors, an integrated gasification production system. This technology
  combines modern gasification with gas turbine technologies to produce
  synthetic gas, hydrogen or electricity. We intend to further develop the
  technology to make it commercially viable and intend to then sell or license
  the technology. We purchased the asset by issuing 10,000,000 common shares of
  our stock to 975110 Alberta Ltd.
- On January 28, 2005, we entered into an agreement to acquire all of the
  outstanding stock of Syngas Energy Corp. At the time the agreement was entered
  into, Anish Somani was our President and the President of Syngas Energy. On
  June 30, 2005, we completed the acquisition of Syngas Energy by issuing
  30,000,000 shares of our stock, which also included an issuance of 10,000,000
  shares of our stock to 975110 Alberta Ltd., a company controlled by Wilf
  Ouellette, the President, CEO and a director of Syngas.
- On June 30, 2005, after we acquired 100% of the outstanding capital stock
  of Syngas Energy in exchange for the issuance of 30,047,500 shares of our
  stock issued to the five prior shareholders of Syngas Energy. We now own 100%
  of the issued and outstanding stock of Syngas Energy. The five prior
  shareholders of Syngas Energy held approximately 87% of the outstanding common
  stock of Syngas on completion of the transaction on June 30, 2005. Wilf
  Ouellette, the Chief Executive Officer of Syngas Energy and our President, CEO
  and a director, is a director and 50% owner of 975110 Alberta Ltd., which
  received 10,000,000 of our common shares pursuant to our acquisition of Syngas
  Energy. The 10,000,000 shares in Syngas Energy owned by 975110 Alberta Ltd.
  were exchanged for 10,000,000 shares in our common stock on June 30, 2005.
  However, pursuant to the terms of the Agreement, all 10,000,000 of our common
  shares issued to 975110 Alberta Ltd. are to remain in escrow until we have
  raised a minimum of $1,000,000 by way of equity private placements. On July 4,
  2005, all of the parties to the Agreement, namely 975110 Alberta Ltd.,
  Draycott Investments Ltd., Nilufar Jamani and Syngas, signed an Addendum
  amending the Agreement to add a section stating that if, by January 1, 2006 we
  have not raised a minimum of $1,000,000 by way of equity private placements,
  we will have the option until June 30, 2006, of canceling the 10,000,000
  shares issued to 975110 Alberta Ltd. and subject to escrow, in consideration
  for the transfer to 975110 Alberta Ltd. of 100% of the interest in the
  gasification technology.

29

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- On November 1, 2005, Syngas Energy, our wholly owned subsidiary, acquired
  rights, in consideration for an initial fee of $25,000, to a process and
  apparatus for low cost hydrogen generation through assignment of an agreement
  from 975110 Alberta Ltd. to Syngas Energy. 975110 Alberta Ltd. is owned and
  controlled by Wilf Ouellette, who is Chief Executive of Syngas Energy and the
  President, CEO and a director of Syngas.

Item
13.           Exhibits

Exhibits

|3.1  | Articles of Incorporation (incorporated
        by reference from our Registration Statement on Form 10-SB filed on November
        30, 1999)                                                        
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                       
|3.2  | Certificate of Amendment
        (incorporated by reference from our Report of Form 8- K filed on February
        24, 2005)                                                                          
|     |                                                                                                                                                                                                       
|10.1 | Share exchange agreement 1 dated January
        28, 2005 (incorporated by reference from our Report on Form 8-K filed
        on April 14, 2005).                                                    
|     |                                                                                                                                                                                                       
|10.2 | Share exchange agreement 2 dated January
        28, 2005 (incorporated by reference from our Report on Form 8-K filed
        on April 15, 2005)                                                     
|     |                                                                                                                                                                                                       
|10.3 | Assignment and relinquishment of Oil
        and gas interests agreement dated January 28, 2005 (incorporated by reference
        from our Report on Form 10-KSB filed on April 15, 2005)            
|     |                                                                                                                                                                                                       
|10.4 | Assignment Agreement dated February
        14, 2005 between R. Sadowski and 975110 Alberta Ltd. (incorporated by
        reference from our Report on Form 8-K filed on November 4, 2005)            
|     |                                                                                                                                                                                                       
|10.5 | Assignment Agreement dated November
        1, 2005 between 975110 Alberta Ltd. and Syngas Energy (incorporated by
        reference from our Report on Form 8-K filed on November 4, 2005)           
|     |                                                                                                                                                                                                       
|10.6 | Consulting agreement dated November
        7, 2005 with 0719746 BC Ltd. (incorporated by reference from our Report
        on Form 10-QSB filed on November 21, 2005)                                
|     |                                                                                                                                                                                                       
|10.7 | Letter of Intent with Salmon Arm Plastics
        Ltd. (incorporated by reference form our Report on Form 10-QSB filed on
        August 21, 2006).                                                   
|     |                                                                                                                                                                                                       
|31.1 | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002                                                        
|     |                                                                                                                                                                                                       
|32.1 | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to 18
        U. S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002

30

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Item
14.           Principal
Accountant Fees and Services.

The aggregate fees billed for the two most recently completed
fiscal years ended December 31, 2006 for professional services rendered by the
principal accountant for the audit of our company's annual financial statements
and review of the financial statements included our Annual Report on Form 10-KSB
and services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for these fiscal periods were as
follows:

Year EndedDecember 31, 2006
    December 31, 2005Audit Related Fees
      18,775
    23,675Tax Fees
    -
    -All Other Fees
      -
      -Total
      $18,775
    $23,675


SIGNATURES

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

| | SYNGAS INTERNATIONAL CORP.        
| | ----------------------------------
| | a Nevada corporation              
| |                                   
| | /s/
      Wilf Ouellette          
| | By: Wilf Ouellette, President, CEO
| | and Director                      

Date: April 10, 2007

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

Signatures

/s/Wilf Ouellette__________________
      Date: April 10, 2007Wilf Ouellette, President, ChiefExecutive Officer, Chief Financial Officer and Director/s/Margaret Hunt_________________
      Date: April 10, 2007Margaret Hunt, Secretary, Treasurerand Director/s/Robert Klein___________________
      Date: April 10, 2007Robert Klein, Director


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