NOTE 9 – NONCONTROLLING INTEREST

The Company initially owned 100% of the issued and outstanding common stock of its subsidiary FFI, which was represented by 30,000,000 shares. On June 12, 2009, the Company entered into a Stock Purchase Agreement and sold 10%, or 3,000,000 FFI common shares (the “Shares”) to Schrader & Associates Defined Benefit Pension Plan (herein, “Schrader”) for the sum of $350,000.

Schrader granted the Company the first right of refusal to match or exceed any third party bona fide offer to purchase the Shares until June 12, 2014.

As of September 11, 2011, the Company had recorded a subscription receivable of $6.3 million related to the liabilities that were to be ultimately settled by G&A Capital. In 2012, G&A Capital settled approximately $2.7 million of accrued liabilities. As a result, the Company recorded a bad debt charge in 2011 related to the remaining $3.6 million that was not subsequently settled.

Additionally, on June 12, 2009, in consideration of $5,000, the Company granted Schrader an option to purchase an additional 10% of FFI for the sum of $350,000. The option expired on September 12, 2009. On June 30, 2009, Schrader partially exercised the option and purchased an additional 1,500,000 common shares of FFI, which represents 5.0% percent of the issued and outstanding common stock of FFI, for proceeds of $175,000.

The investment by Schrader in FFI is recorded as a noncontrolling interest in the financial statements and is summarized as follows at December 31, 2011 and 2010:

Sale of FFI shares	$	525,000
Sale of option		5,000
Allocated loss – 2009		(17,581)
Balance at December 31, 2009		512,419
Allocated loss - 2010		(9,263)
Balance at December 31, 2010		503,156
Allocated loss - 2011		(4,014)
Balance at December 30, 2011	$	499,142

Management Agreement

In conjunction with the sale of its partial interest in FFI on June 12, 2009, the Company, FFI and Schrader entered into a Management Agreement, (the “Agreement”). The Agreement states that the Company will use the proceeds of the sale of the Shares according to the Company’s use of proceeds Schedule which is attached the Agreement. Additionally, the Company has agreed to nominate and appoint, and or vote into office one person named by Schrader who will be seated as a member of the FFI board of directors for a 12-month term.

FFI, upon receipt of funds from the Company’s use of proceeds schedule, has agreed to purchase certain real property located in Muhlenberg, Kentucky (the “Muhlenberg Property”) for the proposed construction of a Coal-to-Liquids (CTL) plant for approximately $150,000. FFI has agreed to take title to the Muhlenberg Property in such a manner so that the property ownership would automatically transfer to Schrader in the event FFI were to file a petition in Bankruptcy Court, wind-up or liquidate.

Additionally, if FFI were to abandon its pursuit of a CTL plant on the Muhlenberg Property because FFI’s inability to obtain all appropriate approvals and permits required for a CTL plant, then FFI would sell the Muhlenberg Property and use the net proceeds to acquire another property for a CTL plant according to the same type of acquisition and title structure.

If FFI were able to secure an off-take agreement or fuel purchase agreement for fuels from its proposed CTL Plant, that would permit FFI to secure project financing, or if FFI were to secure project financing using the Muhlenberg or similar property as collateral, the Schrader would quit claim the future interest in and to the property to FFI.