---

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# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549

# Form 10-K

# FOR ANNUAL AND
TRANSITION REPORTS
PURSUANT TO
SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE
ACT OF 1934

# x ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended
December 31, 2008

# o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

# Commission File Number:
000-28025

GLOBAL ENERGY INC.
(Exact Name of
Registrant as Specified in its Charter)

|                                         |                    
|---------------------------------------- | -------------------
|
|
|
|
|Nevada                                   | 86-0951473         
|(State or Other Jurisdiction of          | (IRS Employer      
|Incorporation or Organization)           | Identification No.)
|                                        
|415 Madison Avenue, 15th Floor,          | 10017              
|New York, NY                             | (Zip Code)         
|(Address of Principal Executive Offices)

+1 (646) 673-8435
(Registrants
Telephone Number, Including Area Code)

Securities registered pursuant to
Section 12(b) of the Act: None

Securities
registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act:

Yes o     No x

Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13
or Section 15(d) of the Act:

Yes o     No x

Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days:

Yes x     No o

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
is not contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. x

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer or a smaller reporting company:

| |                                                  |                                               
| | ------------------------------------------------ | ----------------------------------------------
| | Large accelerated filer oNon-accelerated filer o | Accelerated filer oSmaller reporting company x

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act):

Yes o     No x

The
aggregate market value of the common stock held by non-affiliates of the registrant as of
June 30, 2008, the last business day of the registrants most recently completed
second fiscal quarter, was approximately $13.1 million (based on the average bid and
asked price for the registrants common stock on June 30, 2008 on the OTC Bulletin
Board of $0.62 per share).

At
May 2, 2009, 83,982,536 shares of the registrants common stock were
outstanding.

DOCUMENTS INCORPORATED
BY REFERENCE: None



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# TABLE OF CONTENTS

|              |                                                                                                               |   
|------------- | ------------------------------------------------------------------------------------------------------------- | --
|
|
|
|
|PART I       
|              |                                                                                                               |   
|Item 1.       | Business                                                                                                      | 1 
|Item 1A.      | Risk Factors                                                                                                  | 10
|Item 1B.      | Unresolved Staff Comments                                                                                     | 11
|Item 2.       | Properties                                                                                                    | 11
|Item 3.       | Legal Proceedings                                                                                             | 11
|Item 4.       | Submission of Matters to a Vote of Security Holders                                                           |   
|              |                                                                                                               | 11
|PART II      
|              |                                                                                                               |   
|Item 5.       | Market for Registrant's Common Equity, Related Stockholder Matters
and Issuers Purchases of Equity Securities | 11
|Item 6.       | Selected Consolidated Financial Data                                                                          | 14
|Item 7.       | Management's Discussion and Analysis of Financial Condition and
Results of Operations                         | 14
|Item 7A.      | Quantitative and Qualitative Disclosures About Market Risk                                                    | 18
|Item 8.       | Financial Statements and Supplementary Data                                                                   | 18
|Item 9.       | Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure                          | 19
|Item 9A(T).   | Controls and Procedures                                                                                       | 19
|Item 9B.      | Other Information                                                                                             | 19
|              |                                                                                                               |   
|PART III     
|              |                                                                                                               |   
|Item 10.      | Directors, Executive Officers and Corporate Governance                                                        | 20
|Item 11.      | Executive Compensation                                                                                        | 22
|Item 12.      | Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters                | 25
|Item 13.      | Certain Relationships and Related Transactions, and
Director Independence                                     | 26
|Item 14.      | Principal Accountant Fees and Services                                                                        | 27
|              |                                                                                                               |   
|PART IV      
|              |                                                                                                               |   
|Item 15.      | Exhibits and Financial Statements                                                                             | 27
|              |                                                                                                               |   
|SIGNATURES    |                                                                                                               | 28
|EXHIBIT INDEX |                                                                                                               | 29



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# PART I

# Item 1.  Business

Certain
statements in this Annual Report on Form 10-K are forward-looking statements.
These statements involve a number of risks, uncertainties and other factors that could
cause our actual results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by these forward-looking
statements. Factors which could materially affect such forward-looking statements are
incorporated herein by reference. Investors are urged to consider these factors carefully
in evaluating the forward-looking statements and are cautioned not to place undue
reliance on such forward-looking statements. The forward-looking statements made herein
are only made as of the date hereof and we will undertake no obligation to publicly
update such forward-looking statements to reflect subsequent events or circumstances.

References
in this Annual Report on Form 10-K to Global Energy, the Company, we, us or
our are to Global Energy Inc., a Nevada corporation, and its subsidiaries.

# Description of the
Business

Historical Information

Our
business address is 415 Madison Avenue, 15th Floor, New York, NY 10017, and our telephone
number is (646) 673-8435. Our registered agent is Rite, Inc., 1905 South Eastern Ave.,
Las Vegas, NV 89104. We maintain a website located at http://www.global-nrg.biz. The
information contained in this website is not incorporated by reference into this annual
report.

We
are a Nevada corporation that was incorporated on February 16, 1999 as Global Smartcards
Inc. We originally planned to market plastic cards with embedded microprocessors.
However, we were unable to complete negotiations to market these cards and did not
proceed with this business plan.

In
early 2003, we decided to engage in the business of acquiring, exploring and developing
crude oil and natural gas properties in the United States. On April 28, 2003, we changed
our name to Global Energy Inc., and on June 5, 2003, we purchased certain petroleum and
natural gas producing properties and commenced oil and gas operations.

During
April 2005, our management decided to seek alternative business opportunities. Effective
July 1, 2005, we entered into and subsequently effected an agreement with Roxbury Capital
Group Ltd. and Qwest Capital Inc. pursuant to which we sold substantially all of our
assets, then comprising oil and gas lease interests, for the sum of $50,000. After the
completion of that sale, we continued to look for alternative business opportunities.

On
April 30, 2007, in connection with a private placement of our securities with one foreign
investor, Asi Shalgi joined as our President and Chief Executive Officer and we began to
build our current business, focusing on the production of alternative fuels.

We
are currently a development stage company that intends to acquire build and operate
facilities in various locations around the world that will use a proprietary technology,
which is described below beginning on page 19.

Company Strategy

Since
June 2007, we have observed efforts in the United States and the European Community to
develop facilities for the production of renewable, alternative fuels  primarily
biofuels based on corn and other feedstocks. We believe that the United States has
focused primarily, on ethanol while the European Community has focused primarily on
biodiesel. Today, the production of both ethanol and biodiesel has been constrained by
price increases for their respective primary feedstocks, corn and rapeseed (Canola).

Against
this background, the emerging alternative fuels industry has placed a high priority on
developing and deploying new technologies capable of utilizing abundant waste streams
instead of corn and other feedstocks for the production of alternative fuels. While we
have noted that much attention has been focused on high profile waste streams such as
municipal solid waste (MSW) and biomass waste derived from agriculture and
forestry , we believe that there are many other high volume industrial waste streams
available to be converted into alternative fuels. We have also determined that unlike
traditional biofuels based on corn and other food-based feedstocks, which must be
purchased in order to be converted into ethanol or biofuel, the utilization of waste
streams as feedstocks to produce alternative fuels also offers the potential of earning
additional revenues from garbage tipping fees and through the recycling of waste.

1

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With
the above factors in mind, we developed our business plan to take advantage of these
potential dual revenue streams through the utilization of a patented technology known as
the KDV process. The KDV process has been developed during the past thirty years by a
German scientist, Dr. Christian Koch. The KDV process, which Dr. Koch describes as a
catalytic de-polymerization, utilizes hydrocarbon-based feedstocks such as biomass, wood
and paper as well as plastic, rubber and waste oils, to produce high quality synthetic
diesel fuel, similar to diesel fuel available at the pump today.

Our
strategy is to build, own and operate, independently or with strategic partners,
industrial scale facilities that will utilize this technology to produce synthetic diesel
fuel from different types of hydrocarbon-based waste. In each project, we plan to partner
with local companies, generally operators of landfill sites and recycling facilities,
that have the ability under long term contracts to supply large, consistent quantities of
appropriate waste feedstock as well as arrange off-take agreements for the diesel fuel.
We also expect that such local partners will have the requisite regulatory and technical
expertise to obtain necessary governmental approvals for the diesel fuel producing
facilities based on this technology.

Based
on the production capabilities demonstrated by pilot projects utilizing this technology,
we believe that a single KDV500 unit is capable of producing approximately 500 liters of
synthetic diesel fuel per hour, or approximately 4,000,000 liters (approximately
1,000,000 gallons) of synthetic diesel fuel per year.

We
are currently negotiating with potential local partners to build plants in the United
States, China, and Romania. We anticipate that each plant should initially begin
operations with one or more KDV500 units with plans to subsequently expand to industrial
scale facilities with the capacity to produce approximately 15-20 million gallons per
year of diesel fuel. We believe that at optimal capacity, these facilities should be
capable of producing synthetic diesel fuel at a net cost of approximately $1.20 per
gallon given a zero feedstock cost. In addition, we believe that we will be able to
negotiate agreements under which we will collect tipping fees for taking and processing
MSW. When these tipping fees are factored in, the net cost should be significantly lower.

Description of the KDV
Technology

KDV Process

The
KDV process, which we believe represents a major breakthrough in the quest for renewable
energy sources, utilizes proprietary technology developed by Dr. Koch, which he had
licensed to his German company, Alphakat GmbH. Dr Christian Koch is a distinguished
scientist who during his long-standing career at Siemens Corporation held several senior
positions.

The
core elements of the KDV process are a catalyst and a patented turbine. Known technically
as catalytic de-polymerization, the KDV process takes long carbon chains (polymers) and
breaks them into the shorter carbon chains that comprise a high quality diesel fuel.

Catalysts
are chemical compounds that facilitate chemical reactions but, because they are not
consumed in the process, can be recovered and used again. In layman terms, Dr. Koch
describes the KDV process catalyst as a mixture of substances found in nature, which over
millions of years converted organic matter such as plants and micro-organisms into the
primary fossil fuels such as oil, gas and coal. The catalysts primary ingredients
are silicon, alumina and sodium, which are among the most prevalent substances on Earth,
therefore, we believe that the catalyst will not be subject to any supply risks.

The
patented turbine, which Dr. Koch designed, is critical to the KDV process. According to
Dr. Koch, the turbine creates the conditions required for the catalyst to work
efficiently. Each KDV500 unit has two turbines, each of which is approximately 3long
x 14 wide x 14 high. Conceptually, the turbine is like a blender spinning at
high speed. The spinning of the turbine creates friction and raises the temperature of
the catalyst and feedstock, which are suspended in a host oil at 545 degrees Fahrenheit.
At this temperature, vapor is created and vented into a standard distillation column
where it is condensed into synthetic diesel fuel and water. We have observed that the
only by-product or waste associated with the process is a small amount of cake comprised
of inorganic material or ash, and no emissions are released to the atmosphere except for
CO2 and vapor.

We
believe that the KDV process is an improvement over gasification and pyrolysis, which are
the two main types of processes currently being developed by other companies as part of
their efforts to find commercially successful waste-to-fuel solutions. We believe that
while different, both of these processes share certain traits that make them less
efficient and hence less economically attractive than the KDV process. According to
industry standards, these processes operate at temperatures ranging from 800 to 1,800
degrees Fahrenheit, considerably higher than the KDV process. As a result, the basic cost
to build and operate these types of facilities is greater than with the KDV process due
to design issues, high energy consumption, and environmentally hazardous by-products,
which require special disposal, treatment or further refining.

2

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---

When
describing alternative fuels, net energy balance which measures energy input
versus output, is an important measure of efficiency. We believe that the KDV process
requires 1 unit of energy input to produce 7 to 8 units of energy, depending on the
feedstock. In contrast, production of corn-based ethanol requires 1 unit to produce 1.25
units, while biodiesel requires 1 unit to produce 3.2 units.

Feedstocks

According
to Dr. Koch, the KDV process is capable of utilizing virtually any hydrocarbon-based
waste stream to produce synthetic diesel fuel. Depending on the particular feedstock, one
KDV500 unit requires approximately 5,760 to 13,200 tons of feedstock per year to produce
approximately 1 million gallons of synthetic diesel fuel. We believe that the key
commercial issue is sourcing a reliable, consistent, long-term supply of waste feedstock
for each project.

We
have determined that MSW is in abundant supply. Broadly defined, MSW may include plastic,
rubber, paper, cardboard and various food wastes. It requires major financial and
logistical resources to collect recycle and arrange disposal. Population growth and
landfill constraints are placing greater financial and logistical pressure on the waste
management resources of municipalities. Therefore, environmentally and fiscally
acceptable waste-management practices are increasingly essential in order to avoid
damaging consequences, such as those due to toxic/hazardous waste, greenhouse-gas
emissions, water pollution, air pollution and noise/visual impact of recycling/waste
disposal facilities.

We
are (i) aware of three primary types of municipal waste treatment technologies that are
currently used today: incineration/gasification, (ii) chemical decomposition, and (iii)
landfill burying. These technologies have substantial negative economic and environmental
impacts, particularly from production of hazardous byproducts such as toxic ash, toxic
water, and noxious air emissions. Due to the harm they pose to the environment, it is
expensive to dispose of these hazardous by-products. We believe that until now efforts to
produce energy or fuel from MSW and landfills has been limited to two options: (i)
burning MSW in waste-to-energy plants to produce steam to generate electricity or heat
for buildings; and (ii) capturing methane from landfills. The KDV process offers another
option, which we believe avoids the by-products of existing treatment technologies and as
a result should be more cost effective.

In
addition to MSW, we believe the KDV process can be applied to:

| |  | refinery
 residuals,  such as  petroleum  coke,  tar and  paraffin,  which  cannot be used today,
 are            environmentally harmful and very expensive to neutralize
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | used
oil from engines, organic wastes, sewerage sludge and animal manures;
| | - | --------------------------------------------------------------------------

| |  | all
types of waste biomass such as corn stover, sugar cane bagasse and other types of plant
stalks and parts such as peal and husks that are left over after harvesting edible
grains, juices and oils; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | glycerin.
| | - | ---------

While
we believe that the KDV process can utilize a broad range of feedstocks as outlined
above, we plan to focus on projects where we are able to sign long term contracts for
waste feedstocks for which we will be paid a tipping fee. We have estimated that tipping
fees for MSW and non-hazardous waste average to be about $35 per ton in the U.S. and $60
per ton in Europe.

Strategic Agreements

Alphakat GmbH Agreements

Our
plan to set up a series of worldwide waste-to-diesel production facilities is reflected
by the terms of three agreements with Dr. Kochs company Alphakat GmbH:

|(1) | Terms
of agreement between us and Alphakat GmbH, dated May 2, 2007,           agreeing to
incorporate an equally-owned subsidiary which would be granted           certain
exclusive rights with respect to the KDV technology;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Shareholders Agreement between
us and Alphakat GmbH, dated           July 10, 2007, agreeing on the terms of operation
of Alphakat-Global Energy GmbH           and the scope of the rights with respect to the
KDV technology granted to it;           and
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3

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|(3) | Incorporators agreement
and articles of Alphakat-Global Energy GmbH, dated           October 8, 2007, by which we
and Alphakat incorporate Alphakat-Global Energy           GmbH as equal shareholders, and
by which Alphakat granted Alphakat-Global Energy           GmbH certain rights with
respect to the KDV technology.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Under
these three agreements, Alphakat GmbH has granted Alphakat-Global Energy GmbH, the
equally-owned subsidiary of Alphakat GmbH and ourselves, the following rights:

|(1) | The
exclusive right to sell and market KDV500 units worldwide, subject to rights
          previously granted to third parties to sell the KDV units Bulgaria, Spain,
          Portugal, Italy, Mexico, and Canada, and to co-operate in establishing plants
          using the KDV technology in Spain and Mexico.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The
exclusive right to sell and market KDV units based on turbines larger than
          350kW in the United States and China.
|--- | ------------------------------------------------------------------------------------------------------------------------------

4

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Business Development
Agreements

On February 6, 2008, each of Dr.
Koch, Alphakat GmbH, and Alphakat-Global Energy GmbH entered into agreements with Covanta
Energy Corp., a wholly owned subsidiary of Covanta Holding Corporation. Alphakat GmbH is a
company controlled by Dr. Koch and was licensed by him to utilize the KDV technology.
Alphakat-Global Energy GmbH is a company equally owned by Alphakat GmbH and us. We had
consolidated Alphakat-Global Energy GmbH in accordance with FIN 46R Consolidation of
Variable Interest Entities, an interpretation of ARB no. 51 (FIN 46R).
Covanta Holding Corporation is an internationally recognized owner and operator of
waste-to-energy and power generation projects. Covanta Holdings facilities convert
municipal solid waste into renewable energy for numerous communities, predominately in the
United States. Under the terms of these agreements, Covanta Energy Corp. has the exclusive
right to purchase, use and make improvements to the KDV technology in the United States
for household waste feedstock, and non-exclusive rights to use the technology in China,
United Kingdom and the Republic of Ireland. In accordance with the terms of this
agreement, to preserve these rights, Covanta Energy Corp. purchased a KDV500 unit through
Alphakat-Global Energy GmbH on July 8, 2008. Covanta Energy Corp. should achieve
target final acceptance date after 350 days from the second payment, the final
acceptance date can be changed by change of delivery dates of agreed shipments and work
schedule. If Covanta Energy Corp.s tests are positive, and it wishes to proceed
further with its deployment of the KDV technology, then it must order five additional
KDV500 units within twelve months of the commissioning date of the first KDV500 unit. Over
a ten-year period, which begins on the commissioning date of the first unit, Covanta
Energy Corp is obligated to order a total of 600 KDV500 units or equivalent units in terms
of production capacity.

Covanta
Energy Corp. has also granted us the right to fund and own up to 35% of each of Covanta
Energy Corp.s KDV-based projects. In addition, Covanta Energy Corp. has agreed to
pay us an amount equal to 10% of the gross revenue of each of Covanta Energy Corp.s
KDV-based projects, regardless of whether we invest in these projects or not.

On
February 6, 2008, Alphakat-Global Energy GmbH and American Renewable Diesel executed an
agreement granting to American Renewable Diesel the right to sell and use the KDV
technology in five U.S. states: Texas, California, New York, New Jersey and Florida.
American Renewable Diesel is a special purpose company owned and managed by Trianon
Partners. Trianon Partners has extensive international project development experience,
has worked with Covanta Energy Corp. in connection with various power projects, and has
facilitated the negotiation of the agreements between Alphakat-Global Energy GmbH, us,
and Covanta Energy Corp.

Similar
to the business arrangement with Covanta Energy Corp., we have the right to fund and own
up to 51% of each of American Renewable Diesels KDV-based projects. Furthermore,
under the terms of this agreement, certain projects will be offered to Covanta Energy
Corp. for development and we will have the opportunity to receive royalties from such
projects in accordance with our agreement with Covanta Energy Corp.

On May 8, 2009, Alphakat 
Global Energy GmbH entered into an agreement for service operation of a KDV 500 unit with
Waste 2 Oil GmbH (W2O), a German company, by which W2O will provide plant
operations and testing services in Hoyerswerda, Germany, to Alphakat  Global Energy
GmbH for three months. W2O is responsible for operating the KDV 500 unit, hiring and
paying the qualified workers involved with its operation and paying all taxes by law. The
aim is to produce and sell diesel fuel. Alphakat  Global Energy GmbH agreed to pay
W2O a monthly fee for covering the costs for operating the KDV 500 unit as follows: (a) a
monthly fee of 5,000 Euro and (b) a fee of 1,000 Euro for each day of actual operation,
plus VAT.

Joint Venture Agreement
with S.C. Supercom S.A

On
November 11, 2008, we entered into a Joint Venture Agreement with S.C. Supercom S.A., a
Romanian company engaged in the business of collecting (and landfilling) municipal solid
waste in and around the City of Bucharest, and S.C. Target Group S.R.L., a Romanian
company. Our company and Supercom have agreed to incorporate a legal entity in Romania
under the name Super Energy S.A., to engage in converting municipal solid
waste into synthetic diesel fuel in Romania using the KDV technology.

The
initial share capital of Super Energy S.A. is to be 51% held by us and 49% held by
Supercom, with each contributing 5% of their shares to Target Group upon incorporation of
Super Energy S.A. so that the share capital of Super Energy S.A. would be held in the
following manner: our company  46%, Supercom  44%, and Target Group 10%.
Initially, the board of directors of Super Energy S.A. will be comprised of four board
members, with each of Supercom and ourselves entitled to appoint two.

All
projects undertaken under this agreement are to be financed by Supercom providing 100% of
the required equity via a special purpose vehicle, and Super Energy S.A. reimbursing
Supercom for investments made on its behalf.

As
of December 31, 2008 and as of this day, no such KDV-based projects were initiated.

5

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Memorandums of
Understanding with Shaanxi ShenMu SanJian Coal Chemical Co. Ltd.

On
March 9, 2008, the Company entered into a Memorandum of Understanding (MOU)
with Shaanxi ShenMu SanJian Coal Chemical Co. Ltd. (Shaanxi), a company
located in the Peoples Republic of China, to initiate the KDV project in that
region. Completion of the transaction based on this MOU is subject to due diligence,
further negotiation and testing.

Other Operations 
Production of Crude Castor Oil in Ethiopia

We
have invested approximately $2,300,000 in the cultivation of castor plants in Southern
Ethiopia. Our activities are based in Sodo, Ethiopia and in the regions of Waletia and
Goma Gofa, Ethiopia. We engaged a large number of local independent farmers who use a
portion of their existing land to cultivate the castor seeds, or clear additional land,
and trained these farmers on new agricultural techniques. The local independent farmers
seeded approximately 4,000 hectares of land commencing in April, 2008. In the fourth
quarter of 2008, the farmers harvested several hundred tons of castor crop.

We
have also implemented a research and development program to develop a new species of
castor to improve future yields. Pursuant to the amending and restating agreement with
our senior secured lender dated September 22, 2008, described in detail in the Financing
Agreement section of this prospectus beginning below, we agreed to pay our senior
secured lender, towards the repayment of our debt, 50% of all cash flows generated by our
Ethiopian operations in excess of the first $700,000 of cash flow.

On
March 18, 2009, our subsidiary, Global N.R.G. Pacific Ltd., or Pacific, sold to Presaco
Investments Ltd., or Presaco, a company registered in Cyprus, all the stock capital of
Pacifics subsidiary, Global Energy Ethiopia Ltd. as well as all of Pacifics
right, title, and interest in and to all its property and assets in connection with the
business of community castor farming for oil and the development of governmental lands
for castor oil in Ethiopia.

Pursuant
to the purchase agreement, Presaco paid an aggregate consideration of $700,000 in cash,
of which the initial payment of $595,000 was paid at closing and deposited in escrow. The
entire amount has since been released from escrow and the second payment of $105,000 was
deposited at closing in escrow and is subject to release to Pacific on March 1, 2010.

For
the five years following the closing, Pacific and our company have agreed not to carry on
or hold an interest in any company, venture, entity or other business (other than a
minority interest in a publicly traded company) which competes with Presacos
business of castor operation (including, without limitation, as a shareholder).

Pacific
was formed as a joint venture with Yanai Man Projects Ltd., a company owned by Yanai Man.
As of December 31, 2008, the Company held 95% of the issued and outstanding shares of
Pacific. On April 5, 2009, Yanai Man Projects Ltd. transferred its remaining 5% interest
in Pacific to the Company.

Financing
Agreement

On
July 10, 2007, October 23, 2007, and December 27, 2007, we issued 10% secured convertible
debentures to YA Global Investments, L.P., our senior secured lender for gross proceeds
of $3,000,000, as a part of a private placement of up to $4,000,000 of debentures. These
debentures are secured against all of our assets. Prior to the amendment to the
securities purchase agreement on March 20, 2008, described below, these debentures were
convertible by the lender into shares of our common stock at a fixed conversion price of
$2.20 per share. In conjunction with the placement of these debentures with our senior
secured lender, on July 10, 2007, we also issued to the lender warrants to purchase
300,000 shares of common stock exercisable for five years at an exercise price of $2.35
and warrants to purchase additional 300,000 shares of our common stock exercisable for
five years at an exercise price of $2.50.

6

---

---

On
March 20, 2008, we entered into an amendment to the securities purchase agreement with
our senior secured lender that amended the terms of the convertible debentures issued
July 10, 2007, October 23, 2007, and December 5, 2007, as follows:

|(1) | the
amount of convertible debentures we agreed to issue prior to a registration
          statement registering the shares of our common stock to be issued on conversion
          of the convertible debentures becoming effective was changed from $3,000,000 to
          $3,500,000;
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | conversion
price was changed from $2.20 to $1.25 for all debentures held by the           lender;
and
|--- | -----------------------------------------------------------------------------------------------------

|(3) | exercise
price was changed from $2.50 and $2.35 to $1.25 for all warrants issued           to the
lender.
|--- | ---------------------------------------------------------------------------------------------------------

All
of the other provisions of the securities purchase agreement, pursuant to which
debentures were issued to the lender on July 10, 2007, October 23, 2007, and December 5,
2007, remained in full force and effect.

On
March 20, 2008 and May 13, 2008, we issued two more 10% secured convertible debentures to
our senior secured lender for gross proceeds of $1,000,000. These debentures mature on
October 31, 2010 and, prior to the amending and restating agreement dated September 22,
2008, described below, were convertible by the lender into shares of our common stock at
a fixed conversion price of $1.25 per share, subject to further adjustment as further set
out in the debenture. These debentures, as the three previously issued to the lender, are
secured against all of our assets.

Under
the terms of the debenture issued on May 13, 2008, amortizing payments of the outstanding
principal amount of the debenture and accrued interest at an annual rate equal to 10%
were to commence on the first business day on or after July 31, 2008, and were to
continue on the first business day of each successive calendar month thereafter until the
principal amount has been repaid in full, whether by the payment of cash or by the
conversion of the principal amount and interest into Common Stock. Other terms of this
debenture were the same as in the debentures previously issued to our senior secured
lender.

Effective
July 15, 2008, we entered into an amending agreement with our senior secured lender with
respect to outstanding secured convertible debentures in the aggregate principal amount
of $4,000,000, and warrants to purchase 600,000 shares of our common stock issued by our
company to the lender. The amendment allowed us to immediately defer certain principal
and interest payments due under these debentures. Specifically, under the terms of
the July 15, 2008 amending agreement, interest payments accrued and due during the first
three quarters of the 2008 calendar year (approximately $267,000 as of July 31, 2008)
were deferred until approximately September 30, 2008. In addition, principal
installments that were due July 31, 2008 and August 31, 2008 were deferred until
September 30, 2008, subject to further deferment if certain conditions were met. In
consideration of the amendment, we agreed to issue to the lender 200,000 restricted
shares of our common stock.

On
September 22, 2008, prior to the due date of the deferred principal and interest payments
under the July 15, 2008 amending agreement, which had not been paid to that date, we
entered into an amending and restating agreement with our senior secured lender on the
following terms:

|(1) | the
lender agreed to defer payment of interest that had accrued on the           $4,000,000
aggregate principal balance represented by the five secured           convertible
debentures held by it to a date as late as October 31, 2008, subject           to further
deferment, but only if we completed an offering of at least           $1,500,000 in gross
proceeds on or before October 31, 2008;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | the
lender agreed to defer payment of the principal installments that were due           on
July 31, August 31, and September 30, 2008 until October 31, 2008, subject to
          further deferment, but only if we completed an offering of at least $1,500,000
          in gross proceeds on or before October 31, 2008;
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | the
rate of interest to be charged on the aggregate principal amount of           $4,000,000
pursuant to the convertible debentures was increased from 10% to 12%;           and
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | we
agreed to issue 1,000,000 restricted shares of our common stock to the lender
          (in addition to the 200,000 shares issued under the July 15, 2008 amending
          agreement).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
addition, the amending and restating agreement provides for the following, but only if
(and when) we completed an offering of at least $1,500,000 in gross proceeds on or before
October 31, 2008:

|(1) | we
would make a payment in the amount of $180,000 for interest accrued and           unpaid
on the aggregate principal amount of $4,000,000, to be paid directly from           the
gross proceeds of the offering, and a payment of an additional amount equal           to
10% of the gross proceeds from the offering if we raised gross proceeds of
          between $2,200,000 and $3,900,000;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | we
would make payments on account of the indebtedness represented by the
          convertible debentures in an amount equal to 50% of all cash flows generated by
          our Ethiopian subsidiary, Global Energy Ethiopia , in excess of the first
          $700,000 in cash flow, to be paid on each installment payment date set out on
          the revised installment payment schedule described in paragraph (5) below;
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

---

---

|(3) | we
would reduce the conversion price of all secured convertible debentures           issued
and outstanding to the lender from $1.25 to $0.10 per share, in each case           as
already required by the terms of those secured convertible debentures;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | we
would reduce the exercise price of all warrants held by the lender from $1.25
          to $0.10 per share, and an increase in the number of shares of our common stock
          to be issued upon exercise of those warrants from 600,000 to 7,500,000 shares
of           our common stock, in each case as already required by the terms of those
          warrants; and
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | we
would revise the repayment schedule for the debentures issued to the lender           to
provide for the following:
|--- | ----------------------------------------------------------------------------------------------------------------------

|Installment Payment   | Company Redemption Amount                   | Company
Conversion
Amount
|--------------------- | ------------------------------------------- | -------------------------
|
|
|
|
|November 2008         | $ 0 + Variable Redemption Amount (VAR)(1) | $ 25,000                 
|December 2008         | $ 0 + VAR(1)                                | $ 35,000                 
|January 2009          | $ 10,000 + VAR(1)                           | $ 50,000                 
|February 2009         | $ 10,000 + VAR(1)                           | $ 60,000                 
|March 2009            | $ 10,000 + VAR(1)                           | $ 70,000                 
|April 2009            | $ 10,000 + VAR(1)                           | $ 70,000                 
|May 2009              | $ 10,000 + VAR(1)                           | $ 70,000                 
|June 2009             | $ 10,000 + VAR(1)                           | $ 75,000                 
|July 2009             | $ 10,000 + VAR(1)                           | $ 75,000                 
|August 2009           | $ 10,000 + VAR(1)                           | $ 75,000                 
|September 2009        | $ 10,000 + VAR(1)                           | $ 75,000                 
|Each Month Thereafter | $ 225,00(2)                                 |                          

| | (1) Under
the terms of this amending and restating agreement, the variable redemption
amount equals to 4% of the amount by which the total gross proceeds raised in
the fall of 2008 private placement exceed $2,200,000.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) This
amount may be paid at our discretion as a combination of company redemption and
company conversion amounts in accordance with the terms of the debentures held
by the lender.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On
September 30, 2008, we closed the first stage of a private placement, selling 30 units at
a price of $50,000 per unit, raising an aggregate of $1,500,000 in gross proceeds. Each
unit consisted of 500,000 shares of our common stock and 500,000 share purchase warrants
with an exercise price of $0.10 per share, exercisable for a period of five years.

As
a result of our closing the first stage of the private placement on September 30, 2008,
the provisions of this amending and restating agreement conditional on raising at least
$1,500,000 in the private placement, as set out above, became effective, including the
reduction of the exercise price and conversion price of the warrants and convertible
debentures held by our senior secured lender, respectively, to $0.10, and the increase of
the number of shares of our common stock to be issued upon exercise of those warrants
from 600,000 to 7,500,000.

On
November 4, 2008, we closed the second stage of our private placement, selling 4 units at
a price of $50,000 per unit, raising an aggregate of $200,000 in gross proceeds. Under
the terms of this amending and restating agreement, based on the total gross proceeds of
$1,700,000 raised in the private placement, we became obligated to pay the following
amounts:

|(1) | $180,000
for interest accrued and unpaid on the aggregate principal amount of
          $4,000,000, to be paid directly from the gross proceeds of the private
          placement;
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

---

---

|(2) | on
account of the indebtedness represented by the debentures held by the lender,
          an amount equal to 50% of all cash flows generated by our Ethiopian operations
          in excess of the first $700,000 in cash flow, to be paid on each installment
          payment date set out above;
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | monthly
installment payments as follows:
|--- | ----------------------------------------

|Installment Payment   | Company Redemption Amount | Company
Conversion
Amount
|--------------------- | ------------------------- | -------------------------
|
|
|
|
|November 2008         | $      0(1)               | $ 25,000                 
|December 2008         | $      0(1)               | $ 35,000                 
|January 2009          | $ 10,000(1)               | $ 50,000                 
|February 2009         | $ 10,000(1)               | $ 60,000                 
|March 2009            | $ 10,000(1)               | $ 70,000                 
|April 2009            | $ 10,000(1)               | $ 70,000                 
|May 2009              | $ 10,000(1)               | $ 70,000                 
|June 2009             | $ 10,000(1)               | $ 75,000                 
|July 2009             | $ 10,000(1)               | $ 75,000                 
|August 2009           | $ 10,000(1)               | $ 75,000                 
|September 2009        | $ 10,000(1)               | $ 75,000                 
|Each Month Thereafter | $ 225,000(2)              |                          

| | (1)
Because the total gross proceeds raised in the private placement were
          $1,700,000, the variable redemption amount, which under the terms of the
          amending and restating agreement equals 4% of the amount of gross proceeds
          raised in the private placement that exceed $2,200,000, is $0.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) This amount may be paid at our
discretion as a combination of the company           redemption and company conversion
amounts in accordance with the terms of the           debentures held by the lender.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2008, we were not
in material breach of any of our obligations under this amending and restating agreement.
During 2009 we did not carried out the conversions according the above table. The Company
is currently negotiating to amend its current obligations.

On
March 4, 2009, we entered into an Escrow Agreement with our senior secured lender in
connection with the sale by Pacific of its Ethiopian assets. In accordance with the
agreement, proceeds released from the buyers escrow and received from the sale of
the Ethiopian assets were transferred to an escrow to be released pursuant to joint
written instructions by our senior secured lender and by us. A portion of the sum was
released on March 30, 2009.

# Competition

The
market for the manufacture, marketing and sale of renewable diesel (mineral and
synthetic) and other alternative fuels is highly competitive. According to the National
Bio-diesel Board (NBB), as of January 25, 2008, there were at least 171 companies engaged
in the development, manufacture and marketing of bio-diesel fuel, with current production
capacity estimated at 2.24 billion gallons per year, with actual production for the
12-month period ended September 30, 2007 of 450 million gallons. The NBB further
estimated that another 1.23 billion gallons of annual plant capacity were under
development. Competition could be intense and may result in an increase in the costs of
feedstock, plant construction and operating expenses, as well as to make it more
difficult to attract and retain qualified engineers, chemists and other employees whose
services could be key to our operations. Larger companies that are already engaged in
this business may have access to greater financial and other resources, making it
difficult to compete with them in recruiting and retaining qualified employees as well as
in acquiring attractive locations for the construction and operation of a producing
plant.

Moreover,
if production capacity in the industry increases faster than demand for alternative fuels
(including synthetic diesel fuel), sale prices could be depressed. Falling oil prices may
have a negative effect on demand for alternative fuels such as the synthetic diesel fuel
that we propose to produce. In addition to competition from other companies engaged in
producing alternative fuel, we will compete with producers of petroleum fuels.

9

---

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# Intellectual Property

We
do not have any intellectual property.

# Governmental Regulations

Our
business will be conducted in various countries, which have varying degrees of
regulation. The following is a discussion of some U.S. regulations which may or may not
apply to our operations.

There
are no readily apparent U.S. Environmental Protection Agency, or EPA, regulatory fuel
certification requirements applicable to using the renewable diesel in a stationary
source, such as industrial applications or home heating fuel, or in certain marine
applications. There may, however, be requirements applicable to emissions from individual
furnaces, boilers, etc. As a practical matter, market acceptance of the bio-fuel may be
limited until we can demonstrate that (i) the renewable diesel is comparable to
conventional fuels, from an energy content and emissions perspective, as well as handling
and storage perspectives, and (ii) that the renewable diesel is compatible with existing
heating systems or power generation systems and other combustion systems. To date, we
have not demonstrated any of the foregoing in such commercially available systems.
Initial testing done on the renewable-diesel in a laboratory indicated that the renewable
diesel is high quality diesel fuel.

We
have evaluated whether the renewable diesel can be formulated to comply with the
standards of the EPA to be classified as diesel. EPA standards mandate that
the diesel comply with the specifications that the American Society for
Testing and Materials (ASTM) requires that the fuel be comprised of. However, we are
currently evaluating whether the ASTM standard can be broadened to include our fuel.

In
order to be legally marketable as a fuel for on-road motor applications, the bio-fuel
must be registered with the EPA and comply with the EPAs health effects
regulations. Under these regulations, a company registering a fuel must either complete a
literature review and possibly health effects testing, or submit an application with a
group of other companies manufacturing similar fuels. The National Biodiesel Board has
completed the required health effects testing on behalf of the bio-diesel industry, and
provides the testing data to companies seeking to register their bio-diesel with the EPA.
To fit under the NBB umbrella, and be considered bio-diesel for marketing
purposes, the bio-fuel must meet the ATSM 6751 specifications for bio-diesel described
above. European countries use similar standards. ASTM 6751 compliant bio-diesel is
already registered with the EPA and also meets the clean diesel standards established by
the California Air Resources Board (CARB) and certain other states. As of the date of
this report, the current formulation of the bio-fuel does not comply with ASTM 6751.
Because water is a component used in the manufacture of our bio-fuel, it is unlikely that
we will be able to reformulate our fuel to meet this ASTM standard; accordingly, we would
need to seek EPA approval as described above for our fuel to be used on on-road motor
vehicle applications.

We
are evaluating the regulatory requirements for using our fuel in motor vehicle
applications in our territory outside the United States.

Environmental
permitting of renewable diesel manufacturing facilities varies with the characteristics
of individual plants. Our renewable diesel is manufactured using a process that is
believed to yield little, if any wastes, emissions or discharges, although there may be
some air emissions that could require us to obtain air emission permits to construct and
operate any plants we may build or acquire.

Being
a mineral, the diesel does not require certification from car and engine manufacturers,
provided it fulfills the EU standards. The KDV process produces a bio-diesel and
therefore is eligible for tax benefits in certain countries.

# Employees

As
of December 31, 2008, we had four full time employees. We believe our relationships with
our employees are good.

# Item 1A.  Risk
Factors

Not
Applicable.

10

---

---

# Item 1B.  Unresolved
Staff Comments

Not
Applicable.

# Item 2.  Properties

On
October 5, 2007, our subsidiary, Global Ethiopia, entered into lease agreements with the
Southern Nations Nationalities Peoples Regional State, Ethiopia, or SNRS, for a 50
year lease of 20,000 hectares of rural land located in the Gamo Gofa zone in the SNRS for
the purpose of cultivating castor seeds and 15 hectares of land located in the Gamu Gofa
zone, Kucha Woreda, in the SNRS for the purpose of operating an oil crushing plant
through an existing facility on the property.

The
agreements are subject to, among other things, the following conditions: (i) Global
Ethiopia must pay SNRS a rental fee of Birr 47 (approximately US$5) or Birr 78
(approximately US$8.50) per hectare per year, depending on whether the leased land is
defined as second or first class land, respectively; (ii) Global Ethiopia must completely
develop the 20,000 hectares leased to it within eight years of the execution date of the
agreement, including planting and maintaining trees or other oil producing crops. If no
development process is carried out within a period of four (4) years from the date of
execution of the agreement, then the undeveloped land may be repossessed by SNRS by
giving six (6) months advance written notice to abandon the land; (iii) Global Ethiopia
must completely develop the 15 hectares leased to it within three years of the execution
date of the agreement; (iv) Global Ethiopia must perform a survey on the 20,000 hectares
within 24 months of the execution date of the agreement; (v) Global Ethiopia has an
option to lease additional farmland from the SNRS during the term of the lease agreement
(up to an additional 100,000 hectares of farmland) on the same terms as the lease
agreement for the 20,000 hectares; and (vi) Global Ethiopia is not required to make any
rental payments on its 20,000 hectare lease agreement until the fourth year of the
agreement.

During
the term of the lease agreements, SNRS may cancel the lease due to failure of Global
Ethiopia to discharge its material obligations under the lease agreements, provided,
however, that Global Ethiopia is given one year prior notice and fails to cure such
failure within such one year period.

In
March 2009, we sold our interest in Global Ethiopia.

Our
facilities located in Israel occupy approximately 150 square meters. Our current lease
commitment relating to our facility in Israel expires at the end of August 2009.

# Item 3.  Legal
Proceedings

As
of date of this annual report, we know of no material, existing or pending legal
proceedings against us, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors, executive
officers or affiliates, or any registered or beneficial shareholder, is an adverse party
or has a material interest adverse to our interest.

# Item 4.  Submission
of Matters to a Vote of Security Holders

On
January 7, 2009, we amended our articles of incorporation to increase the authorized
number of shares of our common stock from 250,000,000 to 750,000,000, par value of $0.001
per share, by filing a certificate of amendment with the Secretary of State of the State
of Nevada. Such amendment was approved by Carrigain Investment Ltd., the holder of the
majority of the outstanding shares of our common stock, by a written consent on November
4, 2008. For additional information, please see the definitive Information Statement
filed with the Commission on December 1, 2008 pursuant to Regulation 14C of the
Securities Exchange Act of 1934.

# PART II

Item 5.  Market for Registrants
Common Equity, Related Stockholder Matters and Issuers Purchases of Equity Securities

# Market for Common Equity

Our
common stock is quoted on the OTC Bulletin Board under the symbol GEYI.
Trading in our common stock has occurred on a relatively inconsistent basis and the
volume of shares traded has been limited.

The
following table shows the quarterly high and low reported bid prices per share for our
common stock over the fiscal quarters for the last two fiscal years as quoted on the OTC
Bulletin Board. The bid prices represent quotations by dealers without adjustments
for retail mark-ups, mark-downs or commissions and may not represent actual transactions.
Investors should not rely on historical prices of our common stock as an indication of
its future price performance. The last sale price of our common stock on April 30, 2009,
was $0.017 per share.

11

---

---

|               | Low | High
|-------------- | --- | ----
|
|
|
|
|2007           |     |     
|               |     |     
|First Quarter  |     |     
|Second Quarter |     |     
|Third Quarter  |     |     
|Fourth Quarter |     |     
|               |     |     
|2008           |     |     
|               |     |     
|First Quarter  |     |     
|Second Quarter |     |     
|Third Quarter  |     |     
|Fourth Quarter |     |     

# Holders

As
of April 30, 2009, there were 83,982,536 shares of our common stock issued and
outstanding held by 80 stockholders of record.

# Dividends

We
have not paid any cash dividends on our common stock and do not anticipate paying any
cash dividends in the foreseeable future. We currently intend to retain future earnings,
if any, to fund the development and growth of our business. Any future determination to
pay cash dividends will be at the discretion of our board of directors and will be
dependent upon our financial condition, operating results, capital requirements,
applicable contractual restrictions and other factors as the board of directors deems
relevant.

# Recent Sales of
Unregistered Securities

Throughout
the 2008 fiscal year, we authorized the issuance of options to our directors and officers
to acquire in the aggregate 2,700,000 shares of our common stock. For more information,
see Item. 11 entitled Executive Compensation.

On
March 20, 2008, we entered into an amendment to the securities purchase agreement with YA
Global Investments, L.P. that amended the terms of the convertible debentures issued July
10, 2007, October 23, 2007 and December 5, 2007. For more information, see Item 1.
entitled Business under Financing Agreements.

On
March 20, 2008, we issued a fourth 10% secured convertible debenture for gross proceeds
of $500,000. The debenture matures on October 31, 2010 and is convertible by the
debenture holder into common shares at a fixed conversion price of $1.25 per share,
subject to further adjustment as further set out in the debenture. The debenture is
secured against all of our assets. We paid a commission of $35,000 to Yorkville Advisors,
LLC, the investment manager of YA Global Investments, L.P., in connection with this
issuance. The debenture was issued pursuant to the exemption from registration under the
Securities Act of 1933, as amended, provided by Section 4(2), Section 4(6) and/or Rule
506 of Regulation D promulgated under the Securities Act of 1933, as amended, to the
investors and brokers who are accredited investors within the respective
meanings ascribed to that term in Rule 501(a) under the Securities Act of 1933, as
amended.

On
May 13, 2008, we sold a 10% Secured Convertible Debenture to YA Global Investments, L.P.,
for gross proceeds of $500,000. The debenture matures on October 31, 2010 and is
convertible by the holder into common shares at a fixed conversion price of $1.25 per
share subject to further adjustment as further set out in the debenture. The debenture is
secured against all our assets. Amortizing payments of the outstanding principal amount
of the debenture and accrued interest at an annual rate equal to 10% was to commence on
the first business day on or after July 31, 2008, and continuing on the first business
day of each successive calendar month thereafter until the principal amount has been
repaid in full, whether by the payment of cash or by the conversion of the principal
amount and interest into common stock. Other terms are the same as in prior debentures
held by YA Global Investments, L.P. We paid a commission of $35,000 to Yorkville
Advisors, LLC, the investment manager of YA Global Investments, L.P., in connection with
this issuance. The debenture was issued pursuant to the exemption from registration under
the Securities Act of 1933, as amended, provided by Section 4(2), Section 4(6) and/or
Rule 506 of Regulation D promulgated under the 1933 Act to the investors and brokers who
are accredited investors within the respective meanings ascribed to that term
in Rule 501(a) under the 1933 Act.

12

---

---

On
July 25, 2008, we issued 200,000 shares of our common stock pursuant to our amending
agreement dated July 15, 2008 with YA Global Investments, L.P. We issued the securities
to one U.S. person pursuant to the exemption from registration provided for under Rule
506 of Regulation D, promulgated under the Securities Act of 1933, as amended.

On
September 22, 2008, we entered into an amending and restating agreement with YA Global
Investments, L.P. with respect to outstanding secured convertible debentures in the
aggregate principal amount of $4,000,000, and warrants to purchase 600,000 shares of our
companys common stock owned by YA Global Investments, L.P. Pursuant to this
agreement, we issued 1,000,000 restricted shares of our common stock to YA Global
Investments, L.P. We issued the securities to a U.S. person pursuant to the exemption
from registration provided for under Rule 506 of Regulation D, promulgated under the
Securities Act of 1933, as amended. For more information, see Item 1. titled Business under
Financing Agreements.

On
September 30, 2008, we sold 30 units to 27 investors in a brokered private placement, at
a purchase price of $50,000 per unit, raising gross proceeds of $1,500,000. Each unit
comprised 500,000 shares of our common stock and 500,000 share purchase warrants
exercisable at $0.10 for a period of five years. All the investors were accredited
investors, and in selling these units we relied on the exemption from the registration
requirements of the Securities Act of 1933, provided by Rule 506 of Regulation D
promulgated thereunder. In connection with this private placement, we paid a registered
broker-dealer that acted as our agent in the sale of these securities aggregate cash
placement agent compensation of $150,000 and issued it placement agent warrants to
purchase an aggregate of 1,500,000 shares of common stock. Each placement agent warrant
entitles the holder to purchase one share of common stock of our company at an exercise
price of $0.10 for a period of five years on terms which are identical to the warrants
included in the units. In addition, we paid the broker-dealer a non-accountable expense
allowance of $45,000 and $82,750 towards the fees and expenses of its attorneys. The
broker-dealer is licensed with Financial Industry Regulatory Authority and a U.S. person
and, in issuing the placement agent warrants we relied on the exemption from the
registration requirements of the Securities Act of 1933, as amended, provided by Rule 506
of Regulation D promulgated thereunder. Pursuant to the terms of a registration rights
agreement between our company and each investor in this private placement, we have agreed
to register for resale by the investors and the agent all of the shares of our common
stock issuable upon exercise of the warrants and the agents warrants that we issued
in this private placement.

On
November 4, 2008, we sold four more units to four investors as part of the brokered
private placement described above. We realized gross proceeds of $200,000. All the
investors were accredited investors, and in selling these units we relied on the
exemption from the registration requirements of the Securities Act of 1933, provided by
Rule 506 of Regulation D promulgated thereunder. In connection with this private
placement, we paid a registered broker-dealer that acted as our agent in the sale of
these securities aggregate cash placement agent compensation of $20,000 and issued it
placement agent warrants to purchase an aggregate of 200,000 shares of common stock. Each
placement agent warrant entitles the holder to purchase one share of common stock of our
company at an exercise price of $0.10 for a period of five years on terms which are
identical to the warrants included in the units. In addition, we paid the broker-dealer a
non-accountable expense allowance of $6,000 and $5,583 towards the fees and expenses of
its attorneys. The broker-dealer is licensed with Financial Industry Regulatory Authority
and a U.S. person and, in issuing the placement agent warrants we relied on the exemption
from the registration requirements of the Securities Act of 1933, as amended, provided by
Rule 506 of Regulation D promulgated thereunder. Pursuant to the terms of a registration
rights agreement between our company and each investor in this private placement, we have
agreed to register for resale by the investors and the agent all of the shares of common
stock issuable upon exercise of the warrants and the agents warrants that we issued
in this private placement.

# Use of Proceeds from
Registered Securities

None.

# Issuer Purchases of
Equity Securities

None.

# Equity Compensation Plan
Information

|(1) | Our
board of directors adopted an equity compensation plan, the 2007 Share           Option
Plan, on May 15, 2007, under which a total of 8,500,000, shares of our           common
stock have been authorized for issuance, On March 31, 2009, our board of
          directors approved the increase of the number of shares reserved for issuance
          under the Plan from 8,500,000 shares to 12,150,000 shares. The following
summary           information is presented for stock options authorized for issuance on
an           aggregate basis as of December 31, 2008.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

---

---

|Plan Category                 | Number of Securities to be
issued upon exercise of
outstanding options,
warrants and rights.
(a) | Weighted average
exercise price of
outstanding options,
warrants and rights.
(b) | Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a)
(c)
|----------------------------- | ------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|
|Equity compensation plans     |                                                                                                  |                                                                                  |                                                                                                                                               
|approved by security holders  | Not Applicable                                                                                   | Not Applicable                                                                   | Not Applicable                                                                                                                                
|                             
|Equity compensation plans not
|approved by security holders  | 8,181,436 (1)                                                                                    | $ 0.1                                                                            | 318,564 (2)                                                                                                                                   

(1)     As of December 31,
2008, the following options have been issued and outstanding           pursuant to an
equity compensation plan: 5,055,021 options granted to Asi Shalgi           pursuant to
an option agreement dated April 30, 2007, 200,000 options with an           exercise
price of $0.01 granted to Dr. Irit Arbel , 226,415 options with an           exercise
price of $1.25 granted to Mr. Amir Elbaz for his services in YA Global
          transaction and 2,700,000 options with an average exercise price of $0.178
          granted to officers and directors during 2008.

(2)     Options remaining
available for future issuance under the share option plan,           excluding securities
reflected in column (a).

The
share option plan is administered by either our board of directors or a committee,
consisting of such number of members (but no less than two (2)) as may be determined by
our board of directors, to which the board of directors shall have delegated power to act
on its behalf with respect to the share option plan. The administrator of the share
option plan has full power and authority to select the individuals to whom awards will be
granted, to make any combination of awards to participants, to accelerate the
exercisability or vesting of any award, to provide substitute awards and to determine the
specific terms and conditions of each award, subject to the provisions of the share
option plan, our Articles of Association and any applicable law.

The
share option plan permits us to make grants of stock options to officers, employees,
directors, consultants and other key persons. Stock options granted under the share
option plan shall have an exercise price as determined by the administrator of the share
option plan.

In
the event of a merger or sale of all or substantially all assets or shares of capital
stock, the administrator at its sole discretion shall decide the treatment of the options
in the sale event.

# Item 6.  Selected
Consolidated Financial Data

Not
applicable.

Item 7.  Managements
Discussion and Analysis of Financial Condition and           Results of Operations

You should read the following
discussion in conjunction with our consolidated financial statements and related notes
thereto. In addition to historical information, this discussion contains forward-looking
statements that involve risks, uncertainties and assumptions that could cause actual
results to differ materially from managements expectations. Factors that could cause
such differences include those incorporated herein by reference. See Risk
Factors in Item 1A in this Annual Report on Form 10-K.

# Critical Accounting
Policies

Going concern
considerations

As
of December 31, 2008, we had negative working capital of approximately $5,305,000 and an
accumulated capital deficiency of approximately $3,947,000. Our ability to continue to
operate as a going concern is dependent on our ability to generate sufficient cash flows
to meet our obligations on a timely basis, to obtain additional financing and to
ultimately attain profitability. As of December 31, 2008, we have had no revenues and have
incurred losses and an accumulated deficit resulting from our activity as a development
stage company and have a negative cash flow from operating activities. In the event we are
unable to successfully raise capital and generate revenues, it is unlikely that we will
have sufficient cash flows and liquidity to finance our business operations as currently
contemplated.

14

---

---

There
can be no assurance that additional funds will be available on terms acceptable to us, or
at all. These conditions raise substantial doubt about our ability to continue to operate
as a going concern. The audited financial statements attached to this annual report do
not include any adjustments to reflect the possible future effect on the recoverability
and classification of assets or the amounts and classification of liabilities that may
result from the outcome of this uncertainty. We are also currently committed to loans
repayment of approximately $1,640,000 during the period between December 31, 2008 and
December 31, 2009, as described in detail in Item. 1 entitled Business under
Financing Agreement.

Derivative financial
instruments

We
have adopted FAS 133, as amended, which establishes accounting and reporting standards
for derivatives, including certain derivatives embedded in other contracts, and for
hedging activities. Under FAS 133, all derivatives are recognized on the balance sheet at
their fair value. On the date that our company enters into a derivative contract, it
designates the derivative, for accounting purposes, as: (1) hedging instrument, or (2)
non-hedging instrument. Any changes in fair value are to be reflected as current gains or
losses or other comprehensive gains or losses, depending upon whether the derivative is
designated as a hedge and what type of hedging relationship exists. Changes in fair value
of non-hedging instruments are carried to financial expenses-net on a current
basis.

# Liquidity and Capital
Resources

In the private placement
offering of our common stock that closed on September 30, 2008 and November 4, 2008, we sold
34 units for an aggregate purchase price of $1,700,000, each unit comprising 500,000
shares of our common stock and 500,000 share purchase warrants. As of December 31,
2008, our cash and cash equivalents were $278,000 compared to $1,470,000 as of
December 31, 2007, and we had a negative working capital of $5,305,000.

As
described in Item. 1 entitled Business under Financing
Agreement, we have committed to an installment payment schedule that requires
us to make monthly payments in cash and shares on our outstanding debt to our senior
secured lender. These payments increase on a monthly basis, ranging from $25,000 in
November 2008 to 225,000 in October 2009, and every month thereafter. Pursuant to this
installment payment schedule and other loans received from related parties and
shareholders, we are committed to cash payments of approximately $1,640,000 during the
period between December 31, 2008 and December 31, 2009.

Furthermore,
we are expecting to continue to expend cash in our activities through payments of
salaries, business development activities, payments for services and other costs. We also
plan to continue to finance our operations through a combination of private placements,
stock issuances, debt issuances, mutual development agreements with possible milestone
license payments and research and development programs. We cannot assure, however, that
we will be successful in obtaining the adequate level of financing required for the
long-term development and commercialization of our planned products.

# Results of Operations
for the Year ended December 31, 2008

We
initiated our activities during the last six months of 2007, focusing our effort on
building an infrastructure that would support our future activities in the alternative
energy field. We did not generate any revenues in the fiscal year ended December 31, 2008
and incurred a loss of $4,876,000 during that period.

# Off-Balance Sheet
Arrangements

We
do not currently have off-balance sheet arrangements.

# Plan of Operation

For
the 12 months ending in December 2009, we estimate expending a total of approximately
$600.000 for our proposed business activities. This amount includes the funds required to
finance our marketing activities, purchase KDV units, pay salaries of over employees,
office and maintenance costs, pay cost of cultivation, among others, in order to execute
our plan of operations. The following table provides our current estimate of the break
down of costs for the upcoming year of operations:

|Estimated Funding Required During the Next 12 Months |           
|---------------------------------------------------- | ----------
|
|
|
|
|G&A Salaries                                         | $  120,000
|Other Operations                                     | $  480,000
|Total                                                | $  600,000

15

---

---

# Newly Issued Accounting
Pronouncements

| | 1) | In
May 2008, the FASB issued SFAS 162, The Hierarchy of Generally
          Accepted Accounting Principles. SFAS 162 identifies the sources of
          accounting principles and the framework for selecting the principles used in
the           preparation of financial statements of nongovernmental entities that are
          presented in conformity with GAAP in the United States. Any effect of applying
          the provisions of SFAS 162 shall be reported as a change in accounting
principle           in accordance with SFAS 154, Accounting Changes and Error
          Corrections. SFAS 162 is effective 60 days following approval by the
          Securities and Exchange Commission of the Public Company Accounting Oversight
          Board amendments to AU Section 411, The Meaning of Present Fairly in
          Conformity with Generally Accepted Accounting Principles. Management does not
          anticipate that the adoption of SFAS 162 will have a material impact on the
          Companys financial statements.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2) | In
April 2008, the FASB issued FASB Staff Position (FSP) FAS
          142-3, Determination of the Useful Life of Intangible Assets. This
          FSP amends the factors that should be considered in developing renewal or
          extension assumptions used to determine the useful life of a recognized
          intangible asset under SFAS 142, Goodwill and Other Intangible
          Assets. The intent of this FSP is to improve the consistency between the
          useful life of a recognized intangible asset under SFAS 142 and the period of
          expected cash flows used to measure the fair value of the asset under SFAS
141R,           and other generally accepted accounting principles (GAAP).
This FSP           is effective for fiscal years beginning after December 15, 2008.
Early           adoption is prohibited. The Company is required to adopt FSP FAS 142-3
for the           fiscal year beginning January 1, 2009. Management does not
anticipate that           the adoption of this FSP will have a material impact on the
Companys           financial statements.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3) | In
December 2007, the FASB issued SFAS No. 160, Non-controlling Interests           in
Consolidated Financial Statements, an Amendment of ARB No. 51          (SFAS
160). SFAS 160 amends ARB 51 to establish accounting and           reporting
standards for the non-controlling interest in a subsidiary and for the
          deconsolidation of a subsidiary. Ownership interests in subsidiaries held by
          parties other than its parent company are required to be presented in the
          consolidated statement of financial position within equity, but separate from
          the parent companys equity. SFAS 160 requires that changes in a parent
          companys ownership interest while the parent company retains its
          controlling financial interest in its subsidiary should be accounted for in a
          manner similar to the accounting treatment of equity transactions. When a
          subsidiary is deconsolidated, any retained non-controlling equity investment in
          the former subsidiary should be initially measured at fair value, with any gain
          or loss recognized in earnings.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SFAS
160 requires consolidated net income to be reported in amounts that include the amounts
attributable to both the parent company and the non-controlling interest. It also
requires disclosure, on the face of the consolidated income statement, of the amounts of
consolidated net income attributable to both parent companies and the non-controlling
interests.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16

---

---

| | SFAS
160 is effective for fiscal years (including interim periods within those fiscal years)
beginning on or after December 15, 2008. Earlier adoption is prohibited. SFAS 160 is
required to be applied prospectively as of the beginning of the fiscal year in which it
is initially applied, except for the presentation and disclosure requirement which shall
be applied retrospectively for all periods presented. The Company is required to adopt
SFAS 160 as of January 1, 2009. The Company is currently assessing the impact that SFAS
160 may have on its results of operations and financial position.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4) | In
March 2008, the FASB issued SFAS No. 161, Disclosures about
          Derivative Instruments and Hedging Activities, an amendment of FASB Statement
          No. 133 (SFAS 161), which requires additional
disclosures           about the objectives of using derivative instruments; the method by
which the           derivative instruments and related hedged items are accounted for
under FASB           Statement No.133 and its related interpretations; and the effect of
derivative           instruments and related hedged items on financial position,
financial           performance, and cash flows. SFAS 161 also requires disclosure of the
fair           values of derivative instruments and their gains and losses in a tabular
format.           SFAS 161 is effective for financial statements issued for fiscal years
and           interim periods beginning after November 15, 2008, with early adoption
          encouraged. The Company is currently evaluating the effect SFAS 161 will have
on           its financial statement presentations.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5) | In
June 2008, the EITF reached a consensus on EITF Issue No. 07-5,                Determining
Whether an Instrument (or Embedded Feature) Is Indexed to an                Entitys
Own Stock (EITF 07-5). EITF 07-5 addresses the
               determination of whether an equity linked financial instrument (or
embedded                feature) that has all of the characteristics of a derivative
under other                authoritative U.S. GAAP accounting literature is indexed to an
entitys own                stock and would thus meet the first part of a scope
exception from                classification and recognition as a derivative instrument.
The Company plans to                adopt the provisions of EITF 07-5 on January 1, 2009.
The Company is currently                assessing the impact of the adoption of EITF
07-5, if any, on its results of                operations and financial condition.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6) | In
February 2008, the FASB issued FSP FAS 157-2, Effective Date of           FASB
Statement No. 157". FSP FAS 157-2 delays the effective date of           SFAS
No. 157 from 2008 to 2009 for all nonfinancial assets and nonfinancial
          liabilities, except for those that are recognized or disclosed at fair value in
          the financial statements on a recurring basis (at least annually).
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7) | In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
          Combinations (SFAS 141(R)).SFAS 141(R) changes significantly
          the accounting for business combinations. Among the more significant changes,
it           expands the definition of a business and a business combination, changes the
          measurement of acquirer shares issued in consideration for a business
          combination, the recognition of contingent consideration, the accounting for
          contingencies, the recognition of capitalized in-process research and
          development, the accounting for acquisition-related restructuring cost
accruals,           the treatment of acquisition related transaction costs and the
recognition of           changes in the acquirers income tax valuation allowance
and income tax           uncertainties.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SFAS
141(R) applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or after
December 15, 2008. Early application is prohibited. The Company will be required to adopt
SFAS 141(R) on January 1, 2009. The Company does not expect the adoption of SFAS 141(R)
to have a material effect on the consolidated financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17

---

---

| | 8) | In
May 2008, the FASB issued Staff Position No. APB 14-1, Accounting for
          Convertible Debt Instruments That May Be Settled in Cash upon Conversion
          (Including Partial Cash Settlement) (the FSP), which
clarifies           the accounting for convertible debt instruments that may be settled
in cash           (including partial cash settlement) upon conversion. The FSP requires
issuers to           account separately for the liability and equity components of
certain           convertible debt instruments in a manner that reflects the issuers
          nonconvertible debt (unsecured debt) borrowing rate when interest cost is
          recognized. The FSP requires bifurcation of a component of the debt,
          classification of that component in equity and the accretion of the resulting
          discount on the debt to be recognized as part of interest expense in
          consolidated statement of operations. The FSP requires retroactive application
          to the terms of instruments as they existed for all periods presented. The FSP
          is effective for fiscal years beginning after December 15, 2008. The
          Company will be required to adopt the FSP on January 1, 2009. The Company is
          currently assessing the impact of the adoption of APB 14-1 on its results of
          operations and financial condition.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 9) | In December 2007, the FASB ratified
EITF Issue No. 07-1, Accounting for Collaborative Arrangements (EITF
07-1). EITF 07-01 defines collaborative arrangements and establishes reporting
requirements for transactions between participants in a collaborative arrangement and
between participants in the arrangement and third parties. EITF 07-1 also establishes the
appropriate income statement presentation and classification for joint operating
activities and payments between participants, as well as the sufficiency of the
disclosures related to these arrangements. EITF 07-1 is effective for fiscal years
beginning after December 15, 2008. The Company will be required to adopt EITF 07-1 on
January 1, 2009. EITF 07-1 shall be applied using modified version of retrospective
transition for those arrangements in place at the effective date. An entity should report
the effects of applying this Issue as a change in accounting principle through
retrospective application to all prior periods presented for all arrangements existing as
of the effective date, unless it is impracticable to apply the effects the change
retrospectively. The Company is currently assessing the impact that EITF 07-1 may have on
the Consolidated Financial Statements. / The Company does not expect the adoption of this
Statement to have a material effect on the Consolidated Financial Statements.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Item 7A. 
Quantitative and Qualitative Disclosures about Market Risk

Not
applicable.

# Item 8.  Financial
Statements and Supplementary Data

18

---

---

GLOBAL ENERGY INC.
(A development stage company)CONSOLIDATED FINANCIAL STATEMENTS
2008 ANNUAL REPORT



---

---

# GLOBAL ENERGY INC. 
(A development stage
company)

2008 ANNUAL REPORT

TABLE OF CONTENTS

|                                                                   | Page      
|------------------------------------------------------------------ | ----------
|
|
|
|
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM            | F-3       
|                                                                  
|CONSOLIDATED FINANCIAL STATEMENTS IN U.S. DOLLARS:                
|Balance Sheets                                                     | F-4       
|Statements of operations                                           | F-5       
|Statements of changes in shareholders' equity (capital deficiency) | F-6       
|Statements of cash flows                                           | F-7       
|Notes to financial statements                                      | F-8 - F-39
|                                                                   |           

F - 2

---

---

# Report of Independent
Registered Public Accounting Firm

To the board of directors and
shareholders of Global Energy Inc. (a development stage company):

We have audited the accompanying
consolidated balance sheets of Global Energy Inc. and its subsidiaries (a development
stage company)(the Company) as of December 31, 2008 and 2007, and the related
consolidated statements of operations, changes in shareholders equity (capital
deficiency) and cash flows for the years ended December 31, 2008 and 2007 and,
cumulatively, the period from January 1, 2007 to December 31, 2008 (not separately
presented herein). These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements
based on our audits. We did not audit the statement of operation for the year ended
December 31, 2006 and the cumulative totals of the Company for the period from July 7,
2005 (date of inception) to December 31, 2006, which totals reflect a deficit of $98,998
accumulated during the development stage. Both, the statement and the cumulative totals
were audited by other auditors whose report, dated February 9, 2007, expressed an
unqualified opinion on the cumulative amounts.

We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the 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 December 31, 2008
and 2007 consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Global Energy Inc. and its subsidiaries (a
development stage company) as of December 31, 2008 and 2007, and the results of their
operations and their cash flows for the years then ended and, commulatively, for the
period from January 1, 2007 to December 31, 2008 (not separately presented herein), in
conformity with accounting principles generally accepted in the United States of America.

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

Kesselman & Kesselman

Tel Aviv, Israel
May 18, 2009

F - 3

---

---

GLOBAL ENERGY INC.(A development stage company)
CONSOLIDATED BALANCE SHEETS

|                                                                              | December 31
|----------------------------------------------------------------------------- | -----------
|
|
|
|
|A s s e t s                                                                   |            
|CURRENT ASSETS:                                                               |            
|Cash and cash equivalents                                                     |            
|Advance to related party                                                      |            
|Other accounts receivable                                                     |            
|                                                                              |            
|T o t a l   current assets                                                    |            
|LONG TERM DEPOSITS                                                            |            
|ADVANCE TO MINORITY INTEREST SHAREHOLDER                                      |            
|PROPERTY PLANT AND EQUIPMENT, net of accumulated depreciation                 |            
|                                                                              |            
|T o t a l   assets                                                            |            
|                                                                              |            
|                                                                              |            
|Liabilities net of capital deficiency                                         |            
|CURRENT LIABILITIES:                                                          |            
|Accounts payables                                                             |            
|Accounts payable - other                                                      |            
|Advance from third party                                                      |            
|Short term loans                                                              |            
|Short term loans from related parties                                         |            
|Debentures convertible into shares                                            |            
|                                                                              |            
|T o t a l   current liabilities                                               |            
|LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT                                 |            
|MINORITY INTEREST                                                             |            
|                                                                              |            
|T o t a l   liabilities                                                       |            
|                                                                              |            
|COMMITMENTS AND CONTINGENCIES                                                 |            
|CAPITAL DEFICIENCY:                                                           |            
|Share capital (Note 11) -                                                     |            
|Common shares of $0.001 par value each:                                       |            
|Authorized: 750,000,000 and 250,000,000 shares at December 31, 2008 and 2007, |            
|respectively; Issued and outstanding: 81,701,834 and 63,187,764 shares at     |            
|December 31, 2008 and 2007, respectively                                      |            
|Additional paid-in capital                                                    |            
|Warrants                                                                      |            
|Receivables in respect of shares issued                                       |            
|Accumulated deficit during development stage                                  |            
|Accumulated deficit before development stage                                  |            
|                                                                              |            
|T o t a l   capital deficiency                                                |            
|                                                                              |            
|T o t a l   liabilities net of capital deficiency                             |            
|                                                                              |            
|                                                                              |            

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

F - 4

---

---

GLOBAL ENERGY INC.(A development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                   | Year ended December 31 | Cumulative from
July 7,
2005 through
December 31,
2008
|------------------------------------------------------------------ | ---------------------- | ------------------------------------------------------
|
|
|
|
|OPERATING EXPENSES -                                               |                        |                                                       
|general and administrative expenses (*)                            |                        |                                                       
|                                                                   |                        |                                                       
|OPERATING LOSS                                                     |                        |                                                       
|                                                                   |                        |                                                       
|FINANCIAL EXPENSES - NET                                           |                        |                                                       
|                                                                   |                        |                                                       
|GAIN RELATED TO THE EXTINGUISHMENT                                 |                        |                                                       
|OF CONVERTIBLE DEBENTURE                                           |                        |                                                       
|                                                                   |                        |                                                       
|NET LOSS                                                           |                        |                                                       
|                                                                   |                        |                                                       
|                                                                   |                        |                                                       
|NET LOSS PER SHARE, BASIC AND DILUTED                              |                        |                                                       
|                                                                   |                        |                                                       
|                                                                   |                        |                                                       
|WEIGHTED AVERAGE NUMBER OF                                         |                        |                                                       
|SHARES USED IN COMPUTING BASIC      AND DILUTED NET LOSS PER SHARE |                        |                                                       
|                                                                   |                        |                                                       

|* | In
the year ended December 31, 2008  includes $150 thousand share-based compensation
(31.12.2007  $110 thousand, 31.12.2006  $0).
|- | ------------------------------------------------------------------------------------------------------------------------------------

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

F - 5

---

---

GLOBAL ENERGY INC.(A development stage company)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (CAPITAL DEFICIENCY)

|                                       | Share capital | Additional
paid-in
capital | Warrants | Share
subscription
received | Receivables
in respect of
shares issued | Deficit
accumulated
during the
development
stage | Deficit
accumulated
before the
development
stage | Total
|-------------------------------------- | ------------- | -------------------------- | -------- | --------------------------- | --------------------------------------- | ------------------------------------------------ | ------------------------------------------------ | -----
|
|
|
|
|BALANCE AS OF JULY 7, 2005             |               |                            |          | 4,650,000                   |                                         | $                                                | 5                                                |      
|CHANGES DURING THE PERIOD FROM         |               |                           
|JULY 7, 2005 THROUGH                   |               |                           
|DECEMBER 31, 2005                      |               |                           
|Net loss for the period                |               |                            |          |                             |                                         |                                                  |                                                  |      
|                                       |               |                            |          |                             |                                         |                                                  |                                                  |      
|BALANCE AT DECEMBER 31, 2005           |               |                            |          | 4,650,000                   |                                         |                                                  | 5                                                |      
|CHANGES DURING THE YEAR,               |               |                           
|ENDED DECEMBER 31, 2006                |               |                           
|Issuance of shares                     |               |                            |          | 1,331,764                   |                                         |                                                  | 1                                                |      
|Net loss for the year                  |               |                            |          |                             |                                         |                                                  |                                                  |      
|                                       |               |                            |          |                             |                                         |                                                  |                                                  |      
|BALANCE AT DECEMBER 31, 2006           |               |                            |          | 5,981,764                   |                                         |                                                  | 6                                                |      
|CHANGES DURING THE YEAR,               |               |                           
|ENDED DECEMBER 31, 2007                |               |                           
|Issuance of warrants                   |               |                            |          |                             |                                         |                                                  |                                                  |      
|Issuance of shares                     |               |                            |          | 57,206,000                  |                                         |                                                  | 57                                               |      
|Net loss for the year                  |               |                            |          |                             |                                         |                                                  |                                                  |      
|Share based compensation expenses      |               |                            |          |                             |                                         |                                                  |                                                  |      
|                                       |               |                            |          |                             |                                         |                                                  |                                                  |      
|BALANCE AT DECEMBER 31, 2007           |               |                            |          | 63,187,764                  |                                         |                                                  | 63                                               |      
|CHANGES DURING THE YEAR                |               |                           
|ENDED DECEMBER 31, 2008                |               |                           
|Proceeds from Issuance of shares to    |               |                           
|shareholders in prior year             |               |                            |          |                             |                                         |                                                  |                                                  |      
|Issuance of shares and warrants - in   |               |                           
|Relations with the debt extinguishment |               |                            |          | 1,200,000                   |                                         |                                                  | 1                                                |      
|Issuance of shares - net of            |               |                           
|issuance expenses                      |               |                            |          | 17,000,000                  |                                         |                                                  | 17                                               |      
|Issuance of shares - in relation       |               |                           
|with conversion of debenture           |               |                            |          | 314,070                     |                                         |                                                  | 1                                                |      
|Net loss for the year                  |               |                            |          |                             |                                         |                                                  |                                                  |      
|Share based compensation expenses      |               |                            |          |                             |                                         |                                                  |                                                  |      
|                                       |               |                            |          |                             |                                         |                                                  |                                                  |      
|BALANCE AT DECEMBER 31, 2008           |               |                            |          | 81,701,834                  |                                         | $                                                | 82                                               |      
|                                       |               |                            |          |                             |                                         |                                                  |                                                  |      
|                                       |               |                            |          |                             |                                         |                                                  |                                                  |      

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

F - 6

---

---

GLOBAL ENERGY INC.(A development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                       | Year ended December 31 | Cumulative
from July 7,
2005 through
December 31,
2008
|---------------------------------------------------------------------- | ---------------------- | ------------------------------------------------------
|
|
|
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                                  |                        |                                                       
|Net loss for the period                                                |                        |                                                       
|Adjustments required to reconcile net loss                             |                        |                                                       
|to net cash used in operating activities:                              |                        |                                                       
|Depreciation                                                           |                        |                                                       
|Gain from exchange rates on long term deposits                         |                        |                                                       
|Share based compensation expenses                                      |                        |                                                       
|Expenses in respect of the convertibles debentures                     |                        |                                                       
|Gain in relation with debt extinguishment                              |                        |                                                       
|Liability for employee rights upon retirement                          |                        |                                                       
|Increase in advance to related party                                   |                        |                                                       
|Decrease (increase) in other accounts receivable                       |                        |                                                       
|Increase (decrease) in advance to minority shareholder                 |                        |                                                       
|Increase in accounts payables                                          |                        |                                                       
|Increase (decrease) in other accounts payable-other                    |                        |                                                       
|                                                                       |                        |                                                       
|Net cash used in operating activities                                  |                        |                                                       
|                                                                       |                        |                                                       
|CASH FLOWS FROM INVESTING ACTIVITIES:                                  |                        |                                                       
|Lease deposits                                                         |                        |                                                       
|Payment for purchasing of property and equipment                       |                        |                                                       
|                                                                       |                        |                                                       
|Net cash used in investing activities                                  |                        |                                                       
|                                                                       |                        |                                                       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                  |                        |                                                       
|Issuance of shares - net of issuance expenses                          |                        |                                                       
|Loans received from shareholders                                       |                        |                                                       
|Loans received from related parties                                    |                        |                                                       
|Loans received from others                                             |                        |                                                       
|Proceeds from debt issuance                                            |                        |                                                       
|Proceeds from issuance of convertible debentures and                   |                        |                                                       
|warrants net of issuance expenses                                      |                        |                                                       
|                                                                       |                        |                                                       
|Net cash provided by financing activities                              |                        |                                                       
|                                                                       |                        |                                                       
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                       |                        |                                                       
|CASH AND CASH EQUIVALENTS AT                                           |                        |                                                       
|BEGINNING OF PERIOD                                                    |                        |                                                       
|                                                                       |                        |                                                       
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                             |                        |                                                       
|                                                                       |                        |                                                       
|NON-CASH TRANSACTION:                                                  |                        |                                                       
|Conversion of promissory note into shares, see Note 12a                |                        |                                                       
|                                                                       |                        |                                                       
|Conversion of debentures into shares, see Note 12a                     |                        |                                                       
|                                                                       |                        |                                                       
|Issuance of shares and warrants - in relation with debt extinguishment |                        |                                                       
|                                                                       |                        |                                                       
|                                                                       |                        |                                                       

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

F - 7

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

# NOTE 1 
SIGNIFICANT ACCOUNTING POLICIES:

| | a. | Going
concern considerations
| | -- | ----------------------------

| | The
accompanying financial statements have been prepared assuming that Global Energy Inc. (the
Company) will continue as a going concern. As of December 31, 2008, the Company had
approximately $278 thousand in cash and cash equivalents, approximately $5,305 thousand
in negative working capital, a shareholders deficit of approximately $3,947
thousand and an accumulated deficit during development stage of approximately $6,640
thousand. Management anticipates that the Company will continue to generate significant
losses from operations for the foreseeable future, and that its business will
require substantial additional investments that have not yet been secured. The Company
and its subsidiaries anticipate that the existing cash and loans received during the
third and the fourth quarters in 2008, will not be sufficient to continue its operations
through the next 12 months. The Company is also committed to repay the loans in a period
less than a year. Management is continuing in the process of fund raising in the private
equity markets as the Company will need to finance future activities and general and
administrative expenses. These conditions raise substantial doubt about the Companys
ability to continue as a going concern.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | These
financial statements do not include any adjustments that may be necessary should the
Company be unable to continue as a going concern. The Companys continuation as a
going concern is dependent on its ability to obtain additional financing as may be
required and ultimately to attain profitability.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b. | General
| | -- | -------

| | The
Company was incorporated under the laws of the State of Nevada on February 16, 1999.
| | ----------------------------------------------------------------------------------------

| | On
July 6, 2005, the Company completed the sale of all of its oil and gas assets for the sum
of $50,000.
| | --------------------------------------------------------------------------------------------------------

| | Subsequent
to the disposal of the Companys principal operation  petroleum and natural
gas resource properties, the Company is considered as a development stage enterprise
since July 7, 2005, as defined by Statement of Financial Accounting Standards (SFAS)
No. 7  Accounting and Reporting by Development Stage Enterprise. The
accompanying financial statements have disclosed cumulative amounts in the statements of
operations and cash flows since July 7, 2005, inception of becoming a development stage
company, until December 31, 2008.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
May 2007 the Company established two subsidiaries in Israel: Global Fuel Israel Ltd. (Fuel)
a wholly owned subsidiary and Global N.R.G. Pacific Ltd. (Pacific) which the
Company owned 50.1%. In October 2007, Pacific established a subsidiary in Ethiopia named
Global Energy Ethiopia PLC (Global Ethiopia). Pacific and its consolidated
company are acting as the agriculture arm of the Companys activities in the Bio
Diesel field.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 8

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---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 1  SIGNIFICANT
ACCOUNTING POLICIES(continued):

| | b. | General(continued):
| | -- | -------------------

| | On
October 8, 2008 the Company entered into an agreement with a related party, Yanai Man
Projects Ltd. (YMP), with respect to the shares held by YMP in Pacific. The
sole shareholder of YMP is also the CEO of Pacific. YMP holds 49.9% interest of Pacific.
Pursuant to the agreement, the parties agreed that the Company would have the right at
any time to purchase from YMP 449 ordinary shares in Pacific, constituting 90% of YMPs
holdings in Pacific, for a consideration of $150 thousand, payable by the Company over a
period of one year through the payment of ten monthly installments of $15 thousand each
starting January 30, 2009. The Company exercised this right of purchase on October 8,
2008 and therefore as of December 31, 2008 the Company holds 95% of Pacifics share
capital. Additionally, during the first two years following the effective date of the
agreement, YMP has the right to require the Company to purchase an additional 25 ordinary
shares in Pacific held by YMP per year, for a total of $50 thousand, payable by the
Company over a period of one year from the exercise of the right by YMP. The parties also
agreed that at all times, the Company has the right to purchase the 50 remaining shares
of Pacific held by YMP for an additional consideration of $100 thousand, payable by the
Company over a period of one year from the exercise of the right by the Company. On March
3, 2009 this agreement with YMP was amended and it was agreed that the 95% of the shares
of Pacific will remain the Companys but the sum of $150 thousand will not be paid.
According to this amendment the $150 thousand was not presented in these financial
statements as a liability.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
to an agreement to issue to third party shares in Pacific constituting 44% of the
outstanding shares of Pacific that was not fulfilled, see Note 5.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
to a term sheet with third party in which the third party is entitled to 2% of the share
capital of Pacific that was not fulfilled, see Note 6.
| | --------------------------------------------------------------------------------------------------------------------------------------------------

| | After
the balance sheet date, Global Ethiopia was sold in consideration of $700 thousand. Right
after the sale, Pacifics CEO resigned and YMP agreed to sell the remaining 5% of
the share capital of Pacific to the Company in consideration for NIS 50 ($12), see Notes
16b. and 16c.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
May 2, 2007, the Company entered into an agreement with AlphaKat GmbH (AlphaKat)
in order to cooperate in commercialization of AlphaKats technology of producing
mineral diesel oil from municipal waste using machines that converts hydrocarbon waste
into diesel oil invented for that purpose by AlphaKat (KDV machines). As to
commitments of the Company to AlphaKat, see Note 10c. As part of the agreement, the
Company intends to order up to three KDV500 plants from AlphaKat. As of December 31, 2008
the Company paid AlphaKat an amount of $931 thousand on account of a KDV500 plant that
has yet to be ordered. This amount is presented in the financial statements as advance on
account of acquisition of machinery as part of property plant and equipment. The total
amount that the Company will have to pay for the KDV500 plant will be at least Euro 2.5
million (approximately $3.4 million).The final amount depends on the KDV500 and
additional features that will be ordered.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 9

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 1  SIGNIFICANT
ACCOUNTING POLICIES(continued):

| | b. | General(continued):
| | -- | -------------------

| | On
July 10, 2007, the Company entered into an agreement with AlphaKat to incorporate and
operate a company, named AlphaKat  Global Energy GmbH (AGEI). Each
party holds 50% of the shares of AGEI. AGEI is to provide worldwide marketing and sales
services of KDV machines in consideration of 10% sale commission.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company is responsible to finance AGEI if such financing is required; AlphaKat has the
right to object to any sale of KDV machines.
| | ---------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has consolidated AGEI in accordance with FIN 46R Consolidation of Variable
Interest Entities, an interpretation of ARB no. 51 (FIN 46R). See d,
below.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
February 6, 2008, each of AlphaKat and its President, Dr. Koch and AGEI entered into
agreements, which were amended on July 8, 2008, with Covanta Energy Corporation, a wholly
owned subsidiary of Covanta Holding Corporation (Covanta), owner and operator
of waste-to-energy and power generation projects. Under the terms of these agreements,
Covanta has the exclusive right to purchase, use and make improvements to the KDV
technology in the United States for household waste feedstock, and non-exclusive rights
to use the KDV process in China, UK and the Republic of Ireland.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
Covantas tests on its first unit are positive and it wishes to proceed further with
its deployment of the KDV process then it must begin by ordering five additional KDV500
units within twelve months of the commissioning date of the first KDV500 unit. Over a
ten-year period, which begins on the commissioning date of its first unit, Covanta must
order a total of 600 KDV 500 units or the equivalent in terms of production capacity.
Covanta also granted the Company the right to fund and own up to 35% of each of Covantas
KDV-based projects. In addition, Covanta has agreed to pay to the Company an amount equal
to 10% of the gross revenue of each of Covantas KDV-based projects, regardless of
whether the Company invests in these projects or not.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
July 8, 2008, Covanta purchased a KDV500 unit through AGEI. Until December 31, 2008
Covanta had paid $3,550 thousand on account of the purchased KDV 500 unit, according to
the payment schedule. This amount is presented in these financial statements as a
liability to Covanta (Advance from third party) and as an asset (Advance
to related party).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | American
Renewable Diesel (American) is a special purpose company owned and managed by
Trianon Partners. On February 6, 2008, AGEI and American executed an agreement granting
to American the right to sell and use the KDV technology in five states in the U.S.:
Texas, California, New York, New Jersey and Florida for all types of feedstocks, except
for household waste. Similar to the business arrangement with Covanta, the Company has
the right to fund and own up to 51% of each of Americans KDV-based projects. As of
December 31, 2008, no such KDV-based projects were initiated.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 10

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 1  SIGNIFICANT
ACCOUNTING POLICIES(continued):

| | b. | General(continued):
| | -- | -------------------

| | On
November 11, 2008 the Company entered into a joint venture agreement with S.C. Supercom
S.A. (Supercom), a Romanian company engaged in the business of collecting
(and landfilling) municipal solid waste in and around the City of Bucharest, and S.C.
Target Group S.R.L. (Target), a Romanian company. The Company and Supercom
agreed to incorporate a legal entity in Romania under the name Super Energy S.A. (Super
Energy), to engage in converting municipal solid waste into synthetic diesel fuel
in Romania using the KDV technology.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
initial share capital of Super Energy S.A. is to be 51% held by us and 49% held by
Supercom, with each contributing 5% of their shares to Target Group upon incorporation of
Super Energy S.A. so that the share capital of Super Energy S.A. would be held in the
following manner: our company  46%, Supercom  44%, and Target Group 10%.
Initially, the board of directors of Super Energy S.A. will be comprised of four board
members, with each of Supercom and ourselves entitled to appoint two.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | All
projects undertaken under this agreement are to be financed by Supercom providing 100% of
the required equity via a special purpose vehicle, and Super Energy S.A. reimbursing
Supercom for investments made on its behalf.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of December 31, 2008 and as of the date of the approval of these financial statements, no
such KDV-based projects were initiated.
| | ------------------------------------------------------------------------------------------------------------------------------------

| | On
March 9, 2008, the Company entered into a Memorandum of Understanding (MOU)
with Shaanxi ShenMu SanJian Coal Chemical Co. Ltd. (Shaanxi), a company
located in the Peoples Republic of China, to initiate the KDV project in that
region. Completion of the transaction based on this MOU is subject to due diligence,
further negotiation and testing.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c. | Functional
Currency
| | -- | -------------------

| | The
currency of the primary economic environment in which the operations of the Company are
conducted is the U.S dollar ($ or dollar).
| | ------------------------------------------------------------------------------------------------------------------------------------------

| | Most
of the Companys expenses are incurred in dollars. Most of the Companys
external financing is in dollars. The Company holds most of its cash and cash equivalents
in dollars. Thus, the functional currency of the Company is the dollar (except AGEI which
is EURO).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 11

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 1  SIGNIFICANT
ACCOUNTING POLICIES(continued):

| | c. | Functional
Currency(continued):
| | -- | -------------------------------

| | Since
the dollar is the primary currency in the economic environment in which the Company
operates, monetary accounts maintained in currencies other than the dollar are
re-measured using the representative foreign exchange rate at the balance sheet date.
Operational accounts and non-monetary balance sheet accounts are measured and recorded at
the rate in effect at the date of transaction. The effects of foreign currency
re-measurement are reported in current operations (as financial expenses  net)
and have not been material to date.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d. | Principles
of consolidation
| | -- | ---------------------------

| | The
consolidated financial statements include the accounts of the Company and its
subsidiaries mentioned above, and the accounts of the 50% owned entity (AGEI) which
according to FIN 46R is a variable interest entity and the Company is the primary
beneficiary.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Inter-company
balances and transactions have been eliminated upon consolidation.
| | --------------------------------------------------------------------------------

| | e. | Cash
equivalents
| | -- | ----------------

| | Cash
equivalents are short-term highly liquid investments which include short term bank
deposit (up to three months from date of deposit), that are not restricted as to
withdrawals or use that are readily convertible to cash with maturities of three months
or less as of the date acquired.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f. | Property,
plant and equipment
| | -- | -----------------------------

| | Property,
plant and equipment are stated at cost, less accumulated depreciation. Assets are
depreciated using the straight-line method over their estimated useful lives. The annual
depreciation set as follows: leasehold improvements are amortized over the term of the
lease which is shorter than the estimated useful life of the improvements. Computers,
software and electronic equipment are depreciated over three years. Tools and equipment
and motor cycles are depreciated over five years. Furniture are depreciated over 14 years.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Construction
in progress was not depreciated since it is not operational yet.
| | -----------------------------------------------------------------------------

| | g. | Impairment
of long-lived assets
| | -- | -------------------------------

| | The
Companys long-lived assets are reviewed for impairment in accordance with SFAS No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets whenever
events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a comparison
of the carrying amount of the assets to the future undiscounted cash flows expected to be
generated by the assets. If such assets are considered to be impaired, the impairment to
be recognized is measured by the amount by which the carrying amount of the assets
exceeds their fair value. During the years ended December 31, 2008, 2007 and 2006, no
impairment losses have been identified.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 12

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 1  SIGNIFICANT
ACCOUNTING POLICIES(continued):

| | h. | Use
of estimates
| | -- | ----------------

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

| | i. | Derivative
financial instruments (derivatives)
| | -- | ------------------------------------------------

| | The
Company has adopted SFAS No. 133 Accounting for Derivative Instruments and Hedging
Activities, as amended, which establishes accounting and reporting standards for
derivatives, including certain derivatives embedded in other contracts, and for hedging
activities.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Under
SFAS No. 133, all derivatives are recognized on the balance sheet at their fair value. On
the date that the Company enters into a derivative contract, it designates the
derivative, for accounting purposes, as: (1) hedging instrument, or (2) non-hedging
instrument. Any changes in fair value are to be reflected as current gains or losses or
other comprehensive gains or losses, depending upon whether the derivative is designated
as a hedge and what type of hedging relationship exists. Changes in fair value of
non-hedging instruments are carried to financial expenses-net on a current
basis. To date, the Company did not have any contracts that qualify for hedge accounting
under SFAS No. 133.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company entered into convertible debentures agreement in which a derivative instrument is
embedded. Embedded derivative is separated from the host contract and carried
at fair value when (1) the embedded derivative possesses economic characteristics that
are not clearly and closely related to the economic characteristics of the host contract
and (2) a separate, stand-alone instrument with the same terms would qualify as a
derivative instrument.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
to embedded derivatives arising from the issuance of convertible debentures, see Note 9.
| | -------------------------------------------------------------------------------------------

F - 13

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 1  SIGNIFICANT
ACCOUNTING POLICIES(continued):

| | j. | Share-based
payments
| | -- | --------------------

| | The
Company implements SFAS No. 123 (revised 2004), Share-based Payment(FAS
123(R)). FAS 123(R) requires awards classified as equity awards be accounted for
using the grant-date fair value method. The fair value of share-based payment
transactions is recognized as expense over the requisite service period, net of estimated
forfeitures. The Company recognizes compensation cost for an award with only service
conditions that has a graded vesting schedule using the graded vesting attribution method.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company accounts for equity instruments issued to third party service providers
(non-employees) in accordance with the fair value based on an option-pricing model,
pursuant to the guidance in EITF 96-18, Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or
Services. The fair value of the options granted is revalued over the related
service periods and recognized over the vesting period.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | k. | Loss
per share
| | -- | --------------

| | Net
loss per share, basic and diluted, is computed on the basis of the net loss for the
period divided by the weighted average number of common shares outstanding during the
period. Diluted net loss per share is based upon the weighted average number of common
shares and of common shares equivalents outstanding when dilutive. Common shares
equivalents include: (i) outstanding stock options under the Companys
Long-Term Incentive Plan and warrants which are included under the treasury share method
when dilutive, and (ii) Common shares to be issued under the assumed conversion of
the Companys outstanding convertible debentures, which are included under the
if-converted method when dilutive. The computation of diluted net loss per share for the
years ended December 31, 2008, 2007, and 2006 does not include common share
equivalents, since such inclusion would be anti-dilutive. Disclosures required by SFAS 128,
Earnings per Share, have been included in Note 14.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | l. | Deferred
income taxes
| | -- | ---------------------

| | Deferred
taxes are determined utilizing the asset and liability method based on the estimated
future tax effects of differences between the financial accounting and tax bases of
assets and liabilities under the applicable tax laws. Deferred tax balances are computed
using the tax rates expected to be in effect when those differences reverse. A valuation
allowance in respect of deferred tax assets is provided if, based upon the weight of
available evidence, it is more likely than not that some or all of the deferred tax
assets will not be realized. The Company has provided a full valuation allowance with
respect to its deferred tax assets. See Note 13.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 14

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 1  SIGNIFICANT
ACCOUNTING POLICIES(continued):

| | m. | Uncertainty
in income taxes
| | -- | ---------------------------

| | As
of January 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting
for Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109 (FIN
48). FIN 48 specifies how tax benefits for uncertain tax positions are to be
recognized, measured and derecognized in financial statements; requires certain
disclosures of uncertain tax positions; specifies how reserves for uncertain tax
positions should be classified on the balance sheet; and provides transition and
interim-period guidance, among other provisions. On May 2, 2007, the FASB
issued FASB Staff Position No. FIN 48-1, Definition of Settlement in FASB
Interpretation No. 48-1 (FSP FIN 48-1). FSP FIN 48-1 provides guidance
regarding how an entity should determine whether a tax position is effectively settled
for the purpose of recognizing previously unrecognized tax benefits. The Company adopted
FSP FIN 48-1 as of January 1, 2007. The adoption of FIN 48 did not result in
any adjustment to the Companys financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | n. | Comprehensive
loss
| | -- | ------------------

| | The
Company has no component of comprehensive income loss other than net loss.
| | ------------------------------------------------------------------------------

| | o. | Fair
Value Measurement:
| | -- | -----------------------

| | Effective
January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements(SFAS
157), and the related effective FSPs SFAS 157 defines fair value, establishes a
frameworks of measuring fair value and enhanced fair value measurement discloser. Under
this standard, fair value is defined as the price that would be received to sell an asset
or paid to transfer a liability (i.e., the exit price) in an orderly
transaction between market participants at the measurement date.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 15

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 1  SIGNIFICANT
ACCOUNTING POLICIES(continued):

| | o. | Fair
Value Measurement(continued):
| | -- | ----------------------------------

| | In
determining fair value, the Company uses various valuation approaches, including market,
income and/or cost approaches. SFAS 157 establishes hierarchy for inputs used in measuring
fair
value that maximizes the use of observable inputs and minimizes the use of unobservable
inputs by requiring that the most observable inputs be used when available. Observable
inputs are inputs that market participants would use in pricing the asset or liability
developed based on market data obtained from sources independent of the Company.
Unobservable inputs are inputs that reflect the Companys assumptions about the
assumptions market participants would use in pricing the asset or liability developed
based on the best information available in the circumstances. The hierarchy is broken
down into three levels based on the reliability of inputs. For further disclosure, see
Note 15.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
adoption of SFAS 157 and the related FSPs did not have a material effect on the
Companys consolidated financial position and operating results.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------

| | p. | Newly
issued accounting pronouncements:
| | -- | ---------------------------------------

| | 1) | In
May 2008, the FASB issued SFAS 162, The Hierarchy of Generally
          Accepted Accounting Principles. SFAS 162 identifies the sources of
          accounting principles and the framework for selecting the principles used in
the           preparation of financial statements of nongovernmental entities that are
          presented in conformity with GAAP in the United States. Any effect of applying
          the provisions of SFAS 162 shall be reported as a change in accounting
principle           in accordance with SFAS 154, Accounting Changes and Error
          Corrections. SFAS 162 is effective 60 days following approval by the
          Securities and Exchange Commission of the Public Company Accounting Oversight
          Board amendments to AU Section 411, The Meaning of Present Fairly in
          Conformity with Generally Accepted Accounting Principles. Management does not
          anticipate that the adoption of SFAS 162 will have a material impact on the
          Companys financial statements.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2) | In
April 2008, the FASB issued FASB Staff Position (FSP) FAS
          142-3, Determination of the Useful Life of Intangible Assets. This
          FSP amends the factors that should be considered in developing renewal or
          extension assumptions used to determine the useful life of a recognized
          intangible asset under SFAS 142, Goodwill and Other Intangible
          Assets. The intent of this FSP is to improve the consistency between the
          useful life of a recognized intangible asset under SFAS 142 and the period of
          expected cash flows used to measure the fair value of the asset under SFAS
141R,           and other generally accepted accounting principles (GAAP).
This FSP           is effective for fiscal years beginning after December 15, 2008.
Early           adoption is prohibited. The Company is required to adopt FSP FAS 142-3
for the           fiscal year beginning January 1, 2009. Management does not
anticipate that           the adoption of this FSP will have a material impact on the
Companys           financial statements.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 16

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 1  SIGNIFICANT
ACCOUNTING POLICIES(continued):

| | p. | Newly
issued accounting pronouncements(continued):
| | -- | --------------------------------------------------

| | 3) | In
December 2007, the FASB issued SFAS No. 160, Non-controlling Interests           in
Consolidated Financial Statements, an Amendment of ARB No. 51          (SFAS
160). SFAS 160 amends ARB 51 to establish accounting and           reporting
standards for the non-controlling interest in a subsidiary and for the
          deconsolidation of a subsidiary. Ownership interests in subsidiaries held by
          parties other than its parent company are required to be presented in the
          consolidated statement of financial position within equity, but separate from
          the parent companys equity. SFAS 160 requires that changes in a parent
          companys ownership interest while the parent company retains its
          controlling financial interest in its subsidiary should be accounted for in a
          manner similar to the accounting treatment of equity transactions. When a
          subsidiary is deconsolidated, any retained non-controlling equity investment in
          the former subsidiary should be initially measured at fair value, with any gain
          or loss recognized in earnings.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SFAS
160 requires consolidated net income to be reported in amounts that include the amounts
attributable to both the parent company and the non-controlling interest. It also
requires disclosure, on the face of the consolidated income statement, of the amounts of
consolidated net income attributable to both parent companies and the non-controlling
interests.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SFAS
160 is effective for fiscal years (including interim periods within those fiscal years)
beginning on or after December 15, 2008. Earlier adoption is prohibited. SFAS 160 is
required to be applied prospectively as of the beginning of the fiscal year in which it
is initially applied, except for the presentation and disclosure requirement which shall
be applied retrospectively for all periods presented. The Company is required to adopt
SFAS 160 as of January 1, 2009. The Company is currently assessing the impact that SFAS
160 may have on its results of operations and financial position.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4) | In
March 2008, the FASB issued SFAS No. 161, Disclosures about
          Derivative Instruments and Hedging Activities, an amendment of FASB Statement
          No. 133 (SFAS 161), which requires additional
disclosures           about the objectives of using derivative instruments; the method by
which the           derivative instruments and related hedged items are accounted for
under FASB           Statement No.133 and its related interpretations; and the effect of
derivative           instruments and related hedged items on financial position,
financial           performance, and cash flows. SFAS 161 also requires disclosure of the
fair           values of derivative instruments and their gains and losses in a tabular
format.           SFAS 161 is effective for financial statements issued for fiscal years
and           interim periods beginning after November 15, 2008, with early adoption
          encouraged. The Company is currently evaluating the effect SFAS 161 will have
on           its financial statement presentations.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 17

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 1  SIGNIFICANT
ACCOUNTING POLICIES(continued):

| | p. | Newly
issued accounting pronouncements(continued):
| | -- | --------------------------------------------------

| | 5) | In
June 2008, the EITF reached a consensus on EITF Issue No. 07-5,                Determining
Whether an Instrument (or Embedded Feature) Is Indexed to an                Entitys
Own Stock (EITF 07-5). EITF 07-5 addresses the
               determination of whether an equity linked financial instrument (or
embedded                feature) that has all of the characteristics of a derivative
under other                authoritative U.S. GAAP accounting literature is indexed to an
entitys own                stock and would thus meet the first part of a scope
exception from                classification and recognition as a derivative instrument.
The Company plans to                adopt the provisions of EITF 07-5 on January 1, 2009.
The Company is currently                assessing the impact of the adoption of EITF
07-5, if any, on its results of                operations and financial condition.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6) | In
February 2008, the FASB issued FSP FAS 157-2, Effective Date of           FASB
Statement No. 157". FSP FAS 157-2 delays the effective date of           SFAS
No. 157 from 2008 to 2009 for all nonfinancial assets and nonfinancial
          liabilities, except for those that are recognized or disclosed at fair value in
          the financial statements on a recurring basis (at least annually).
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7) | In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
          Combinations (SFAS 141(R)).SFAS 141(R) changes significantly
          the accounting for business combinations. Among the more significant changes,
it           expands the definition of a business and a business combination, changes the
          measurement of acquirer shares issued in consideration for a business
          combination, the recognition of contingent consideration, the accounting for
          contingencies, the recognition of capitalized in-process research and
          development, the accounting for acquisition-related restructuring cost
accruals,           the treatment of acquisition related transaction costs and the
recognition of           changes in the acquirers income tax valuation allowance
and income tax           uncertainties.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SFAS
141(R) applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or after
December 15, 2008. Early application is prohibited. The Company will be required to adopt
SFAS 141(R) on January 1, 2009. The Company does not expect the adoption of SFAS 141(R)
to have a material effect on the consolidated financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 18

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---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 1  SIGNIFICANT
ACCOUNTING POLICIES(continued):

| | p. | Newly
issued accounting pronouncements (continued):
| | -- | ---------------------------------------------------

| | 8) | In
May 2008, the FASB issued Staff Position No. APB 14-1, Accounting for
          Convertible Debt Instruments That May Be Settled in Cash upon Conversion
          (Including Partial Cash Settlement) (the FSP), which
clarifies           the accounting for convertible debt instruments that may be settled
in cash           (including partial cash settlement) upon conversion. The FSP requires
issuers to           account separately for the liability and equity components of
certain           convertible debt instruments in a manner that reflects the issuers
          nonconvertible debt (unsecured debt) borrowing rate when interest cost is
          recognized. The FSP requires bifurcation of a component of the debt,
          classification of that component in equity and the accretion of the resulting
          discount on the debt to be recognized as part of interest expense in
          consolidated statement of operations. The FSP requires retroactive application
          to the terms of instruments as they existed for all periods presented. The FSP
          is effective for fiscal years beginning after December 15, 2008. The
          Company will be required to adopt the FSP on January 1, 2009. The Company is
          currently assessing the impact of the adoption of APB 14-1 on its results of
          operations and financial condition.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 9) | In
December 2007, the FASB ratified EITF Issue No. 07-1, Accounting for
          Collaborative Arrangements (EITF 07-1). EITF 07-01 defines
          collaborative arrangements and establishes reporting requirements for
          transactions between participants in a collaborative arrangement and between
          participants in the arrangement and third parties. EITF 07-1 also establishes
          the appropriate income statement presentation and classification for joint
          operating activities and payments between participants, as well as the
          sufficiency of the disclosures related to these arrangements. EITF 07-1 is
          effective for fiscal years beginning after December 15, 2008. The Company will
          be required to adopt EITF 07-1 on January 1, 2009. EITF 07-1 shall be applied
          using modified version of retrospective transition for those arrangements in
          place at the effective date. An entity should report the effects of applying
          this Issue as a change in accounting principle through retrospective
application           to all prior periods presented for all arrangements existing as of
the effective           date, unless it is impracticable to apply the effects the change
          retrospectively. The Company is currently assessing the impact that EITF 07-1
          may have on the Consolidated Financial Statements. / The Company does not
expect           the adoption of this Statement to have a material effect on the
Consolidated           Financial Statements.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 19

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---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

# NOTE 2  OTHER
ACCOUNTS RECEIVABLE:

| |                           | December 31
| | ------------------------- | -----------
|
|
|
|
| | Prepaid expenses          |            
| | Governmental Institutions |            
| | Other receivable          |            
| |                           |            
| |                           |            
| |                           |            
| |                           |            

# NOTE 3  PROPERTY
AND EQUIPMENT:

| |                                                 | December 31
| | ----------------------------------------------- | -----------
|
|
|
|
|
| | Cost:                                           |            
| | Advances on account of                          |            
| | acquisition of machinery                        |            
| | Construction in progress                        |            
| | Tools and equipment                             |            
| | Motor Cycles                                    |            
| | Computer software and electronic equipment      |            
| | Furniture                                       |            
| | Leasehold improvements                          |            
| |                                                 |            
| |                                                 |            
| | Less, accumulated depreciation and amortization |            
| |                                                 |            
| |                                                 |            
| |                                                 |            
| |                                                 |            

# NOTE 4  ACCOUNTS PAYABLE
 OTHER:

| |                                | December 31
| | ------------------------------ | -----------
|
|
|
|
| | Accrued expenses               |            
| | Employees and payroll accruals |            
| | Government authorities         |            
| |                                |            
| |                                |            
| |                                |            
| |                                |            

F - 20

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---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 5  SHORT TERM LOANS

| |                                 | December 31
| | ------------------------------- | -----------
|
|
|
|
| | Loan from third party (a)       |            
| | Loan from other third party (b) |            
| |                                 |            
| |                                 |            
| |                                 |            
| |                                 |            

| | (a) | On October 26, 2008, Pacific
entered into a Loan Agreement (the Agreement) with third party (the
Lender). The lender is the brother of one of the controlling shareholders of
Carrigain Investment Ltd, which is the controlling shareholder of the Company. It was
agreed that the Lender shall loan Pacific an aggregate of $400 thousand, with $300
thousand being transferred to Pacific in three equal installments during October and
November 2008 and $100 thousand will remain on-call. The loan is to be fully repaid to the
Lender by May 1, 2009 and will bear no interest. In addition, the Company shall give a
corporate guarantee for the repayment of the loan. In addition Pacific will issue to the
Lender shares in Pacific constituting 44% of the outstanding shares of Pacific. Also, upon
acquisition of additional 5% of the shares in Pacific held by YMP (see Note 1b), the
Company shall transfer said 5% shares to the Lender, no later than November 1, 2010. In
the case of default in the loan repayment, the debt shall be transferred to the Company,
and the Lender shall be entitled to 1,000,000 shares of the Company at no cost.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of December 31, 2008, the amount that was transferred to Pacific was $216 thousand and
the agreement was not fulfilled.
| | --------------------------------------------------------------------------------------------------------------------------

| | After
the balance sheet date, amount of $128 thousand was repaid by Pacific.
| | ----------------------------------------------------------------------------

| | (b) | On
July 9, 2008, Pacific entered into a term sheet for a loan with another third
               party (term sheet). It was agreed in the term sheet that the
third                party will loan Pacific an amount of $400 thousand in consideration
for some                percentages in the share capital of Pacific and collaborations in
projects in                Ethiopia and non competition understandings in some parts of
Ethiopia. On July,                2008, the third party loaned Pacific an amount of $100
thousand that should have                been repaid no later than November 30, 2008 and
entitled the third party to 1%                of the share capital of Pacific. Since it
was not repaid, according to the term                sheet, this amount bears a weekly
interest rate of 1% from the repayment date                until the actual date of
repayment and entitles the third party to 2% of the                share capital of
Pacific (interest accrued until the balance sheet date is                approximately $5
thousand).
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | After
the balance sheet date, an amount of $78 thousand out of the loan was repaid.
| | -----------------------------------------------------------------------------------

F - 21

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---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 6  SHORT TERM LOANS FROM RELATED PARTIES:

| |                                      | 2008 | 2007
| | ------------------------------------ | ---- | ----
|
|
|
|
| | Loan from a shareholder (a)          |      |     
| | Loans from other shareholders (b)    |      |     
| | Loan from a related party (a)        |      |     
| | Loans from other related parties (c) |      |     
| |                                      |      |     
| |                                      |      |     
| |                                      |      |     
| |                                      |      |     

| | (a) | Loans
to Pacific from a shareholder and a related party are bearing interest at           an
annual rate of 4% and are due on January 1, 2009. After the balance sheet           date,
amounts of $234 thousand out of the loans were repaid. According to the           terms
of the agreement with the shareholder, since it was not repaid on January           1,
2009, the loan should bear interest at a monthly rate of 3% from that date.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | The
Company borrowed $18 thousand from four shareholders of the Company on May           4,
2006. The loans are unsecured, non-interest bearing and due on demand.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Loan
that was received from related parties and was back to back with a loan
               they had received from a bank. The loan was granted for one month and has
               revolved for one month each time since. The interest rate is changing and
is                determined each month by the bank. As of December 31, 2008, the
interest rate                was 7%.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# NOTE 7  ADVANCE TO
MINORITY INTEREST SHAREHOLDER:

| | On
July 10, 2007, the Company entered into an agreement with AlphaKat to incorporate and
operate AGEI, see note 1b. According to the agreement the Company has provided a loan to
the shareholders of AlphaKat. The terms of the loan has not yet been set.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# NOTE 8  FINANCIAL
EXPENSE  NET:

| |                                                      | 2008 | 2007
| | ---------------------------------------------------- | ---- | ----
|
|
|
|
| | Interest on convertible debentures (see Note 9)      |      |     
| | Expenses (income) from evaluating the fair value of  |      |     
| | the conversion option of the debentures (see Note 9) |      |     
| | Other                                                |      |     
| |                                                      |      |     
| |                                                      |      |     
| |                                                      |      |     
| |                                                      |      |     

F - 22

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---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

# NOTE 9 
CONVERTIBLE DEBENTURES AND WARRANTS

| | In
July 2007, the Company entered into an agreement to issue in four different installments,
as set in the agreement, $4 million aggregate principal amount of convertible debentures (Debentures)
in a private placement. As of December 31, 2007 three installments in the sum of $3
million principal were issued for consideration of $2.8 million. The last installment was
due after a registration statement for the underlying shares is declared effective by the
Securities and Exchange Commission (SEC). The Debentures bear interest at 10%
per annum, the payments of the principals and interest was due to commence on July 31,
2008 and continuing on each successive month thereafter until October 2010. The
Debentures are convertible, at the option of the investor at any time, into shares of the
Companys common Shares at a conversion price which is defined as the lower of an
applicable conversion price of $2.2 per share or 95% of the lowest volume weighted
average price during the 15 prior trading days. The Company has the right to redeem a
portion or all amounts outstanding prior to maturity date, provided that (1) the closing
Bid price is less than the conversion price,(2) the underlying shares registration
statement is effective and (3) no event of default has occurred.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
any event of default occurred, the full unpaid principal amount of these Debentures,
together with interest shall become at the investors election, immediately due and
payable in cash. In conjunction with this financing, the Company issued to the private
investor 300,000 warrants to purchase 300,000 common shares of the Company, exercisable
for five years at an exercise price of $2.35 and 300,000 warrants to purchase 300,000
common shares of the Company, exercisable for five years at an exercise price of $2.50.
The conversion of the Debentures and the exercise of the warrants are subject to further
adjustments and conditions as further set out in the Debentures Agreement.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 20, 2008, the Company signed an amendment to the Debentures Agreement. The Company
agreed to amend certain sections of the agreement dated July 2007 as follows:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
private investor agreed to purchase the fourth installment of $1 million in two equal
installments, the first installment was on the date of the amendment and the last $0.5
million was due after a registration statement for the underlying shares is declared
effective by the SEC. On May 13, 2008, the registration statement was declared effective
and the investor purchased the last installment;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
applicable conversion price was reduced from $2.20 to $1.25 for all debentures
outstanding;
| | - | -----------------------------------------------------------------------------------------------

| |  | The
exercise prices of the warrants were reduced from $2.50 and $2.35 to $1.25.
| | - | -------------------------------------------------------------------------------

F - 23

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 9  CONVERTIBLE
DEBENTURES AND WARRANTS (continued):

| | On
July 15, 2008, while the Company was seeking to raise additional financing by selling
units of common stocks and warrants (offering), the Company entered into
amended agreement with the Investor. The agreement amends the agreement dated July
6, 2007 between the Company and the Investor. The amendment allows the Company to
immediately defer certain principal and interest payments due under the Debentures
Agreement in consideration of:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
Company issued the Investor 200,000 restricted shares of its common stock (the
restriction is on their trade-ability for the first 180 days after registration):
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
applicable conversion price was reduced from $1.25 to the price of shares that were to be
issued in the offering, for all Debentures outstanding (since the offering eventually did
not take place, the applicable conversion price was not reduced);
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
exercise price of the warrants was reduced from $1.25 to the same exercise price of
warrants that were to be issued in the offering. The amount of warrants was also adjusted
(increased) according to the proportion between the exercise price before the offering
and the exercise price afterwards (since the offering eventually did not take place, the
exercise price and number of warrants was not changed).
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
September 22, 2008, while the Company was seeking to raise additional financing by
selling units of common stocks and warrants (offering), the Company entered
into a third amendment with the Investor in order to defer certain principal and interest
payments. The amendment was become effective as of September 30, 2008. The Amendment
allows the Company the following:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
applicable conversion price was further reduced to the price of shares that were to be
issued in the offering, for all Debentures outstanding (since the shares were eventually
sold in the offering at the price of $0.1 per share, the new applicable conversion price
is $0.1);
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
exercise price of the warrants was further reduced to the same exercise price of warrants
that were to be issued in the offering. The amount of warrants were also adjusted
(increased) according to the proportion between the exercise price before the offering
and the exercise price after (since the shares were eventually sold in the offering at
the price of $0.1 per share, the new exercise price is $0.1 and the warrants increased
from 600,000 to 7,500,000);
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 24

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---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 9  CONVERTIBLE
DEBENTURES AND WARRANTS (continued):

| |  | The
Company issued the Investor 1,000,000 restricted shares of its common stock (the
restriction is on their tradeability for the first 180 days after registration);
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
interest rate on the Debentures was increased from 10% to 12% as of that date;
| | - | ----------------------------------------------------------------------------------

| |  | The
Company paid an amount of $180 thousand as interest directly from the proceeds of the
offering (see Note 12a) to the debenture investors;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
repayment schedule of the Debentures was revised and commenced in November 2008.
| | - | ------------------------------------------------------------------------------------

| | In
addition, it was also agreed in the third amendment that the Company has to comply with
an approved budget. Any violation of this covenant shall be deemed an event of default,
and the full unpaid principal amount of this Debenture, together with interest shall
become at the Investors election, immediately due and payable in cash.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company analyzed the difference between the value of the Debentures using the original
terms compare to the value of the Debentures using the new terms under EITF Issue No.
96-19, Debtors Accounting for a Modification or Exchange of Debt
Instruments, and found this difference is greater than 10%, therefore it was
determined to account this transaction as debt extinguishment. Accordingly the Company
recorded a gain from extinguishment of $867 thousand.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
any event of default occurred, the full unpaid principal amount of these Debentures,
together with interest shall become at the Investors election, immediately due and
payable in cash. The conversion option included within each of the Companys
Debentures does not meet all the conditions of EITF 00-19 Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock related
to equity classification and therefore should be bifurcated from the debt host contract.
In addition the put option and call option are considered as embedded derivatives that
require bifurcation, therefore these instruments are evaluated each reporting period and
the difference in fair value is recorded as financial income or expense.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
December 5, 2008, $25 thousand of the principal amount of Debentures were converted into
314,070 shares of the Company (at a conversion price of $0.0796 per share).
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
to conversion of Debentures into shares after the balance sheet date, see Note 16a.
| | --------------------------------------------------------------------------------------

| | During
2009, with the understanding of the investor, The Company did not carried out certain
conversions according the schedule in the amendments. In now days, the Company is
negotiating with the investor to amend the current obligations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
December 31, 2008, the Company re-measured the fair value of the embedded derivatives
features at approximately $3,441 thousand.
| | -----------------------------------------------------------------------------------------------------------------------------------

F - 25

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 9  CONVERTIBLE
DEBENTURES AND WARRANTS (continued):

| | Following
are the details of the Debentures:
| | --------------------------------------------

| |                   | December 31,
| | ----------------- | ------------
|
|
|
|
| | Principal         |             
| | Accrued interest  |             
| | Conversion option |             
| | Call option       |             
| |                   |             
| |                   |             
| |                   |             
| |                   |             

| | *
Representing an amount less than $1,000
| | -----------------------------------------

| | The
notes are secured by a pledge on all of the Companys assets.
| | -----------------------------------------------------------------

# NOTE 10 
COMMITMENTS AND CONTINGENCIES:

| | a. | Fuel currently leases office in Ramat Gan, Israel, under operating lease
               agreement, which expires at August 2009. The monthly rent is approximately $4
               thousand.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b. | The Company gave guarantee to all of Pacifics loans (approximately $650
               thousand), see notes 5 and 6.
| | -- | ---------------------------------------------------------------------------------------------------------------------

| | c. | Under the agreement signed with AlphaKat (see Note 1b) with regard to
               commercialization of AlphaKat technology of producing mineral diesel oil from
               municipal waste, the Company agreed to: 1) Provide financial support for the
               project, 2) Purchase up to three KDV 500 turbines for implementation in Poland,
               the United States and Israel, 3) Start a regulatory process, including filing of
               permit applications and 4) Monthly payments of 10 thousand to AlphaKat for
               consulting (until December 31, 2008, the Company paid AlphaKat an amount of $931
               thousand on account of the first KDV500 turbine).
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d. | On October 5, 2007, Global Ethiopia, entered into lease agreements with the
               Southern Nations Nationalities Peoples Regional State, Ethiopia,
               (SNRS), for a 50 year lease of 20,000 hectares of rural land located
               in the Gamo Gofa zone in the SNRS for the purpose of cultivating castor seeds
               and 15 hectares of land located in the Gamu Gofa zone, Kucha Woreda, in the SNRS
               for the purpose of operating an oil crushing plant through an existing facility
               on the property.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 26

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---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 10  COMMITMENTS AND
CONTINGENCIES(continued):

| | The
agreements are subject to, among other things, the following conditions: (i) Global
Ethiopia must pay SNRS a rental fee of Birr 47 (approximately $4.70) or Birr 78
(approximately $7.85) per hectare per year, depending on whether the leased land is
defined as second or first class agricultural land, respectively; (ii) Global Ethiopia
must completely develop the 20,000 hectares leased to it within eight years of the
execution date of the agreement, including planting and maintaining trees or other oil
producing crops. If no development process is carried out within a period of four years
from the date of execution of the agreement, then the undeveloped land may be repossessed
by SNRS by giving six months advance written notice to abandon the land; (iii) Global
Ethiopia must completely develop the 15 hectares leased to it within three years of the
execution date of the agreement; (iv) Global Ethiopia must perform a survey on the 20,000
hectares within 24 months of the execution date of the agreement;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | After
the balance sheet date, Global Ethiopia was sold in consideration of $700 thousand, see
Note 16b.
| | -------------------------------------------------------------------------------------------------------

| | e. | Under
a joint venture agreement signed with Supercom to engage in converting
               municipal solid waste into synthetic diesel fuel in Romania using the KDV
               technology, the Company is obligated to submit to Super Energy a detailed
               contract for the purchase of the KDV system (the First System)
which                shall detail the price, payment terms, timetable and manufacturer
guaranties. In                addition, the Company will guaranty the supply of the
necessary catalizator in                connection with the First System for a period of
at least ten years and AGEI                will guarantee together with the producer of
the equipment the good function of                the installation to the established
parameters, respectively processing                municipal solid waste and proceeding
500 liters of diesel per hour.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 27

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---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

# NOTE 11 
RESTRICTION PLACED IN RESPECT OF LIABILITY

| | According
to the third amendment between the Company and the Investor to the Debentures Agreement,
dated September 22, 2008, (refer to Note 9), it was agreed that the Company has to comply
with an approved budget. Any violation of this covenant shall be deemed an event of
default, and the full unpaid principal amount of these Debentures, together with interest
shall become at the Investors election, immediately due and payable in cash. As of
December 31, 2008 and as of the date of the approval of these financial statements the
Company is complied with the approved budget.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# NOTE 12  SHARE
CAPITAL:

| | a. | Common
shares
| | -- | -------------

| | The
Companys shares are traded on the Over-The-Counter Bulletin Board.
| | -----------------------------------------------------------------------

| | Common
stock confers on its investors the right to receive notice to participate and vote in
general meetings of the Company, the right to a share in the excess of assets upon
liquidation of the Company, and the right to receive dividends, if declared.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
October 24, 2006, the Company issued 1,331,764 common shares at a price per share of
$0.01 for an aggregate consideration of $13 thousand.
| | ---------------------------------------------------------------------------------------------------------------------------------------------

| | On
February 7, 2007, the Company issued 17,031,000 common shares at a price per share of
$0.01 for consideration of approximately $170 thousand.
| | ------------------------------------------------------------------------------------------------------------------------------------------------

| | On
April 30, 2007, the Company issued a total of 40,175,000 common shares at a price per
share of $0.01 for consideration of approximately $402 thousand of which approximately
$47 thousand was paid in cash, $28 thousand was paid by conversion of $28 thousand
promissory note and approximately $327 thousand was paid via the issuance of non interest
notes receivables having maturities up to one year. An amount of $150 thousand was
collected in 2008, the rest was collected in previous years.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 28

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---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 12  SHARE CAPITAL(continued):

| | a. | Common
shares(continued):
| | -- | -------------------------

| | On
July 15, 2008, the Company issued 200,000 restricted shares to the Debenture investors,
see also Note 9.
| | -----------------------------------------------------------------------------------------------------------

| | On
September 22, 2008, the Company issued an additional 1,000,000 restricted shares to the
Debenture investors, see also Note 9.
| | --------------------------------------------------------------------------------------------------------------------------------

| | On
September 30, 2008, the Company entered into a Securities Purchase Agreement with
twenty-seven accredited investors for the sale of 30 units at a purchase price of $50
thousand per unit for total consideration of $1,500 thousand. Each unit consists of
500,000 shares of common shares and 500,000 share purchase warrants exercisable at $0.10
for a period of five years. As finders fee, in connection with the securities purchase
agreement, the Company paid $389 thousand, as well as issued 1,500,000 share purchase
warrants fully vested exercisable at $0.10 to the placement agent.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
net consideration was allocated to the shares and warrants issued based on relative fair
value. The value allocated to all warrants estimated by using the Black-Scholes
option-pricing model is $744 thousand and was based on the following assumptions:
dividend yield of 0%; expected volatility of 206%; risk-free interest rate of 3.91%; and
expected term of 5 years.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
November 4, 2008, as part of the brokered private placement that took place on September
30, 2008 (see above), the Company sold an additional 4 units at a purchase price of $50
thousand per unit for total consideration of $200 thousand. Each unit consists of 500,000
shares of common shares and 500,000 share purchase warrants exercisable at $0.10 for a
period of five years. As finders fee, in connection with the securities purchase
agreement, the Company paid $47 thousand, as well as issued 200,000 share purchase
warrants fully vested exercisable at $0.10 to the placement agent.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
net consideration was allocated to the shares and warrants issued based on relative fair
value. The value allocated to all warrants estimated by using the Black-Scholes
option-pricing model is $99 thousand and was based on the following assumptions: dividend
yield of 0%; expected volatility of 209%; risk-free interest rate of 3.51%; and expected
term of 5 years.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
December 5, 2008, $25 thousand of the principal amount of Debentures were converted into
314,070 shares of the Company, see also Note 9.
| | -------------------------------------------------------------------------------------------------------------------------------------------

| | As
to the issuance of warrants, see Note 9.
| | -------------------------------------------

| | As
to issuance of shares after the balance sheet date, see Note 16a.
| | --------------------------------------------------------------------

F - 29

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 12  SHARE CAPITAL(continued):

| | b. | Stock
option plan
| | -- | -----------------

| | In
2007, the Company established the 2007 share option plan, which provides for the issuance
of up to 8,500,000 of the Companys common shares.
| | -----------------------------------------------------------------------------------------------------------------------------------------------

| | In
March 2009, the Company increased the total number of shares reserved for issuance under
the share option plan to 12,150,000 shares.
| | ---------------------------------------------------------------------------------------------------------------------------------------

| | In
April 2007, the Company granted 5,055,021 stock options exercisable for ten years at an
exercise price of $0.01 per share, to the CEO, the options vest in four equal batched
over a period of four years from the date of the option, provided that the CEO is still
the Companys employee. The Company estimates the fair value of stock options
granted using the Black-Scholes option-pricing model. The option-pricing model requires a
number of assumptions, of which the most significant are, expected stock price
volatility, and the expected option term.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Expected
volatility was based on the average of similar companies in the market due to
insufficient trade volume of the share of the Company. The expected option term
represents the contractual period of the stock options as defined in the option
agreement. The Company has historically not paid dividends and has no foreseeable plans
to do so. Risk-free interest rates are based on quoted H15 report of the Federal Reserve
Board.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
fair value of the Companys stock options granted to the CEO was estimated using the
following weighted average assumptions:
| | --------------------------------------------------------------------------------------------------------------------------------

|                         | 
|------------------------ | 
|
|
|
|
|Risk free interest       | 
|Dividend yields          | 
|Volatility               | 
|Expected term (in years) | 
|                         | 

| | The
fair value of the options granted to the CEO using the Black-Scholes model is $0.01 per
option.
| | ---------------------------------------------------------------------------------------------------

| | On
May 7, 2007, the Company granted 400,000 stock options to a service provider for Investor
Relations and Marketing Advisor services. 200,000 options were exercisable immediately at
an exercise price of $0.01 per share. 200,000 additional options were intended to vest
effective May 1, 2008, on a pro rata basis in the event the service provider was not to
give services to the company until May 1, 2008. The agreement with the service provider
was terminated as of January 1, 2008, and at that date 50,000 options were forfeited,
another 150,000 options were vested and exercisable at an exercise price of $0.01 per
share until they were canceled three month after the termination of the agreement,
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 30

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 12  SHARE CAPITAL(continued):

| | The
calculated fair value of the abovementioned warrants amounted to $92 thousand. This fair
value was estimated using the following weighted average assumptions:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         | 
|------------------------ | 
|
|
|
|
|Risk free interest       | 
|Dividend yields          | 
|Volatility               | 
|Expected term (in years) | 
|                         | 

| | In
January 31, 2008, the Board of Directors approved the following options grants: 1,150,000
to three directors (350,000 options each) pursuant to the Company director compensation
plan, at an exercise price of US $2.2 per share, and 1,150,000 incentive options granted
to executive officer pursuant to an employment agreement effective November 1, 2007. Two
of the three directors have resigned on September 2008, their 700,000 options were
forfeited and none were vested. The executive officer resigned on November 2008, his
1,150,000 were canceled and none were vested.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
fair value of the stock options grants was estimated using the Black-Scholes option
valuation model that used the following assumptions:
| | --------------------------------------------------------------------------------------------------------------------------------------------

|                         | 
|------------------------ | 
|
|
|
|
|Risk free interest       | 
|Dividend yields          | 
|Volatility               | 
|Expected term (in years) | 
|                         | 

| | The
fair value of the options granted above using the Black-Scholes model is $0.55 per option.
| | ----------------------------------------------------------------------------------------------

| | On
December 29, 2008, the Company reduced the exercise price of the remaining 350,000 from
an exercise price of $2.2 per share to exercise prices ranging from $0.15 per share to
$0.2 per share.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
fair value of the stock options that their exercise price was reduced, was estimated
using the Black-Scholes option valuation model that used the following assumptions:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         | 
|------------------------ | 
|
|
|
|
|Risk free interest       | 
|Dividend yields          | 
|Volatility               | 
|Expected term (in years) | 
|                         | 

| | Since
there is not material difference between the value of these modified options at the
original grant date and at the modification date, no additional expense was recorded.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 31

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 12  SHARE CAPITAL(continued):

| | On
May 21, 2008, the Company granted options to a consultant to purchase 226,415 of the
Companys common shares of $0.001 par value, the options were immediately vested and
exercisable at an exercise price of $1.25 per share. The fair value of the options
granted was $85 thousand. On September 24, 2008, the Company announced the appointment of
the consultant to its Board of Directors.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
fair value of the stock options grants was estimated using the Black-Scholes option
valuation model that used the following assumptions:
| | --------------------------------------------------------------------------------------------------------------------------------------------

|                         | 
|------------------------ | 
|
|
|
|
|Risk free interest       | 
|Dividend yields          | 
|Volatility               | 
|Expected term (in years) | 
|                         | 

| | On
December 29, 2008, the Board of Directors of the Company resolved the granting of
2,350,000 options to four directors of the Company, exercisable for five years at an
exercise prices ranging from $0.15 per share to $0.2 per share, to be vested on the
second anniversary of grant.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
fair value of the stock options grants was estimated using the Black-Scholes option
valuation model that used the following assumptions:
| | --------------------------------------------------------------------------------------------------------------------------------------------

|                         | 
|------------------------ | 
|
|
|
|
|Risk free interest       | 
|Dividend yields          | 
|Volatility               | 
|Expected term (in years) | 
|                         | 

| | The
fair value of the options granted above using the Black-Scholes model is $0.07 per option.
| | ----------------------------------------------------------------------------------------------

F - 32

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 12  SHARE CAPITAL(continued):

| | A
summary of the status of the stock options granted to employees and directors as of
December 31, 2008 and 2007, and changes during the year ended on those dates, is
presented below:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                            | Year ended December 31,
| | -------------------------- | -----------------------
|
|
|
|
| | Options outstanding at     |                        
| | beginning of year          |                        
| | Changes during the year:   |                        
| | Granted - at an exercise   |                        
| | price above market price   |                        
| | Forfeited                  |                        
| |                            |                        
| | Options outstanding at end |                        
| | of year                    |                        
| |                            |                        
| | Options exercisable at end |                        
| | of year                    |                        
| |                            |                        
| | Weighted average fair      |                        
| | value of options granted   |                        
| | during the year            |                        
| |                            |                        
| |                            |                        

| | Costs
incurred in respect of stock based compensation for employees and directors, for the
years ended December 31, 2008 and 2007 were $150 thousand and $25 thousand, respectively.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table presents summary information concerning the options outstanding as of
December 31, 2008:
| | ------------------------------------------------------------------------------------------------------------

| | Range of
exercise
prices | Number
outstanding | Weighted
Average
Remaining
Contractual
Life | Weighted
average
exercise
price | Aggregate
intrinsic value
| | ------------------------ | ------------------ | ------------------------------------------- | ------------------------------- | -------------------------
|
|
|
|
| | 0.01                     |                    |                                             |                                 | 5,055,021                
| | 0.15 to 0.20             |                    |                                             |                                 | 2,700,000                
| |                          |                    |                                             |                                 |                          
| |                          |                    |                                             |                                 | 7,755,021                
| |                          |                    |                                             |                                 |                          

F - 33

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 12  SHARE CAPITAL(continued):

| | The
following table presents summary information concerning the options exercisable as of
December 31, 2008:
| | ------------------------------------------------------------------------------------------------------------

| | Range of
exercise
prices | Number
exercisable | Weighted
Average
Remaining
Contractual
Life | Weighted
average
exercise
price | Aggregate
intrinsic value
| | ------------------------ | ------------------ | ------------------------------------------- | ------------------------------- | -------------------------
|
|
|
|
| | 0.01                     |                    |                                             |                                 | 1,263,755                
| |                          |                    |                                             |                                 |                          
| |                          |                    |                                             |                                 |                          

| | A
summary of the status of the stock options granted to non-employees as of December 31,
2008 and 2007, and changes during the year ended on those dates, is presented below:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                            | Year ended December 31
| | -------------------------- | ----------------------
|
|
|
|
| | Options outstanding at     |                       
| | beginning of year          |                       
| | Changes during the year -  |                       
| | granted - at an exercise   |                       
| | price above market price   |                       
| | Forfeited                  |                       
| |                            |                       
| | Options outstanding at end |                       
| | of year                    |                       
| |                            |                       
| | Options exercisable at end |                       
| | of year                    |                       
| |                            |                       
| |                            |                       

| | The
Company recorded stock compensation of $85 thousand and $92 thousand during the years
ended December 31, 2008 and 2007, respectively, related to consulting services.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 34

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 12  SHARE CAPITAL(continued):

| | The
following table presents summary information concerning the options outstanding and
options exercisable as of December 31, 2008:
| | ------------------------------------------------------------------------------------------------------------------------------------

| | exercise
prices | Number
outstanding | Weighted
Average
Remaining
Contractual
Life | Weighted
average
exercise
price | Aggregate
intrinsic value
| | --------------- | ------------------ | ------------------------------------------- | ------------------------------- | -------------------------
|
|
|
|
| | 1.25            |                    |                                             |                                 | 226,415                  
| | 0.01            |                    |                                             |                                 | 200,000                  
| |                 |                    |                                             |                                 |                          
| |                 |                    |                                             |                                 | 426,415                  
| |                 |                    |                                             |                                 |                          
| |                 |                    |                                             |                                 |                          

| | As
of December 31, 2008 no options were exercised.
| | --------------------------------------------------

| | As
of December 31, 2008, there were $799 thousand of total unrecognized compensation
expenses related to unvested share based compensation arrangement granted under the plan.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# NOTE 13  INCOME
TAXES

| | US
resident companies are taxed on their worldwide income for corporate income tax purposes
at a statutory rate of 35%. No further taxes are payable on this profit unless that
profit is distributed. If certain conditions are met, income derived from foreign
subsidiaries is tax exempt in the US under applicable tax treaties to avoid double
taxation.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
income of the companys Israeli subsidiaries is taxed through 2008 at the rate of
27%. The corporate tax rates for 2009 and thereafter are as follows: 2009  26% and
for 2010 and thereafter  25%.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | For
subsidiaries, local commercial and tax legislation contains provisions that may imply
more than one treatment for a transaction. Thus, managements judgment of the
companies business activities and transactions may not coincide with the
interpretation of the tax authorities. In the event that a particular transaction is
challenged by the tax authorities the subsidiaries may incur penalties and taxes on
present and past transactions. Management believes that the financial statements
adequately reflect the activities of the subsidiaries.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 35

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 13  INCOME TAXES(continued):

| | Deferred
income taxes reflect the net effects of temporary differences between the amounts of
assets and liabilities for financial reporting purposes and the amounts used for income
tax purposes. The breakdown of the deferred tax asset as of December 31, 2008 and
2007 is as follows:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                  | 2008 | 2007
| | -------------------------------- | ---- | ----
|
|
|
|
| | Deferred tax assets:             |      |     
| | Net operating loss carry-forward |      |     
| | Valuation allowance              |      |     
| |                                  |      |     
| |                                  |      |     
| |                                  |      |     
| |                                  |      |     

| | A
valuation allowance is provided when it is more likely than not that some portion of the
deferred tax asset will not be realized. Management has determined, based on its recurring
net losses, lack of a commercially viable product and limitations under current tax rules,
that a full valuation allowance is appropriate.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                        | U.S dollars
in thousands
| | -------------------------------------- | ------------------------
|
|
|
|
| | Valuation allowance, December 31, 2007 |                         
| | Increase                               |                         
| |                                        |                         
| | Valuation allowance, December 31, 2008 |                         
| |                                        |                         
| |                                        |                         

| | At
December 31, 2008, the Company had net operating loss carry forwards for United
States Federal income tax purposes of approximately $5,633 thousand and net operating loss
carry forwards of approximately $5,633 thousand for Nevada state income tax purposes.
Current United States Federal tax law limits the use of net operating loss carry forwards
after there has been a substantial change in ownership, as defined in Internal Revenue
code Section 382, during a three year period. Due to changes in ownership between
2006 and 2007, there exists substantial risk that the Companys use of net operating
losses for United States be severely limited under the Internal Revenue Code for losses
incurred prior to 2007.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Carryforward
losses of the Companys Israeli subsidiaries aggregate $1,437 thousand at
December 31, 2008.
| | ---------------------------------------------------------------------------------------------------------

| | In
June 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes-an
interpretation of FASB Statement No. 109 (FIN 48) which clarifies the
accounting for uncertainty in income taxes recognized in an enterprises financial
statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48
prescribes a recognition threshold and measurement criteria for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax
return. FIN No. 48 also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure, and transition and defines the
criteria that must be met for the benefits of a tax position to be recognized. The
cumulative effect of the change in accounting principle must be recorded as an adjustment
to opening retained earnings. Effective January 1, 2007, the Company adopted FIN No. 48.
The adoption did not result in any adjustment to the Companys financial statements.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 36

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

# NOTE 14  NET LOSS
PER SHARE DATA

| | The
shares issuable upon the exercise of options, and conversion of convertible debentures
and warrants, which have been excluded from the diluted per share amounts because their
effect would have been anti-dilutive, include the following:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                       | December 31,
2008 | December 31,
2007
| | ------------------------------------- | ----------------- | -----------------
|
|
|
|
| | Options:                              |                   |                  
| | Weighted average number, in thousands |                   |                  
| | Weighted average exercise price       |                   |                  
| | Warrants:                             |                   |                  
| | Weighted average number, in thousands |                   |                  
| | Weighted average exercise price       |                   |                  
| | Convertible Debt:                     |                   |                  
| | Weighted average number, in thousands |                   |                  
| | Weighted average Conversion price     |                   |                  
| |                                       |                   |                  

# NOTE 15  FAIR
VALUE OF FINANCIAL ASSETS:

| | In
September 2006, the Financial Accounting Standards Board (FASB) issued
SFAS 157, Fair Value Measurements. SFAS 157 defines fair value, establishes a
framework for measuring fair value in accordance with accounting principles generally
accepted in the United States, and expands disclosures about fair value measurements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company adopted the provisions of SFAS 157 as of January 1, 2008, for financial
instruments.
| | ------------------------------------------------------------------------------------------------

| | Although
the adoption of SFAS 157 did not materially impact the Companys financial
condition, results of operations, or cash flows, the Company is now required to provide
additional disclosures as part of its financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 37

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 15  FAIR VALUE OF
FINANCIAL ASSETS(continued):

| | SFAS
157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in
measuring fair value. The three tiers are Level 1, defined as observable inputs such as
quoted prices in active markets; Level 2, defined as inputs other than quoted prices in
active markets that are either directly or indirectly observable; and Level 3, defined as
unobservable inputs in which little or no market data exists, therefore requiring an
entity to develop its own assumptions.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys liabilities that are measured at fair value on a recurring basis, and
subject to the disclosure requirements of SFAS 157 at December 31, 2008, were as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                      |  | Fair value measurements at reporting date using
| | -------------------- |  | -----------------------------------------------
|
|
|
|
| | Embedded derivative: |  |                                                
| | Conversion option    |  |                                                
| | Call option          |  |                                                
| | Put Option           |  |                                                
| |                      |  |                                                

| | The
Company held no Level 1 and Level 2 financial assets during the year ended December 31,
2008.
| | -------------------------------------------------------------------------------------------------

| | The
Embedded Derivative  conversion call and the options included in Level 3 above was
valued using information provided by the Company. In its evaluation the Company used
Mertons model. thr Company used the market stock price for the evaluation (in spite
of the problem of low trade volume of the stock), the Company used the interest rate of
1.95% and measured the volatility from the volatility of the traded stock (263%).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Changes
in the Embedded Derivative  conversion options included in Level 3 above during the
year ended December 31, 2008 were as follows:
| | ------------------------------------------------------------------------------------------------------------------------------------------

|                                             | Level 3
|-------------------------------------------- | -------
|
|
|
|
|Balance January 1, 2008                      |        
|Total gains or losses (realized /unrealized) |        
|Purchases, issuances and settlements         |        
|                                             |        
|Balance December 31, 2008                    |        
|                                             |        
|                                             |        

F - 38

---

---

GLOBAL ENERGY INC.(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

# NOTE 16 
SUBSEQUENT EVENTS:

| | a. | On January 5, 2009, $35 thousand of the Principal amount of Debenture were
               converted into 1,228,070 shares of the Company (a conversion price of $0.0285
               per share). In addition, four payments of $10 thousand each were made to the
               investor. During 2009, with the understanding of the investor, The Company did
               not carried out certain conversions according the schedule in the amendments. In
               now days, the Company is negotiating with the investor to amend the current
               obligations.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b. | On March 3, 2009 Pacific entered into an agreement to sell all the share capital
               of Global Ethiopia. Subject to the closing, the buyer agreed to pay Pacific the
               sum of $700 thousand in two installments: $595 thousand at closing and $105
               thousand on March 1, 2010. The closing occurred on March 18, 2009, the two
               installments were deposited to escrow and until the date of approval of these
               financial statements the amount of the first installment was released from
               escrow. The Company is obligated to all of the disclosures that were presented
               in the agreement
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c. | Following the selling of Global Ethiopia by Pacific, on April 1, 2009
               Pacifics CEO resigned and YMP agreed to sell the remaining 5% of the share
               capital of Pacific to the Company in consideration for NIS 50 ($12).
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d. | In March 2009, the Company increased the total number of shares reserved for
               issuance under the share option plan to 12,150,000 shares, see note 12b.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e. | In April 2009, an amount of $440 thousand was repaid out of Pacifics
               loans, see Notes 5 and 6.
| | -- | --------------------------------------------------------------------------------------------------------------

F - 39

---

---

Item 9.  Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure

None.

# Item 9A(T).  Controls and
Procedures

(a)        Our
management, including our chief executive officer and chief financial           officer,
has evaluated the effectiveness of our disclosure controls and           procedures as of
December 31, 2008. Based on such review, our chief executive           officer and chief
financial officer have determined that in light of their           conclusion with
respect to the effectiveness of our internal control over our           financial
reporting as of such date, we didnt have in place effective           controls and
procedures designed to ensure that information required to be           disclosed by us
in the reports that we file or submit under the Securities           Exchange Act of
1934, as amended, is accumulated and communicated to our           management, including
our principal executive and principal financial officers,           or persons performing
similar functions, as appropriate to allow timely           decisions regarding required
disclosure, and is recorded, processed, summarized           and reported, within the
time periods specified in the Commissions rules           and forms.

(b)        Our
management, under the supervision of our chief executive officer and chief
          financial officer, is responsible for establishing and maintaining adequate
          internal control over our financial reporting, as defined in Rules 13a-15(f)
and           15d-15(f) of the Securities Exchange Act of 1934, as amended. The Companys
          internal control over financial reporting is defined as a process designed to
          provide reasonable assurance regarding the reliability of financial reporting
          and the preparation of financial statements for external purposes in accordance
          with generally accepted accounting principles. Internal control over financial
          reporting includes policies and procedures that:

| |  | pertain
to the maintenance of records that in reasonable detail accurately and fairly reflect our
transactions and asset dispositions;
| | - | --------------------------------------------------------------------------------------------------------------------------------------

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

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

Under
the supervision and with the participation of our management, including our principal
executive officer and principal financial officer, we evaluated the effectiveness of our
internal control over financial reporting as of December 31, 2008 based on the
framework for Internal Control-Integrated Framework set forth by The Committee of
Sponsoring Organizations of the Treadway Commission. Due to the inherent limitations of
our company, derived from our small size and the small number of employees, managements
evaluation concluded that there is a material weakness with respect to segregation of
duties that may not provide reasonable assurance regarding the reliability of internal
control over financial reporting and may not prevent or detect misstatements. In
addition, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

Based
on this evaluation, our management concluded that the Companys internal controls
over financial reporting were not effective as of December 31, 2008.

This
management report on internal control over financial reporting shall not be deemed to be
filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or
otherwise subject to the liabilities of that Section.

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

(c)        There
were no changes in our internal controls over financial reporting           identified
with the evaluation thereof that occurred during the quarter ended           December 31,
2008, that have materially affected, or are reasonably likely to           materially
affect our internal control over financial reporting.

# Item 9B.  Other
Information

None.

19

---

---

# PART III

# Item 10.  Directors,
Executive Officers and Corporate Governance

# Executive Officers, Directors
and Key Employees

The following table sets forth
information regarding our directors, executive officers and key employees, including their
ages as of April 4, 2009.

| | Name                             | Age |  | Position                             
| | -------------------------------- | --- |  | -------------------------------------
|
|
|
|
| | Directors and Executive Officers |     |  |                                      
| | Asi Shalgi                       | 54  |  | President, Chief Executive Officer,  
| |                                  |     |  | Secretary and Director               
| | Alex Werber                      | 53  |  | Treasurer and Chief Financial Officer
| | Avner Raanan(1)                  | 58  |  | Director                             
| | Amir Elbaz(2)                    | 32  |  | Director                             
| | Nissan Caspi(3)                  | 51  |  | Director                             
| | Yehezkel Ram(4)                  | 59  |  | Director                             

| | 
| | 

| | (1) Member
of the Audit Committee.
| | ----------------------------------

| | (2) Chairman
of the Compensation Committee and member of the Audit Committee.
| | -----------------------------------------------------------------------------

| | (3) Chairman
of the Audit Committee.
| | ------------------------------------

| | (4) Member
of the Compensation Committee.
| | -----------------------------------------

Asi
Shalgi. Mr. Shalgi has served as our President, Chief Executive Officer and director
since April 2007. He has more than 20 years of experience and involvement in the private
and public sector. He has served as general manager and director for industrial and
agriculture companies with significant export activities. He was the director general of
the Israeli Ministry of Energy and Infrastructure. During his term with the Ministry he
was involved in the peace treaty negotiations with Jordan on the energy annex. He was
responsible for new legislation regarding electricity in Israel that allowed the
involvement of Independent Power Producers and the implementation of the Public Utility
Authority that regulates the energy sector and prices in Israel. He has been involved in
the power and water sector mainly in developing and financing IPP projects. This has
included developing, financing, building and operating the first private power plant in
Israel, and the first private water desalination plant in Israel. He served in the
Israeli Defense Forces and retired as a Lieutenant Colonel. Mr. Shalgi received an
Engineering degree for Industry and Management from Tel Aviv University.

Alex
Werber. Mr. Werber has served as our Treasurer and Chief Financial Officer since May
2007. He is a Certified Public Accountant with over 15 years of financial management
experience in privately held and publicly traded companies. He has served as controller
and chief financial officer for several public companies since 1983. During the past
decade he specialized in the hi-tech sector, serving in managerial positions including
controller, VP Finance and chief financial officer. He received a B.A. in Economics and
Accounting from Tel Aviv University, where he completed post-graduate studies in
Accounting.

Avner
Raanan. Mr. Raanan has served as our director since December 2007. He has vast
technical and managerial experience in venture capital investments, business consulting,
managing multi-million dollar projects, developing airborne electronic warfare systems
and air to air missiles. Mr. Raanan founded Avnan Enterprises Ltd., an investment company
that invests in early stage start up companies. Mr. Raanan is currently a Ph.D. candidate
at Bar-Ilan University, Israel. He received an M.Sc. in Business Administration and a
B.Sc. in Electronic and Computer Engineering from Ben-Gurion University in Israel.

Nissan
Caspi. Mr. Caspi has served as our director since September 24, 2008. He has
considerable experience in the public infrastructure projects sector and is an expert in
the analysis and financing of infrastructure projects. Mr. Caspi owns his own
accounting firm, Caspi Ben David and Co. CPA (Israel), and is currently Co-CEO of Eco
Capital Ltd., an entity which he founded, and which develops independent power and water
projects in Israel. Mr. Caspi was the Chief Financial Officer of Veolia Israel (formerly
Vivendi), and also held a number of positions in various projects and companies owned by
Veolia. In 2001-2002, he led the financing of VID Desalination Ltd., the largest Israeli
sea water desalination project, which produces 100,000,000 cubic meters of fresh water
per year. In 2005, this project received an award for the most successful BOT project in
the world from the Association for Infrastructure Projects. Mr. Caspi was also formerly
Chairman of INFRA (Insurance Fund for Natural Risks in Agriculture), an Israeli
government-backed entity. Mr. Caspi was also a former head of the accounting department
and accounting lecturer at the Hebrew University of Jerusalem. Mr. Caspi holds an MBA
from the Hebrew University of Jerusalem, a B.A. degree in accounting and economics from
the Hebrew University of Jerusalem, and a he is a CPA (Israel).

Yehezkel
Ram.Mr. Ram has served as our director since October 6, 2008. Mr. Ram is the founder
of Ram Power Inc., a California based company engaged in developing cutting-edge
geothermal and solar thermal solutions. Prior to founding Ram Power Inc., Mr. Ram led the
North American Business Development Department of Ormat Technologies, a global player in
the development, manufacturing, marketing and financing of innovative power systems. In
this position, Mr. Ram was instrumental in creating shareholder value of approximately
$26 billion. While at Ormat, Mr. Ram initiated and executed the aggressive North American
acquisitions of geothermal plants which provided the base for Ormat growth in this
decade. Additionally, he was involved with various financings at Ormat in the aggregate
amount of almost a billion dollars and was instrumental in the negotiation of power
purchase agreements with some of the leading electric utilities in North America. Mr. Ram
earned a B.Sc. in Mechanical Engineering from Ben-Gurion University, Israel in 1975, his
MS in Mechanical Engineering from Ben Gurion University in 1977, and his MBA from the
Hebrew University in 1978.

20

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---

Amir
Elbaz. Mr. Elbaz has served as our director since September 22, 2008. He specializes
in corporate financing and strategic planning for private and public companies. Mr. Elbaz
has served as the Executive Vice President, Chief Financial Officer and director of
Lithium Technology Corporation since October 11, 2006. At Lithium Technology Corporation,
Mr. Elbaz oversees its finances, reporting and the planning of its business ventures.
Previously, Mr. Elbaz served as a senior associate of Arch Hill Capital, NV, a Dutch
venture firm, where he played an active role in the management and business development
of two of its portfolio companies. Mr. Elbaz also served as Vice President of Corporate
Finance at Cornell Capital Partners, LP, where he sourced, structured and managed
investments in more than a dozen public and private companies. Prior to joining Cornell
Capital, Mr. Elbaz served for several years as an analyst with the Economic Department in
the Procurement Mission of the Israeli Ministry of Defense in New York. In that capacity,
Mr. Elbaz co-headed multi-million dollar negotiations with first tier technology
companies and was in charge of the financial aspects of the day-to-day operations. Mr.
Elbaz holds a B.A. from the University of Haifa, Israel, and an MBA in Finance & Investments
from Bernard Baruch College, CUNY, New York.

# Section 16(a) Beneficial
Ownership Compliance

Section
16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, 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 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 Commission regulations to furnish us with copies of all Section 16(a)
reports they file.

Based
solely on our review of the copies of such forms received by us, or written
representations from certain reporting persons, we believe that all filing requirements
applicable to our officers, directors and greater than ten percent beneficial owners were
complied with, with the exception of the following:

|Name             | Number of Late
Insider Reports | Number of Transactions
Not Reported on
a Timely Basis | Failure to File
Requested Forms
|---------------- | ------------------------------ | ----------------------------------------------------- | -------------------------------
|
|
|
|
|Amir Elbaz       | 1                              | None                                                  | None                           
|                
|Ram Yehezkel     | 1                              | None                                                  | None                           
|                
|Nissan Caspi (1) | None                           | None                                                  | 1                              

| | (1) Form
3 of Nissan Caspi was filed subsequent to December 31, 2008.
| | ---------------------------------------------------------------------

# Nominating Committee

Our
company currently does not have a nominating committee nor does our company have a
written nominating committee charter. Our board of directors does not believe that it is
necessary to have such a committee because it believes that the functions of such a
committee can be adequately performed by the board of directors.

Our
company does not have any defined policy or procedure requirements for shareholders to
submit recommendations or nominations for directors. The board of directors believes
that, given the early stages of our development, a specific nominating policy would be
premature and of little assistance until our business operations develop to a more
advanced level. Our company does not currently have any specific or minimum criteria for
the election of nominees to the board of directors and we do not have any specific
process or procedure for evaluating such nominees. The board of directors assesses all
candidates, whether submitted by management or shareholders, and makes recommendations
for election or appointment.

A
shareholder who wishes to communicate with our board of directors may do so by directing
a written request addressed to our President at the address appearing under Business.

# Audit Committee

The
audit committee is comprised of Nissan Caspi (chairman), Amir Elbaz and Avner Raanan. The
audit committee assists the board of directors in discharging its responsibility relating
to the accounting, reporting and financial practices of the Company and its subsidiaries,
and has general responsibility for oversight of internal controls, accounting and audit
activities and the legal compliance of the Company and its subsidiaries. The audit
committee operates under a charter adopted by the board of directors.

21

---

---

# Compensation Committee

The
compensation committee is comprised of Amir Elbaz (chairman) and Hezy Ram. The
compensation committee assists the board of directors in discharging its responsibilities
relating to compensation of the Companys directors and executives. The primary
objective of the committee is to develop and implement compensation policies and plans
that are appropriate for the Company in light of all relevant circumstances, its level of
operations and which provide incentives that further the Companys long-term
strategic plans and are consistent with the culture of the Company and the overall goal
of enhancing enduring shareholder value. The compensation committee operates under a
charter adopted by the board of directors.

# Code of Ethics

We
have not yet adopted a corporate code of ethics. Given our current operations, management
does not believe a code of ethics is necessary at this stage of our development.

# Audit Committee
Financial Expert

Our
board of directors determined that Mr. Nissan Caspi qualifies as an audit committee
financial expert as defined by Item 407(d) of Regulation S-K. Mr. Nissan Caspi is
an independent director as defined in NASDAQ Marketplace Rule 4200(a)(15).

# Item 11.  Executive
Compensation

The
table set forth below summarizes the annual and long-term compensation for services
payable to our executive officers during the fiscal years ended December 31, 2008 and
2007.

# Summary Compensation

|SUMMARY COMPENSATION TABLE
|--------------------------
|
|
|
|
|
|Asi Shalgi                
|President, CEO            
|and Director              
|                          
|Alex Werber               
|CFO                       
|                          
|Christopher Kape          
|Former President,         
|CEO, CFO,                 
|Secretary and             
|Director (3)              
|                          
|Yossi Raz                 
|VP for Project            
|Development and           
|CTO                       
|                          
|Yanai Man,                
|CEO of Global             
|NRG. Pacific Ltd.         
|and Global                
|Energy                    
|Ethiopia(6)               

|(1) | Including
social benefits. Mr. Shalgi did not receive any compensation as a                director
of our company.
|--- | -------------------------------------------------------------------------------------------------------------------

|(2) | 5,055,021
options were issued to Mr. Shalgi on April 30, 2007. The monetary                value of
these options is computed in accordance with U.S. Generally Accepted
               Accounting Principles. These options began vesting on April 30, 2008.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Elected
as director and appointed President, Chief Executive Officer, Secretary
               and Treasurer on April 5, 2005. As of November 5, 2007, Christopher Kape
               resigned as secretary and from our Board of Directors. As of May 6, 2007
               Christopher Kape resigned as our Treasurer and Chief Financial Officer. As
of                April 30, 2007, Christopher Kape resigned as our President and Chief
Executive                Officer.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Mr.
Raz was appointed as VP for Project Development and CTO on November 1, 2007.
               Mr. Raz resigned from these positions on November 1, 2008.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Mr.
Raz received $20,302 as a success fee.
|--- | ------------------------------------------

|(6) | Effective
April 1, 2009, Mr. Yanai Man resigned from his position as CEO of                Global
NRG. Pacific Ltd. The shares of Global Energy Ethiopia were sold to
               Presaco Investments Ltd. on March 18, 2009
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

22

---

---

Effective
May 6, 2007, we appointed Alex Werber as our new Treasurer and Chief Financial Officer
and entered into an employment agreement, pursuant to which it was agreed Mr. Weber
should be employed on a part-time basis and paid a monthly salary, payable immediately
upon receipt of his invoice, at a gross monthly rate of $2,500, to be paid in NIS
translated pursuant to the official representative rate of exchange of the US$ as
published by the Bank of Israel on the payment date. Under the employment agreement, Mr.
Werber and the Company agreed to open and maintain a study fund. We agreed to contribute
to the fund an amount equal to 7.5% of each monthly salary payment up to the maximum
amount recognized for tax benefits pursuant to the Income Tax Ordinance, and Mr. Werber
agreed to contribute to the fund an amount equal to 2.5% of each monthly salary payment
up to the maximum amount recognized for tax purposes pursuant to the Income Tax
Ordinance. In addition, we agreed to provide Mr. Werber (including his heirs, executors
and administrators) with coverage under a standard directors and officers liability
insurance policy at our expense.

On
December 1, 2007, Mr. Werbers employment agreement was amended, pursuant to which
his salary was increased to a gross monthly salary of US $5,000. All other terms of the
employment agreement remain unchanged and in full force and effect.

On
April 30, 2007, we appointed Asi Shalgi as our new President and Chief Executive Officer
and entered into an employment agreement. Under the terms of the agreement, Asi Shalgi is
being paid a monthly base salary of $10,000. In addition, on April 30, 2007, we granted
5,055,021 stock options exercisable for ten years at an exercise price of $0.01 per share
to Asi Shalgi. Mr. Shalgi has also been appointed to our board of directors (for more
details regarding his compensation as director see below, Director Compensation
Policy).

# Outstanding Equity
Awards at Fiscal Year-End

|OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|--------------------------------------------
|
|
|
|
|
|
|Asi Shalgi                                  
|President,                                  
|CEO and Director (1)                        
|                                            
|Alex Werber                                 
|Treasurer and                               
|CFO                                         
|                                            
|Yossi Raz                                   
|VP for Project                              
|Development and                             
|CTO                                         
|                                            
|Yanai Man,                                  
|CEO of Global                               
|NRG. Pacific                                
|Lt. and Global                              
|Energy Ethiopia                             

23

---

---

|(1) | Asi
Shalgi was granted 5,055,021 stock options on April 30, 2007 to vest at a           rate
of 25% per year beginning April 30, 2008. Effective January 31, 2008, the
          expiration date of the options was extended to April 30, 2017.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Director Compensation
Policy

On
November 2, 2007, we adopted a director compensation policy for all directors pursuant to
which we authorized the issuance to each of our directors of 200,000 options at an
exercise price of $0.56 per share.

On
November 18, 2007, the compensation policy was amended such that each director would be
authorized to receive 350,000 options at an exercise price of $2.20 per share, rather than
200,000 options at an exercise price of $0.56 per share.

On
January 31, 2008, we decided to provide for payment of $1,000 per month to each director
as compensation.

On
November 2, 2007, we elected Yehuda Eliraz and Yair Aloni to serve on our board of
directors. On November 20, 2007, Mr. Eliraz resigned from our board of directors.
Effective September 25, 2008, Mr. Aloni resigned from our board of directors.

On
December 6, 2007, we appointed Josef Neuhaus and Avner Raanan to our board of directors.
On January 31, 2008, pursuant to the director compensation policy, we issued to each of
Josef Neuhaus, Yair Aloni, and Avner Raanan options to purchase 350,000 shares of our
common stock at an exercise price of $2.20 per share. The stock options were issued in
accordance with the terms of the share option plan adopted in May 2007. Mr. Raanans
options are exercisable until December 6, 2017. Mr. Aloni resigned as a director effective
September 25, 2008 and Mr. Neuhaus resigned as director effective September 22, 2008.
Their options terminated on their respective dates of resignation.

We
issued the stock options to Messrs. Neuhaus, Aloni and Raanan, who are non-U.S. persons
(as that term is defined in Regulation S of the Securities Act of 1933, as ameded), in an
offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of
1933, as amended.

|DIRECTOR COMPENSATION (1)
|-------------------------
|
|
|
|
|Josef Neuhaus(5)         
|                         
|Avner Raanan             
|                         
|Yair Aloni(6)            
|                         
|Nissan Caspi(7)          
|                         
|Amir Elbaz(7)            
|                         
|Yehezkel Ram(8)          

|(1) | For
the fiscal year ended December 31, 2008.
|--- | --------------------------------------------

|(2) | 350,000
options were granted on January 31, 2008 and were to begin vesting on           December
6, 2008. Mr. Neuhaus resigned from our board of directors effective           September
22, 2008 and his unvested options terminated on that date.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | 350,000
options were granted on December 6, 2007 and began vesting on December           6, 2008.
The options have an exercise price of $2.20 per share and expire on           December 6,
2017. The grant date fair value of the common shares underlying the           options was
$0.55 per common share. On December 29, 2008 the exercise price was           changed as
follows (i) 1/3 of the options are exercisable at a price of $0.15           per share;
(ii) 1/3 of the options are exercisable at a price of $0.175 per           share; and
(iii) 1/3 of the options are exercisable at a price of $0.20 per           share,
providing an average exercisable price of $0.178. This reprising is           subject to
receipt of a pre-ruling from the Israeli Tax Authority. On December           29, 2008
400,000 additional options were granted to be vested on January 1, 2011           with
the following exercise price: (i) 1/3 of the options are exercisable at a           price
of $0.15 per share; (ii) 1/3 of the options are exercisable at a price of
          $0.175 per share; and (iii) 1/3 of the options are exercisable at a price of
          $0.20 per share, providing an average exercisable price of $0.178.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | 350,000
options were granted on January 31, 2008 and were to begin vesting on           November
18, 2008. Mr. Aloni resigned from our board of directors effective           September
25, 2008 and his unvested options terminated on that date.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | On
September 24, 2008, Jos Neuhaus resigned from our board of directors.
|--- | ------------------------------------------------------------------------

|(6) | September
25, 2008, Yair Aloni resigned from our board of directors.
|--- | --------------------------------------------------------------------

|(7) | On
September 24, 2008, we elected Nissan Caspi and Amir Elbaz to serve on our
          board of directors.
|--- | -----------------------------------------------------------------------------------------------------------

|(8) | On
October 7, 2008, we elected Hezy Ram to serve on our board of directors.
|--- | ---------------------------------------------------------------------------

|(9) | On
December 29, 2008 each of the directors was granted 650,000 options to be
          vested on January 1, 2011 with the following exercise price: (i) 1/3 of the
          options are exercisable at a price of $0.15 per share; (ii) 1/3 of the options
          are exercisable at a price of $0.175 per share; and (iii) 1/3 of the options
are           exercisable at a price of $0.20 per share, providing an average exercisable
          price of $0.178.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24

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# Item 12.  Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The
following table provides certain information with respect to the beneficial ownership of
our common stock as of May 4, 2009 for:

| |  | each
beneficial owner of more than 5% of our outstanding common stock;
| | - | ----------------------------------------------------------------------

| |  | each
of our executive officers;
| | - | -------------------------------

| |  | each
of our directors; and
| | - | --------------------------

| |  | all
of our executive officers and directors as a group.
| | - | -------------------------------------------------------

In
the following table, we have determined the number and percentage of shares beneficially
owned in accordance with Rule 13d-3 of the Exchange Act based on information provided to
us by our controlling shareholder, executive officers and directors, and this information
does not necessarily indicate beneficial ownership for any other purpose. In determining
the number of shares of our common stock beneficially owned by a person and the percentage
ownership of that person, we include any shares as to which the person has sole or shared
voting power or investment power, as well as any shares subject to warrants or options
held by that person that are currently exercisable or exercisable within 60 days after May
4, 2009. Applicable percentages are based on 83,982,536 shares of common stock
outstanding on May 4, 2009.

| | Name:(1)                                                    | Shares Beneficially Owned
| | ----------------------------------------------------------- | -------------------------
|
|
|
|
| | Carrigain Investment Ltd.(3)                                |                          
| | YA Global Investments L.P.(4)                               |                          
| | Asi Shalgi (5)                                              |                          
| | President, CEO, Secretary, and Director                     |                          
| | Alex Werber                                                 |                          
| | Treasurer and CFO                                           |                          
| | Avner Raanan (6)                                            |                          
| | Director                                                    |                          
| | Nissan Caspi(7)                                             |                          
| | Director                                                    |                          
| | Amir Elbaz(8)                                               |                          
| | Director                                                    |                          
| | Yehezkel Ram(9)                                             |                          
| | Director                                                    |                          
| | Yanai Man                                                   |                          
| | CEO of Global NRG Pacific                                   |                          
| | All executive officers and directors as a group (7 persons) |                          

| | *
Less than 1%.
| | ---------------

|(1) | Except
as otherwise indicated, addresses are c/o Global Energy Inc., 415           Madison
Avenue, 15th Floor, New York, NY 10017.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(2) | Based
on 83,982,536 shares of our common stock issued and outstanding as of May           4,
2009. Beneficial ownership is determined in accordance with the rules of the
          Commission and generally includes voting or investment power with respect to
          securities. Except as otherwise indicated, we believe that the beneficial
owners           of shares of our common stock listed above, based on information
furnished by           such owners, have sole investment and voting power with respect to
such shares,           subject to community property laws where applicable.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Carrigain
Investment Ltd. is controlled jointly by Ariel Malik and Zeev Bronfeld           each
holding 50% of its common shares. Effectively, therefore, each of Mr. Malik           and
Mr. Bronfeld beneficially owns 25.8% of our common stock. Carrigain           Investment
Ltd.s address is Jasmine Court, Regent Street, Belize City,           Belize.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Comprises
200,000 shares issued to YA Global Investments, L.P. under the           amending
agreement dated July 15, 2008; 3,594,772 shares issued to YA Global           under the
amending and restating agreement dated September 22, 2008; and           warrants to
purchase 7,500,000 shares at an exercise price of $0.10, as agreed           between us
and YA Global under the amending and restating agreement dated           September 22,
2008. YA Global Investments, L.P.s address is 101 Hudson           Street, Suite
3700, Jersey City, NJ 07302, United States.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Mr.
Shalgi was granted 5,055,021 options on April 30, 2007, to be vested to him           at
a rate of 25% per year beginning on April 30, 2008. 2,527,511 of these           options
are exercisable within 60 days of May 4, 2009.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | 350,000
options were granted on December 6, 2007 and began vesting on December           6, 2008.
The options have an exercise price of $2.20 per share and expire on           December 6,
2017. The grant date fair value of the common shares underlying the           options was
$0.55 per common share. On December 29, 2008 the exercise price was           changed as
follows: (i) 1/3 of the options are exercisable at a price of $0.15           per share;
(ii) 1/3 of the options are exercisable at a price of $0.175 per           share; and
(iii) 1/3 of the options are exercisable at a price of $0.20 per           share,
providing an average exercisable price of $0.178 This reprising is           subject to
receipt of a pre-ruling from the Israeli Tax Authority. On December           29, 2008
400,000 additional options were granted to be vested on January 1, 2011           with
the following exercise price: (i) 1/3 of the options are exercisable at a           price
of $0.15 per share; (ii) 1/3 of the options are exercisable at a price of
          $0.175 per share; and (iii) 1/3 of the options are exercisable at a price of
          $0.20 per share, providing an average exercisable price of $0.178.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | None
of the 650,000 options granted to Mr. Caspi on December 29, 2008 are
          exercisable within 60 days of May 4, 2009.
|--- | ------------------------------------------------------------------------------------------------------------------------------

|(8) | All
of the 226,415 options granted to Mr. Elbaz on May 22, 2008 are exercisable
          within 60 days of May 4, 2009.
|--- | ------------------------------------------------------------------------------------------------------------------------

|(9) | None
of the 650,000 options granted to Mr. Ram on December 29, 2008 are           exercisable
within 60 days of April 30, 2009.
|--- | -------------------------------------------------------------------------------------------------------------------------------

25

---

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# Item 13.  Certain
Relationships and Related Transactions, and Director Independence

# Transactions with
Related Persons, Promoters and Certain Control Persons

On
May 15, 2007, our directors approved a share option plan, authorizing the issue of a total
of 8,500,000 shares of our common stock. Information regarding compensation contracts with
our directors and officers, including the grant of options under the share option plan, is
described above in Item. 11 entitled Executive
Compensation.

On
March 31, 2009, our board of directors approved the increase of the number of shares
reserved for issuance under the Plan from 8,500,000 shares to 12,150,000 shares.

During
the year ended December 31, 2007, we paid approximately $40,000for accounting and
administrative services performed by a company controlled by our former president. During
the comparable period in 2006, no such fees were paid. As of December 31, 2007, no amounts
were due and payable in respect of such accounting and administrative services.

During
the year ended December 31, 2006, we were charged $19,144 for accounting and
administration fees. These fees were paid to Jamco Capital Partners Inc., a company
controlled by our former president, Mr. Christopher Kape. As of December 31, 2007, no
amount remained unpaid for past fees and disbursements incurred on behalf of our company.

YA
Global Investments, L.P. is a related party of our company because it is beneficial owner
of over 5% of our common stock. We have entered into two transactions with YA Global,
which are described in detail in Item 1. entitled Business under
Financing Agreement.

On
October 8, 2008, we entered into a Letter Agreement (the Letter
Agreement) with Yanai Man Projects Ltd., or YMP, a company owned by Yanai Man,
with respect to the shares held by YMP in Pacific Ltd. Pacifics first project was to
work with an Ethiopian entity to farm castor seeds for castor oil in Ethiopia. Pursuant to
the Letter Agreement, the parties agreed that we would have the right at any time to
purchase from YMP 449 ordinary shares in Pacific, constituting 90% of YMPs holdings
in Pacific, for a consideration of $150,000, payable by us over a period of one year
through the payment of ten installments of $15,000 each starting January 30, 2009. We
exercised this right of purchase on October 8, 2008, and subsequently YMP transferred 449
shares to us. Additionally, during the first two years following the effective date of the
Letter Agreement, YMP had the right to require us to purchase an additional 25 ordinary
shares in Pacific held by YMP per year, for an additional consideration of $ 50,000, and
that at all times (including during at the time of YMPs right mentioned above), we
had the right to purchase all remaining shares in Pacific held by YMP (i.e., 50
ordinary shares in Pacific) for an additional consideration of $ 100,000. On March 3, 2009
this agreement with YMP was amended and it was agreed that the 449 of the shares of
Pacific will remain the Companys but the sum of $150,000 will not be paid. On April
1, 2009, YMP sold its remaining 50 shares in Pacific to us, for a consideration of $12.

On
October 26, 2008, we entered into a Loan Agreement (for the purposes of this paragraph,
the Agreement) with Mr. Aviram Malik (the Lender),
which is the brother of Ariel Malik, and our subsidiary, Global NRG Pacific Ltd. Ariel
Malik is one of the controllers of Carrigain Investment Ltd, which is our controlling
shareholder. Among the provisions of the Agreement, it was agreed that the Lender shall
loan Global NRG Pacific Ltd. an aggregate of US$ 400,000, with US$ 300,000 being
transferred to Pacific in three equal installments of US$ 100,000 on October 27, 2008,
November 3, 2008 and November 10, 2008, respectively. The loan is to be fully repaid to
the Lender by May 1, 2009 and will not bear interest. In the case of a default, the debt
shall be transferred to us, and the Lender shall be entitled to 1,000,000 shares in our
company at no cost. In addition, we agreed to give a corporate guarantee for the repayment
of the loan. Additionally, upon the transfer of the loan amount by the Lender, Global NRG
Pacific Ltd. will issue to the Lender shares in Global NRG Pacific Ltd. constituting 44%
of the outstanding shares of Global NRG Pacific Ltd. Also, we agreed that upon the
exercise of the Call/Put Option by us for 5% of the shares in Global NRG Pacific Ltd. held
by YMP, we would transfer said 5% shares to the Lender, but no later than November 1,
2010. It was also agreed that upon achievement of milestones of annual castor seeds
production of 30,000, 40,000, 50,000, 60,000 or 70,000 tons of castor seeds, respectively,
during any calendar year, then we will be entitled to a share of 55%, 60%, 65% 70%, 75%,
respectively, of all dividends distributed by Global NRG Pacific Ltd. with respect to such
year.

Transactions with our
Controlling Shareholder

On
February 7, 2007, we issued 12,000,000 shares to our controlling shareholder, Carrigain
Investment Ltd. At the time of this issue, this comprised approximately 52.14% of our
total issued and outstanding shares. We are informed that Carrigain Investment Ltd. is
controlled by Ariel Malik and Zeev Bronfeld. On April 11, 2007, Carrigain Investment Ltd.
entered into a subscription agreement with us pursuant to which it acquired 30,000,000
additional shares of our common stock for an aggregate acquisition consideration of
$300,000. Carrigain Investment Ltd. currently holds 50.00% of our common stock based on
83,982,536 total issued and outstanding shares of our common stock as of May 4, 2009.

Transaction with Our
Stockholders.

During
the year ended December 31, 2006, we borrowed $18,000 from four of our significant
shareholders. The loans do not bear interest and are repayable upon demand by the
respective creditors. As of December 31, 2008, the loans are still outstanding.

26

---

---

Indebtedness of Directors
and Executive Officers

None
of the directors or executive officers of our company or any associate or affiliate of our
company during the last two fiscal years, is or has been indebted to our company by way of
guarantee, support agreement, letter of credit or other similar agreement or understanding
currently outstanding.

Director
Independence

We
currently act with five directors, consisting of Asi Shalgi, Avner Raanan, Nissan Caspi,
Amir Elbaz and Yehezkel Ram. We have determined that Avner Raanan, Amir Elbaz, Nissan
Caspi and Yehezkel Ram are independent directors as defined in NASDAQ
Marketplace Rule 4200(a)(15).

# Item 14.  Principal
Accountant Fees and Services

# Pre-Approval Policy and
Procedures

In December
2007 we established an audit committee. Our board of directors approved
the engagement of our accountants and all other services provided to us throughout
fiscal year 2008, prior to the services being performed.

Accountant
Fees

The
following table shows the aggregate fees for professional services rendered by our
accountants for the fiscal years ended December 31, 2008 and December 31, 2007.

|                   | Fiscal Year Ended
December 31,
|------------------ | ------------------------------
|
|
|
|
|Audit Fees         |                               
|Audit-Related Fees |                               
|Tax Fees           |                               
|All Other Fees     |                               
|Total              |                               

Audit Fees

Audit
fees for both years consist of fees for professional services associated with the annual
audit of our consolidated financial statements, review of the interim consolidated
financial statements and services that are normally provided by our accountants in
connection with statutory audits required in regulatory filings.

Tax Fees

Tax
Fees consist of fees for professional services rendered for assistance with federal and
state tax compliance.

# PART IV

# Item 15.  Exhibits and
Financial Statements

(a) (1) Financial
Statements:  Reference is made to the Index to Financial Statements and
Financial Statement Schedule in the section entitled Financial Statements and
Supplementary Data in Item 8. of this annual report.

(2) Financial
Statement Schedule: None

(3) Exhibits:  Exhibits
are as set forth in the section entitled Exhibit Index which follows the
section entitled Signatures in this annual report on Form 10-K.

27

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# SIGNATURES

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

| | GLOBAL ENERGY INC.(Registrant)By:  /s/ Asi Shalgi
Asi ShalgiPresident, Chief Executive Officerand DirectorDate: May 18, 2009 | /s/  Alex Werber
Alex WerberTreasurer andChief Financial OfficerDate: May 18, 2009
| | ------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------

KNOWN
ALL MEN BY THESE PRESENTS that each  individual  whose  signature  appears below
 constitutes  and appoints  each of Asi Shalgi and Alex  Werber such  person's  true and
lawful  attorney-in-fact  and agent with full power of substitution and  resubstitution,
 for such person and in such person's name, place and stead, in any and all  capacities,
 to sign any and all  amendments to this annual  report on Form 10-K,  and to file the
same, with all exhibits  thereto,  and all documents in connection  therewith,  with the
 Commission,  granting unto each said  attorney-in-fact  and agent full power and
 authority  to do and perform each and every act and thing  requisite and  necessary to
be done in and about the  premises,  as fully to all intents and purposes as such person
might or could do in person,  hereby  ratifying and confirming  all that any said
 attorney-in-fact and agent,  or any  substitute  or  substitutes  of any of them,  may
lawfully do or cause to be done by virtue hereof.

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

|Signature                                    | Title                                                                                              | Date        
|-------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------
|
|/s/ Asi Shalgi
Asi Shalgi      | President, Chief Executive Officer & Director
(principal executive officer)                        | May 18, 2009
|                                             |                                                                                                    |             
|/s/ Alex Werber
Alex Werber    | Treasurer & Chief Financial Officer (principal
financial officer and principal accounting officer) | May 18, 2009
|                                             |                                                                                                    |             
|/s/  Avner Raanan
Avner Raanan | Director                                                                                           | May 18, 2009
|                                             |                                                                                                    |             
|/s/  Nissan Caspi
Nissan Caspi | Director                                                                                           | May 18, 2009
|                                             |                                                                                                    |             
|/s/  Amir Elbaz
Amir Elbaz     | Director                                                                                           | May 18, 2009
|                                             |                                                                                                    |             
|/s/  Yehezkel Ram
Yehezkel Ram | Director                                                                                           | May 18, 2009

28

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# EXHIBIT INDEX

|Exhibit Number |  | Description
|-------------- |  | -----------

|3.1 |  | Articles
of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Registrants
to the Registrants current report on Form 8-K filed with the Commission on January
1, 2009).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Bylaws
(incorporated by reference to Exhibit 3.(II) to the Registrants Form 10-SB12G as
filed with the Commission on November 10, 1999, file number 000-28025).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.1 |  | Specimen
Certificate for shares of Common Stock (incorporated by reference to exhibit 4.1 to the
registrants registration statement on Form SB-2 filed with the Commission on December 5,
2007).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 |  | Lease
Agreements between Global Energy Ethiopia PLC and the Southern Nations Nationalities
Peoples Regional State, Ethiopia (incorporated by reference to Exhibits 10.1 and
10.2 to the Registrants current report on Form 8-K filed with the Commission on
October 12, 2007).
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 |  | Shareholders
Agreement and Term Sheet with Yanai Man Projects Ltd. (incorporated by reference to
Exhibit 10.1              to the Registrant's current report on Form 8-K filed with the
Commission on July 25, 2007).
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | Shareholder
Agreement with Alphakat GMBH (incorporated by reference to Exhibit 10.1 to the Registrants
current report on Form 8-K field with the Commission on July 13, 2007).
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 |  | Term
sheet with Alphakat GMBH (incorporated by reference to Exhibit 10.1 to the Registrants
current report on Form 8-K field with the Commission on July 13, 2007).
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 |  | Securities
Purchase Agreement between the Registrant and the Buyer listed on Schedule I attached
thereto (incorporated by reference to Exhibit 10.1 to the Registrants current
report on Form 8-K filed with the Commission on July 12, 2007).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 |  | Warrants
GEYI-1-1 and GEYI-1-2 (incorporated by reference to Exhibits 10.2 and 10.3 to the
Registrants current report on Form 8-K filed with the Commission on July 12, 2007).
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 |  | Registration
Rights Agreement between the Registrant and the Buyer listed on Schedule I attached
thereto (incorporated by reference to Exhibit 10.4 to the Registrants current
report on Form 8-K filed with the Commission on July 12, 2007).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 |  | Securities
Purchase Agreement between the Registrant and Cornell Capital Partners, LP (incorporated
by reference to Exhibit 10.5 to the Registrants current report on Form 8-K filed
with the Commission on July 12, 2007).
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9 |  | Term
sheet with Cornell Capital Partners, LP (incorporated by reference to Exhibit 10.1 to the
Registrants current report on Form 8-K filed with the Commission on June 1, 2007).
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.10 |  | DeMonte
Associates Investor Relations Agreement (incorporated by reference to Exhibit 10.1 to the
Registrants current report Form 8-K filed with the Commission on May 30, 2007).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.11 |  | Stock
Option Plan (incorporated by reference to Exhibit 99 to the Registrants current
report on Form 8-K filed with the Commission on May 21, 2007).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

|10.12 |  | Employment
Agreement with Alex Werber (incorporated by reference to Exhibit 99.1 to the Registrants
current report filed on Form 8-K on May 15, 2007).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

|10.13 |  | Employment
Agreement with Dr. Irit Arbel (incorporated by reference to Exhibit 10.2 to the
Registrant's              current report on Form 8-K filed with the Commission on May 11,
2007).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.14 |  | Consulting
Service Agreement with Yossi Raz (incorporated by reference to Exhibit 10.1 to the
Registrants current report filed on Form 8-K on May 11, 2007).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.15 |  | Employment
Agreement with Asi Shalgi (incorporated by reference to Exhibit 10.1 to the Registrants
current report on Form 8-K filed with the Commission on May 2, 2007).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.16 |  | Form
of Subscription Agreement (incorporated by reference to Exhibit 10.2 to the Registrants
current report on Form 8-K filed with the Commission on February 9, 2007).
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.17 |  | Form
of Subscription Agreement (incorporated by reference to Exhibit 10.1 to the Registrants
current report Form 8-K filed with the Commission on October 30, 2006).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.18 |  | Form
of Subscription Agreement (incorporated by reference to Exhibit 10.1 to the Registrants
current report on Form 8-K filed on May 2, 2007)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------

|10.19 |  | Promissory
Note dated September 1, 2006 to the order of Emerdale Enterprises Ltd. (incorporated by
reference to Exhibit 10.1 the Registrants current report on Form 8-K filed with the
Commission on September 11, 2006).
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.20 |  | Amended
and Restated Secured Convertible Debenture No. GEYI-1-1 (incorporated by reference to
Exhibit 10.1              the Registrant's current report on Form 8-K filed with the
Commission on October 26, 2007).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

29

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|10.21 |  | Secured
Convertible Debenture No. GEYI-1-2 (incorporated by reference to Exhibit 10.2 the
Registrant's              current report on Form 8-K filed with the Commission on October
26, 2007).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.22 |  | Consulting
Agreement dated October 20, 2007 between Registrant and Trianon Partners (incorporated by
reference to Exhibit 10.6 to the Registrants quarterly report on Form 10-QSB filed
with the Commission on November 19, 2007).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.23 |  | Employment
Agreement dated November 21, 2007 between Global Energy Inc. and Yossi Raz (incorporated
by reference to Exhibit 10.1 to the Registrants current report on Form 8-K filed
with the Commission on November 29, 2007).
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.24 |  | Secured
Convertible Debenture No. GEYI-1-3 (incorporated by reference to Exhibit 10.8 to the
Registrant's              current report on Form 8-K filed with the Commission on
December 7, 2007).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.25 |  | Business
and Royalty Agreement, dated as February 6, 2008, between Global Energy Inc. and Covanta
Energy Corporation (portions omitted pursuant to a request for confidential treatment).
(incorporated by reference to Exhibit 10.1 to the Registrants current report on
Form 8-K filed on February 12, 2008).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.26 |  | License
Agreement, dated as of February 6, 2008, between AlphaKat  Global Energy GmbH and
Covanta Energy Corporation (portions omitted pursuant to a request for confidential
treatment). (incorporated by reference to Exhibit 10.2 to the Registrants current
report on Form 8-K filed on February 12, 2008).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.27 |  | Business
and Development Agreement, dated as February 6, 2008, between Global Energy Inc. and
Renewable Diesel, LLC. (incorporated by reference to Exhibit 10.3 to the Registrants
exhibit to our current report on Form 8-K filed on February 12, 2008).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.28 |  | License
Agreement, dated as of February 6, 2008, between AlphaKat  Global Energy GmbH and
American Renewable Diesel, LLC (portions omitted pursuant to a request for confidential
treatment). (incorporated by reference to Exhibit 10.4 to the Registrants our
current report on Form 8-K filed on February 12, 2008).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.29 |  | Business
and Royalty Agreement with Covanta Energy Corporation (incorporated by reference to
Exhibit 10.24 to the Registrants annual report on Form 10-K filed on March 31,
2008)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.30 |  | License
Agreement between AlphaKat-Global Energy GmbH and Covanta Energy Corporation
(incorporated by reference to Exhibit 10.25 to the Registrants annual report on
Form 10-K filed on March 31, 2008)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.31 |  | Business
and Development Agreement with Renewable Diesel, LLC (incorporated by reference to
Exhibit 10.26 to the Registrants annual report on Form 10-K filed on March 31,
2008)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.32 |  | License
Agreement between AlphaKat-Global Energy GmbH and American Renewable Diesel, LLC
(incorporated by reference to Exhibit 10.27 to the Registrants annual report on
Form 10-K filed on March 31, 2008)
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.33 |  | Irrevocable
Transfer Agent Instructions  Exhibit D to Securities Purchase Agreement
(incorporated by reference to Exhibit 10.1 to the Registrants current report on
Form 8-K/A filed on February 26, 2008).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.34 |  | Amended
and Restated Irrevocable Transfer Agent Instructions dated March 20, 2008. (incorporated
by reference              to Exhibit 10.34 to the Registrant's registration statement on
Form S-1/A filed on April 14, 2008)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.35 |  | Due
diligence report of Dr. Richard J. Harley, dated October 12, 2007 (incorporated by
reference to Exhibit              10.19 to the Registrant's registration statement on
Form S-1/A filed on April 14, 2008)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.36 |  | Amended
and Restated Irrevocable Transfer Agent Instructions dated March 20, 2008. (incorporated
by reference              to Exhibit 10.34 to the Registrant's registration statement on
Form S-1 filed on May 1, 2008)
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.37 |  | Due
diligence report of Dr. Richard J. Harley, dated October 12, 2007 (incorporated by
reference to Exhibit              10.19 to the Registrant's registration statement on
Form S-1 filed on May 1, 2008)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.38 |  | Business
and Royalty Agreement with Covanta Energy Corporation (incorporated by reference to
Exhibit 10.1 to the Registrants current report on Form 8-K/A filed with the
Commission on April 8, 2008; note that portions of the agreement have been omitted
pursuant to a request for confidential treatment).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.39 |  | License
Agreement between AlphaKat-Global Energy GmbH and Covanta Energy Corporation
(incorporated by reference to Exhibit 10.2 to the Registrants current report on
Form 8-K/A filed with the Commission on April 8, 2008; note that portions of the
agreement have been omitted pursuant to a request for confidential treatment).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.40 |  | Business
and Development Agreement with Renewable Diesel, LLC (incorporated by reference to
Exhibit 10.3 to the Registrants current report on Form 8-K/A filed with the
Commission on April 8, 2008).
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.41 |  | License
Agreement between AlphaKat-Global Energy GmbH and American Renewable Diesel, LLC
(incorporated by reference to Exhibit 10.4 to the Registrants current report on
Form 8-K/A filed with the Commission on April 8, 2008; note that portions of the
agreement have been omitted pursuant to a request for confidential treatment).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.42 |  | Secured
Convertible Debenture No. GEYI-1-4 (incorporated by reference to Exhibit 10.9 to the
Registrant's              current report on Form 8-K filed with the Commission on March
26, 2007).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.43 |  | Amendment
to the Securities Purchase Agreement, dated March 20, 2008 (incorporated by reference to
Exhibit 10.10 to the Registrants current report on Form 8-K filed with the
Commission on March 26, 2007).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.45 |  | Amendment
no. 1 to Amended and Restated Secured Convertible Debenture No. GEYI-1-1 and Amendment
No. 1 to Warrant (incorporated by reference to Exhibit 10.11 to the Registrants
current report on Form 8-K filed with the Commission on March 26, 2008).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

30

---

---

|10.46 |  | Amendment
no. 1 to Secured Convertible Debenture No. GEYI-1-2 1 and Amendment No. 1 to Warrant
(incorporated by reference to Exhibit 10.12 to the Registrants current report on
Form 8-K filed with the Commission on March 26, 2007).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.47 |  | Amendment
no. 1 to Secured Convertible Debenture No. GEYI-1-3 (incorporated by reference to Exhibit
10.13 to              the Registrant's current report on Form 8-K filed with the
Commission on March 26, 2007).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.48 |  | Secured
Convertible Debenture No. GEYI-1-5 (incorporated by reference to Exhibit 10.14 to the
Registrant's              current report on Form 8-K filed with the Commission on May 15,
2008).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.49 |  | Consulting
Agreement with the Resultz Media Group Corp. dated May 22, 2008 (incorporated by
reference to              Exhibit 10.1 to the Registrant's current report on Form 8-K
filed with the Commission on May 30, 2008).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.51 |  | Consulting
Services, Compensation Agreement and Non-Circumvent Agreement with Amir Elbaz dated May
22, 2008 (incorporated by reference to Exhibit 10.14 to the Registrants current
report on Form 8-K filed with the Commission on May 30, 2008).
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.52 |  | Terms
of Agreement dated June 2, 2008 between the Registrant and S.C. Supercom S.A.
(incorporated by reference to Exhibit 10.1 to the Registrants current report on
Form 8-K filed with the Commission on June 19, 2008).
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.53 |  | Letter
Agreement dated July 15, 2008, by and between the Registrant and YA Global Investments,
L.P. (incorporated by reference to Exhibit 10.1 to the Registrants quarterly report
for the quarterly period ended September 30, 2008 on Form 10-Q filed with the Commission
on November 19, 2008).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.54 |  | Letter
Agreement dated September 22, 2008, by and between the Registrant and YA Global
Investments, L.P. (incorporated by reference to Exhibit 10.2 to the Registrants
quarterly report for the quarterly period ended September 30, 2008 on Form 10-Q filed
with the Commission on November 19, 2008).
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.55 |  | Letter
Agreement dated October 8, 2008, by and between the Registrant and Yanai Man Projects
Ltd. (incorporated by reference to Exhibit 10.1 to the Registrants current report
on Form 8-K filed with the Commission on October 14, 2008).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.56 |  | Terms
of Loan Agreement dated October 26, 2008, by and between the Registrant, Mr. Aviram Malik
and Global N.R.G. Pacific Ltd. (incorporated by reference to Exhibit 10.1 to the
Registrants current report on Form 8-K filed with the Commission on October 30,
2008).
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.57 |  | Joint
Venture Agreement dated November 12, 2008, by and between the Registrant, S.C. Supercom
S.A. and S.C. Target Group S.R.L. (incorporated by reference to Exhibit 10.1 to the
Registrants current report on Form 8-K filed with the Commission on November 20,
2008).
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.58 |  | Form
of Securities Purchase Agreement used in connection with the private placement offering
of Global Energy Inc. that closed in two tranches on September 30, 2008 and October 4,
2008 (incorporated by reference to Exhibit 10.62 to the Registrants registration
statement on Form S-1 filed on January 1, 2009)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.59 |  | Form
of Registration Rights Agreement used in connection with the private placement offering
of Global Energy Inc. that closed in two tranches on September 30, 2008 and October 4,
2008 (incorporated by reference to Exhibit 10.63 to the Registrants registration
statement on Form S-1 filed on January 1, 2009)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.60 |  | Purchase
Agreement, dated March 3, 2009 between Global Energy Inc., Global N.R.G. Pacific Ltd. and
Presaco              Investments Ltd. (incorporated by reference to Exhibit 10.1 to the
Registrant's current report on Form 8-K              filed with the Commission on March
10, 2009).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.61 |  | Agreement
to Service Operation between Alphakat  Global Energy GmbH and Waste 2 Oil GmbH.
(incorporated by reference to Exhibit 10.1 to the Registrants current report on
Form 8-K filed with the Commission on May12, 2009).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|21.1* |  | List
of Subsidiaries of the Registrant.
|----- |  | ---------------------------------------

|24.1* |  | Power
of Attorney (included on signature page).
|----- |  | -----------------------------------------------

|31.1* |  | Rule
13a-14(a)/15d-14(a) Certification, executed by Asi Shalgi, Chief Executive Officer,
President and              Director.
|----- |  | -----------------------------------------------------------------------------------------------------------------------------

|31.2* |  | Rule
13a-14(a)/15d-14(a) Certification, executed by Alex Werber, Treasurer and Chief Financial
Officer.
|----- |  | -------------------------------------------------------------------------------------------------------

|32.1* |  | Section
1350 Certifications, executed by Asi Shalgi, Chief Executive Officer, President and
Director, and              Alex Werber, Treasurer and Chief Financial Officer.
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

* Filed herewith

31

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