Unassociated Document

10-K/A 1 v147029_10ka.htm Unassociated Document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-KSB/A3

x ANNUAL REPORT UNDER SECTION 13 OR 15 (D) OF THE

SECURITIES EXCHANGE ACT OF 1934

For Fiscal Year Ended

December 31, 2007

Commission File #333-74638

ADINO ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Montana	82-0369233
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification
	Number)

2500 CityWest Boulevard, Suite 300
Houston, Texas	77042
(Address of principal executive offices)	(Zip Code)

Issuer’s telephone number: (281) 209 – 9800

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

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

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No¨

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B not contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB/A2 or any amendment to this Form 10-KSB/A2. x

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

State issuer’s revenues for its most recent fiscal year: $1,967,813

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days (See definition of affiliate in Rule 12b-2 of the Exchange Act.) $3,610,143 (calculated as of the closing price of April 11, 2008)

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. 49,544,226

DOCUMENTS INCORPORATED BY REFERENCE

None.

STATEMENT REGARDING THIS FILING

This filing amends our Annual Report on Form 10-KSB/A for the year ended December 31, 2007, previously filed on August 11, 2008. This filing is being submitted to expand the Results of Operations section in Management’s Discussion and Analysis and to correct the amortization period of a gain realized during the lawsuit settlement in March 2007. The periods affected have been corrected and are reflected in Note 19.

PART 1

ITEM 1. DESCRIPTION OF BUSINESS

ORGANIZATION AND GENERAL INFORMATION ABOUT THE COMPANY

Adino Energy Corporation ("Adino" or the "Company"), was incorporated under the laws of the State of Montana on August 13, 1981 under the name Golden Maple Mining and Leaching Company, Inc. In 1985, the Company ceased its mining operations and discontinued all business operations in 1990. The Company then acquired Consolidated Medical Management, Inc. (“CMMI”) and kept the CMMI name. The Company initially focused its efforts on the continuation of the business services offered by CMMI. These services focused on the delivery of turn-key management services for the home health industry, predominately in south Louisiana. The Company exited the medical business in December 2000. In August 2001, the Company decided to refocus on the oil and gas industry. In 2006, we decided to cease our oil and gas activities and focus on becoming an energy company.

The Company has a subsidiary, Intercontinental Fuels, LLC (“IFL”), a Texas limited liability company, which was founded in 2003. Adino first acquired 75% of IFL’s membership interests in 2003. We now own 100% of IFL.

In January 2008, after the period covered by this annual report, the Company changed its name to Adino Energy Corporation. We believe that this name better reflects our current and future business activities, as we plan to continue focusing on the energy industry. Specifically, Adino plans on acquiring fuel terminals, outsourcing operations, and selling fuel to others in the fuel supply chain, such as wholesalers, distributors, and jobbers.

DESCRIPTION OF BUSINESS

During 2007, all of the Company’s revenues came from IFL. IFL operates a fuel storage terminal located in Houston, Texas. The IFL terminal is the only non-branded, independent fuel terminal in North Houston. This terminal distributes petroleum-based products and biodiesel to local wholesale and retail fuel distributors. IFL’s customers include the Metropolitan Transportation Authority of Harris County, Texas and Gulf Hydrocarbon, a leading biodiesel distributor in the Gulf Coast region with national operations.

IFL’s business consists of storing fuel for customers and dispensing fuel through our leased facility in Houston, Texas. Our customers pay storage fees for storing their fuels in our tanks. They pay IFL throughput fees for blending and dispensing the fuels into our customer’s tanker trucks.

IFL has designed a streamlined terminal management plan. In 2007, IFL began using a third party terminal management company for basic terminal operations. This strategy allows IFL to contain costs and easily duplicate the model for future acquisitions.

IFL is currently at maximum storage capacity, with four customers that occupy 99% of the terminal’s storage capacity. One customer represents 94% of the Company’s outstanding accounts receivable at December 31, 2007.

ENVIRONMENTAL MATTERS

Our operations are subject to numerous federal, state, and local laws and regulations controlling the generation, use, storage, and discharge of materials into the environment or otherwise relating to the protection of the environment.

In the United States, the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), also known as "Superfund," and comparable state statutes impose strict, joint, and several liability on certain classes of persons who are considered to have contributed to the release of a "hazardous substance" into the environment. These persons include the owner or operator of a disposal site or sites where a release occurred and companies that generated, disposed or arranged for the disposal of the hazardous substances released at the site. Under CERCLA such persons or companies may be retroactively liable for the costs of cleaning up the hazardous substances that have been released into the environment and for damages to natural resources, and it is common for neighboring land owners and other third parties to file claims for personal injury, property damage, and recovery of response costs allegedly caused by the hazardous substances released into the environment. The Resource Conservation and Recovery Act ("RCRA") and comparable state statutes govern the disposal of "solid waste" and "hazardous waste" and authorize imposition of substantial civil and criminal penalties for failing to prevent surface and subsurface pollution, as well as to control the generation, transportation, treatment, storage and disposal of hazardous waste generated by oil and gas operations.

Although CERCLA currently contains a "petroleum exclusion" from the definitions of "hazardous substance," state laws affecting our operations impose cleanup liability relating to petroleum and petroleum related products, including crude oil cleanups. In addition, although RCRA regulations currently classify certain oilfield wastes which are uniquely associated with field operations as "non-hazardous," such exploration, development and production wastes could be reclassified by regulation as hazardous wastes thereby administratively making such wastes subject to more stringent handling and disposal requirements.

We currently own or lease, or will own or lease in the future, properties that have been used for the storage of petroleum products. Although we utilize standard industry operating and disposal practices, hydrocarbons or other wastes may be disposed of or released on or under the properties owned or leased by us or on or under other locations where such wastes have been taken for disposal. In addition, many of these properties have been operated by third parties whose treatment and disposal or release of hydrocarbons or other wastes was not under our control. These properties and the wastes disposed thereon may be subject to CERCLA, RCRA, and analogous state laws. Our operations are also impacted by regulations governing the disposal of naturally occurring radioactive materials ("NORM"). The Company must comply with the Clean Air Act and comparable state statutes, which prohibit the emissions of air contaminants, although a majority of our activities are exempted under a standard exemption.

United States federal regulations also require certain owners and operators of facilities that store or otherwise handle oil to prepare and implement spill prevention, control and countermeasure plans and spill response plans relating to possible discharge of oil into surface waters. The federal Oil Pollution Act ("OPA") contains numerous requirements relating to prevention of, reporting of, and response to oil spills into waters of the United States. For facilities that may affect state waters, OPA requires an operator to demonstrate $10 million in financial responsibility. State laws mandate crude oil cleanup programs with respect to contaminated soil.

We are not currently involved in any administrative, judicial or legal proceedings arising under domestic or foreign, federal, state, or local environmental protection laws and regulations, or under federal or state common law, which would have a material adverse effect on our financial position or results of operations.

EMPLOYEES

As of December 31, 2007, Adino has 4 full time employees, including executive officers, non-executive officers, secretarial and clerical personnel and field personnel.

ITEM 2. DESCRIPTION OF PROPERTY

Adino’s executive offices are located at 2500 CityWest Boulevard, Houston, Texas. These premises are leased.

IFL’s headquarters are located at the fuel distribution terminal it operates for 17617 Aldine Westfield Rd., LLC. The terminal, located at 17617 Aldine Westfield Road, Houston, Texas, is situated on 10 ½ acres adjacent to, and to the west of the George Bush International Airport (IAH). There are 7 fuel storage tanks with a collective capacity of 163,349 barrels of product (6,860,658 gallons). Auxiliary buildings containing 5,800 square feet are present. There are three loading bays for tanker trucks. The terminal is configured to handle 20,000,000 gallons of motor fuel per month through the truck loading racks. Although not currently connected, a six inch dedicated pipeline connects the terminal to IAH, capable of moving 22,000,000 gallons of jet fuel per month through the pipeline to the airport.

Originally built between 1981 and 1988, substantial renovation and improvement was done by two customers in 2000-2001. Adino’s management team acquired the non-operational terminal in 2003. In 2004, the property was appraised for $7,100,000, without customers or revenue. Adino’s management then brought the terminal up to code, passed all inspections and acquired all licenses necessary for operations. In March 2006, the terminal opened with its first storage customer, the Metropolitan Transportation Authority of Harris County (Houston’s mass transit authority). During 2006 and 2007, additional customers were added and substantial improvements were made to the property and facilities. Security was enhanced and office buildings and grounds were improved. The loading rack had a third lane added to accommodate additional customer load. Larger, more efficient pumps were installed and the rack was configured to handle the newly mandated ultra low sulfur diesel (“ULSD”).

Kerosene, jet fuel, gasoline and diesel oil can be brought to the terminal via TEPPCO and Magellan pipelines. Jet fuel can be provided to IAH via pipeline and by truck to other airports. Gasoline and diesel fuel are shipped out by tanker truck. IFL is not currently pursuing the aviation market.

The property is not located in a flood hazard area. There are no known soil or subsoil conditions which would adversely affect construction. Private well and septic systems are in place and in sufficient capacity to support the terminal. Neither functional nor external obsolescence affect the property.

IFL has an option to purchase the terminal until September 30, 2008 for $3.55 million.

ITEM 3. LEGAL PROCEEDINGS

North American Reserve Corporation v. Palmer, et. al.

In 2005, North American Reserve Corporation (“NARC”) sued Dr. David Zehr, Patrick Palmer, and Jack Peoples based on their personal guarantees of certain promissory notes issued to Wells Fargo Bank, N.A. (“Wells Fargo”). The guarantees related to Wells Fargo’s loan to Palm Petroleum and were secured by the land on which IFL’s terminal is now located. This lawsuit and the other related litigation concerned a joint venture between Adino and NARC to acquire the terminal that IFL now operates. Several other parties were indirectly involved in this joint venture.

In connection with this joint venture, NARC purchased the Wells Fargo notes, which were then in default. These notes were secured by the land on which the terminal is located. The debtors on these notes were Dr. David Zehr, Patrick Palmer, Jack Peoples, and Palm Petroleum. Adino loaned part of the money to NARC to purchase the Wells Fargo notes. The money that Adino loaned to NARC had come from Dr. Zehr’s purchase of a Adino debenture. Adino then purchased Dr. Zehr’s UCC-1 liens on the terminal’s assets and second lien on the land on which the terminal is located in exchange for a second debenture.

After purchasing the notes from Wells Fargo, NARC proceeded to foreclose on the land guaranteeing the notes in 2003. Adino also foreclosed on the terminal’s assets securing the liens that it purchased from Dr. Zehr. NARC then sold the land to IFL for $1,025,733 in September 2003 in exchange for a promissory note. Adino sold its assets to IFL in exchange for a 75% membership interest in IFL and a $1,100,000 promissory note.

Two years after NARC had sold the property to IFL, it alleged that a deficiency existed on the Wells Fargo notes. NARC then sued Dr. Zehr, Palmer and Peoples, all of whom had personally guaranteed the notes, in order to recover this deficiency.

Palmer filed a counterclaim against Dr. Zehr for negligent misrepresentation, conspiracy to defraud, and wrongful foreclosure. Dr. Zehr was a director of Palm Petroleum, and as a result, Palmer claimed that Dr. Zehr had conspired with NARC and Adino to allow them to foreclose on the terminal in breach of Dr. Zehr’s fiduciary duty to the company.

Dr. Zehr then crossclaimed against Adino, alleging fraud and violations of the Texas Securities Act based on Adino’s sale to him of the debentures.

At the time of these lawsuits, IFL’s note to NARC was in default. The amount outstanding under the note was $725,733. In addition, Adino owed Dr. Zehr the principal amount of $3,100,000 plus accrued interest under certain notes and debentures. These debentures were also in default at the time of the lawsuits.

One of the main issues in these lawsuits was whether NARC or IFL owned the terminal. NARC claimed that as a result of its foreclosure of the terminal, it owned the entire terminal, including the facilities. Adino claimed that NARC’s foreclosure only vested NARC with ownership of the real property and that all of the above-ground assets (storage tanks and other facilities) belonged to IFL.

On March 23, 2007, the Company settled all litigation with all parties to this transaction. In the settlement, IFL released its claim of ownership of the terminal in favor of NARC. 17617 Aldine Westfield Road, LLC, an entity controlled by Dr. Zehr, then purchased the terminal from NARC for total consideration of $1.55 million ($150,000 in cash and a $1.4 million note). Simultaneously with these transactions, IFL agreed to lease the terminal from 17617 Aldine Westfield Road, LLC for 18 months at $15,000 per month with an option to purchase the terminal for $3.55 million. In return for the lease, all debentures and other obligations owed to Dr. Zehr were extinguished.

As a result of these transactions, all claims by and against all parties except Peoples were released. In addition, all liens pending on IFL’s property were released.

Adino Energy Corporation v. CapNet Securities Corporation

On July 20, 2007, the Company filed suit against CapNet Securities Corporation, its former investment banking firm (“CapNet”), in the 189th Judicial District Court of Harris County, Texas under Cause No. 2007-44066.

In this lawsuit, Adino claimed that CapNet breached its fiduciary duty to Adino and that CapNet had converted 3,000,000 shares of Adino stock. In the lawsuit, Adino requested significant damages and a declaratory judgment of Adino’s and CapNet’s rights, status, and legal relations under an investment banking agreement between Adino and CapNet entered into on September 29, 2006 (the “Investment Banking Agreement”).

CapNet has filed a counterclaim against Adino alleging that Adino owes CapNet certain sums as compensation for services rendered under the Investment Banking Agreement. CapNet seeks to compel Adino to issue CapNet a certain amount of shares of Adino stock (the amount is in dispute), plus attorney’s fees, certain expenses that CapNet allegedly incurred under the Investment Banking Agreement, and costs of suit. Management believes that the outcome will be favorable for Adino and that no estimate of loss if any is determinable at this time.

This case is currently set for trial in May 2009.

Adino Energy Corporation v. Coastal Resources Group, Inc. and Lowell Leatherman

On December 17, 2007, the Company filed suit against Coastal Resources Group, Inc. (“Coastal”) in the 12th Judicial District Court of Walker County, Texas, under Cause No, 24102, to collect a $30,000 loan made to Coastal in 2004. Adino’s suit seeks $30,000 plus interest at 6% per annum, plus attorney’s fees and costs of court.

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

Not applicable.

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of December 31, 2007, Adino had 49,544,226 shares of common stock outstanding. There are approximately 442 holders of record of our common stock.

The following table sets forth certain information as to the high and low bid quotations quoted on the OTC Bulletin Board for 2006 and 2007. Information with respect to over-the-counter bid quotations represents prices between dealers, does not include retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions.

Period	High		Low
First Quarter 2007	$	0.05	$	0.03
Second Quarter 2007	$	0.26	$	0.04
Third Quarter 2007	$	0.19	$	0.05
Fourth Quarter 2007	$	0.23	$	0.06

First Quarter 2006	$	0.010	$	0.009
Second Quarter 2006	$	0.015	$	0.015
Third Quarter 2006	$	0.011	$	0.008
Fourth Quarter 2006	$	0.035	$	0.009

The source of the above information is Small Cap Support Services, Inc., the Company’s investor relations firm.

DIVIDENDS

We have not paid any dividends on our common stock in the past two fiscal years. We presently intend to retain future earnings to support our growth. Any payment of cash dividends in the future will be dependent upon the amount of funds legally available, our earnings, financial condition, capital requirements, and any other factors which our Board of Directors deems relevant.

RECENT SALES OF UNREGISTERED SECURITIES

On December 8, 2006, we authorized the issuance of 12,750,000 shares to our directors and officers. Of this amount, 12,000,000 were authorized for our Chairman and Chief Executive Officer as conversion of their accrued salaries into stock of the Company. The additional 750,000 were issued as compensation to a director.

On June 13, 2007, we issued options to our Chairman and Chief Executive Officer permitting them to purchase up to 12,000,000 shares apiece of Adino stock. In November 2007, they relinquished 9,000,000 shares each under these options. Under the new terms of the options, they are exercisable for 3,000,000 shares apiece of Adino stock at $0.03 per share.

On November 20, 2007, we authorized the issuance of 1,500,000 shares to our Chairman and Executive Officer in exchange for 1,000,000 shares of stock they paid to a third party on our behalf.

Each of these offerings was made upon reliance on the exemption from registration contained in Section 4(2) of the Securities Act.

PART II

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

The following is a discussion of our financial condition, results of operations, liquidity and capital resources. This discussion should be read in conjunction with our Consolidated Financial Statements and the notes thereto included elsewhere in this Form 10-KSB.

FORWARD-LOOKING INFORMATION

This report contains a number of forward-looking statements, which reflect the Company's current views with respect to future events and financial performance including statements regarding the Company's projections. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. In this report, the words "anticipates", "believes", "expects", "intends", "future", "plans", "targets" and similar expressions identify forward-looking statements. Readers are cautioned to not place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements, to reflect events or circumstances that may arise after the date hereof. Additionally, these statements are based on certain assumptions that may prove to be erroneous and are subject to certain risks including, but not limited to, the Company's dependence on limited cash resources, and its dependence on certain key personnel within the Company. Accordingly, actual results may differ, possibly materially, from the predictions contained herein.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. These estimates and assumptions provide a basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and these differences may be material.

Consolidation

The accompanying financial statements include the accounts of Adino Energy Corporation and its wholly owned subsidiary, Intercontinental Fuels, LLC. All intercompany accounts and transactions have been eliminated.

Revenue Recognition

IFL earns revenue from both throughput and storage fees on a monthly basis. The Company recognizes revenue from throughput fees in the month that the services are provided based upon contractually determined rates. The Company recognizes storage fee revenue in the month that the service is provided in accordance with our customer contracts. As described above, in accordance with the requirement of Staff Accounting Bulletin 104, the Company recognizes revenue when (1) persuasive evidence of an arrangement exists (contracts) (2) delivery has occurred (monthly) (3) the seller’s price is fixed or determinable (per the customer’s contract) and (4) collectability is reasonably assured (based upon our credit policy).

The Company has performed an analysis under Emerging Issues Task Force 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent,” and determined that gross revenue reporting is appropriate, since (1) the Company is the primary obligor in the transaction (2) the Company has latitude in establishing price and (3) the Company changes the product and performs part of the service.

Stock-Based Compensation

On January 1, 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123 — Revised 2004, “Share-Based Payment.” which establishes accounting for stock-based payment transactions for employee services and goods and services received from non-employees. SFAS 123(R) is a revision of SFAS 123, “Accounting for Stock-Based Compensation”, and supersedes Accounting Principles Board No. 25, “Accounting for Stock Issued to Employees”. Under the provisions of SFAS 123(R), stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the award, and is recognized as expense over the employee's or non-employee's service period, which is generally the vesting period of the equity grant.

Goodwill and Intangible Assets

Goodwill represents the cost in excess of the fair value of net assets acquired in business combinations. Statement of financial accounting standards SFAS No. 142, “Goodwill and Other Intangible Assets”, prescribes the process for impairment testing of goodwill on an annual basis or more often if a triggering event occurs.

We evaluate the carrying value of goodwill during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include a significant adverse change in legal factors or in business or the business climate or unanticipated competition. When evaluating whether goodwill is impaired, we compare the fair value of the business to its carrying amount, including goodwill. The fair value of the reporting unit is estimated using discounted cash flows. If the carrying amount of the business exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss would be calculated by comparing the implied fair value of reporting unit goodwill to its carrying amount. Based on the evaluations performed by management there were no indicators of impairment at December 31, 2007.

Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at it fair value and is then re−valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option−based derivative financial instruments, the Company uses the Black−Scholes model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non−current based on whether or not cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Income Taxes

We have adopted the provisions of SFAS No. 109, “Accounting for Income Taxes" which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 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,” by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. If a tax position is more likely than not to be sustained upon examination, then an enterprise would be required to recognize in its financial statements the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

Restatements

The 2003-2006 financial results have been restated. See Note 19 for details. Additionally, the quarterly filings for March 31, June 30, and September 30, 2006 and 2007 have been restated. See Note 20 for details.

RESULTS OF OPERATIONS

Revenue: The Company continues to see strong growth from operations. Revenue increased from $760,313 at December 31, 2006 to $1,967,813 at December 31, 2007. During the first quarter of 2007, Adino’s wholly owned subsidiary, Intercontinental Fuels, LLC added a substantial new customer. The new customer and increased throughput volumes from the existing customer base accounted for an increase in throughput and additive revenue of $807,992 for 2007. Additionally, Adino realized consulting revenues of $250,000 for the year ended December 31, 2007, with no corresponding revenue for 2006.

Cost of Product Sales: The increased throughput realized from new customers and increased volumes accounted for an increase in cost of goods sold (fuel additive expense) from $142,988 to $511,908 for the periods ended December 31, 2006 and 2007, respectively. Revenues increased at a greater rate than costs, and as a result, Adino posted a gross margin of $1,455,905 for the year ended December 31, 2007, compared to $617,325 for the prior year.

Payroll and related expenses: The terminal restarted significant operations in March 2006, with 2 employees from March 2006 through June 2007. In July 2007, the operation of the terminal was outsourced to a terminal management company. Payroll expenses increased from $77,594 at December 31, 2006 to $129,393 at December 31, 2007 primarily due to compensation accrued for the president of IFL.

Terminal Management: In an effort to control costs within the Company’s terminal operations, in July 2007, the Company outsourced its terminal operations. The monthly contract includes employee salaries and benefits, terminal operational expenses, insurance and other ancillary operating expenses. For this reason, the terminal management expense has increased from $75,322 at December 31, 2006 to $268,195 at December 31, 2007. Management is encouraged by the success of this transaction and plans to utilize the terminal management model in any future acquisitions.

General and administrative: The Company had a decrease in general and administrative expense from 2006 to 2007 of $35,288 due to certain office management and facility repair expenses being included in the terminal management contract, effective July 1, 2007.

Legal and professional: During March 2007, the Company experienced significant legal expenses associated with the 17617 Aldine Westfield Road terminal lawsuit settlement. Legal and professional expense was $110,574 at December 31, 2006, compared to $500,183 at December 31, 2007, an increase of $389,609.

Consulting Expense: The Company’s consulting expenses increased from $1,120,361 to $1,960,075 at December 31, 2006 and 2007, respectively. The 2007 increase was largely due to expense recognized in Mr. Byrd and Mr. Wooley’s warrant conversion and fluctuation in the stock payable valuation. See Notes 11 and 14 of the Company’s audited financial statement for a detailed explanation of these instruments.

Interest Expense: Interest expense to the Company was $880,798 at December 31, 2007 compared to $512,153 at December 31, 2007, a decrease of $368,645. During 2006, the Company recorded interest expense on several notes payable that were extinguished in the 17617 Aldine Westfield terminal lawsuit settlement on March 23, 2007. This expense was partially offset by interest expense associated with the terminal capital lease effective April 1, 2007.

Loss on Embedded Derivative Liability: The Company had a convertible debenture (see Notes 9 and 10) that was settled as part of the terminal lawsuit settlement on March 23, 2007. Derivative financial instruments are recorded at fair value and then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. Revaluation at December 31, 2006 resulted in a loss of $2,490,426, with no accompanying expense for 2007 due to the settlement.

Oil and Gas Writeoffs: During 2006, the Company wrote off shut in oil and gas wells for $60,000. There are no other oil and gas properties held by the Company.

Gain from Lawsuit: The lawsuit settlement on March 23, 2007 resulted in a gain to the Company of $1,480,383. The transaction was deemed to be a sale/leaseback, and therefore the gain is recognized over the life of the capital asset, or 15 years. Expense for 2007 was $74,019 for April – December 2007. See Note 15 of the Company’s audited financial statements for more information regarding the accounting treatment of this transaction.

RESULTS OF OPERATIONS FOR RESTATED PERIODS (See Note 19)

2003: For the fiscal year ended December 31, 2003, Adino had a net loss of ($898,303) or ($0.02) per share. The most significant change over previously filed financials statements was the consolidation of Intercontinental Fuels, LLC, a majority owned subsidiary and the related interest expense.

2004: For the fiscal year ended December 31, 2004, Adino had a net loss of ($1,835,127) or ($0.04) per share. During 2004, Adino entered into a convertible debenture agreement with Dr. Zehr, which resulted in a derivative. This restatement properly accounts for the derivative loss during 2004 of ($46,417). The primary reason for the additional loss is fully recording the operating losses of IFL.

2005: For the fiscal year ended December 31, 2005, Adino had a net loss of ($1,111,162) or ($0.02) per share. This increased loss of ($852,237) was primarily due to interest expense related to several defaulted notes payable. All of the notes in question were settled without cash payment in the March 23, 2007 lawsuit settlement.

2006: For the fiscal year ended December 31 2006, Adino had a net loss of ($4,817,315) or ($0.11) per share. A significant portion of this loss is due to Adino’s loss on derivatives of (2,490,426) and interest expense of ($880,798). During 2006, Adino’s wholly owned subsidiary, Intercontinental Fuels, LLC began operations, realizing $760,313 in revenue and $617,325 in gross margin.

Adino has restated the March 31, June 30 and September 30, 2006 financial statements in attached Note 19. The most significant changes over previously filed financial statements were the consolidation of Intercontinental Fuels, LLC and the correction of accounting treatment for the Dr. Zehr convertible debenture, determined to be a derivative.

2007: Adino has restated the March 31, June 30 and September 30, 2007 financial statements in attached Note 19. The most significant adjustment to the financial statements is the accounting for the capital lease associated with the terminal operated by Intercontinental Fuels, LLC at 17617 Aldine Westfield Road, Houston, TX. Additionally, the Company settled all litigation associated with the acquisition of the above mentioned terminal on March 23, 2007. The net gain from this settlement, $1,480,383, has been corrected for recognition over the life of the capital asset, 15 years.

See Note 19 of the Company’s audited financial statements for detailed restatement presentation.

LIQUIDITY AND CAPITAL RESOURCES

During the years 2003 to 2006, Adino had substantial liquidity and cash flow problems due to its lack of operating revenues. In 2007, the Company’s liquidity and cash flow improved due to revenues generated by IFL; however, we still experienced liquidity problems due to debts incurred by Adino in prior years.

Our working capital deficit at December 31, 2007 was $7,307,724 compared to $11,325,117 at December 31, 2006. Of this amount, $3,355,984 represents the purchase price for the terminal assets which are currently under a capital lease. The Company believes that the market value of the terminal assets is significantly greater than the total working capital deficit and that current cash flow is adequate to support a longer term financing package to satisfy the working capital deficit. These factors lead the Company to expect that the terminal financing will include additional capital to service and pay down existing obligations. Certain officers and directors have agreed in writing to postpone payment if necessary should the Company need capital it would otherwise pay these individuals. Lastly, the Company plans to satisfy current year and future cash flow requirements through merger and acquisition opportunities including the expansion of existing business opportunities.

COMPETITION

The market for fuel storage is localized by its very nature. Fuel wholesalers need quick and close access to fuel to supply their customers. As a result, the relevant market may not be a city, but only a certain part of a city.

Adino’s IFL terminal is located in North Houston close to the George Bush Intercontinental Airport. Due to the size of the Houston metropolitan area, the relevant market is North Houston, not the entire metropolitan area.

There are several terminals in the Houston area. Several of these terminals are owned by integrated petroleum companies and exist solely to supply their franchisees and company-owned retail locations. Others sell to wholesalers in general but will not sell to competitors.

Overall, we believe that competition to IFL is negligible given its location and the fact that it serves independent petroleum wholesalers.

RISK FACTORS

Although the Company is now an operating entity and its financial results have improved greatly, Adino still continues to sustain minor operating losses. Revenues must be maintained and increased to allow Adino to show continued improvement.

The market price of the Company's common stock has fluctuated significantly since it began to be publicly traded in 1998 and may continue to be highly volatile. Factors such as the ability of the Company to achieve development goals, ability of the Company to compete in the petroleum distribution industry, the ability of the Company to raise additional funds, general market conditions and other factors affecting the Company's business that are beyond the Company's control may cause significant fluctuations in the market price of the Company's common stock. Such market fluctuations could adversely affect the market price for the Company's common stock.

Our auditors included a going concern paragraph regarding their doubt of our ability to continue as a going concern in our audited financial statements which can be found in note 2 to the financial statements. The ability of the Company to continue as a going concern depends upon its ability to obtain funding for its working capital deficit. $3,355,984 of the working capital deficit represents the purchase price for the terminal assets which are currently under a capital lease. The Company believes that the market value of the terminal assets is significantly greater than the total working capital deficit and that current cash flow is adequate to support a longer term financing package to satisfy the working capital deficit. These factors lead the Company to expect that the terminal financing will include additional capital to service and pay down existing obligations. Certain officers and directors have agreed in writing to postpone payment if necessary should the Company need capital it would otherwise pay these individuals. Lastly, the Company plans to grow through merger and acquisition opportunities including the expansion of existing business opportunities. The Company expects these growth opportunities to be financed by a combination of equity and debt capital; however, in the event the Company is unable to obtain additional debt and equity financing; the Company may not be able to continue its operations.

Company management has also identified additional risk factors related to its operations and financial statement presentation and reliability. Specifically, as of December 31, 2007, we do not have a written code of business conduct and ethics that governs the Company’s employees, officers and directors. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-B.

As of December 31, 2007, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Additionally, we did not maintain effective controls over financial reporting which resulted in the restatement of several previous financial statements. Specifically, controls were not designed and in place to ensure that majority-owned subsidiaries and complex convertible instruments were properly reflected in our financial statements.

The Company has taken the following steps to address the weaknesses described above. First, the Company has adopted a code of ethics which is attached by exhibit to this filing. Second, we have hired an internal controller whose function is to handle the Company’s accounting. Finally, we have restated our financial statements in order to reflect the proper consolidation of IFL and proper accounting for the derivate instrument discussed above.

ITEM 7. FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Adino Energy Corporation

Houston, Texas

We have audited the accompanying consolidated balance sheets of Adino Energy Corporation as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2007. 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 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. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 financial statements referred to above present fairly, in all material respects, the financial position of Adino Energy Corporation as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and at December 31, 2007 is in a negative working capital position. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 19 to the financial statements, the Company has restated its financial statements as of and for the years ended December 31, 2003 to December 31, 2006 to correct errors in its accounting for convertible notes payable, consolidation of majority owned entities, and other short term liabilities.

/s/ McElravy, Kinchen & Associates, P.C.

www.mkacpas.com

Houston, Texas

April 14, 2008

ITEM 1. FINANCIAL STATEMENTS.

ADINO ENERGY CORPORATION

Consolidated Balance Sheets

AS OF DECEMBER 31, 2007 AND DECEMBER 31, 2006

	December 31, 2007 (Restated)			December 31, 2006 (Restated)
ASSETS
Cash in bank	$	91,264		$	14,223
Accounts receivable		301,765			137,945
Prepaid assets		3,896			-
Inventory		4,177			-
Total current assets		401,102			152,168

Fixed assets, net of accumulated depreciation of $168,518 and $660,841, respectively		3,246,750			3,328,221
Goodwill		1,559,240			1,559,240
Notes receivable		750,000			850,000
Other assets		312,658			253,908
Total non-current assets		5,868,648			5,991,369

TOTAL ASSETS	$	6,269,750		$	6,143,537

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Accounts payable	$	888,140		$	382,592
Accrued liabilities		141,375			284,849
Accrued liabilities – related party		1,311,789			904,644
Notes payable – current portion		412,006			2,047,686
Debenture payable		-			2,350,000
Lease obligation – terminal		3,355,984			-
Stock payable		1,290,840			450,738
Interest payable		210,000			794,766
Deferred gain on sale/leaseback – current portion		98,692			-
Derivative liability		-			4,262,010
Total current liabilities		7,708,826			11,477,285

Deferred gain on sale/leaseback		1,307,672			-
Notes payable		1,569,650			1,500,000

TOTAL LIABILITIES		10,586,148			12,977,285

STOCKHOLDERS’ DEFICIT

Preferred stock, $.001 par value, 20,000,000 shares authorized, no shares outstanding		-			-
Capital stock, $0.001 par value, 50,000,000 shares authorized, 49,544,226 and 44,544,226 shares issued and outstanding at December 31, 2007 and December 31, 2006, respectively		49,544			44,544
Additional paid in capital		11,228,933			6,452,788
Retained deficit		(15,594,875	)		(13,331,080	)
Total stockholders’ deficit		(4,316,398	)		(6,833,748	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	6,269,750		$	6,143,537

The accompanying notes are an integral part of these financial statements.

ADINO ENERGY CORPORATION

Consolidated Statements of Operations

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

	Year Ended December 31, 2007 (Restated)			Year Ended December 31, 2006 (Restated)
REVENUES AND GROSS MARGIN
Revenues	$	1,967,813		$	760,313

OPERATING EXPENSES
Cost of product sales		511,908			142,988
Payroll and related expenses		129,393			77,594
Terminal management		268,195			75,322
General and administrative		151,609			186,897
Legal and professional		500,183			110,574
Consulting fees		1,960,075			1,120,361
Repairs		123,959			121,114
Depreciation expense		214,516			198,094
Operating supplies		6,796			95,536
Total operating expenses		3,866,634			2,128,480

OPERATING LOSS		(1,898,821	)		(1,368,167	)

OTHER INCOME AND EXPENSES
Interest income		78,359			82,441
Interest expense		(512,153	)		(880,798	)
Loss on embedded derivative liability		-			(2,490,426	)
Other expense		(5,199	)		(100,365	)
Oil and gas write-offs		-			(60,000	)
Gain from lawsuit		74,019			-
Total other income and expense		(364,974	)		(3,449,148	)

NET LOSS	$	(2,263,795	)	$	(4,817,315	)

Net loss per share, basic	$	(0.05	)	$	(0.11	)

Net loss per share, fully diluted (50,000,000 shares 2007 and 44,544,226 shares 2006) See Note 13	$	(0.05	)	$	(0.11	)
Weighted average shares outstanding		48,133,267			44,544,226

The accompanying notes are an integral part of these financial statements.

ADINO ENERGY CORPORATION

Consolidated Statement of Changes in Stockholders’ Deficit

FOR THE YEARS ENDED DECEMBER 31, 2006 and 2007

	Shares		Amount		Additional Paid in Capital		Retained Deficit			Total

Balance December 31, 2005 (Restated)		44,544,226	$	44,544	$	6,452,788	$	(8,513,765	)	$	(2,016,433	)

Net loss								(4,817,315	)		(4,817,315	)

Balance December 31, 2006 (Restated)		44,544,226		44,544		6,452,788		(13,331,080	)		(6,833,748	)

Options issued for services						14,782					14,782
Warrants issued for services						179,353					179,353
Shares issued for stock payable		5,000,000		5,000		320,000					325,000
Extinguishment of derivative liability						4,262,010					4,262,010
Net loss								(2,263,795	)		(2,263,795	)

Balance December 31, 2007 (Restated)		49,544,226	$	49,544	$	11,228,933	$	(15,594,875	)	$	(4,316,398	)

The accompanying notes are an integral part of these financial statements.

ADINO ENERGY CORPORATION

Consolidated Statements of Cash Flows

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

	December 31, 2007 (Restated)			December 31, 2006 (Restated)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,263,795	)	$	(4,817,315	)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		214,516			198,094
Warrants and options issued for services		-			-
Amortization of debt discount		-			591,497
Impairment of oil and gas properties		-			60,000
Stock issued for services and compensation		519,135			-
Change in derivative liability valuation		-			2,490,426
Gain from lawsuit		(74,019	)		-

Change in operating assets and liabilities:
Accounts receivable		(163,820	)		(137,945	)
Inventory		(4,177	)		-
Other assets		(80,258	)		(82,400	)
Accounts payable and accrued liabilities		2,161,820			1,259,913

Net cash provided by (used in) operating activities		309,402			(437,730	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		(232,361	)		-
Net cash used in investing activities		(232,361	)		-

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of debt		-			451,953
Net cash provided by financing activities		-			451,953

Net change in cash and cash equivalents		77,041			14,223
Cash and cash equivalents, beginning of period		14,223			-
Cash and cash equivalents, end of period	$	91,264		$	14,223

Cash paid for:
Interest		-			-
Income taxes		-			-

Supplemental disclosures of non-cash information:

Exchange of debenture and terminal for liabilities including convertible debenture	$	1,324,516		$	-
Additional interest in IFL in exchange for a note payable	$	-		$	1,500,000
Extinguishment of derivative liability	$	4,262,010		$	-

The accompanying notes are an integral part of these financial statements.

ADINO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Background

In January 2008, after the period covered by this annual report, the Company changed its name to Adino Energy Corporation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements include all of the assets, liabilities and results of operations of subsidiaries in which the Company has a controlling interest. All significant inter-company accounts and transactions among consolidated entities have been eliminated.

Concentrations of Credit Risk

Financial instruments which subject the Company to concentrations of credit risk include cash and cash equivalents and accounts receivable.

The Company maintains its cash in well known banks selected based upon management’s assessment of the banks’ financial stability. Balances periodically exceed the $100,000 federal depository insurance limit; however, the Company has not experienced any losses on deposits and believes the risk of loss is minimal.

For the years ended December 31, 2007 and 2006 we had no reserve for doubtful accounts as all of our receivables were collected early in the subsequent year or had no expectation of loss.

Cash Equivalents

For purposes of reporting cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. We had no cash equivalents at either December 31, 2007 or December 31, 2006.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is provided on the straight-line method over the estimated useful lives of the assets, which range from three to fifteen years. Expenditures for major renewals and betterments that extend the original estimated economic useful lives of the applicable assets are capitalized. Expenditures for normal repairs and maintenance are charged to expense as incurred. The cost and related accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts, and any gain or loss is included in operations.

Revenue Recognition

Income Taxes

The Company has adopted the provisions of SFAS 109, “Accounting for Income Taxes," which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company provides a valuation allowance to reduce deferred tax assets to their net realizable value.

Income (Loss) Per Share

Basic income (loss) per share is computed on the basis of the weighted average number of shares of common stock outstanding during each period. Diluted income (loss) per share is calculated by adjusting the outstanding shares by common equivalent shares from common stock options and warrants. Detailed earnings per share data is reflected in Note 13.

Stock-Based Compensation

On January 1, 2006, the Company adopted SFAS 123(R) “Accounting for Stock Based Compensation,” which establishes accounting for stock-based payment transactions for employee services and goods and services received from non-employees. SFAS 123(R) is a revision of SFAS 123, “Accounting for Stock-Based Compensation” and supersedes APB 25, “Accounting for Stock Issued to Employees.” Under the provisions of SFAS 123(R), stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the award, and is recognized as expense over the employee's or non-employee's service period, which is generally the vesting period of the equity grant.

The company has granted options and warrants to purchase Adino’s common stock. These instruments have been valued using the Black-Scholes model and are fully detailed in Note 14.

Impairment of Long-Lived Assets

In the event that facts and circumstances indicate that the carrying value of a long-lived asset may be impaired, an evaluation of recoverability is performed by comparing the estimated future undiscounted cash flows associated with the asset or the asset’s estimated fair value to the asset’s carrying amount to determine if a write-down to market value or discounted cash flow is required. The Company applies the guidance regarding the impairment of long-lived assets pursuant to SFAS 144.

For the years ended December 31, 2007 and 2006, Adino evaluated and determined that no impairment was warranted on the assets of Adino Energy Corporation or its subsidiary, Intercontinental Fuels, LLC.

Goodwill

Under the provisions of SFAS 142, “Goodwill and Other Intangible Assets,” goodwill is tested for impairment on an annual basis and between annual tests if an event occurs or circumstances change in a way to indicate a potential decline in the fair value of the reporting unit. In assessing the recoverability of our goodwill, we must make assumptions regarding the estimated future cash flows and other factors to determine the fair value of the reporting unit. If the fair value of the reporting unit is less than its carrying value, an impairment loss will be recognized in an amount equal to the difference. As of December 31, 2007 an impairment analysis was preformed and no impairment was deemed necessary.

Fair Value of Financial Instruments

The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made.

Reclassification

Certain amounts reported in the prior period financial statements have been reclassified to the current period presentation.

Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at it fair value and is then re−valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option−based derivative financial instruments, the Company uses the Black−Scholes model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non−current based on whether or not net−cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Restatements

Recently Issued Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”– an interpretation of FASB Statement No. 109, “Accounting for Income Taxes.”. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with SFAS 109 and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a return. Guidance is also provided on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. Adino adopted the provisions of FIN 48 in 2007 and no material uncertain tax positions were identified. Thus, the adoption of FIN 48 did not have an impact on Adino’s financial statements.

NOTE 2-GOING CONCERN

As of December 31, 2007, the Company has a working capital deficit of $7,307,724 and a retained deficit of $15,594,875. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern depends upon its ability to obtain funding for its working capital deficit. $3,355,984 of the working capital deficit represents the purchase price for the terminal assets which are currently under a capital lease. The Company believes that the market value of the terminal assets is significantly greater than the total working capital deficit and that current cash flow is adequate to support a longer term financing package to satisfy the working capital deficit. These factors lead the Company to expect that the terminal financing will include additional capital to service and pay down existing obligations. Certain officers and directors have agreed in writing to postpone payment if necessary should the Company need capital it would otherwise pay these individuals. Lastly, the Company plans to grow through merger and acquisition opportunities including the expansion of existing business opportunities. The Company expects these growth opportunities to be financed by a combination of equity and debt capital; however, in the event the Company is unable to obtain additional debt and equity financing; the Company may not be able to continue its operations.

NOTE 3 – LEASE COMMITMENTS

There were no lease commitments at December 31, 2006. The company entered into a lease commitment April 1, 2007. IFL agreed to lease the terminal from 17617 Aldine Westfield Road, LLC for 18 months at $15,000 per month with an option to purchase the terminal for $3.55 million by July 31, 2008. AEC has evaluated this lease and determined this lease qualifies as a capital lease for accounting purposes. The terminal has been capitalized at $3,179,572, calculated using the present value of monthly rent at $15,000 for the months April 2007 – July 2008 and the final purchase price of $3.55 million discounted at IFL’s incremental borrowing rate of 12.75%. The terminal is being depreciated over its useful life of 15 years resulting in monthly depreciation expense of $17,664. As the purchase must be exercised by July 31, 2008, the entire lease obligation is a current liability. As of December 31, 2007 the carrying value of the capital lease liability is $3,355,984.

The lawsuit settlement just prior to the lease with 17617 Aldine Westfield Road, LLC resulted in a gain to the Company of $1,480,383. The Company initially amortized this gain over the life of the capital lease (18 months), but later recognized that this time frame was in error. The appropriate amortization period for the gain is the life of the capital asset, or 15 years. The Company has restated all appropriate periods to reflect this change. See Note 19 for restated financial statements for March 31, June 30, and September 30, 2007 related to this correction.

NOTE 4 – EQUIPMENT

The following is a summary of this category:

	December 31, 2007			December 31, 2006
Land	$	-		$	1,025,733
Vehicles		86,217			-
Leasehold Improvements		146,144			-
Office Equipment		3,335			3,335
Terminal-Capital Lease		3,179,572			-
Terminal-Equipment		-			2,959,994
Subtotal		3,415,268			3,989,062
Less: Accumulated Depreciation		(168,518	)		(660,841	)
Total	$	3,246,750		$	3,328,221

The useful lives for material and terminal equipment are 15 years along with the related leasehold improvements. Office equipment is being deprecated over three years and Vehicles are deprecated over five years.

NOTE 5 – NOTES RECEIVABLE

Stuart Sundlun - On November 6, 2003, Mr. Stuart Sundlun acquired 1,200 units in Intercontinental Fuels, LLC (IFL) from Adino. Part of the purchase price was a note from Mr. Sundlun dated November 6, 2003, bearing interest of 10% per annum in the amount of $750,000. This note is secured by 600 units of IFL being held in attorney escrow and released pursuant to the sales agreement. In the event that Mr. Sundlun does not acquire the remaining 600 units in accordance with the sales agreement, the unreleased units will revert to Adino.

On August 7, 2006 as discussed in note 8 below we purchased our shares and options back from Mr. Sundlun. The entire amount due from Mr. Sundlun and payable to Mr. Sundlun are both reported at gross in our financial statements. Our net notes receivable and payable to and from Mr. Sundlun is a net payable of $750,000.

Due to our inability to collect the debt due from Coastal Resources and NARC, $100,000 was relieved during the year ended December 31, 2007.

A schedule of the balances at December 31, 2007 and 2006 is as follows:

	December 31,		December 31,
	2007		2006
Sundlun	$	750,000	$	750,000
Coastal Resources		-		30,000
NARC		-		70,000
Total	$	750,000	$	850,000

NOTE 6 – CONSOLIDATION OF IFL AND GOODWILL

From the period of IFL’s inception to 2005, our ownership percentage was 60%, our ownership increased during 2005 when our 20% partner rescinded their shares. On August 7, 2006 we obtained the remaining 20% interest in IFL from Stuart Sundlun in consideration for a note payable as described in Note 8 below. This transaction was accounted for as a step acquisition. This step acquisition resulted in an additional $1,500,000 of goodwill as the fair value of the net assets acquired was determined by management to be zero and the consideration given as discussed above was the $1,500,000 note.

Adino evaluated the aggregate goodwill for impairment in accordance with SFAS 142 Goodwill and Other Intangible Assets. Adino has determined that the fair value of the reporting unit exceeds its carrying amount and hence the goodwill is not impaired.

NOTE 7 – ACCRUED LIABILITIES / ACCRUED LIABILITIES –RELATED PARTY

Other liabilities and accrued expenses consisted of the following as of December 31, 2007 and 2006:

	December 31, 2007		December 31, 2006

Accrued accounting and legal fees		140,600		131,500
Other		775		153,349
Total accrued liabilities	$	141,375	$	284,849

Accrued salaries		1,311,789		888,869
Due to Byrd		-		15,775
Accrued liabilities-related party	$	1,311,789	$	904,644

NOTE 8 - NOTES PAYABLE

	2007			2006
Note payable - Stuart Sundlun, bearing interest of 10% per annum, due August 7, 2011	$	1,500,000		$	1,500,000

Note payable - Gulf Coast Fuels, bearing interest of $25,000, due on demand		275,000			275,000

Note payable - Dr. David Zehr, bearing interest of 5% per annum, due on demand		-			600,000

Note payable - Dr. David Zehr, bearing interest of 4% per annum, due on demand		-			150,000

Note payable - North American Reserve Corp, non interest bearing, due on demand		-			725,733

Note payable - Brent Bossart, interest of $35,000, due on demand		-			120,000

Note payable - Ronnie Byrd, non interest bearing, due on demand		15,000			15,500

Note payable - Bill Gaines, non interest bearing, due on demand		9,000			7,000

Capnet Risk Management – no written agreement		100,000			100,000

Note payable - Suntrust Bank, bearing interest of 8.99% per annum with 72 monthly payments of $857.86, due June 17, 2013
and
Note payable - GMAC, bearing interest of 8.91% per annum with 60 monthly payments of 803.43, due November 14, 2012		82,656			-

Note payable - Greenway, bearing interest of 8.5% per annum with 24 monthly payments of $4,750, due December 2007		-			54,453

Total notes payable		1,981,656			3,547,686

Less current portion		(412,006	)		(2,047,686	)

Long term note payable	$	1,569,650		$	1,500,000

The table below reflects the aggregate principal maturities of long-term debt for years ended December 31:

Principal

2008	$	412,006
2009	$	13,751
2010		15,371
2011		1,517,031
2012		18,071
Total	$	1,976,230

NOTE 9 – CONVERTIBLE DEBENTURES

The Company issued Debenture No. 299 in the amount of $350,000 on April 15, 2003. The debenture bears interest at the rate of 5% per annum and matured on October 15, 2003.

The Company issued Convertible Debenture No. 300 on April 15, 2003. The debenture bears interest at the rate of 5% per annum and matures on April 15, 2006. The debenture is convertible after April 15, 2004 into $2,000,000 of common stock at a cost per share of seventy percent of the average bid price for the stock for the immediate twenty (20) days before exercise.

These Debentures were cancelled as part of the lawsuit settled March 23, 2007.

NOTE 10 – DERIVATIVE FINANCIAL INSTRUMENTS

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.

Based on the guidance in SFAS 133 and EITF 00-19, the Company concluded that the convertible debentures (Note 9) were required to be accounted for as derivatives. SFAS 133 and EITF 00-19 require the Company to bifurcate and separately account for the conversion features of the convertible debentures and warrants issued as embedded derivatives.

Pursuant to SFAS 133, the Company bifurcated the conversion feature from the debentures because the conversion price is not fixed and the debentures are not convertible into a fixed number of shares. Accordingly, the embedded derivative must be bifurcated and accounted for separately.

Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option and conversion based derivative financial instruments, the Company uses the Black-Scholes model to value the derivative instruments.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

The derivative instrument was cancelled upon cancellation of the convertible debenture as part of the lawsuit settled March 23, 2007. The cancellation of the convertible note payable and relief of the derivative liability has been reflected during 2007 as an adjustment to additional paid in capital.

NOTE 11 – STOCK PAYABLE

As of December 31, 2007, the Company had 50,000,000 shares of common stock authorized and 49,544,226 shares issued. The Company entered into several stock option / warrant agreements with the Chairman and Executive Officer, but was unable to issue those shares. The officers agreed to not force issuance until the Company’s shareholders authorized additional capital. At the Company’s annual meeting in January, 2008, the shareholders increased the authorized capital to 500,000,000 shares of common stock. At December 31, 2007 and December 31, 2006, the following common stock shares were payable to the following parties:

	Common		December 31,		December 31,
	Shares		2007		2006

Bill Gaines		1,000,000	$	120,000	$	0
David LeClere		507,000		60,840		17,238
Timothy G. Byrd, Sr		5,000,000		300,000		170,000
Sonny Wooley		7,000,000		540,000		238,000
Peggy Behrens		750,000		90,000		25,500
Total		14,257,000	$	1,290,840	$	450,738

NOTE 12 – STOCK

COMMON STOCK

The Company's common stock has a par value of $0.001. There are 50,000,000 shares authorized as of December 31, 2007 and December 31, 2006. As of December 31, 2007 and December 31, 2006 the Company had 49,544,226 and 44,544,226 shares issued and outstanding, respectively.

During April 2007, Messrs. Byrd and Wooley were each issued 2,500,000 shares of common stock valued at $325,000, see Note 14.

In November 2007, the Company entered into an investment banking agreement with Aurora Financial Services. As a portion of its compensation, the Company was to issue Aurora 1,000,000 shares of common stock upfront. The Company did not have adequate authorized shares to give to Aurora, therefore the Company’s Chairman and Executive Officer each gave Aurora 500,000 personally held, non-restricted shares. Since the Chairman and Executive Officer gave non-restricted shares on behalf of the Company, the Board approved issuance of 750,000 restricted shares each as repayment. These shares were valued at 17 cents each on November 12, 2007 based upon the closing market price of the Company’s commons stock and expense to the company of $255,000 was recorded. The shares have not been issued, as of December 31, 2007 and are part of the stock payable at December 31, 2007.

PREFERRED STOCK

In 1998, the Company amended its articles to authorize Preferred Stock. There are 20,000,000 shares authorized with a par value of $0.001. The shares are non-voting and non-redeemable by the Company. The Company further designated two series of its Preferred Stock: "Series 'A' $12.50 Preferred Stock" with 2,159,193 shares of the total shares authorized and "Series "A" $8.00 Preferred Stock," with the number of authorized shares set at 1,079,957 shares. As of December 31, 2007 and December 31, 2006 there are no shares issued and outstanding.

Any holder of either series may convert any or all of such shares into shares of common stock of the Company at any time. Said shares shall be convertible at a rate equal to three (3) shares of common stock of the Company for each one (1) share of Series "A" $12.50 Preferred Stock. The Series "A" 12.50 Preferred Stock shall be convertible, in whole or in part, at any time after the common stock of the Company shall maintain an average bid price per share of at least $12.50 for ten (10) consecutive trading days.

Series "A" $8.00 Preferred Stock shall be convertible at a rate equal to three (3) shares of common stock of the Company for each one (1) share of Series "A" $8.00 Preferred Stock. The Series "A" $8.00 Preferred Stock shall be convertible, in whole or in part, at any time after the common stock of the Company shall maintain an average bid price per share of at least $8.00 for ten (10) consecutive trading days.

The preferential amount payable with respect to shares of either Series of Preferred Stock in the event of voluntary or involuntary liquidation, dissolution, or winding-up, shall be an amount equal to $5.00 per share, plus the amount of any dividends declared and unpaid thereon.

DIVIDENDS

Dividends are non-cumulative, however, the holders of such series, in preference to the holders of any common stock, shall be entitled to receive, as and when declared payable by the Board of Directors from funds legally available for the payment thereof, dividends in lawful money of the United States of America at the rate per annum fixed and determined as herein authorized for the shares of such series, but no more, payable quarterly on the last days of March, June, September, and December in each year with respect to the quarterly period ending on the day prior to each such respective dividend payment date. In no event shall the holders of either series receive dividends of more than percent (1%) in any fiscal year. Each share of both series shall rank on parity with each other share of preferred stock, irrespective of series, with respect to dividends at the respective fixed or maximum rates for such series.

NOTE 13 – EARNINGS PER SHARE

Earnings per share for the year ended December 31, 2007 is computed as follows:

	Income (Numerator)			Shares (Denominator)			Per-Share Amount
Net Loss		(2,263,795	)

Basic EPS
Loss available to common stockholders		(2,263,795	)		48,133,267			(0.05	)
Effective Dilutive EPS
Loss available to common stockholders		(2,263,795	)		50,000,000	*		(0.05	)

*As of December 31, 2007, Adino had 49,544,226 shares outstanding. There are 17,257,000 potential common shares or equivalents authorized for issuance to officers, directors and others. All parties signed an agreement not to force Adino to issue more shares than those that are authorized. Adino only had 50,000,000 shares authorized in its Articles of Incorporation, as of December 31, 2007. It cannot legally issue more shares than the total number authorized by the Articles of Incorporation. Therefore, for purposes of the above calculation, it is assumed that all of Adino’s authorized shares (50,000,000) are outstanding, rather than the full 66,801,226 that are committed. If the full committed amount were used, the Diluted EPS would be (0.02).

NOTE 14 – STOCK OPTIONS / STOCK WARRANTS

The Company’s employment agreement with Mr. Byrd and Mr. Wooley provide that they will be paid a salary of $156,000 per year. However, during 2003 - 2006, Mr. Byrd’s and Wooley’s salaries accrued but were not paid due to the Company’s severe cash flow problems. Mr. Byrd and Wooley may require the Company to pay the accrued amounts at any time.

In 2006, Mr. Byrd and Wooley each elected to convert a portion of their accrued salaries into Adino stock. As a result, the Company agreed to issue Mr. Byrd and Mr. Wooley 5,000,000 shares each of common stock. On April 13, 2007, they each exercised and were issued 2,500,000 shares of common stock. The remaining shares of common stock to be issued are reflected in our stock payable liability at December 31, 2007.

On April 3, 2007, Mr. Byrd and Mr. Wooley again elected to and the board approved conversion of part of their accrued salaries into Adino stock options. To that end, the Company issued 12,000,000 stock options to each officer to purchase 12,000,000 shares of Adino stock for an exercise price of $0.03 cents per share. Each officer relinquished $100,000 of accrued compensation for the options. Using the Black-Scholes valuation model, and an expected life of two years, volatility of 262%, and a discount rate of 4.57% the Company has determined the aggregate value of the 24,000,000 five year warrants to be $717,412. As the warrants are fully purchased and vested, this resulted in a net expense to the Company of $517,412 (after considering the $200,000 already accrued). Subsequently, on November 10, 2007, both Mr. Byrd and Mr. Wooley relinquished and returned to Adino 9,000,000 warrants, each. The total reduction in authorized but outstanding shares of 18,000,000, resulted in reinstatement of $75,000 of accrued compensation to each officer and reduction of consulting expense of $538,059, or 75% of the original expense to the Company.

The Company awarded Ms. Behrens 750,000 shares of restricted stock for her service as a director in 2004, 2005 and 2006. None of these shares have actually been issued to her, however. This resulted in an accrued expense of $90,000 at December 31,2007 and $25,500 at December 31,2006 for these shares based upon the fair market value of the shares the balance sheet date and is reflected in our stock payable liability at December 31, 2007.

In September 2007, the Company entered into a consulting agreement with Small Cap Support Services, Inc. (“Small Cap”) to provide investor relations services. In addition to monthly compensation, Small Cap is entitled to 500,000 options, vesting ratably over 8 quarters, through August 30, 2009, priced at 166,667 shares at .15, .25, and .35, each. Using the Black-Scholes valuation model and an expected life of 3.5 years, volatility of 271.33%, and a discount rate of 4.53% the Company has determined the aggregate value of the 500,000 seven year options to be $59,126, the vested amount of $14,782 was recorded as stock-based compensation expense during the year ended December 31, 2007.

In November 2007, the Company entered into an agreement with Ms. Nancy Finney, the Company’s Controller. In addition to monthly compensation, Ms. Finney is entitled to 500,000 options, vesting over 24 months as certain milestones are met. In accordance with SFAS 123(R), these options will be expensed at their fair value over the requisite service period. As of December 31, 2007, none of the contingencies included in this grant have been met and as a result no expense has been recorded.

NOTE 15 – LAWSUIT SETTLEMENT

In 2005, a lawsuit was filed putting IFL’s ownership of the terminal in question. At the time of these lawsuits, Adino’s note to NARC was in default. The amount outstanding under the note was $725,733. In addition, Adino’s notes and debentures to Dr. Zehr in the principal amount of $3,100,000 plus accrued interest were in default.

On March 23, 2007, the Company settled all litigation with all parties to this transaction. In the settlement, IFL released its claim of ownership of the terminal in favor of NARC. 17617 Aldine Westfield Road, LLC, an entity controlled by Dr. Zehr, then purchased the terminal from NARC for total consideration of $1.55 million ($150,000 in cash and a $1.4 million note). Simultaneously with these transactions, IFL agreed to lease the terminal from 17617 Aldine Westfield Road, LLC for 18 months at $15,000 per month with an option to purchase the terminal for $3.55 million at the end of the lease. In return for the lease, all debentures owed to Dr. Zehr were extinguished.

As a result of these transactions, all claims by and against all parties except Mr. Peoples were released. In addition, all liens pending on IFL’s property were released. The settlement resulted in a gain to the Company of $1,480,383. The transaction was deemed to be a sale/leaseback, and therefore the gain is recognized over the life of the capital asset, or 15 years. Expense for 2007 was $74,019.

NOTE 16 – CONTINGENCIES

Adino Energy Corporation v. CapNet Securities Corporation

This case is currently set for trial in May 2009.

NOTE 17 – CONCENTRATIONS

The Company had customer revenue concentrations of 94% at December 31, 2007 (3 customers comprising 12%, 35% and 47% of total revenue) and 72% at December 31, 2006 (one customer).

NOTE 18 – SUBSEQUENT EVENTS

On January 30, 2008, the Company held its annual stockholders meeting at the corporate offices in Houston, Texas. At the meeting, the shareholders unanimously approved the following:

Directors Timothy G. Byrd, Sr., Sonny Wooley and Peggy Behrens were all re-elected for another term.

The Company’s articles of incorporation were amended to increase the number of authorized common shares from 50,000,000 to 500,000,000.

The Company changed its name from Consolidated Medical Management, Inc. (dba Consolidated Minerals Management, Inc.) to Adino Energy Corporation.

The shareholders did not approve the Company’s desire to re-domicile in Wyoming. The Company remains a Montana corporation.

NOTE 19 –RESTATEMENT OF THE YEARS ENDED 2003, 2004, 2005 AND 2006

The Company has restated its annual financial statements from amounts previously reported for periods ended December 31, 2003, 2004, 2005 and 2006. The Company has determined that there were certain errors in the amounts as reported previously.

The Company had not consolidated its majority ownership position in Intercontinental Fuels, LLC. The Company held a 60% ownership of IFL for the years 2003, 2004 and 2005. In 2006, IFL was originally accounted for as a consolidated entity. Adjustments to previously reported amounts for the years 2003 – 2006 are reflected in the tables, below.

The Company had not accounted for an embedded derivative attached to the $2,000,000 debenture with Dr. Zehr. The debenture contained a provision for conversion to common stock, upon default, at a price tied to the share value at the time. The Company did not have adequate authorized capital to satisfy the conversion requirement. Within this restatement the derivative has been accounted for the years ended December 31, 2004, 2005 and 2006 and all amounts are included in this Note 19. The convertible debenture associated with the derivative was settled on March 23, 2007 and the derivative liability of $4,262,010 was posted to Additional paid in Capital.

The Company had several notes that were in default and as such, did not accrue interest during the years 2003, 2004, 2005 or 2006 on those notes. The interest for all notes has now been posted to the appropriate years and is reflected in the attached restated Balance Sheets and Statements of Operations for the years ended December 31, 2003, 2004, 2005 and 2006.

It should be noted that the 2006 restated financial statements and related restatement schedules have been audited, but the restatement schedules for 2003 – 2005 are unaudited.

(Unaudited) RESTATEMENT SCHEDULES FOR 2003 AND 2004

	December 31. 2003									December 31. 2004
	As Reported			Adjustments			As Restated			As Reported			Adjustments			As Restated
Summary Balance Sheet

Assets
Cash		13,659			6,636	A		20,295			9,455			1,152	A		10,607
Accounts Receivable		-			5,000	A		5,000			-			-			-
Oil and Gas Producing Assets		60,000			-			60,000			60,000			-			60,000
Notes Receivable		2,786,000			(1,656,000	)A		1,130,000			2,506,000			(1,656,000	)A		850,000
Fixed Assets		-			3,916,959	A		3,916,959			-			3,724,758	A		3,724,758
Goodwill		-			357,940	A		357,940			-			357,940	A		357,940
Investment in IFL		1,320,000			(1,320,000	)A		-			1,600,000			(1,600,000	)A		-
Other Assets		-			95,107	A		95,107			-			89,108	A		89,108

Total Assets		4,179,659			1,405,642			5,585,301			4,175,455			916,958			5,092,413

Liabilities
Accounts Payable		109,132			12,856	A		121,988			-			288,686	A		288,686
Accrued Liabilities		339,157			377,776	A		716,933			220,066			295,791	A		515,857
Accrued Interest		-			121,863	C		121,863			-			326,164	C		326,164
Notes Payable - Current Portion		80,493			(80,493	)A		-			-			-			-
Stock Payable		-			-			-			-			3,750	A		3,750
Convertible Debentures		465,000			(465,000	)A		-			-			-			-
Notes Payable		150,000			1,871,226	A		2,021,226			150,000			1,445,733	A		1,595,733
Derivative Liability		-			-			-			-			2,046,417	B		2,046,417
Debentures Payable		350,000			-			350,000			350,000			522,299	B		872,299

Total Current Liabilities		1,493,782			1,838,228			3,332,010			720,066			4,928,840			5,648,906

Long Term Liabilities
Debenture Payable		2,000,000			-			2,000,000			2,000,000			(2,000,000	)B		-
Note Payable - Dr. Zehr		600,000			(600,000	)A		-			600,000			(600,000	)A		-

Total Long Term Liabilities		2,600,000			(600,000	)		2,000,000			2,600,000			(2,600,000	)		-
Total Liabilities		4,093,782			1,238,228			5,332,010			3,320,066			2,328,840			5,648,906

Stockholder's Equity
Minority Interest		-			598,989	A		598,989			-			348,778	A		348,778
Preferred Stock		-			-			-			-			-			-
Common Stock		44,173			-			44,173			44,544			-			44,544
Additional Paid in Capital		4,047,605			1,130,000	A		5,177,605			4,332,172			2,120,616	A		6,452,788
Retained Earnings		(4,005,901	)		(1,561,575	)A		(5,567,476	)		(3,521,327	)		(3,881,276	)A		(7,402,603	)
Total Stockholder's Equity		85,877			167,414			253,291			855,389			(1,411,882	)		(556,493	)

Total Liabilities and Equity		4,179,659			1,405,642			5,585,301			4,175,455			916,958			5,092,413

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to properly account for convertible debenture and bifurcated embedded derivative

C - Amount adjusted to reflect additional interest associated with notes receivable / payable

(Unaudited) RESTATEMENT SCHEDULES FOR 2003 AND 2004

	December 31. 2003									December 31. 2004
Consolidated Income Statement	As Reported			Adjustments			As Restated			As Reported			Adjustments			As Restated

Revenues		1,245,042			(1,161,667	)A		83,375			25,000			-	A		25,000
COGS		-			-			-			-			5,301	A		5,301
Gross Margin		1,245,042			(1,161,667	)		83,375			25,000			(5,301	)		19,699

Operating Expenses
Well Expenses		36,245			-			36,245			-			-			-
Personnel Costs		78,000			48,807	A		126,807			96,000			(48,024	)A		47,976
Consulting		376,691			(10,161	)A		366,530			426,351			93,295	A		519,646
Other Expenses		79,506			20,359	A		99,865			17,893			49,433	A		67,326
Legal and Professional		65,575			4,089	A		69,664			1,578			159,845	A		161,423
Depreciation		-			65,927	A		65,927			-			198,376	A		198,376
G&A & Office Expenses		13,678			183,381	A		197,059			8,388			67,112	A		75,500

Total Operating Expense		649,695			312,402			962,097			550,210			520,037			1,070,247
Income (Loss) from Operations		595,347			(1,474,069	)		(878,722	)		(525,210	)		(525,338	)		(1,050,548	)

Other Income (Expense)		-			-			-			1,009,784			(1,009,784	)A		-
Interest Expense		(81,370	)		(119,731	)C		(201,101	)		-			(765,090	)C		(765,090	)
Interest Income		-			32,469	C		32,469			-			104,202	C		104,202
Extinguishment of Debt		-			-			-			-			(327,485	)A		(327,485	)
Derivative Gain/loss		-			-			-			-			(46,417	)B		(46,417	)
Minority Interest in Loss		-			149,051	A		149,051			-			250,211	A		250,211
Net Income (Loss)		513,977			(1,412,280	)		(898,303	)		484,574			(2,319,701	)		(1,835,127	)

Earnings per share, basic		0.01						(0.02	)		0.01						(0.04	)
Earnings per share, diluted		0.01						(0.02	)		0.01						(0.04	)
Weighted Avg # of shares		44,124,285						44,124,285			44,544,223						44,544,223

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to properly account for convertible debenture and bifurcated embedded derivative

C - Amount adjusted to reflect additional interest associated with notes receivable / payable

(Unaudited) RESTATEMENT SCHEDULES FOR 2005 AND 2006

	December 31. 2005									December 31. 2006
	As Reported			Adjustments			As Restated			As Reported			Adjustments			As Restated
Summary Balance Sheet

Assets
Cash		-			-			-			14,223			-			14,223
Accounts Receivable		-			-			-			137,945			-			137,945
Oil and Gas Producing Assets		60,000			-			60,000			-			-			-
Notes Receivable		2,506,000			(1,656,000	)A		850,000			1,091,813			(241,813	)A		850,000
Fixed Assets		-			3,526,314	A		3,526,314			3,172,473			155,748	A		3,328,221
Goodwill		-			183,551	A		183,551			-			1,559,240	A		1,559,240
Investment in IFL		1,600,000			(1,600,000	)A		-			1,500,000			(1,500,000	)A		-
Other Assets		-			171,508	A		171,508			11,920			241,988	A		253,908

Total Assets		4,166,000			625,373			4,791,373			5,928,374			215,163			6,143,537

Liabilities
Accounts Payable		469,536			(180,382	)A		289,154			1,691,300			(1,308,708	)A		382,592
Accrued Liabilities		-			734,857	A		734,857			38,278			1,151,215	A		1,189,493
Accrued Interest		-			530,465	C		530,465			-			794,766	C		794,766
Notes Payable - Current Portion		-			-			-			1,941,016			106,670	A		2,047,686
Stock Payable		-			3,200	A		3,200			37,500			413,238	A		450,738
Convertible Debentures		-			-			-			-			-			-
Debenture Payable		2,000,000			(241,497	)B		1,758,503			2,000,000			-			2,000,000
Derivative Liability		-			1,771,584	B		1,771,584			-			4,262,010	B		4,262,010
Debentures Payable		350,000			-			350,000			350,000			-			350,000

Total Current Liabilities		2,819,536			2,618,227			5,437,763			6,058,094			5,419,191			11,477,285

Long Term Liabilities
Notes Payable		150,000			495,733	A		645,733			1,500,000			-			1,500,000
Note Payable - Dr. Zehr		600,000			-			600,000			-			-			-

Total Long Term Liabilities		750,000			495,733			1,245,733			1,500,000			-			1,500,000
Total Liabilities		3,569,536			3,113,960			6,683,496			7,558,094			5,419,191			12,977,285

Stockholder's Equity
Minority Interest		-			124,310	A		124,310			-			-			-
Preferred Stock		-			-			-			-			-			-
Common Stock		44,544			-			44,544			44,544			-			44,544
Additional Paid in Capital		4,332,172			2,120,616	A		6,452,788			4,332,172			2,120,616	A		6,452,788
Retained Earnings		(3,780,252	)		(4,733,513	)A		(8,513,765	)		(6,006,436	)		(7,324,644	)A		(13,331,080	)
Total Stockholder's Equity		596,464			(2,488,587	)		(1,892,123	)		(1,629,720	)		(5,204,028	)		(6,833,748	)

Total Liabilities and Equity		4,166,000			625,373			4,791,373			5,928,374			215,163			6,143,537

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to properly account for convertible debenture and bifurcated embedded derivative

C - Amount adjusted to reflect additional interest associated with notes receivable / payable

(Unaudited) RESTATEMENT SCHEDULES FOR 2005 AND 2006

	December 31. 2005									December 31. 2006
Consolidated Income Statement	As Reported			Adjustments			As Restated			As Reported			Adjustments			As Restated

Revenues		-			-			-			760,313			-			760,313
COGS		-			-			-			142,988			-			142,988
Gross Margin		-			-			-			617,325			-			617,325

Operating Expenses
Well Expenses		-			-			-			-			-			-
Personnel Costs		96,000			(96,000	)A		-			70,394			7,200	A		77,594
Terminal Management		-			-			-			75,322			-			75,322
Consulting		132,000			15,921	A		147,921			1,215,663			(95,302	)A		1,120,361
Other Expenses		5,925			(1,149	)A		4,776			223,151			(6,501	)A		216,650
Legal and Professional		25,000			-			25,000			105,216			5,358	A		110,574
Depreciation		-			198,444	A		198,444			234,625			(36,531	)A		198,094
G&A & Office Expenses		-			1,751	A		1,751			147,706			39,191	A		186,897

Total Operating Expense		258,925			118,967			377,892			2,072,077			(86,585	)		1,985,492
Income (Loss) from Operations		(258,925	)		(118,967	)		(377,892	)		(1,454,752	)		86,585			(1,368,167	)

Other Income (Expenses)		-			-			-			(100,365	)		-			(100,365	)
Interest Expense		-			(1,090,503	)C		(1,090,503	)		(65,786	)		(815,012	)C		(880,798	)
Interest Income		-			82,400	C		82,400			291,854			(209,413	)C		82,441
Extinguishment of debt		-			-			-			-			-			-
Derivative Gain/loss		-			274,833	B		274,833			-			(2,490,426	)B		(2,490,426	)
Oil and Gas writeoff		-			-			-			(60,000	)		-			(60,000	)

Net Income (Loss)		(258,925	)		(852,237	)		(1,111,162	)		(1,389,049	)		(3,428,266	)		(4,817,315	)

Earnings per share, basic		(0.01	)					(0.02	)		(0.03	)					(0.11	)
Earnings per share, diluted		(0.01	)					(0.02	)		(0.03	)					(0.11	)
Weighted Avg # of shares		44,544,361						44,544,361			44,544,226						44,544,226

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to properly account for convertible debenture and bifurcated embedded derivative

C - Amount adjusted to reflect additional interest associated with notes receivable / payable

NOTE 19 – (cont’d) RESTATEMENT OF THE QUARTERS ENDED MARCH 31, JUNE 30 AND SEPTEMBER 30, 2006 AND 2007

As a result of the errors described above, our quarterly reports also reported an error. The following pages reflect our unaudited restated quarterly results for each quarter in the years ended December 31, 2006 and December 31, 2007. We have not included restatements for the various quarters in the years ended December 31, 2003, 2004 and 2005.

The overall impact to the balance sheet and statement of operations of the company as of the quarters presented are as follows

Quarter ended	Net increase (decrease) in net assets		Net change in income (loss)			Net increase (decrease) in earnings per share, basic

March 31, 2006		737,156		44,720			0.00

June 30, 2006		712,320		(225,246	)		(0.01	)

September 20, 2006		1,922,733		(2,054,798	)		(0.05	)

March 31, 2007		3,109,103		(735,558	)		(0.02	)

June 30, 2007		3,050,849		(2,067,064	)		(0.04	)

September 30, 2007		2,983,045		801,876			0.02

Consolidated Unaudited Quarterly Balance Sheet	March 31, 2006
	As Reported			Adjustments			As Restated
Assets

Cash		-			173,679	A		173,679

Accounts Receivable		-			27,115	A		27,115

Oil and Gas Producing Assets		60,000			(60,000	)A		-

Notes Receivable		2,506,000			(1,656,000	)A		850,000

Equipment, net of depreciation		-			3,476,703	A		3,476,703

Investment in IFL		1,600,000			(1,600,000	)A		-

Goodwill		-			183,551	A		183,551

Other Assets		-			192,108	A		192,108

Total Assets		4,166,000			737,156			4,903,156
Liabilities

Accounts Payable		526,536			(236,291	)A		290,245

Accrued Liabilities		-			812,857	A		812,857

Accrued Interest		-			581,540	A		581,540

Notes Payable - Current Portion		500,000			967,908	A		1,467,908

Stock Payable		-			7,500	F		7,500

Derivative Liability		-			1,342,043	B		1,342,043

Note Discount		-			(168,960	)B		(168,960	)

Debentures Payable		-			2,500,000	B		2,500,000

Total Current Liabilities		1,026,536			5,806,597			6,833,133
Long Term Liabilities

Debenture Payable		2,000,000			(2,000,000	)A		-

Note Payable - Dr. Zehr		600,000			(600,000	)A		-

Total Long Term Liabilities		2,600,000			(2,600,000	)		-

Total Liabilities		3,626,536			3,206,597			6,833,133

Stockholders' Equity

Minority Interest		-			98,736	A		98,736

Common Stock		44,544			-			44,544

Additional Paid in Capital		4,332,172			2,120,616	A		6,452,788

Retained Earnings		(3,837,252	)		(4,688,793	)A		(8,526,045	)

Total Stockholders' Equity		539,464			(2,469,441	)		(1,929,977	)

Total Liabilities and Stockholders' Equity		4,166,000			737,156			4,903,156

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to property account for convertible debenture and bifurcated embedded derivative

F - Amount adjusted to account for stock payable at current market value

Consolidated Unaudited Quarterly Balance Sheet	June 30, 2006
	As Reported			Adjustments			As Restated
Assets

Cash		-			57,722	A		57,722

Accounts Receivable		-			147,247	A		147,247

Oil and Gas Producing Assets		60,000			(60,000	)A		-

Notes Receivable		2,506,000			(1,656,000	)A		850,000

Equipment, net of depreciation		-			3,427,092	A		3,427,092

Investment in IFL		1,600,000			(1,600,000	)A		-

Goodwill		-			183,551	A		183,551

Other Assets		-			212,708	A		212,708

Total Assets		4,166,000			712,320			4,878,320

Liabilities

Accounts Payable		583,536			(146,073	)A		437,463

Accrued Liabilities		-			869,948	A		869,948

Accrued Interest		-			632,616	A		632,616

Notes Payable - Current Portion		500,000			967,908	A		1,467,908

Stock Payable		-			7,000	F		7,000

Derivative Liability		-			1,216,697	B		1,216,697

Debentures Payable		-			2,500,000	B		2,500,000

Total Current Liabilities		1,083,536			6,048,096			7,131,632

Long Term Liabilities

Debenture Payable		2,000,000			(2,000,000	)A		-

Note Payable - Dr. Zehr		600,000			(600,000	)A		-

Total Long Term Liabilities		2,600,000			(2,600,000	)		-

Total Liabilities		3,683,536			3,448,096			7,131,632

Stockholders' Equity

Minority Interest		-			57,647	A		57,647

Common Stock		44,544			-			44,544

Additional Paid in Capital		4,332,172			2,120,616	A		6,452,788

Retained Earnings		(3,894,252	)		(4,914,039	)A		(8,808,291	)

Total Stockholders' Equity		482,464			(2,735,776	)		(2,253,312	)

Total Liabilities and Stockholders' Equity		4,166,000			712,320			4,878,320

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to property account for convertible debenture and bifurcated embedded derivative

F - Amount adjusted to account for stock payable at current market value

Consolidated Unaudited Quarterly Balance Sheet	September 30, 2006
	As Reported			Adjustments			As Restated
Assets

Cash		-			52,592	A		52,592

Accounts Receivable		-			16,011	A		16,011

Oil and Gas Producing Assets		60,000			(60,000	)A		-

Notes Receivable		2,506,000			(1,656,000	)A		850,000

Equipment, net of depreciation		-			3,377,581	A		3,377,581

Investment in IFL		1,600,000			(1,600,000	)A		-

Goodwill		-			1,559,241	A		1,559,241

Other Assets		-			233,308	A		233,308

Total Assets		4,166,000			1,922,733			6,088,733

Liabilities

Accounts Payable		640,536			(246,065	)A		394,471

Accrued Liabilities		-			927,015	A		927,015

Accrued Interest		-			705,883	A		705,883

Notes Payable - Current Portion		500,000			2,467,908	A		2,967,908

Stock Payable		-			7,350	F		7,350

Derivative Liability		-			3,008,863	B		3,008,863

Debentures Payable		-			2,500,000	B		2,500,000

Total Current Liabilities		1,140,536			9,370,954			10,511,490

Long Term Liabilities

Debenture Payable		2,000,000			(2,000,000	)A		-

Note Payable - Dr. Zehr		600,000			(600,000	)A		-

Total Long Term Liabilities		2,600,000			(2,600,000	)		-

Total Liabilities		3,740,536			6,770,954			10,511,490

Stockholders' Equity
Minority Interest		-			-			-

Common Stock		44,544			-			44,544

Additional Paid in Capital		4,332,172			2,120,616	A		6,452,788

Retained Earnings		(3,951,252	)		(6,968,837	)A		(10,920,089	)

Total Stockholders' Equity		425,464			(4,848,221	)		(4,422,757	)

Total Liabilities and Stockholders' Equity		4,166,000			1,922,733			6,088,733

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to property account for convertible debenture and bifurcated embedded derivative

F - Amount adjusted to account for stock payable at current market value

Consolidated Unaudited Quarterly Income Statement	Three Months Ended March 31, 2006
	As Reported			Adjustments			As Restated

Revenues		-			302,400	A		302,400
COGS		-			-			-

Gross Margin		-			302,400			302,400

Operating Expenses

Personnel Costs		-			5,763	A		5,763

Terminal Management		-			607	A		607

Consulting		57,000			53,464	A		110,464

Legal and Professional		-			55,358	A		55,358

Depreciation		-			49,611	A		49,611

Repairs		-			17,253	A		17,253

Operating Supplies		-			11,287	A		11,287

G&A & Office Expenses		-			2,140	A		2,140

Total Operating Expenses		57,000			195,483			252,483

Income (Loss) from Operations		(57,000	)		106,917			49,917

Other Income (Expense)

Interest Expense		-			(473,612	)A		(473,612	)

Interest Income		-			20,600	A		20,600

Other Income (Expense)		-			(64,300	)A		(64,300	)

Derivative Gain/Loss		-			429,541	B		429,541

Minority Interest in Loss		-			25,574	A		25,574

Net Loss		(57,000	)		44,720			(12,280	)

Loss per share, basic		(0.00	)					(0.00	)
Loss per share, diluted		(0.00	)					(0.00	)

Weighted Avg # of shares		44,544,226						44,544,226

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to property account for convertible debenture and bifurcated embedded derivative

Consolidated Unaudited Quarterly Income Statement	Three Months Ended June 30, 2006									Six Months Ended June 30, 2006
	As Reported			Adjustments			As Restated			As Reported			Adjustments			As Restated

Revenues		-			130,196	A		130,196			-			432,596	A		432,596

COGS		-			94,493	A		94,493			-			94,493	A		94,493

Gross Margin		-			35,703			35,703			-			338,103			338,103

Operating Expenses

Personnel Costs		-			19,811	A		19,811			-			25,574	A		25,574

Terminal Management		-			19,000	A		19,000			-			19,607	A		19,607

Consulting		57,000			2,000	A		59,000			114,000			55,464	A		169,464

Legal and Professional		-			19,700	A		19,700			-			75,058	A		75,058

Depreciation		-			49,611	A		49,611			-			99,222	A		99,222

Repairs		-			65,802	A		65,802			-			83,055	A		83,055

Operating Supplies		-			50,501	A		50,501			-			61,788	A		61,788

G&A & Office Expenses		-			2,023	A		2,023			-			4,163	A		4,163

Total Operating Expenses		57,000			228,448			285,448			114,000			423,931			537,931

Income (Loss) from Operations		(57,000	)		(192,745	)		(249,745	)		(114,000	)		(85,828	)		(199,828	)

Other Income (Expense)

Interest Expense		-			(220,036	)A		(220,036	)		-			(693,648	)A		(693,648	)

Interest Income		-			20,600	A		20,600			-			41,200	A		41,200

Other Income (Expense)		-			500	A		500			-			(63,800	)A		(63,800	)

Derivative Gain/Loss		-			125,346	B		125,346			-			554,887	B		554,887

Minority Interest in Loss		-			41,089	A		41,089			-			66,663	A		66,663

Net Loss		(57,000	)		(225,246	)		(282,246	)		(114,000	)		(180,526	)		(294,526	)

Loss per share, basic		(0.00	)		(0.01	)		(0.01	)		(0.00	)		(0.01	)		(0.01	)

Loss per share, diluted		(0.00	)		(0.01	)		(0.01	)		(0.00	)		(0.01	)		(0.01	)

Weighted Avg # of shares		44,544,226						44,544,226			44,544,226						44,544,226

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to property account for convertible debenture and bifurcated embedded derivative

Consolidated Unaudited Quarterly Income Statement	Three Months Ended September 30, 2006									Nine Months Ended September 30, 2006
	As Reported			Adjustments			As Restated			As Reported			Adjustments			As Restated

Revenues		-			82,866	A		82,866			-			515,462	A		515,462

COGS		-			48,611	A		48,611			-			143,104	A		143,104

Gross Margin		-			34,255			34,255			-			372,358			372,358

Operating Expenses

Personnel Costs		-			23,872	A		23,872			-			49,446	A		49,446

Terminal Management		-			33,000	A		33,000			-			52,607	A		52,607

Consulting		57,000			-			57,000			171,000			55,464	A		226,464

Legal and Professional		-			5,468	A		5,468			-			80,526	A		80,526

Depreciation		-			49,511	A		49,511			-			148,733	A		148,733

Repairs		-			14,074	A		14,074			-			97,129	A		97,129

Operating Supplies		-			43,517	A		43,517			-			105,305	A		105,305

G&A & Office Expenses		-			7,765	A		7,765			-			11,928	A		11,928

Total Operating Expenses		57,000			177,207			234,207			171,000			601,138			772,138

Income (Loss) from Operations		(57,000	)		(142,952	)		(199,952	)		(171,000	)		(228,780	)		(399,780	)

Other Income (Expense)

Interest Expense		-			(73,267	)A		(73,267	)		-			(766,915	)A		(766,915	)

Interest Income		-			20,600	A		20,600			-			61,800	A		61,800

Other Income (Expense)		-			(350	)A		(350	)		-			(64,150	)A		(64,150	)

Derivative Gain/Loss		-			(1,792,166	)B		(1,792,166	)		-			(1,237,279	)B		(1,237,279	)

Minority Interest in Loss		-			(66,663	)A		(66,663	)		-			-			-

Net Loss		(57,000	)		(2,054,798	)		(2,111,798	)		(171,000	)		(2,235,324	)		(2,406,324	)

Loss per share, basic		(0.00	)		(0.05	)		(0.05	)		(0.00	)		(0.05	)		(0.05	)

Loss per share, diluted		(0.00	)		(0.05	)		(0.05	)		(0.00	)		(0.05	)		(0.05	)

Weighted Avg # of shares		44,544,226						44,544,226			44,544,226						44,544,226

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to property account for convertible debenture and bifurcated embedded derivative

Consolidated Unaudited Quarterly Balance Sheet	March 31, 2007
	As Reported			Adjustments			As Restated
Assets
Cash		64,553			-			64,553

Accounts Receivable		123,565			(20,000	)A		103,565

Oil and Gas Producing Assets		-			-			-
Notes Receivable		1,005,208			(255,208	)A		750,000

Inventory		31,230			-			31,230

Equipment, net of depreciation		99,492			3,080,080	D		3,179,572

Investment in IFL		1,500,000			(1,500,000	)A		-

Goodwill		-			1,559,240	A		1,559,240

Other Assets		10,217			244,991	A		255,208

Total Assets		2,834,265			3,109,103			5,943,368

Liabilities
Accounts Payable		2,165,846			(1,375,386	)A		790,460

Accrued Liabilities		40,250			1,049,457	A		1,089,707

Accrued Interest		-			97,500	C		97,500

Notes Payable - Current Portion		489,603			1,464,942	A		1,954,545

Lease Obligation		-			3,179,572	D		3,179,572

Stock Payable		37,500			390,210	F		427,710

Deferred Gain		-			1,480,383	D		1,480,383

Total Current Liabilities		2,733,199			6,286,678			9,019,877

Long Term Liabilities
Notes Payable		1,500,000			(1,500,000	)A		-

Total Long Term Liabilities		1,500,000			(1,500,000	)		-

Total Liabilities		4,233,199			4,786,678			9,019,877

Stockholders' Equity
Minority Interest		-			-			-
Common Stock		44,544			-			44,544

Additional Paid in Capital		4,332,172			6,382,626	B		10,714,798

Retained Earnings		(5,775,650	)		(8,060,201	)A		(13,835,851	)

Total Stockholders' Equity		(1,398,934	)		(1,677,575	)		(3,076,509	)

Total Liabilities and Stockholders' Equity		2,834,265			3,109,103			5,943,368

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to property account for convertible debenture and bifurcated embedded derivative

C - Amount adjusted to reflect interest adjustments associated with notes receivable / payable

D - Amount adjusted to properly account for sale/leaseback of IFL terminal and associated gain

F - Amount adjusted to account for stock payable at current market value

Consolidated Unaudited Quarterly Balance Sheet	June 30, 2007
	As Reported			Adjustments			As Restated
Assets
Cash		100,984			-			100,984

Accounts Receivable		161,518			(30,126	)A		131,392

Oil and Gas Producing Assets		-			-			-
Notes Receivable		1,023,958			(273,958	)A		750,000

Inventory		57,554			-			57,554

Equipment, net of depreciation		142,967			3,030,249	D		3,173,216

Investment in IFL		-			-			-
Goodwill		1,500,000			59,240	A		1,559,240

Other Assets		9,714			265,444	A		275,158

Total Assets		2,996,695			3,050,849			6,047,544

Liabilities
Accounts Payable		2,091,540			(1,161,428	)A		930,112

Accrued Liabilities		25,295			1,234,642	A		1,259,937

Accrued Interest		135,833			(833	)C		135,000

Notes Payable - Current Portion		283,507			1,692,019	A		1,975,526

Lease Obligation		-			3,255,909	D		3,255,909

Stock Payable		22,500			1,551,190	F		1,573,690

Deferred Gain		-			1,455,711	D		1,455,711

Total Current Liabilities		2,558,675			8,027,210			10,585,885

Long Term Liabilities
Notes Payable		1,541,724			(1,541,724	)A		-

Total Long Term Liabilities		1,541,724			(1,541,724	)		-

Total Liabilities		4,100,399			6,485,486			10,585,885

Stockholders' Equity
Common Stock		49,544			-			49,544

Additional Paid in Capital		5,059,584			6,692,626	B		11,752,210

Retained Earnings		(6,212,832	)		(10,127,263	)A,D		(16,340,095	)

Total Stockholders' Equity		(1,103,704	)		(3,434,637	)		(4,538,341	)

Total Liabilities and Stockholders' Equity		2,996,695			3,050,849			6,047,544

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to property account for convertible debenture and bifurcated embedded derivative

C - Amount adjusted to reflect interest adjustments associated with notes receivable / payable

D - Amount adjusted to properly account for sale/leaseback of IFL terminal and associated gain

F - Amount adjusted to account for stock payable at current market value

Consolidated Unaudited Quarterly Balance Sheet	September 30, 2007
	As Reported			Adjustments			As Restated
Assets
Cash		170,892			-			170,892

Accounts Receivable		142,945			(52,619	)A		90,326

Notes Receivable		1,042,708			(292,708	)A		750,000

Inventory		18,910			-			18,910

Equipment, net of depreciation		134,615			2,983,236	D		3,117,851

Goodwill		1,500,000			59,240	A		1,559,240

Other Assets		8,012			285,896	A		293,908

Total Assets		3,018,082			2,983,045			6,001,127

Liabilities
Accounts Payable		1,992,728			(1,175,172	)A		817,556

Accrued Liabilities		24,000			1,248,906	A		1,272,906

Accrued Interest		173,333			(833	)C		172,500

Notes Payable - Current Portion		295,415			1,664,329	A		1,959,744

Lease Obligation		-			3,315,318	D		3,315,318

Stock Payable		22,500			671,775	F		694,275

Deferred Gain		-			1,431,037	D		1,431,037

Total Current Liabilities		2,507,976			7,155,360			9,663,336

Long Term Liabilities
Notes Payable		1,539,555			(1,539,555	)A		-

Total Long Term Liabilities		1,539,555			(1,539,555	)		-

Total Liabilities		4,047,531			5,615,805			9,663,336

Stockholders' Equity
Common Stock		49,544			-			49,544

Additional Paid in Capital		5,066,975			6,692,626	B		11,759,601

Retained Earnings		(6,145,968	)		(9,325,386	)A,D		(15,471,354	)

Total Stockholders' Equity		(1,029,449	)		(2,632,760	)		(3,662,209	)

Total Liabilities and Stockholders' Equity		3,018,082			2,983,045			6,001,127

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

B - Amount adjusted to property account for convertible debenture and bifurcated embedded derivative

C - Amount adjusted to reflect interest adjustments associated with notes receivable / payable

D - Amount adjusted to properly account for sale/leaseback of IFL terminal and associated gain

F - Amount adjusted to account for stock payable at current market value

Consolidated Unaudited Quarterly Income Statement	Three Months Ended March 31, 2007
	As Reported			Adjustments			As Restated

Revenues		225,676			-			225,676

COGS		34,339			-			34,339

Gross Margin		191,337			-			191,337

Operating Expenses

Personnel Costs		25,559			20,000	E		45,559

Terminal Management		22,500			-			22,500

Consulting		107,000			(59,000	)E		48,000

Legal and Professional		4,592			281,424	A		286,016

Depreciation		266,015			(249,571	)D		16,444

Repairs		114,428			(5,923	)D		108,505

Operating Supplies		7,122			40,885	A		48,007

G&A & Office Expenses		53,083			28,320	A		81,403

Total Operating Expenses		600,299			56,135			656,434

Income (Loss) from Operations		(408,962	)		(56,135	)		(465,097	)

Other Income (Expense)

Interest Expense		(38,841	)		(44,043	)C		(82,884	)

Interest Income		18,775			1,406	C		20,181

Other Income (Expense)		-			23,028	F		23,028

Gain from Lawsuit		659,814			(659,814	)D		-

Net Income (Loss)		230,786			(735,558	)		(504,772	)

Earnings (loss) per share, basic		0.01			(0.02	)		(0.01	)
Earnings (loss) per share, diluted		0.01			(0.02	)		(0.01	)

Weighted Avg # of shares		44,544,226						44,544,226

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

C - Amount adjusted to reflect interest adjustments associated with notes receivable / payable

D - Amount adjusted to properly account for sale/leaseback of IFL terminal and associated gain

E - Amount adjusted to properly reflect compensation and accrued compensation

F - Amount adjusted to account for stock payable at current market value

Consolidated Unaudited Quarterly Income Statement	Three Months Ended June 30, 2007									Six Months Ended June 30, 2007
	As Reported			Adjustments			As Restated			As Reported			Adjustments			As Restated

Revenues		538,676			25,545	A		564,221			764,352			25,545	A		789,897

COGS		232,715			-			232,715			267,054			-			267,054

Gross Margin		305,961			25,545			331,506			497,298			25,545			522,843

Operating Expenses

Personnel Costs		28,093			10,125	E		38,218			53,652			30,125	E		83,777

Terminal Management		47,000			-			47,000			69,500			-			69,500

Consulting		602,912			225,000	E		827,912			709,912			166,000	E		875,912

Legal and Professional		123,114			361,100	A		484,214			389,129			381,100	A		770,229

Depreciation		3,835			49,948	D		53,783			118,263			(48,036	)D		70,227

Repairs		9,407			510	D		9,917			16,529			101,892	D		118,421

Operating Supplies		7,792			7,172	A		14,964			12,384			50,587	A		62,971

G&A & Office Expenses		71,751			9,800	A		81,551			124,834			38,120	A		162,954

Total Operating Expenses		893,904			663,655			1,557,559			1,494,203			719,788			2,213,991

Income (Loss) from Operations		(587,943	)		(638,110	)		(1,226,053	)		(996,905	)		(694,243	)		(1,691,148	)

Other Income (Expense)

Interest Expense		(40,528	)		(135,310	)C		(175,838	)		(79,369	)		(179,353	)C		(258,722	)

Interest Income		18,952			-			18,952			37,727			1,406	C		39,133

Other Income (Expense)		19,830			(1,165,810	)F		(1,145,980	)		19,830			(1,142,782	)F		(1,122,952	)

Gain from Lawsuit		152,507			(127,834	)D		24,673			812,321			(787,648	)D		24,673

Net Loss		(437,182	)		(2,067,064	)		(2,504,246	)		(206,396	)		(2,802,620	)		(3,009,016	)

Loss per share, basic		(0.01	)		(0.04	)		(0.05	)		(0.00	)		(0.06	)		(0.06	)

Loss per share, diluted		(0.01	)		(0.04	)		(0.05	)		(0.00	)		(0.06	)		(0.06	)

Weighted Avg # of shares		49,544,226						48,877,559			49,544,226						46,710,893

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

C - Amount adjusted to reflect interest adjustments associated with notes receivable / payable

D - Amount adjusted to properly account for sale/leaseback of IFL terminal and associated gain

E - Amount adjusted to properly reflect compensation and accrued compensation

F - Amount adjusted to account for stock payable at current market value

Consolidated Unaudited Quarterly Income Statement	Three Months Ended September 30, 2007									Nine Months Ended September 30, 2007
	As Reported			Adjustments			As Restated			As Reported			Adjustments			As Restated

Revenues		634,498			(5,716	)A		628,782			1,398,850			19,829	A		1,418,679

COGS		220,031			-			220,031			487,085			-			487,085

Gross Margin		414,467			(5,716	)		408,751			911,765			19,829			931,594

Operating Expenses

Personnel Costs		4,722			22,495	E		27,217			58,374			52,620	E		110,994

Terminal Management		96,000			-			96,000			165,500			-			165,500

Consulting		87,391			63,500	E		150,891			797,303			229,500	E		1,026,803

Legal and Professional		40,724			(10,712	)A		30,012			429,853			370,388	A		800,241

Depreciation		8,352			47,013	D		55,365			126,615			(1,023	)D		125,592

Repairs		300			-			300			16,829			101,892	D		118,721

Operating Supplies		2,624			6,465	A		9,089			15,008			57,051	A		72,059

G&A & Office Expenses		74,473			(122,742	)A		(48,269	)		199,307			(84,622	)A		114,685

Total Operating Expenses		314,586			6,019			320,605			1,808,789			725,806			2,534,595

Income (Loss) from Operations		99,881			(11,735	)		88,146			(897,024	)		(705,977	)		(1,603,001	)

Other Income (Expense)

Interest Expense		(64,061	)		(78,914	)C		(142,975	)		(143,430	)		(258,267	)C		(401,697	)

Interest Income		19,480			-			19,480			57,207			1,406	C		58,613

Other Income (Expense)		2,137			877,278	F		879,415			21,968			(265,505	)F		(243,537	)

Gain from Lawsuit		9,426			15,247	D		24,673			821,747			(772,401	)D		49,346

Net Income (Loss)		66,863			801,876			868,739			(139,532	)		(2,000,744	)		(2,140,276	)

Earnings (loss) per share, basic		0.00			0.02			0.02			(0.00	)		(0.04	)		(0.04	)

Earnings (loss) per share, diluted		0.00			0.02			0.02			(0.00	)		(0.04	)		(0.04	)

Weighted Avg # of shares		49,544,226						49,544,226			47,657,779						47,692,374

Legend:

A - Amounts adjusted due to consolidation of majority owned subsidiary, Intercontinental Fuels, LLC

C - Amount adjusted to reflect interest adjustments associated with notes receivable / payable

D - Amount adjusted to properly account for sale/leaseback of IFL terminal and associated gain

E - Amount adjusted to properly reflect compensation and accrued compensation

F - Amount adjusted to account for stock payable at current market value

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

There are no disagreements with our accountant on accounting and financial disclosure.

ITEM 8A. CONTROL AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2007. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. We have identified the following material weaknesses.

As of December 31, 2007, we did not maintain effective controls over the control environment. Specifically, as of December 31, 2007, we do not have a written code of business conduct and ethics that governs the Company’s employees, officers and directors. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-B. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

As of December 31, 2007, we did not maintain effective controls over financial reporting which resulted in the restatement of several previous financial statements. Specifically, controls were not designed and in place to ensure that majority-owned subsidiaries, complex convertible instruments and gains from settlements were properly reflected in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2007, based on the criteria established in "Internal Control-Integrated Framework" issued by the COSO.

Changes in Internal Control Over Financial Reporting

During 2007, the Company hired an internal controller whose function is to handle the Company’s accounting. Management anticipates that this staff addition will assist in more complete and accurate financial statements and accompanying disclosures.

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

Corrective Action

The Company has taken the following steps to address the weaknesses described above.

First, the Company has adopted a code of ethics which is attached as an exhibit to this filing. Second, as described above, we have hired an internal controller whose function is to handle the Company’s accounting. Third, we have restated our financial statements in order to reflect the proper consolidation of IFL and proper accounting for the derivate instrument discussed above.

PART III

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

The directors and officers of the Company as of December 31, 2007, are set forth below. The directors hold office for their respective term and until their successors are duly elected and qualified. The officers serve at the will of the Board of Directors.

DIRECTORS , EXECUTIVE OFFICERS, AND SIGNIFICANT EMPLOYEES

Set forth below are the names, ages, and positions of the executive officers and directors of the Company.

Name	Age	Office

Sonny Wooley	69	Chairman of the Board of Directors and Director
Timothy Byrd	46	Chief Executive Officer, Chief Financial Officer and Director
Peggy Behrens	52	Secretary and Director
Nancy Finney	47	Controller

SONNY WOOLEY, CHAIRMAN OF THE BOARD OF DIRECTORS

Mr. Wooley founded Adino in 1989 and managed it as a private company until going public in 1996. He worked with the Company as an outside consultant prior to rejoining it as Chairman in 2001.

TIMOTHY G. BYRD, SR., CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER AND DIRECTOR

Mr. Byrd became the Company’s CEO, CFO and director in December 2001. Prior to then, Mr. Byrd was President of Innovative Capital Markets, an advisory firm that developed growth strategies for corporations through strategic alliances and mergers and acquisitions.

PEGGY BEHRENS, SECRETARY AND DIRECTOR

Ms. Behrens joined Adino in 1998 as Secretary and director. Prior to 1998, Ms. Behrens worked as the Administrator and Director of Nurses from 1996-1998 for Health Link Home Care.

NANCY FINNEY, CONTROLLER

We have identified our controller, Nancy Finney, as an employee who is expected to make a significant contribution to our business. Ms. Finney is not an executive officer. Ms. Finney joined Adino in October 2007. Prior to joining the Company, Ms. Finney was an outsourced controller for CapNet Risk Services, Inc. since August 2003. From 2001 until 2003, she was Manager of Pinnacle Financial Service LLC, a receivables factoring firm.

All officers and directors listed above will remain in office until the next annual meeting of our stockholders and until their successors have been duly elected and qualified. There are no agreements with respect to the election of directors. Officers are appointed annually by our Board of Directors and each Executive Officer serves at the discretion of our Board of Directors. We do not have any standing committees.

None of our officers or directors have filed any bankruptcy petition, been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities law within the past five (5) years.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires the Company's officers, directors and persons who own more than 10% of the Company's common stock to file reports of ownership and changes in ownership with the SEC.

Officers, directors and greater than 10% stockholders are required by regulation to furnish the Company with copies of all forms they file pursuant to Section 16(a) of the Exchange Act.

We have reviewed the Section 16(a) filings made in connection with the Company’s stock. We believe that all persons subject to Section 16(a) of the Exchange Act in connection with their relationship with us have complied on a timely basis.

CODE OF ETHICS

The Company has adopted a code of ethics applicable to our Chief Executive Officer, Chief Financial Officer, controller, our other employees, and our suppliers. This code is intended to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to the SEC and in other public communications that we make; compliance with applicable governmental laws, rules and regulations; the prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and accountability for adherence to the code. A copy of our code of ethics is included as an exhibit to this Form 10-KSB. The Company will provide a copy of our code of ethics, without charge, to any person who requests it. In order to request a copy of our code of ethics, please contact our headquarters and speak with our investor relations department.

AUDIT COMMITTEE

The Company does not have an audit committee. The entire Board of Directors instead acts as the Company’s audit committee. Our Board does not have an audit committee financial expert as defined by Securities and Exchange Commission rules.

ITEM 10. EXECUTIVE COMPENSATION

The following describes the cash and stock compensation paid to our directors and officers for the two past fiscal years.

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary ($)		Stock Awards		Option Awards ($)		All Other Compensation		Total
Timothy G. Byrd, Sr., CEO	2007		156,000		-0-		89,677		45,000		290,677
Timothy G. Byrd, Sr., CEO	2006		156,000		135,000		-0-		-0-		291,000
Sonny Wooley, Chairman	2007		156,000		-0-		89,677		45,000		290,677
Sonny Wooley, Chairman	2006		156,000		203,000		-0-		-0-		359,000

Mr. Byrd’s and Mr. Wooley’s salaries have accrued on the Company’s books, but because of the Company’s poor liquidity and cash flow, they have not been paid. In December 2006, we agreed to allow Messrs. Byrd and Wooley to convert their accrued salaries into stock of the Company at the conversion rate of $0.007 cents per share. This stock is not additional compensation to Messrs. Byrd and Wooley; it represents a partial payment of their accrued salaries. Nonetheless, we are required to record this as a stock-based compensation expense. In December 2006, both Mr. Byrd and Mr. Wooley were issued 2,500,000 shares apiece under this arrangement.

On June 13, 2007, we issued warrants to our Chairman and Chief Executive Officer permitting them to purchase up to 12,000,000 shares apiece of Adino stock. In November 2007, they relinquished 9,000,000 shares each under this warrant. Under the new terms of the warrants, they are exercisable for 3,000,000 shares apiece of Adino stock at $0.03 per share.

In November 2007, we issued Messrs. Byrd and Wooley 750,000 shares of stock apiece in order to reimburse them for their transfer of 1,000,000 shares to stock to a third party for an expense owed by the Company. For further information regarding this transaction, see Item 12 – Transactions with Related Persons.

During 2007, Mr. Byrd’s and Mr. Wooley’s salaries accrued but were not paid due to the Company’s tight cash flow. However, we paid Mr. Byrd $104,080 and Mr. Wooley $115,000 of compensation accrued from previous years.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table shows equity awards outstanding to our directors and officers at the end of the fiscal year.

Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Option Exercise Price		Option Expiration Date
Timothy G. Byrd, Sr.		3,000,000	$	0.03	6/7/2012
Sonny Wooley		3,000,000	$	0.03	6/7/2012

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table shows the Company’s outstanding equity awards as of December 31, 2007.

EQUITY COMPENSATION PLAN INFORMATION

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders		-0-		N/A		-0-
Equity compensation plans not approved by security holders		12,000,000	$	0.0367		-0-

The following table shows the ownership of our stock by our directors, officers, and any person we know to be the beneficial owner of more than five percent (5%) of our common stock.

Name and Address of Beneficial Owner (1)	Amount and Nature of Beneficial Ownership (2)		% of Class (6)

Sonny Wooley		15,975,000(3) (4) (5)		32.24%

Timothy G. Byrd, Sr.		13,250,000(4) (5)		26.74%

Peggy Behrens		2,170,100(5)		4.38%

Executive officers and directors as a group (3 persons)		32,395,100		63.37%

The above numbers and percentages are as of March 31, 2008.

(1) The address of each beneficial owner is 2500 CityWest Boulevard, Suite 300, Houston, Texas 77042.

(2) Unless otherwise indicated, all shares are held directly with sole voting and investment power.

(3) Includes 256 shares held indirectly.

(4) Includes 5,500,000 shares that may be issued in conversion of accrued compensation.

(5) Includes 750,000 shares that have been authorized for issuance to the named person but not yet issued.

(6) As of December 31, 2007, CMMI has 49,544,226 shares outstanding. There are a total of 17,757,000 shares committed and authorized for issuance, 15,250,000 of which are authorized for issuance to our directors and officers. However, as of December 31, 2007, the Company was unable to issue these shares because it did not have sufficient authorized shares. The numbers above include all shares authorized for issuance to our officers and directors even though we cannot legally issue them. The numbers above also assume total outstanding shares of 50,000,000 (the Company’s maximum number of authorized shares). On January 30, 2008, the Company’s shareholders authorized the increase of the Company’s authorized capital to 500,000,000 shares, and as a result, the 17,757,000 previously committed but unissued shares may be issued at any time. If all previously committed shares were issued, then Adino would have a total of 67,301,226 shares outstanding. If the full outstanding amount of Adino shares (67,301,226) were used for purposes of the calculations above, the percentages would be as follows: Mr. Wooley: 23.74%; Mr. Byrd: 19.69%; Ms. Behrens: 3.22%; All directors and executive officers as a group: 46.65%.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

TRANSACTIONS WITH RELATED PERSONS

In October 2007, the Company hired a new investment banking firm, Aurora Financial Services LLC (“Aurora”). Under the Company’s investment banking agreement with Aurora, the Company was required to make an upfront payment of 1,000,000 shares of stock to Aurora. However, the Company did not have sufficient authorized stock to make this payment. As a result, Mr. Byrd, our CEO, and Mr. Wooley, our Chairman, transferred 500,000 shares of stock apiece to Aurora in order to satisfy this expense. They agreed with Aurora that they would retain voting rights to this stock until the Company’s annual meeting. The stock that Messrs. Byrd and Wooley transferred to Aurora was valued at $170,000.

In connection with the Aurora transaction, the Company agreed to reimburse Mr. Byrd and Mr. Wooley with 750,000 shares apiece. The Company deemed it appropriate to repay this expense with 500,000 extra shares due to the fact that the shares that Messrs. Byrd and Wooley transferred to Aurora on the Company’s behalf were no longer restricted, but the shares that the Company would issue to them in reimbursement would be restricted. The Company therefore thought it appropriate to reimburse Mr. Byrd and Mr. Wooley with an extra 250,000 shares apiece for the extra time that they would have to wait in order to sell their shares.

The full amount of the reimbursement to Mr. Byrd and Wooley was $85,000, calculated as the closing price of the Company’s stock on the date of the approval of the reimbursement by the full Board of Directors.

DIRECTOR INDEPENDENCE

The Company does not have any independent directors. For purposes of determining director independence, we used the standards applicable to companies listed on the NASDAQ Stock Exchange.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

The following documents are filed as part of this report:

Exhibit
Number		Exhibit

3.1		Articles of Incorporation (incorporated by reference to our Form 10-K filed on March 18, 2009)
3.2		Bylaws (incorporated by reference to our Form 10-K filed on March 18, 2009)
10.1		Contract with Metropolitan Transit Authority of Harris County, Texas (incorporated by reference to our Form 10-K filed on March 18, 2009)
10.2		Lease with 17617 Aldine Westfield LLC (incorporated by reference to our Form 10-K filed on March 18, 2009)
10.3		Form of Warrants Issued to Timothy G. Byrd, Sr. and Sonny Wooley * (incorporated by reference to our Form 10-K filed on March 18, 2009)
10.4		Form of Partial Relinquishment of Warrant Rights* (incorporated by reference to our Form 10-K filed on March 18, 2009)
10.5		Stock Reimbursement Agreement* (incorporated by reference to our Form 10-K filed on March 18, 2009)
14		Code of Business Conduct and Ethics (incorporated by reference to our Form 10-K filed on March 18, 2009)
31.1		Certification of Chief Executive Officer pursuant to Rule 15d-14(a) of the Exchange Act

31.2		Certification of Chief Financial Officer pursuant to Rule 15d-14(a) of the Exchange Act
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Management contract or compensatory plan or arrangement

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

We paid $50,838 for the audit of our financial statements and review of our quarterly reports for fiscal year 2007. We paid $20,000 for audit of our 2006 financial statements.

AUDIT-RELATED FEES

We paid aggregate fees of $-0- for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements this fiscal year. In 2006, these fees were $-0-.

TAX FEES

We paid aggregate fees of $7,492 for tax compliance, tax advice, and tax planning by our principal accountant for this fiscal year. For the 2006 fiscal year, these fees were $1,000. These services consisted of preparing and filing our federal and state income tax returns and federal excise tax returns for IFL.

ALL OTHER FEES

We paid aggregate fees of $-0- for products and services provided by our principal accountant not otherwise disclosed above. In 2006, we were billed $-0- for these products and services.

PRINCIPAL ACCOUNTANT ENGAGEMENT POLICIES

We do not have an audit committee. We do not have pre-approval policies and procedures for the engagement of our principal accountant. However, the engagement of our principal account was approved by our Board of Directors.

SIGNATURES

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the undersigned has duly caused this Form 10-KSB/A3 to be signed on its behalf by the undersigned, there unto duly authorized, in the City of Houston, Texas on April 21, 2009.

ADINO ENERGY CORPORATION

By: /s/ Timothy G. Byrd, Sr.

Timothy G. Byrd, Sr.

Chief Executive Officer, Chief Financial Officer and

Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this 10-KSB has been signed below by the following persons on behalf of the registrant in the capacities and on the date indicated.

Signature	Name and Title	Date

/s/ Sonny Wooley	Chairman of the Board	April 21, 2009
Sonny Wooley	of Directors

/s/ Timothy G. Byrd, Sr.	Chief Executive Officer,	April 21, 2009
Timothy G. Byrd, Sr.	Chief Financial Officer,
	and Director

/s/ Peggy Behrens	Secretary and Director	April 21, 2009
Peggy Behrens