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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>UNITED
      STATES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>SECURITIES
      AND EXCHANGE COMMISSION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Washington,
      D.C. 20549 </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
      <div>&#160;</div>
      <div>
        <hr style="COLOR: black" align="center" noshade size="1" width="15%">
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
      REPORT </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of 1934
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Date
      of Report (Date of earliest event reported): September 1,
      2006</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
      <div>&#160;</div>
      <div>
        <hr style="COLOR: black" align="center" noshade size="1" width="15%">
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 24pt; FONT-FAMILY: Times New Roman"><strong>ETHANEX
      ENERGY, INC.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(f/k/a
      New Inverness Explorations, Inc.)</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(Exact
      name of registrant as specified in its charter) </strong></font></div>
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      <div>&#160;</div>
      <div>
        <hr style="COLOR: black" align="center" noshade size="1" width="15%">
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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          <tr>
            <td align="left" valign="middle" width="26%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="middle" width="25%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="middle" width="25%">&#160;</td>
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            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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                or other jurisdiction</strong></font></div>
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                incorporation)</strong></font></div>
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                File Number)</strong></font></div>
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          <tr>
            <td valign="middle" width="39%">
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                Parallel Road, Suite A</strong></font></div>
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                KS</strong></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(Address
                of principal executive offices)</strong></font></div>
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                Code)</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(913)
      724-4106</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(Registrant&#8217;s
      telephone number, including area code) </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
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        <hr style="COLOR: black" align="center" noshade size="1" width="15%">
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      <div>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below): </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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                communications pursuant to Rule 425 under the Securities Act (17
                CFR
                230.425) </font></div>
            </td>
          </tr>

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          <tr>
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                material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                240.14a-12) </font></div>
            </td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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          <tr>
            <td align="left" valign="top" width="3%">
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                communications pursuant to Rule 14d-2(b) under the Exchange Act (17
                CFR
                240.14d-2(b)) </font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#168;</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
                communications pursuant to Rule 13e-4(c) under the Exchange Act (17
                CFR
                240.13e-4(c)) </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div>
        <hr style="COLOR: black" align="center" noshade size="1" width="15%">
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div>
          <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="1">
          <hr style="MARGIN-TOP: -13px; COLOR: #000000" noshade size="4">
        </div>
      </div>
      <div id="HDR">
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORWARD
      LOOKING STATEMENTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      Current Report on Form 8-K contains forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended. This Current Report
      includes statements regarding our plans, goals, strategies, intent, beliefs
      or
      current expectations. These statements are expressed in good faith and based
      upon a reasonable basis when made, but there can be no assurance that these
      expectations will be achieved or accomplished. These forward looking statements
      can be identified by the use of terms and phrases such as &#8220;believe,&#8221; &#8220;plan,&#8221;
&#8220;intend,&#8221; &#8220;anticipate,&#8221; &#8220;target,&#8221; &#8220;estimate,&#8221; &#8220;expect,&#8221; and the like, and/or
      future-tense or conditional constructions (&#8220;will,&#8221; &#8220;may,&#8221; &#8220;could,&#8221; &#8220;should,&#8221;
etc.). Items contemplating or making assumptions about, actual or potential
      future sales, market size, collaborations, and trends or operating results
      also
      constitute such forward-looking statements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      forward-looking statements in this report reflect </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
      good
      faith judgment of management, forward-looking statements are inherently subject
      to known and unknown risks, business, economic and other risks and uncertainties
      that may cause actual results to be materially different from those discussed
      in
      these forward-looking statements. Readers are urged not to place undue reliance
      on these forward-looking statements, which speak only as of the date of this
      report. We assume no obligation to update any forward-looking statements in
      order to reflect any event or circumstance that may arise after the date of
      this
      report, other than as may be required by applicable law or regulation. Readers
      are urged to carefully review and consider the various disclosures made by
      us in
      our reports filed with the Securities and Exchange Commission (&#8220;SEC&#8221;) which
      attempt to advise interested parties of the risks and factors that may affect
      our business, financial condition, results of operation and cash flows. If
      one
      or more of these risks or uncertainties materialize, or if the underlying
      assumptions prove incorrect, our actual results may vary materially from those
      expected or projected.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXPLANATORY
      NOTE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      August
      21, 2006, New Inverness Explorations, Inc. (&#8220;NIE&#8221;) changed its name to Ethanex
      Energy, Inc. On September 1, 2006, NIE completed a reverse merger (the &#8220;Merger&#8221;)
      with Ethanex North America Acquisition Corp., a wholly-owned subsidiary of
      NIE
      (&#8220;Acquisition Sub&#8221;), with and into Ethanex Energy North America, Inc., a
      Delaware corporation (&#8220;Ethanex N.A.&#8221;). NIE acquired the business of Ethanex N.A.
      pursuant to the Merger and will continue the existing business operations of
      Ethanex N.A. as a publicly-traded company under the name Ethanex Energy, Inc.
      (the &#8220;Company&#8221;). Unless otherwise indicated, the terms &#8220;the Company,&#8221; &#8220;we,&#8221;
&#8220;us,&#8221; and &#8220;our&#8221; refer to Ethanex Energy, Inc. after giving effect to the Merger,
      unless otherwise stated or the context clearly indicates otherwise. The term
      &#8220;NIE&#8221; refers to Ethanex Energy, Inc. (f/k/a New Inverness Explorations, Inc.)
      before giving effect to the Merger, and the term &#8220;Ethanex N.A.&#8221; refers to
      Ethanex Energy North America, Inc. before giving effect to the
      Merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Entry
      into a Material Definitive Agreement.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 1, 2006, the Company completed the Merger. For a description of the
      Merger and the material agreements entered into in connection therewith, please
      see Item 2.01 of this Current Report on Form 8-K, which disclosure is
      incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      2.01.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Completion
      of Acquisition or Disposition of Assets.</strong></font></div><br>
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      </div>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>THE
      MERGER AND RELATED TRANSACTIONS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      Merger </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 1, 2006 (the &#8220;Closing Date&#8221;), NIE, the Acquisition Sub, and Ethanex
      N.A. entered into an Agreement and Plan of Merger and Reorganization (the
&#8220;Merger Agreement&#8221;). On the Closing Date, NIE completed the Merger with the
      Acquisition Sub, with and into Ethanex N.A. NIE acquired the business of Ethanex
      N.A. pursuant to the Merger and will continue the existing business operations
      of Ethanex N.A. as a publicly-traded company under the name Ethanex Energy,
      Inc.
      (the &#8220;Company&#8221;). Before their entry into the Merger Agreement, no material
      relationship existed among the parties to the Merger Agreement. The form of
      Merger Agreement is attached as Exhibit 2.1 to this Current Report on Form
      8-K
      and is incorporated herein by reference. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      the
      Closing Date, the holders of Ethanex N.A.&#8217;s issued and outstanding capital stock
      before the Merger (the &#8220;Ethanex N.A. Stockholders&#8221;) surrendered all of their
      issued and outstanding capital stock of Ethanex N.A. and received common stock
      of the Company, par value $0.001 per share (&#8220;Common Stock&#8221;). Specifically, the
      holders of shares of Class A common stock of Ethanex N.A. received an aggregate
      of 26,000,000 shares of the Company&#8217;s Common Stock, and the holders of shares of
      Class B common stock received an aggregate of 20,000,000 shares of the Company&#8217;s
      Common Stock as a result of the conversion of their Class B shares (described
      below). The stockholders of NIE before the Merger (the &#8220;NIE Stockholders&#8221;)
      retained 14,000,000 shares of Common Stock. Gamma Capital Partners, LLC was
      issued 1,000,000 shares of Common Stock for finder and advisory services in
      connection with the Merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Merger Agreement contains customary representations, warranties and covenants
      of
      NIE, Ethanex N.A. and, as applicable, Acquisition Sub, for like transactions.
      Breaches of representations and warranties are secured by customary
      indemnification provisions. The Merger Agreement contains a post-closing
      adjustment to the number of shares of Common Stock issued to Ethanex N.A.
      Stockholders in an amount up to 2,000,000 shares of Common Stock issued on
      a pro
      rata basis for any breach of the Merger Agreement by NIE discovered during
      the
      two year period following the Closing Date.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Merger will be treated as a recapitalization of the Company for financial
      accounting purposes. Accordingly, the historical financial statements of NIE
      before the Merger will be replaced with the historical financial statements
      of
      Ethanex N.A. before the Merger in all future filings with the SEC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      the
      Closing Date, Amanda Lamothe and Luke Willis,&#160;constituting all of the
      directors of NIE before the Merger, appointed Robert C. Walther, Albert W.
      Knapp, Bryan J. Sherbacow, Randall L. Rahm and John Farris Norris Jr. to fill
      the vacancies on the Board of Directors.&#160;Also on the Closing Date, Ms.
      Lamothe and Mr. Willis resigned from the Board. Also on the Closing Date, the
      then-current officers of NIE resigned and new executive officers designated
      by
      Ethanex N.A. were appointed. The current officers and directors are identified
      on page&#160;38 under &#8220;Directors and Executive Officers.&#8221; </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Before
      the Merger, the 2006 Equity Incentive Plan (the &#8220;2006 Plan&#8221;) was adopted by the
      Board and the NIE Stockholders. Under the Plan, 2,000,000 shares of Common
      Stock
      are reserved for issuance as incentive awards granted to executive officers,
      key
      employees, consultants and directors after the closing of the transactions
      described herein.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      parties have taken all actions necessary to ensure the Merger is treated as
      a
&#8220;tax free exchange&#8221; under Section&#160;368 of the Internal Revenue Code of 1986,
      as amended. </font></div><br>
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        </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
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      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      Offering </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Before
      the Merger, on August 3, 2006 (the &#8220;PPO Closing Date&#8221;), and in contemplation of
      the Merger, Ethanex N.A. closed a private offering (the &#8220;Offering&#8221;) of
      20,000,000 units of its securities (the &#8220;Units&#8221;), each Unit consisting of one
      share of Class B common stock of Ethanex N.A. and a warrant to purchase one
      share of Class B common stock for a period of five years at an exercise price
      of
      $1.50 per share, which warrants were callable by Ethanex N.A. under certain
      circumstances. On the PPO Closing Date, the investors in the Offering
      collectively purchased 20,000,000 Units for a total consideration of
      $20,000,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      sale
      of the Units (including the Class B common stock, warrants and the Class B
      common stock underlying the Units) in the Offering was exempt from registration
      under Section 4(2) of the Securities Act of 1933, as amended (the &#8220;Securities
      Act&#8221;) and Rule 506 of Regulation D as promulgated by the SEC. The Merger, the
      Offering and the other transactions related thereto are collectively referred
      to
      herein as the &#8220;Transactions.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      contemplation of the closing of the Merger, and in connection with the Offering,
      the holders of all of the shares of Class A common stock of Ethanex N.A., and
      the holders of all of the shares of Class B common stock of Ethanex N.A., with
      the exception of 12 Class B holders, executed an irrevocable proxy in favor
      of
      Tompkins Capital Group, or its designee, giving such proxy holder the power,
      until August 31, 2007, to vote their shares of Class A common stock and Class
      B
      common stock in favor of the Merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Canaccord
      Capital Corporation and Sanders Morris Harris, Inc. acted as placement agents
      in
      connection with the Offering and received fees of $127,750 and
      $228,750.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      the
      Closing Date of the Merger, each share of Class B common stock of Ethanex N.A.
      issued and outstanding before the Merger was converted into one share of the
      Company&#8217;s Common Stock. Each warrant for the purchase of shares of Class B
      common stock of Ethanex N.A. issued and outstanding before the Merger was
      converted into a warrant to purchase the same number of shares of the Company&#8217;s
      Common Stock, and on the same terms and conditions as the Class B warrants.
      The
      form of the Company&#8217;s warrant issued upon the conversion of the Class B warrants
      is attached as Exhibit 4.1 to this Current Report on Form 8-K and is
      incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Restricted
      Securities and Registration Rights</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      securities issued in connection with the Transactions were &#8220;restricted&#8221;
securities and are subject to all applicable resale restrictions specified
      by
      federal and state securities laws.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      the
      PPO Closing Date, Ethanex N.A. entered into a Registration Rights Agreement
      with
      the investors in the Offering, which Registration Rights Agreement was assumed
      by the Company in connection with the Merger. Under the terms of the
      Registration Rights Agreement, as amended by the Consent and Acknowledgment
      thereto, the Company has committed to file a Registration Statement covering
      the
      resale of the Common Stock underlying the Units (including the Common Stock
      issuable upon exercise of the warrants) within 90 days from the Closing Date
      and
      shall use reasonable efforts to cause such Registration Statement to become
      effective no later than 90 days after the date filed (or 120 days if such
      Registration Statement is subject to a review by the SEC).&#160; The Company
      shall use its best efforts to maintain the effectiveness of this Registration
      Statement through the second anniversary of the date the Registration Statement
      is declared effective by the SEC or until Rule 144(k) of the Securities Act
      is
      available to the investors in the Offering with respect to all of their shares,
      whichever is earlier. The Company will be liable for customary penalties if
      the
      Registration Statement is not effective on the date</font></div><br>
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        </div>
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          <hr style="COLOR: black" noshade size="3">
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">by
      which
      the Company is required to cause it to become effective, consistent with the
      Registration Rights Agreement. The form of Registration Rights Agreement,
      including the Consent and Acknowledgment thereto, assumed by the Company
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">is
      attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated
      herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Split-Off
      Agreement</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Contemporaneously
      with the closing of the Merger, the Company split-off its wholly-owned
      subsidiary, New Inverness Leasco, Inc., a Nevada corporation (&#8220;Leaseco&#8221;),
      through the sale of all of the outstanding capital stock of Leaseco (the
&#8220;Split-Off&#8221;). The Company executed a Split Off Agreement with Amanda Lamothe,
      Luke Willis, Ethanex N.A. and Leaseco, a copy of which is attached as Exhibit
      10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Lock-Up
      Agreements</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
      of
      the officers and directors of the Company have agreed not to offer, sell,
      contract to sell or otherwise dispose of or transfer title to any of the shares
      of Common Stock acquired pursuant to or in connection with the Merger Agreement,
      during the period commencing on the Closing Date and ending on the 24-month
      anniversary of the Closing Date (the &#8220;Lockup Period&#8221;), without the prior written
      consent of the Company and Tompkins Capital Group. Such agreements are set
      forth
      in written Lock-Up Agreements, a form of which is attached as Exhibit 4.2 to
      this Current Report on Form 8-K, executed as of the Closing Date, with the
      Company&#8217;s officers and directors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Pro
      Forma Ownership</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Immediately
      after giving effect to the Merger, there are issued and outstanding on a fully
      diluted basis (including the shares of Common Stock underlying the warrants
      and
      options, and the shares reserved for issuance under the Company&#8217;s 2006 Plan),
      83,000,000 shares of Common Stock, as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                former holders of the Class A shares of Ethanex N.A. held 26,000,000
                shares of Common Stock from the Merger, approximately 31.33% of the
                Company&#8217;s outstanding common shares on a fully-diluted
                basis;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                former holders of the Class B shares of Ethanex N.A., who were investors
                in the Offering, held 40,000,000 shares of Common Stock from the
                Merger
                (of which 20,000,000 shares are issuable upon the exercise of warrants),
                approximately 48.19% of the Company&#8217;s outstanding common shares on a
                fully-diluted basis;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                existing stockholders of the Company retained 14,000,000 shares of
                Common
                Stock from the Merger, approximately 16.87% of the Company&#8217;s outstanding
                common shares on a fully-diluted basis;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gamma
                Capital Partners LLC held 1,000,000 shares of Common Stock from the
                Merger, approximately 1.2% of the Company&#8217;s outstanding common shares on a
                fully-diluted basis.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
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          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-5-</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
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      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PART
      I</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>1.
      DESCRIPTION OF BUSINESS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Company
      Overview</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Immediately
      following the Merger, the business of Ethanex N.A. became the business of the
      Company. Ethanex N.A. was incorporated on May 31, 2006 with the objective to
      participate in the cyclical and secular trends in the energy sector. The members
      of management of the Company have significant experience in the energy field
      including the acquisition, restructuring, and operation of energy assets, as
      well as risk management. Initially, the Company plans to produce ethanol and
      its
      animal feed by-products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Demand
      for alternative fuels and ethanol in particular has never been greater. Based
      on
      data published by the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renewable
      Fuels Association</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      the
      industry trade group of ethanol producers, in 2005, 95 ethanol plants produced
      a
      record 4.0 billion gallons of ethanol, an increase of 17% from 2004 and 126%
      from 2001. According to the Research Institute of America, at the end of 2005,
      95 ethanol refineries were in production, 14 new refineries began operations,
      30
      began construction and 10 were expanded. Certain of the new refineries are
      being
      built in California, North Carolina, Arizona, Texas and New Mexico. Contributing
      factors to the current high interest in ethanol production are:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Federal
                and state energy policies; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">high
                crude oil prices; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">relatively
                low grain prices; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">legislative
                bans on the use of MTBE (methyl tertiary butyl ether);
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                August 2005 enactment of a renewable fuels standard in the Energy
                Policy
                Act of 2005; and </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">national
                security concerns due to the reliance on imported crude
                oil.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Favorable
      conditions currently exist for the U.S. ethanol industry, although there is
      no
      certainty that these conditions will continue to exist. During March and April
      2006 ethanol was produced at record and near-record levels of 392.2 million
      gallons and 363.6 million gallons. According to the Renewable Fuels Association,
      in 2005, the U.S. ethanol industry contributed more than $32 billion to Gross
      Domestic Output, $5 billion to household income, nearly $2 billion to federal
      taxes, $1.6 billion to state and local taxes, added $6 billion to net price
      revenue, increased average corn prices by about $0.35 per bushel and was
      responsible for more than 153,000 jobs in all sectors of the economy. In
      addition, ethanol displaced 170 million barrels of oil, at least 65% of which
      would have been imported, and reduced greenhouse gas emissions by 8 million
      tons, the equivalent of taking more than 1 million vehicles off the
      road.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-6-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s business plan is to produce fuel grade ethanol and its co-product
      livestock feed as well as food grade quality corn products. If successfully
      executed, the Company will operate primarily as an ethanol producer with
      co-products serving the food and feed industries, each based on these separate
      products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Using
      the
      proceeds of the Offering, the Company intends to own and operate ethanol plants
      and to market both ethanol and DDGS (dried distillers grain with solubles).
      The
      Company believes that there now exists a shortfall in domestic ethanol
      production capacity resulting from government mandated programs and the recent
      bans on MTBE. To address the business opportunity that may result from the
      shortfall, the Company has plans to acquire:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">options
                to purchase 20-30 millions of gallons per year (&#8220;MMGY&#8221;) ethanol plants
                each of which may be suitable for expansion in capacity in the near
                term;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">additional
                co-location rights from coal-fired electric utilities for brownfield
                development of new ethanol plants;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">additional
                options to acquire rights in proposed ethanol plants that have project
                development and environmental permits in
                place.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After
      four full years of operations, the Company believes that it will have in place
      annual production capacity of over 500 million gallons per year of denatured,
      fuel grade ethanol and 1.7 million tons of dried distillers grain with solubles
      (&#8220;DDGS&#8221;). If the Company is able to acquire the options and rights referred to
      above, the Company plans to own and operate four to seven ethanol plants
      geographically dispersed in the United States. The Company also believes that
      our technical abilities and operating model may make us one of the industry&#8217;s
      low cost producers. The Company&#8217;s business plan also calls for us to grow
      through existing plant expansions, new plant development and strategic
      acquisitions to the extent that we are able to expand, develop and acquire
      business at costs that enable us to operate profitably. The Company further
      expects that as a publicly traded ethanol company, we will be able to access
      capital at a lower cost than our privately-owned competitors and may be able
      to
      use our shares to acquire either ethanol producers in properly accretive
      transactions. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      August
      3, 2006, Ethanex N.A. acquired all of the capital stock of IPT Ethanol, Inc.,
      a
      then-wholly owned subsidiary of Industrial Power Technology (&#8220;IPT&#8221;). See
&#8220;Certain Relationships and Related Transactions&#8221; on page 45. Based in Santa
      Rosa, California, IPT is an engineering and power generation project development
      company with over 22 years of operating history in the alternative energy space.
      IPT has been responsible for the successful planning, design and construction
      of
      more than 30 energy projects utilizing a variety of fuels and energy conversion
      systems. The fuels produced or utilized in IPT&#8217;s projects have included natural
      gas, coal, wellhead residual gas, digester gas, urban waste, scrap tires,
      biomass fuels, agricultural waste, and hydropower. IPT has significant
      experience in the areas of siting, regulatory and permitting activities, as
      well
      as design, construction management, and plant operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      late
      2005, IPT began site selection for a 40 MMGY ethanol processing facility in
      northeast Kansas. In May 2006, IPT entered into a Letter of Understanding (the
      &#8220;LOU&#8221;) with a NYSE-listed electric utility located in the Midwest for the joint
      evaluation of the environmental and operational impact of siting a 132 MMGY
      ethanol plant at a large coal-fired generating facility owned by the electric
      utility. The LOU provides IPT with a six-month exclusive study period ending
      November 30, 2006. IPT</font></div><br>
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        </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">assigned
      all of its rights in the LOU to IPT Ethanol, Inc. before the acquisition of
      IPT
      Ethanol, Inc. by Ethanex N.A.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upon
      the
      receipt of favorable results from the study and upon the satisfactory
      negotiation of business terms between the electric utility and the Company
      for
      the development of the proposed plant, the electric utility and the Company
      intend to enter into a definitive agreement to site the</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ethanol
      plant at the coal-fired generating facility. The Company&#8217;s ability to
      participate in this project is wholly dependent, however, on the successful
      fulfillment of several conditions, including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">favorable
                results for the siting of the
                facility;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">receipt
                of all necessary environmental and other
                permits;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">acquisition
                of capital for the development and construction of the
                plant;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">securing
                acceptable terms from the electric utility;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">review
                and approval of the project by the electric utility's board of
                directors.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Furthermore,
      the Company intends to market a next generation ethanol production technology,
      corn fractionation - a process that increases the starch concentration of
      feedstock and lowers the cost of producing ethanol - to existing ethanol plants
      as a means for such plants to lower production costs in exchange for equity
      interests in those existing ethanol plants. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has identified existing operational ethanol plants with production
      capacity of 30 MMGY or less that meet its selection criteria. The Company
      generally requires that such facilities have acceptable rail access, sufficient
      feedstock sources, strong local demand for DDGS and are suitable for expansion.
      Taking advantage of our industry relationships, the Company plans to market
      our
      fractionation process to these existing ethanol producers in exchange for equity
      interests in the existing ethanol plants. Our ability to do so, however, is
      contingent on the willingness of the current owners of the plants to enter
      into
      agreements with the Company on terms that we consider acceptable. Because of
      the
      current high level of both ethanol prices on a historical basis and investor
      interest in the industry, and because a relatively small number of
      independently-owned operations, it may be difficult for the Company to negotiate
      reasonable terms.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      July
      2006, the Company entered into a letter of intent with SEMO Milling, LLC and
      on
      August 4, 2006 entered into a definitive Joint Venture Agreement, and ancillary
      agreements related thereto, to build a 132 MMGY ethanol plant co-located with
      SEMO Milling&#8217;s dry corn mill production facility at the SEMO port authority in
      Scott City, Missouri. The Company intends to build the ethanol plant using
      next
      generation ethanol production technology, including corn fractionation. If
      this
      technology proves feasible, the Company intends to market next generation
      fractionation technology to existing ethanol plants as a means for such plants
      to lower their production costs in exchange for equity interests in those
      plants.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      August
      2006, the Company entered into a Letter of Intent with Star Ethanol, LLC with
      a
      view towards construction and operating a 132MM gallon ethanol production
      facility in Franklin County, Illinois, utilizing fractionation technology in
      the
      production of ethanol and ethanol-related products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Industry
      Overview</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-8-</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Ethanol</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanol
      is ethyl alcohol-200-proof grain alcohol. Denatured with 5% unleaded gasoline,
      fuel grade ethanol is a fuel component utilized to enhance gasoline performance
      properties and abate gasoline exhaust emissions. Because it is derived primarily
      from processing corn, an abundant agricultural commodity, ethanol is a renewable
      source of energy. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanol
      is primarily used as a blend component in the U.S. gasoline fuel market;
      refiners and marketers, including some of the major integrated oil companies
      and
      a number of independent refiners and distributors, have blended ethanol with
      gasoline to increase octane and reduce tailpipe emissions. According to the
      U.S.
      Department of Energy, refiners typically blend ethanol at 5.7% to 10.0% of
      volume in over 30% of the U.S. gasoline fuel supply. Major manufacturers of
      power equipment, motorcycles, snowmobiles and outboard motors permit the use
      of
      ethanol blends in their products. Ethanol is also used as the primary blend
      component for E85, a fuel blend composed of up to 85% ethanol. Although E85
      represents an insubstantial portion of the U.S. gasoline supply, approximately
      6.0 million vehicles on the road in the U.S. today are fitted to use E85.
      Ethanol blends of up to 10% are approved for use under the warranties of all
      major motor vehicle manufacturers and are often recommended. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">According
      to the Renewable Fuels Association, U.S. production of ethanol in 2005 was
      4.0
      billion gallons (BGY), approximately 3% of the U.S. gasoline fuel supply and
      in
      2005 total U.S. ethanol production capacity increased to more than 4.3 BGY.
      The
      Renewable Fuels Association has also reported that as of June 2006, there are
      98
      ethanol refineries with over 4.6 BGY of capacity with 35 new facilities under
      construction and nine expansions, totaling 2.2 BGY of capacity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      primary uses of ethanol are:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>To
                enhance octane</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
                Because in contrast, pure ethanol has an average octane rating of
                113,
                compared to an octane rating of 86 to 91 for gasoline, adding ethanol
                to
                gasoline enables refiners to produce greater quantities of suboctane
                fuel.
                Adding ethanol to finished regular grade gasoline produces higher
                octane
                midgrade and premium gasoline.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>As
                a clean air additive</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
                Because ethanol contains 35% oxygen, approximately twice that of
                MTBE,
                ethanol results in more complete combustion of the fuel in the engine
                cylinder and in reduced tailpipe emissions and volatile organic compound
                emissions. Ethanol also displaces the use of some gasoline components
                like
                benzene, a known carcinogen, since ethanol is non-toxic, water soluble
                and
                quickly biodegradable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>To
                extend fuel supplies</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
                Much of the ethanol blending throughout the U.S. today is done for
                the
                purpose of extending the volume of fuel sold at the gas pump. Blending
                therefore reduces the amount of foreign crude oil and refined oil
                products. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>To
                produce gasoline alternatives</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
                Ethanol is the primary blend component in E85. The number of service
                stations that sell E85 has grown rapidly. As of February 2006, the
                U.S.
                Department of Energy stated that over 500 service stations in the
                U.S.
                sell E85. Vehicles must be specially equipped to use E85 fuel and,
                according to the National Ethanol Vehicle Coalition, approximately
                6.0
                million U.S. vehicles are so equipped. Experience in Brazil suggests
                that
                E85 could capture a much greater portion of the U.S. market in the
                future.
                U.S. automakers receive incentives under federal fuel economy standards
                for producing Flexible Fuel Vehicles (&#8220;FFVs&#8221;). E85 is generally priced
                lower per gallon than gasoline because most FFVs experience some
                reduction
                in mileage when running on E85.</font></div>
            </td>
          </tr>

      </table>
    </div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-9-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Demand
      for Ethanol</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      believe the ethanol market will grow as a result of:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Favorable
                economics. </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
                current market conditions, ethanol currently represents an economically
                attractive source of fuel. The Company believes that our cost of
                producing
                ethanol is now significantly lower than the cost incurred by refiners
                to
                produce an equivalent volume of gasoline. This favorable balance
                should
                enable ethanol to grow not only as a strategic blend component, but
                also
                as an alternative in the form of
                E85.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
                replacement of MTBE. </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
                once the preferred oxygenate ingredient used by the petroleum industry
                in
                most reformulated gasoline, in recent years, as a result of health
                and
                environmental concerns, 25 states, representing more than half of
                the MTBE
                consumed in the U.S., have banned or significantly limited the use
                of
                MTBE. Product liability concerns regarding MTBE increased following
                passage of the Energy Policy Act, which did not contain limitations
                on
                product liability claims relating to MTBE use. As a result, refiners
                are
                now expediting the phase-out of MTBE nationwide, creating additional
                demand for ethanol. As MTBE is replaced, ethanol is positioned to
                be the
                most likely substitute for MTBE because of its favorable production
                economics, high octane rating and clean burning
                characteristics.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>A
                shortage of domestic petroleum refining capacity. </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                U.S. Energy Information Administration (EIA) reports that the number
                of
                operable U.S. petroleum refineries has decreased from 319 in 1980
                to 148
                in 2005. The EIA also reports that although domestic refining capacity
                decreased approximately 5% from 1980 to 2005, domestic demand increased
                21% over the same period. The EIA expects growth in refining capacity
                to
                average 1.3% per year until 2025, with demand for refined petroleum
                products growing at 1.5% per year over the same period. Because ethanol
                is
                blended with gasoline after the refining process, it directly increases
                domestic fuel capacity.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Geopolitical
                concerns. </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                U.S. is increasingly dependent on foreign oil. According to the Energy
                Information Administration, crude oil imports represented 65% of
                the U.S.
                crude oil supply in 2005 and are estimated to rise to 71% by 2025.
                Political unrest and attacks on oil infrastructure in the major oil
                producing nations have periodically disrupted the flow of oil. Fears
                of
                terrorist attacks have added a &#8220;risk premium&#8221; to world oil prices. At the
                same time, developing nations such as China and India have increased
                their
                demand for oil. World oil prices topped $70 a barrel at times during
                2005
                and have averaged above $60 a barrel during 2006. As a domestic,
                renewable
                source of energy, ethanol reduces the U.S.&#8217;s dependence on foreign oil by
                increasing the availability of domestic fuel supplies. The Renewable
                Fuels
                Association calculates that in 2004 alone, the use of ethanol reduced
                the
                U.S. trade deficit by $5.1 billion by eliminating the need to import
                143.3
                million barrels of oil.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Federally
                mandated renewable fuel usage&#8212;the renewable fuels standard.
                </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
                August 2005, President Bush signed the Energy Policy Act establishing
                a
                nationwide renewable fuels standard (RFS) that will double the use
                of
                ethanol and biodiesel by 2012. The RFS eliminated the mandated use
                of
                oxygenates and mandates levels of annual use of renewable fuels in
                the
                U.S. fuel supply. The RFS requires motor fuels sold in the U.S.
                to</font></div>
            </td>
          </tr>

      </table>
    </div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-10-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">contain
      in the aggregate the following minimum volumes of renewable fuels in future
      years:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" id="ftable" width="30%">

          <tr bgcolor="white">
            <td valign="bottom" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Year</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Renewable</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Fuel
                Usage </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(BGY)</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="10%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4.0</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="10%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2007</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4.7</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="10%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2008</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">5.4</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="10%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2009</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">6.1</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="10%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2010</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">6.8</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="10%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2011</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">7.4</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="10%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2012</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">7.5</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="10%">&#160;</td>
            <td width="2%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="11%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      RFS:</font></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">provides
                for 2.78% by volume renewable fuel use in 2006 if federal regulations
                have
                not yet been promulgated by the U.S. Environmental Protection
                Agency;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">provides
                that beginning in 2013, a minimum of 250 million gallons a year of
                cellulosic derived ethanol be included in the
                RFS;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">provides
                refiners flexibility by creating a credit trading program that allows
                refiners to use renewable fuels where and when it is most efficient
                and
                cost-effective for them to do so. The credit trading program will
                result
                in lower costs to refiners and thus, consumers. RFS credits have
                a
                lifespan of 12 months. Every gallon of cellulose-derived ethanol
                is equal
                to 2.5 gallons of renewable fuel;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">exempts
                small refineries (defined as facilities where the average daily crude
                oil
                throughput does not exceed 75,000 barrels per day) from the RFS program
                until January 1, 2011. Small refineries are able to opt in to the
                program
                and generate credits as do other
                refineries;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">requires
                annual studies on seasonal variations in renewable fuel use. Requires
                regulations to ensure that at least 25% of the annual renewable fuel
                obligations be met in each season should seasonal variations exist;
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">protects
                consumers with a waiver provision in the event the economy or environment
                would be severely harmed because of the
                RFS;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">eliminates
                the reformulated gasoline (RFG) 2.0 wt.% oxygenate standard under
                the
                Clean Air Act which had promoted the case of
                MBTE;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">enhances
                the air quality performance standards established in the RFG
                program;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">creates
                grant and loan guarantee programs for cellulose ethanol;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">creates
                grant and loan programs for ethanol production from
                sugar.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company believes that in general the RFS provides us with a sound basis for
      believing that U.S. ethanol consumption will increase through 2012. During
      this
      period, however, it is likely that substantial amounts of ethanol derived from
      cellulose, biomass, and other organic materials other than corn will come to
      market, providing competition for corn-based ethanol production. It also is
      possible</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-11-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that
      the
      actual use of ethanol and other renewable fuels will surpass the mandated
      requirements, especially in the early years of implementation of the
      RFS.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">More
      recently, the American Coalition for Ethanol (ACE) has sponsored a bill in
      Congress, known as the &#8220;Biofuels Security Act of 2006&#8221;, to revise the current
      RFS schedule to achieve 12 BGY of ethanol by 2012 and 60 BGY of ethanol demand
      in the future when cellulose becomes cost-effective and technically
      feasible.&#160; This bill may also require that all vehicles sold in the country
      be capable of using E85 by 2017 and that 50 percent of the service stations
      affiliated with major oil companies sell E85 by 2017 or sooner if
      possible.&#160; </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Production
      of Ethanol</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Production
      in the ethanol industry remains fragmented. According to the Renewable Fuels
      Association, although domestic ethanol production increased from 1.3 BGY in
      1997
      to 4.0 BGY in 2005 and 4.6 BGY in June 2006, the top 12 producers accounted
      for
      approximately 50% of the industry&#8217;s total estimated production capacity as of
      April 2006. More than 50 smaller producers and farmer-owned cooperatives, most
      with production of 50 MMGY or less, generate the remaining production. Since
      a
      typical ethanol facility can be constructed in approximately 14-18 months from
      groundbreaking to operation, the industry is able to forecast capacity additions
      for up to 18 months in the future. The Renewable Fuels Association currently
      estimates that 30 new ethanol facilities and expansion of 10 other facilities
      with capacity of an aggregate of an additional 2.2 BGY are under construction.
      The Renewable Fuels Association also has reported that many other projects
      are
      in the planning, finance and permitting stages. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      the ethanol industry continues to explore production technologies employing
      various feedstocks, such as biomass, corn-based production technologies remain
      the most practical and provide the lowest operating risks. Consequently, most
      U.S. ethanol is produced from corn grown in the Midwest, where corn is abundant.
      In addition to corn, the production process employs natural gas or, in some
      cases, coal to power the facility and dry distillers grains. Proximity to
      sufficient low-cost corn and natural gas supply, therefore, provides a key
      competitive advantage for ethanol producers. Nevertheless, over the next several
      years, it is likely that the production of ethanol from cellulose will increase
      and it is possible that, because of the size of this untapped biomass resource,
      its cost as a feedstock ethanol producer will be less than the cost of corn.
      A
      joint study by the U.S. Departments of Agriculture and Energy has concluded
      that
      the U.S. land resources could produce a sustainable supply of biomass sufficient
      to displace 30% of the country&#8217;s current gasoline consumption.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">More
      than
      half of total U.S. ethanol production is consumed in the east- and west-coast
      markets, primarily as a result of the stricter air quality requirements in
      large
      parts of those markets. The primary means of transporting ethanol from the
      Midwest to the coasts is by rail transportation. As a result, adequate access
      to
      rail transportation is a key consideration for locating ethanol production
      facilities. Furthermore, a producer&#8217;s ability to form unit trains, consisting
      entirely of ethanol tank cars from one facility, allows for reduced
      transportation costs and faster delivery times. The movement of ethanol via
      pipeline is limited as a result of the tendency of ethanol to absorb water
      and
      other impurities found in the pipelines, logistical limitations of existing
      pipelines and limited volumes of ethanol that need to be transported. Barges
      and
      trucks are also used in the transportation of ethanol.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Imports
      of fuel ethanol from foreign sources, principally Brazil, also affect overall
      supply and pricing. According to a reliable trade source, total foreign imports
      in 2006 may amount to between 210 MMGY and 230 MMGY, or approximately 5% of
      total current U.S. production. Foreign imports of ethanol, except from certain
      Caribbean Basin nations, are subject to a tariff and an ad valorem tax.
</font></div><br>
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-12-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Nevertheless,
      at price levels reached in the second quarter of 2006, prices of imported
      ethanol, including transportation costs, tariff and taxes, were competitive
      with
      domestically produced ethanol. Fuel ethanol imported from Jamaica, Trinidad,
      El
      Salvador, Costa Rica and 17 other nations is not subject to tariff and therefore
      reaches the U.S. at delivered prices below the current market.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      Ethanol Production Process</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      production of ethanol or ethyl alcohol from starch or sugar-based feedstocks
      is
      among the earliest ventures into value-added processing. The process has been
      considerably refined in recent years. There are two production processes: wet
      milling and dry milling. The main difference between the two is in the initial
      treatment of the grain.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Dry
      Milling.</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      dry
      milling, the entire corn kernel or other starchy grain is first ground into
      flour and the starch in the flour is converted to sugar which is then converted
      to ethanol by means of fermentation. The fermentation process generally takes
      about 40 to 50 hours. The ethanol is concentrated to 190 proof using
      conventional distillation and then is dehydrated to approximately 200 proof
      in a
      molecular sieve system.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      anhydrous ethanol is then blended with about 5% denaturant (such as natural
      gasoline) to render it undrinkable and thus not subject to beverage alcohol
      tax.
      It is then ready for shipment to gasoline terminals or retailers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      other
      products of dry milling are carbon dioxide (used to carbonate soft drinks and
      the manufacture of dry ice) and dried distiller grains with solubles (&#8220;DDGS&#8221;), a
      high quality, nutritious livestock feed.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Dry
      Milling with Next Generation Fractionation Technology</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      dry
      milling with fractionation, the corn kernel is separated into three distinct
      streams in the fractionation process. These streams are the bran or fiber,
      the
      germ and the endosperm or starch component. As in a typical dry mill, the starch
      is converted to sugar which is then converted to ethanol by means of
      fermentation. The fermentation process generally takes about 40 to 50 hours.
      The
      ethanol is concentrated to 190 proof using conventional distillation and then
      is
      dehydrated to approximately 200 proof in a molecular sieve system.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Wet
      Milling.</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      wet
      milling, the grain is soaked or &#8220;steeped&#8221; in water and dilute sulfurous acid for
      24 to 48 hours. This steeping facilitates the separation of the grain into
      its
      many component parts, starch protein, germ and fiber, which are then further
      processed.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      products of wet milling include corn oil (which is either extracted on-site
      or
      sold to crushers who extract the corn oil), corn gluten meal co-product (a
      popular feed ingredient in poultry broiler operations), and starch products
      which can be processed in one of three ways: fermented into ethanol, dried
      and
      sold as dried or modified corn starch, or processed into corn syrup. The
      fermentation process for ethanol is very similar to the dry mill process
      described above.</font></div><br>
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        </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-13-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Ethanol
      Production Economics</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Corn
      represents the single largest cost in ethanol production. However, there is
      very
      little relationship between ethanol and corn prices. Ethanol prices most closely
      correlate to conventional gasoline. In fact, the last few years have yielded
      record corn crops with relatively low grain prices and record high ethanol
      prices. The result has been a significant increase in margins. Each bushel
      of
      corn yields approximately 2.8 gallons of denatured fuel ethanol. Moreover,
      to
      date in 2006 prices for ethanol have increased to a 24-year high, with a low
      spread over spot prices for gasoline. Because of the volatility in commodity
      prices, there is no certainty that ethanol prices will remain at these levels.
      In fact, the rise in prices may be resulting in the building of increased
      production capacity, which may well lead to a condition of
      oversupply.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      U.S.
      average ethanol price has shown substantial correlation with the price of
      conventional gasoline over the last decade. In contrast, correlations with
      variables pertaining to ethanol production including agricultural commodities
      have been quite weak (Sparks &amp; KSU). Petroleum product prices will drive
      ethanol prices. According to the U.S. Energy Information Administration&#8217;s Annual
      Energy Outlook 2006, oil prices are not likely to ease in the coming quarter
      century.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      National Corn Growers Association has stated there will be sufficient corn
      production to support 15 BGY of ethanol production, consuming approximately
      30%
      of annual corn production. A volume of 15 BGY is approximately 10% of the
      projected annual U.S. gasoline consumption.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      4.4
      billion gallons, the ethanol industry currently represents only 3% of the US
      gasoline market. With 10% blends, the market has room to expand to 15 billion
      gallons per year or approximately 3.5 times its current size.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Figure
      1
      Historic U.S. Fuel Ethanol Production</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;<img src="graph1.jpg" alt=""></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 99pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Source:
      U.S. Energy Information Administration / RFA</em></font><br>
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          </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Dried
      Distillers Grain</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dried
      distillers grain is an important co-product of drymill ethanol production.
      As
      discussed above, the drymill ethanol production process uses only the starch
      portion of the corn, which is about 70% of the kernel. All the remaining
      nutrients - protein, fat, minerals, and vitamins - are concentrated into
      distillers grain, a valuable feed for livestock. A bushel of corn weighs 56
      pounds and will produce approximately 2.8 gallons of ethanol and 17 pounds
      of
      distillers grain.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dried
      distillers grain with solubles (DDGS) is the form available to the cattle feed
      industry. The liquid that is separated from the mash during the distilling
      process is partially dehydrated into syrup, and then added back onto the
      distillers grain before drying to create DDGS.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DDGS
      is a
      high quality feedstock ration supplement for dairy cattle, beef cattle, and
      is
      suitable in varying amounts as a protein supplement for swine, poultry, and
      aquaculture. The feed is an economical partial replacement for corn, soybean
      meal, and dicalcium phosphate in livestock and poultry feeds. Historically,
      over
      85% of DDGS has been fed to dairy and beef cattle, and DDGS continues to be
      an
      excellent, economical feed ingredient for use in ruminant diets.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">More
      than
      8 million metric tons of DDGS will be produced in the year 2006. Some industry
      experts are predicting that distillers by-product production will reach 10
      to 14
      million metric tons within the next few years. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>The
      Company&#8217;s Proposed </u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Strategy</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company is focusing our efforts to become the industry&#8217;s low cost producer. The
      Company anticipates that our acquisition and brownfield development strategies
      and our focus on alternative energy sources will afford us rapid capacity
      development with significant cost advantages. Brownfield development refers
      to
      the co-location of new ethanol plants adjacent to existing sources of steam
      energy. Further, by co-locating new developments at coal-fired electric plants,
      the Company believes that we may be able to take advantage of existing
      infrastructure, creating initial capital cost savings of up to 20%, as well
      as
      meaningful ongoing operating cost savings through less expensive energy
      services.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, the Company expects that our use of corn fractionation technology
      will
      contribute to our effort to become a low cost producer in the industry.
      Fractionation is a process that separates the germ and the bran from the
      endosperm, which contains the starch used in making ethanol. Fractionation
      leads
      to increased ethanol productivity and to decreased ethanol production costs
      through increased plant output, decreased water use, decreased energy use and
      creation of a higher protein, higher value DDGS. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      agricultural derivatives create higher value products from commodities, they
      themselves become commodities. Industry rationalization will permit only those
      companies that create operating models enabling low-cost production to survive.
      Traditionally, the most important factor in accomplishing low-cost production
      has been the establishment of significant economies of scale, supplemented
      by
      programs to reduce up-front capital costs and other strategic initiatives to
      reduce ongoing operational costs. Beyond the grain feedstock costs, the second
      highest input cost of ethanol production is energy, traditionally natural gas
      for creation of steam. Strategic location of ethanol plants near large coal
      fired utility plants may result in significant reduction of operating costs
      by
      utilizing waste heat and existing infrastructure from the power plant.
      Furthermore, through the use of alternative energy sources, such as coal or
      biomass, significant cost reductions are possible in other brownfield
      locations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company plans to be a low-cost producer by way of alternative energy sources
      and
      applied technology with a goal to move into the top ten ethanol producers over
      the next four years. The Company</font></div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
      <div id="HDR">
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">believes
      that we will be able to accomplish these objectives by successfully executing
      our utility co-location brownfield development, and two-part acquisition
      strategies.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Brownfield
      Utility Co-Location</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By
      siting
      at an electric utility, the Company believes that we will achieve the following
      benefits and advantages:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Established
                railroad infrastructure for shipping ethanol and distillers grain
                and
                receiving feedstock and coal; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Water
                availability;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reduced
                cost for electrical supply;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Existing
                industrial zoning; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Expedited/Minimal
                permitting risk based on siting and thermal supply
                options.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After
      corn, fuel cost is the second largest production cost component. Accordingly,
      overall production cost changes are most sensitive to fuel cost changes. As
      ethanol plants require large amounts of energy to evaporate the water used
      in
      processing, a small change in energy cost has a significant effect on production
      costs. For example, a 50% rise in fuel price would result in a 20% increase
      in
      total production costs. The majority of plants producing ethanol today in the
      United States are fueled by natural gas. The extraordinary rise in the cost
      of
      natural gas in the last two years has had a meaningful impact on these
      producers&#8217; margins. The Company believes that coal will provide us with relative
      price stability. Nonetheless, coal prices, like all commodity prices, are
      volatile and more exposed to factors of supply and demand in the marketplace.
      Since coal is also a desirable alternative to oil and natural gas in other
      industrial processes, including power generation, its price may increase to
      a
      level that does not permit the Company&#8217;s low-cost production of ethanol.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Acquisition
      of Expandable Existing Plants</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company plans to generate rapid capacity development through acquisitions at
      the
      low end of the existing producer market in terms of plant capacity (20-30 MMGY)
      followed by subsequent unit expansion. This model provides near-term economies
      of scale and cash flow while maintaining a competitive cost structure. Smaller,
      cooperative owned plants located with rail access, water availability, and
      alternative energy access will be the primary target. The Company&#8217;s plans to
      develop capacity by acquisition and expansion are subject to our ability to
      access capital from banks, investors, and other financial sources with
      acceptable terms and conditions. The availability of financing for acquisition
      and expansion will depend, in part, on market conditions for the fuel ethanol
      industry, including the capacity being created, the construction or expansion
      of
      other ethanol projects and the development of predictable, financeable supply
      requirements. The Research Institute of America has reported that, according
      to
      information provided to it, in the second quarter of 2006 there are more than
      150 ethanol projects that are seeking financing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Over
      half
      of the ethanol plants operating in the U.S. are farmer-owned. Less than
      one-third of the plants currently being constructed, however, are farmer owned.
      Plants are becoming larger and require more capital to remain competitive.
      As a
      result, the pressure on smaller producers to expand or sell is creating an
      opportunity for the Company. By marketing our fractionation technology to an
      existing 30&#160;MMGY producer in exchange for equity, with the offer to expand
      its output to 60&#160;MMGY with a</font></div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">concurrent
      change of power source from natural gas to coal or biomass, the Company believes
      that the annual return would increase from approximately $9.0 million for the
      ethanol and DDGS by-products to approximately $60 million. Total investment
      to
      accomplish the increase would be approximately $65.0 million, and the return
      is
      based upon an ethanol price of $1.60 per gallon. Several, if not many, other
      businesses, however, are attracted by these economics. As a result, the Company
      may not be able to secure acquisition of existing capacity on acceptable terms
      or at all.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;<img src="graph2.jpg" alt=""></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 99pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Acquisition
      of Projects in Development</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company believes that there are over 100 ethanol production projects currently
      planned. It further believes that many are being developed by inexperienced
      developers without adequate knowledge of the market and cost structures or
      the
      capability to bring the plant to fruition. The Company will target those
      projects in ideal locations with access to rail, water, feedstock, and some
      energy advantage. Energy advantages may come in the way of technology
      advancements resulting in significant energy cost reductions such as
      fractionation technology or high efficiency dried distillers grain with solubles
      (&#8220;DDGS&#8221;) drying. Energy cost reductions may occur with alternative fuel sources
      or the unusual ability to sell DDGS wet thus eliminating the need for
      drying.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has commenced discussions with owners of projects in development. It
      currently plans to enter into agreements with some or all of these developers
      within the 3 months after completion of the Offering. Since at least 18 to
      21
      months are required to construct an ethanol production facility and bring it
      to
      operational levels, and since construction cannot commence without full
      permitting and licensing from all required governmental authorities, the Company
      expects that we will not be able to sell production from these sources until
      early 2009. By this time, the current production capacity of the U.S. ethanol
      industry is expected to increase by at least 70%. As a result, if projected
      demand for ethanol does not increase at a similar pace, or if gasoline prices
      do
      not remain at levels that support the increased use of ethanol, prices for
      ethanol may not remain at levels that support a favorable return on the
      Company&#8217;s investment in these projects.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      is the
      case with existing production facilities, the competition to acquire projects
      in
      development may become intense and the Company may not be able to reach
      agreement with sellers on acceptable terms or on any terms at all. Furthermore,
      the Company&#8217;s ability to finance acquisitions of projects in development may be
      subject to our ability to demonstrate acceptable returns from these</font><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">projects,
      which in turn is subject to market conditions and the willingness of banks
      and
      investors to provide capital on acceptable terms.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Current
      Industry Hurdles</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since
      many new ethanol construction and expenses in projects are currently underway,
      existing ethanol industry resources are in short supply. There are only a few
      experienced ethanol plant construction contractors, all of which are booked
      for
      two years in advance or more. In addition, currently there are many industrial
      projects requiring substantial numbers of construction craft workers. The
      volatility of stainless steel, copper, and other commodities used in the
      construction of ethanol plants makes ethanol plant construction contracting
      difficult at best. The Company plans to seek out contractors outside the ethanol
      industry to provide construction services by way of smaller local subcontractors
      with a craft following. In addition, the Company expects to begin to identify
      procuring long lead equipment and materials required with a view to maintaining
      the shortest construction schedules possible. Despite our efforts, however,
      the
      Company may not be able to secure the services of contractors that are capable
      of providing us with the required services or are willing to provide those
      services on acceptable terms. Similarly, the Company cannot be certain that
      we
      will be able to procure equipment and materials on the terms that we currently
      envision or on any terms. As a result, the Company&#8217;s ability to commence,
      continue or complete construction or expansion of the contemplated facilities
      may be severely limited and the Company may not be able to achieve its business
      goals.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Marketing
      and Sales</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company plans initially to utilize the services of nationally recognized
      third-party traders for the sales of both ethanol and DDGS as well as the
      procurement of corn feedstock. The Company has existing relationships with
      Cargill, F.C. Stone, Eco-Energy, Nobles America, and Scoular Company and plans
      to rely on those relationships to secure appropriate arrangements for purchases
      and sales. No such arrangements currently exist, however. The Company will
      be
      competing with other producers for corn and other feedstocks and will also
      be
      competing with other producers in the sale of ethanol and DDGS. At this stage
      of
      development, the Company cannot be certain that we will be able to secure
      arrangements for the sale and marketing of ethanol and DDGS or for the purchase
      of feedstock necessary for production.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      assist
      us in creating our internal capacity to market our products and buy feedstock,
      the Company is currently seeking an executive with experience as a successful
      commodity trader with specific ethanol experience. If we can employ such an
      individual and if the individual is able to create an effective marketing and
      sales function within the Company, the Company has planned that, in year two
      of
      operations, we will transition these functions in-house to a substantial extent.
      The Company&#8217;s ability to employ the appropriate executive may, however, be
      limited due to the limited number of qualified candidates or the Company&#8217;s
      ability to compete with better-established, better-financed ethanol businesses,
      some of whom already are publicly-traded businesses, for talented executives.
      As
      a result, the Company may not be able to employ a qualified executive on
      acceptable terms, or at all, in which case our sales, marketing and purchasing
      functions would rely wholly on third parties. The terms of third party
      arrangements may adversely affect the Company&#8217;s anticipated financial
      results.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Overview
      of Raw Material Supply, Pricing and Hedging</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company may seek to mitigate our exposure to commodity price fluctuations by
      purchasing forward a portion of our corn requirements on a fixed price basis
      and
      by purchasing corn and natural gas futures contracts. To mitigate ethanol price
      risk, we may sell a portion of our production forward under</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-18-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">fixed
      price and indexed contracts. The indexed contracts are typically referenced
      to a
      futures contract such as unleaded gasoline on the NYMEX, and we may hedge a
      portion of the price risk associated with index contracts by selling
      exchange-traded unleaded gasoline contracts. It is possible, but not certain,
      that our strategy of managing exposure to commodity price fluctuations will
      reduce somewhat the volatility of our results.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company may also:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">purchase
                corn through spot cash, fixed-price forward and delayed pricing contracts;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">utilize
                hedging positions in the corn futures market to manage the risk of
                excessive corn price fluctuations for a portion of our corn
                requirements.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Coal
      and n</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>atural
      gas procurement and hedging strategy. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company may also be subject to market risk with respect to our supply of coal
      and natural gas that will be consumed in our ethanol production process and
      has
      historically been subject to volatile market conditions. Natural gas prices
      and
      availability are affected by weather conditions and overall economic conditions.
      Accordingly, we may hedge a portion of our exposure to natural gas price risk
      from time to time by using fixed price or indexed exchange-traded futures
      contracts.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Unleaded
      gasoline hedging strategy.</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      a
      substantial number of our contracts to sell ethanol are priced based on the
      price of unleaded gasoline, it is possible that we may establish from time
      to
      time an unleaded gasoline hedge position using exchange-traded futures to reduce
      our exposure to unleaded gasoline price risk.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Competition</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      U.S.
      ethanol market is highly competitive. According to the Renewable Fuels
      Association, world ethanol production rose to 12 billion gallons in 2005.
      Non-U.S. ethanol accounted for 65% of world production. The U.S. and Brazil
      are
      the world&#8217;s largest producers of ethanol. As of June 2006, industry capacity in
      the U.S. approximated 4.6&#160;BGY, with an additional 2.2 BGY of capacity under
      new construction or expansion of existing facilities. The ethanol industry
      in
      the U.S. consists of more than 90 production facilities and is primarily corn
      based, while the Brazilian ethanol production is primarily sugar cane based.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">According
      the Research Institute of America, the top 12 U.S. producers currently account
      for 50% of the ethanol production capacity in the U.S. as
      follows:</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-19-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr bgcolor="white">
            <td align="left" valign="bottom" width="47%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Current
                capacity</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(as
                of March 2006)</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: white solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MMGY</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Number
                of</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>plants</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Share
                of the market</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="47%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Archer
                Daniels Midland</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,070</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">7</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">24</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="47%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">VeraSun</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">230</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">5</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="47%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Aventine
                Renewable Energy</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">150</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">3</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
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          </tr>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
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            <td align="left" valign="bottom" width="47%">
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="11%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="11%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="11%">&#160;</td>
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          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div>
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      </div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
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            <td align="left">
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            </td>
          </tr>

      </table>
    </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      industry is otherwise highly fragmented, with many small, independent firms
      and
      farmer-owned cooperatives constituting the rest of the market. If we follow
      our
      current business plan, the Company will compete with our competitors primarily
      on a national basis.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company believes that our ability to compete successfully in the ethanol
      production industry depends on many factors, but we are principally relying
      on
      our strategy to be among the lowest-cost producers. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With
      respect to DDGS, the Company is likely to compete with other ethanol producers,
      as well as a number of large and smaller suppliers of competing animal feed.
      The
      Company believes that we will be able to successfully compete based on our
      product's price, proximity to purchasers and quality.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Legislation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Energy
      Policy Act. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      discussed above, the Energy Policy Act established minimum annual volumes of
      renewable fuel to be used by petroleum refiners in the fuel supply and did
      not
      provide liability protection to refiners who use MTBE as a fuel additive. The
      Energy Policy Act also removed the oxygenate requirements that were put in
      place
      by the Clean Air Act. By including anti-backsliding provisions the Energy Policy
      Act requires refiners to maintain emissions quality standards in the fuels
      that
      they produce, thus providing a source for continued need for
      ethanol.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      is,
      however, the potential that some or all of the Renewal Fuels Standards may
      be
      waived. Under the Energy Policy Act, the U.S. Department of Energy, in
      consultation with the Secretary of Agriculture and the Secretary of Energy,
      may
      waive the renewable fuels mandate with respect to one or more states if the
      Administrator of the U.S. Environmental Protection Agency (&#8220;EPA&#8221;) determines
      that implementing the requirements would severely harm the economy or the
      environment of a state, a region or the U.S., or that there is inadequate supply
      to meet the requirement. </font></div><br>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      Federal blenders&#8217; credit.</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">First
      implemented in 1979, the federal excise tax incentive program allows gasoline
      distributors who blend ethanol with gasoline to receive a federal excise tax
      rate reduction of $0.51 per gallon of ethanol. The incentive program is
      scheduled to expire in 2010 (unless extended).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Federal
      Clean Air Act. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Environmental
      regulations partially drive the use of ethanol as an oxygenate. The federal
      Clean Air Act requires the use of oxygenated gasoline during winter months
      in
      areas with unhealthy levels of carbon monoxide. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>State
      L</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>egislation
      </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      recent
      years, due to environmental concerns, 25 states have banned, or significantly
      limited, the use of MTBE, including California, Connecticut and New York.
      Ethanol has served as a replacement for much of the discontinued MTBE volumes.
      The Company expects that ethanol will continue to replace future MTBE volumes
      that are removed from the fuel supply.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Federal
      tariff on imported ethanol. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      1980,
      Congress imposed a tariff on foreign produced ethanol, made from cheaper sugar
      cane, to encourage the development of a domestic, corn-derived ethanol supply.
      This tariff was designed to prevent the federal tax incentive from benefiting
      non-U.S. producers of ethanol. The tariff is $0.54 per gallon and is scheduled
      to expire in 2007 (unless extended).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanol
      imports from 24 countries in Central America and the Caribbean Islands are
      exempted from the tariff under the Caribbean Basin Initiative, which provides
      that specified nations may export an aggregate of 7.0% of U.S. ethanol
      production per year into the U.S., with additional exemptions from ethanol
      produced from feedstock in the Caribbean region over the 7.0% limit. As a result
      of new plants under development, the Company believes that imports from the
      Caribbean region will continue, subject to the limited nature of the
      exemption.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      North
      American Free Trade Agreement (&#8220;NAFTA&#8221;) also allows Canada and Mexico to export
      ethanol to the United States duty-free or at a reduced rate. Canada is exempt
      from duty under the current NAFTA guidelines, while Mexico&#8217;s duty rate is $0.10
      per gallon.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, there is a flat 2.5% ad valorem tariff on all imported
      ethanol.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Federal
      farm legislation. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      federal blenders&#8217; credits and tariffs, as well as other federal and state
      programs benefiting ethanol, generally are subject to U.S. government
      obligations under international trade agreements, including those under the
      World Trade Organization Agreement on Subsidies and Countervailing Measures.
      Consequently, these credits and tariffs are the subject of challenges
      thereunder, in whole or in part.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Environmental
      Matters</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
      the Company plans to operate ethanol production facilities, we will be subject
      to various federal, state and local environmental laws and regulations,
      including those relating to the discharge of</font></div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
      <div id="HDR">
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        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">materials
      into the air, water and ground; the generation, storage, handling, use,
      transportation and disposal of hazardous materials; and the health and safety
      of
      our employees. These laws, regulations and permits also can require expensive
      pollution control equipment or operational changes to limit actual or potential
      impacts to the environment. A violation of these laws and regulations or permit
      conditions can result in substantial fines, natural resource damage, criminal
      sanctions, permit revocations and/or facility shutdowns. In August 2006, the
      Company entered into an agreement with Natural Resource Group, Inc., of
      Minneapolis, Minnesota. Natural Resource Group, Inc., an environmental
      consulting firm, will assist the Company in its permitting process.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company does not anticipate a material adverse effect on our business or
      financial condition as a result of our efforts to comply with these
      requirements. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      is
      a risk of liability for the investigation and cleanup of environmental
      contamination at each of the properties that we may own or operate and at
      off-site locations where we may arrange for the disposal of hazardous
      substances. If these substances have been or are disposed of or released at
      sites that undergo investigation and/or remediation by regulatory agencies,
      the
      Company may become responsible under the Comprehensive Environmental Response,
      Compensation and Liability Act of 1980 (&#8220;CERCLA&#8221;) or other environmental laws
      for all or part of the costs of investigation and/or remediation and for damage
      to natural resources. In that case we may also be subject to related claims
      by
      private parties alleging property damage and personal injury due to exposure
      to
      hazardous or other materials at or from these properties. Some of these matters
      may require us to expend significant amounts for investigation and/or cleanup
      or
      other costs. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, if we become the owner or operator of any ethanol production
      facilities, new laws, new interpretations of existing laws, increased
      governmental enforcement of environmental laws or other developments could
      require the Company to make additional significant expenditures. Continued
      government and public emphasis on environmental issues can be expected to result
      in increased future investments for environmental controls at its current and
      future environmental laws and regulations (and related interpretations); more
      vigorous enforcement policies and discovery of currently unknown conditions
      may
      require substantial capital and other expenditures. Air emissions from ethanol
      production are subject to the federal Clean Air Act, the federal Clean Air
      Act
      Amendments of 1990 and similar state and local laws and associated regulations.
      The EPA has promulgated National Emissions Standards for Hazardous Air
      Pollutants, or NESHAP, under the federal Clean Air Act that could apply to
      facilities that the Company may come to own or operate if the emissions of
      hazardous air pollutants exceed certain thresholds. If a facility operated
      by
      the Company is authorized to emit hazardous air pollutants above the threshold
      level, then it would be required to comply with the NESHAP related to its
      production process and would be required to come into compliance with another
      NESHAP applicable to boilers and process heaters by September 13, 2007. New
      or
      expanded facilities would be required to comply with both standards upon startup
      if they exceed the hazardous air pollutant threshold. In addition to costs
      for
      achieving and maintaining compliance with these laws, more stringent standards
      may also limit the operating flexibility that the Company expects to achieve.
      Because other domestic ethanol manufacturers will have similar restrictions,
      however, the Company believes that compliance with more stringent air emission
      control or other environmental laws and regulations is not likely to materially
      affect our competitive position.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      hazards and risks associated with producing and transporting ethanol and dried
      distillers grain with solubles (&#8220;DDGS&#8221;), such as fires, natural disasters,
      explosions, abnormal pressures, blowouts and pipeline ruptures also may result
      in personal injury claims or damage to property and third parties. As protection
      against operating hazards, the Company plans to secure and maintain insurance
      coverage against some, but not all, potential losses. The coverage it plans
      will
      include physical damage to assets,</font></div><br>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">employer&#8217;s
      liability, comprehensive general liability, automobile liability and workers&#8217;
compensation. Even if our insurance is adequate and customary for our industry,
      losses could occur for uninsurable or uninsured risks or in amounts in excess
      of
      existing insurance coverage. The Company&#8217;s ability to secure coverage is
      dependent on the successful completion of the Offering and the availability
      of
      insurance. If we are unable to procure adequate insurance, we may not be able
      to
      obtain financing or otherwise execute our business plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Employees</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of
      September 1, 2006, the Company had approximately six full time employees who
      are
      responsible for companywide management, marketing, project management, logistics
      and administration. All of these employees are located in the U.S. None of
      our
      employees is covered by a collective bargaining agreement. The Company has
      had
      no labor-related work stoppages, none of the Company&#8217;s employees are represented
      by a labor union and the Company believes that it has positive relations with
      its employees.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Legal
      Proceedings</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From
      time
      to time the Company may be named in claims arising in the ordinary course of
      business. Currently, no legal proceedings or claims are pending against or
      involve the Company that, in the opinion of management, could reasonably be
      expected to have a material adverse effect on its business and financial
      condition. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Available
      Information</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are
      subject to the reporting requirements of the Securities Exchange Act of 1934,
      as
      amended (the &#8220;Exchange Act&#8221;). Reports filed with the SEC pursuant to the
      Exchange Act, including proxy statements, annual and quarterly reports, and
      other reports we file, can be inspected and copied at the public reference
      facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549.
      Investors may obtain information on the operation of the public reference room
      by calling the SEC at 1-800-SEC-0330. Investors can request copies of these
      documents upon payment of a duplicating fee by writing to the SEC. The reports
      we file with the SEC are also available on the SEC&#8217;s Internet site
      (http://www.sec.gov). </font></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RISK
      FACTORS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>An
      investment in shares of Common Stock is highly speculative and involves a high
      degree of risk. Only those investors who can bear the risk of loss of their
      entire investment should participate. Prospective investors should carefully
      consider the following risk factors in evaluating an investment in the
      Company.</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Risks
      Related to the Company&#8217;s Business</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      Company has had no operating history as a producer of ethanol or dried
      distillers grain with solubles (&#8220;DDGS&#8221;).</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has no operating history in our contemplated ethanol production business
      and, to date, has not earned any revenues. Accordingly, it may be difficult
      for
      investors to evaluate its business prospects. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s business is dependent on the implementation of our business plan,
      including our ability to make future investments. There can be no assurance
      that
      the Company&#8217;s efforts will ultimately be successful or result in revenues or
      profits. There is no assurance that investors will not lose their entire
      investment. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Moreover,
      the Company&#8217;s prospects must be considered in light of the risks and
      uncertainties encountered by an early-stage company and in rapidly evolving
      markets, such as the ethanol market, where supply and demand may change
      significantly in a short amount of time.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Some
      of
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">effectively
                manage our contemplated business and
                operations;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">recruit
                and retain key personnel;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">successfully
                create and maintain the low-cost structure we envision as we expand
                the
                scale of our business;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">manage
                rapid growth in personnel and
                operations;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">develop
                new products that complement our contemplated business;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">successfully
                address the other risks described throughout this Current
                Report.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      the
      Company cannot successfully address these risks, our contemplated business
      and
      the results of our contemplated operations and financial position would
      suffer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      Company&#8217;s ability to execute our business plan depends on
      conditions</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>,
      the satisfaction of which are not under our control.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s ability to successfully execute our business plan depends on the
      satisfaction of several conditions. The Company&#8217;s ability to satisfy these
      conditions may be, in part or in whole, beyond our control. The principal
      conditions to be satisfied include:</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-24-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
            </td>
            <td align="left" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">reaching
                definitive agreements for the development, construction and operation
                of
                the contemplated facilities or, if a contemplated facility is not
                feasible, one or more other sites;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">entering
                into satisfactory agreements for the acquisition of existing, operational
                ethanol production facilities;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">entering
                into satisfactory agreements for the expansion of existing ethanol
                facilities that we may be able to
                acquire;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">obtaining
                all required permits and consents from third parties for our anticipated
                acquisition and expansion of existing facilities, as well as for
                the
                future operation of those
                facilities;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">entering
                into satisfactory agreements to acquire or otherwise participate
                in
                planned ethanol production facilities which may or may not have sufficient
                permits and consents at the time of acquisition;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">entering
                into satisfactory agreements, on either a spot market or forward
                basis,
                for the sale of our ethanol production or the purchase of feedstock,
                natural gas and other materials or services needed for
                operation.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since
      the
      Company has yet to begin full operation as a business, there is no certainty
      that we will be able to achieve satisfaction of any or all of the above
      conditions. Furthermore, to achieve satisfaction, it is likely that the Company
      will be required to raise substantial additional amounts of capital, including
      equity capital. The terms on which such equity capital may be raised, if
      available at all, may be dilutive and otherwise disadvantageous to existing
      Company stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      results of operations, financial position and business outlook of the Company&#8217;s
      planned business are highly dependent on commodity prices, which are subject
      to
      significant volatility and uncertainty, and the availability of supplies.
      Accordingly, any results of our contemplated business could fluctuate
      substantially.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Anticipated
      results may be substantially dependent on commodity prices, especially prices
      for corn, natural gas, ethanol, and unleaded gasoline. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the volatility of the prices for commodities, anticipated results
      may
      fluctuate substantially and the Company may experience periods of declining
      prices for our products and increasing costs for our raw materials, which could
      result in operating losses. Although the Company may attempt to offset a portion
      of the effects of fluctuations in prices by entering into forward contracts
      to
      supply ethanol or purchase corn, natural gas or other items or by engaging
      in
      transactions involving exchange-traded futures contracts, the amount and
      duration of these hedging and other risk mitigation activities may vary
      substantially over time and these activities also involve substantial risks.
      See
&#8220;&#8212;If the Company engages in hedging transactions and other risk mitigation
      strategies, those strategies could harm our financial results&#8221; on page
      27.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      Compan</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>y</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#8217;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>s
      contemplated business is likely to be highly sensitive to corn prices and we
      generally will be unable to pass on increases in corn prices to our customers.
      </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      principal raw material we expect to use to produce ethanol and co-products,
      including dry and wet distillers grains, is corn. As a result, changes in the
      price of corn can significantly affect our contemplated business. In general,
      rising corn prices produce lower profit margins. Because ethanol competes with
      non-corn-based fuels, the Company is not likely to be able to pass along
      increased corn</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-25-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">costs
      to
      customers. At certain levels, corn prices may make ethanol uneconomical to
      use
      in fuel markets. Over the ten-year period from 1996 through 2005, corn prices
      (based on the Chicago Board of Trade, or CBOT, daily futures data) have ranged
      from a low of $1.75 per bushel in 2000 to a high of $5.48 per bushel in 1996,
      with prices averaging $2.47 per bushel during this period. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Weather
      conditions and other factors affecting crop yields, farmer planting decisions,
      and general economic, market and regulatory factors all influence the price
      of
      corn. Government policies and subsidies with respect to agriculture and
      international trade, and global and local demand and supply also impact the
      price. The significance and relative effects of these factors on the price
      of
      corn are difficult to predict. Any event that tends to negatively affect the
      supply of corn, such as adverse weather or crop disease, could increase corn
      prices and potentially harm our business. In addition, ethanol producers may
      also have difficulty, from time to time, in physically sourcing corn on
      economical terms due to supply shortages. Such a shortage could require the
      Company to suspend our contemplated operations until corn becomes available
      at
      acceptable terms, which would have a material adverse effect on our profits
      and
      revenues, thus affecting our financial position. The price paid for corn at
      a
      facility could increase if an additional ethanol production facility is built
      in
      the same general vicinity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      spread between ethanol and corn prices can vary significantly, and the recent
      high levels of these spreads are unlikely to remain. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      gross
      margin of the Company&#8217;s anticipated business depends principally on the spread
      between ethanol and corn prices. During the five-year period from 2001 to 2005,
      ethanol prices (based on average U.S. ethanol rack prices from Bloomberg, L.P.,
      or Bloomberg) have ranged from a low of $0.94 per gallon to a high of $2.76
      per
      gallon, averaging $1.50 per gallon during this period. In recent periods, the
      spread between ethanol and corn prices has been at a historically high level,
      driven in large part by high oil prices and historically low corn prices. During
      2005, however, this spread fluctuated widely and, because of the unusual degree
      of spread in current markets, fluctuations are likely to continue to occur.
      Any
      reduction in the spread between ethanol and corn prices, whether as a result
      of
      an increase in corn prices or a reduction in ethanol prices, would adversely
      affect the Company&#8217;s anticipated results of operations and financial
      position.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      market for natural gas is subject to market conditions that create uncertainty
      in the price and availability of the natural gas that the Company may use in
      our
      anticipated manufacturing process. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s contemplated business may rely upon third parties for supplies of coal
      or natural gas or both, which is consumed in the manufacture of ethanol. The
      prices for and availability of coal and natural gas are subject to volatile
      market conditions. These market conditions often are affected by factors beyond
      our control, such as higher prices resulting from colder than average weather
      conditions and overall economic conditions. Significant disruptions in the
      supply of coal and natural gas could impair our ability to manufacture ethanol
      for our customers. Furthermore, increases in coal and natural gas prices or
      changes in coal and natural gas costs relative to natural gas costs paid by
      competitors could adversely affect our anticipated results of operations and
      financial position. The price fluctuations in natural gas prices over the
      six-year period from December 31, 1999 through December 28, 2005, based on
      the
      NYMEX daily futures data, has ranged from a low of $1.83 per MMBTU in 2001
      to a
      high of $13.91 per MMBTU in 2005, averaging $5.25 per MMBTU during this
      period.</font></div><br>
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        </div>
      </div>
      <div id="HDR">
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        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Fluctuations
      in the selling price and production cost of gasoline may reduce the Company&#8217;s
      anticipated profit margins, if profits are achieved.</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanol
      is marketed both as a fuel additive to reduce vehicle emissions from gasoline
      and as an octane enhancer to improve the octane rating of gasoline with which
      it
      is blended. As a result, ethanol prices are influenced by the supply and demand
      for gasoline and our anticipated results of operations and financial position
      may be materially adversely affected if gasoline demand or price decreases.
      Historically, the price of a gallon of gasoline has been lower than the cost
      to
      produce a gallon of ethanol. In addition, some of the sales contracts into
      which
      the Company may enter may provide for pricing on an indexed basis, so that
      the
      price we may receive for products sold under these arrangements will be adjusted
      as gasoline prices change.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      Company</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#8217;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>s
      anticipated business will be subject to seasonal fluctuations.
</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s anticipated operating results are likely to be influenced by seasonal
      fluctuations in the price of our primary operating inputs, corn and coal or
      natural gas or both, and the price of our primary product, ethanol. The spot
      price of corn tends to rise during the spring planting season in May and June
      and tends to decrease during the fall harvest in October and November. The
      price
      for natural gas, however, tends to move opposite that of corn and tends to
      be
      lower in the spring and summer and higher in the fall and winter. In addition,
      ethanol prices are substantially correlated with the price of unleaded gasoline
      especially in connection with our indexed, gas-plus sales contracts. The price
      of unleaded gasoline tends to rise during each of the summer and winter. Given
      our lack of operating history, the Company does not know yet how these seasonal
      fluctuations will affect our results over time.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      the Company engages in hedging transactions and other risk mitigation
      strategies, those strategies could harm our financial
      results.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It
      is
      possible that, in an attempt to partially offset the effects of volatility
      of
      ethanol prices and corn and natural gas costs, the Company will enter into
      contracts to supply a portion of our ethanol production or purchase a portion
      of
      our corn or natural gas requirements on a forward basis and also engage in
      other
      hedging transactions involving exchange-traded futures contracts for corn,
      natural gas and unleaded gasoline from time to time. The price of unleaded
      gasoline also affects the price we receive for our ethanol under indexed
      contracts. The financial statement impact of these activities is dependent
      upon,
      among other things, the prices involved and our ability to sell sufficient
      products to use all of the corn and natural gas for which we have futures
      contracts. Hedging arrangements, if entered into, will also expose us to the
      risk of financial loss in situations where the other party to the hedging
      contract defaults on its contract or, in the case of exchange-traded contracts,
      where there is a change in the expected differential between the underlying
      price in the hedging agreement and the actual prices paid or received by the
      Company. Hedging activities can themselves result in losses when a position
      is
      purchased in a declining market or a position is sold in a rising market. A
      hedge position is often settled in the same time frame as the physical commodity
      is either purchased (corn and natural gas) or sold (ethanol). Hedging losses
      may
      be offset by a decreased cash price for corn and natural gas and an increased
      cash price for ethanol. If we do hedge, the Company may also vary the amount
      of
      hedging or other risk mitigation strategies we undertake, and we may choose
      not
      to engage in hedging transactions at all. As a result, the Company&#8217;s results of
      operations and financial position may be adversely affected by increases in
      the
      price of corn or natural gas or decreases in the price of ethanol or unleaded
      gasoline.</font></div><br>
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      </div>
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        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em><strong>The
      Company may be substantially dependent on one or two facilities, and any
      operational disruption could result in a reduction of sales volumes and could
      cause us to incur substantial losses.</strong></em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Most
      of
      the Company&#8217;s anticipated revenues are and will continue to be derived from the
      sale of ethanol and the related co-products that we plan to produce. Once
      commenced, our anticipated operations may be subject to significant interruption
      if any of our facilities experience a major accident or are damaged by severe
      weather or other natural disasters. In addition, our operations may be subject
      to labor disruptions and unscheduled downtime, or other operational hazards
      inherent in the ethanol industry, such as equipment failures, fires, explosions,
      abnormal pressures, blowouts, pipeline ruptures, transportation accidents and
      natural disasters. Some of these operational hazards may cause personal injury
      or loss of life, severe damage to or destruction of property and equipment
      or
      environmental damage, and may result in suspension of operations and the
      imposition of civil or criminal penalties. The insurance that the Company plans
      to obtain, if obtained, may not be adequate to fully cover the potential
      operational hazards described above.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      Company may not be able to implement business plan for acquisition and expansion
      as planned or at all.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company plans to grow our contemplated business by investing in new or existing
      facilities. We believe that there is increasing competition for suitable sites.
      Therefore, we may not find suitable additional sites for construction of new
      facilities or other suitable expansion opportunities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company may need financing to implement our business strategies and we may
      not
      have access to the funding required or such funding may not be available to
      us
      on acceptable terms. We may finance the expansion of our business with
      additional indebtedness or by issuing additional equity securities. We could
      face financial risks associated with incurring additional indebtedness, such
      as
      reducing our liquidity and access to financial markets and increasing the amount
      of cash flow required to service such indebtedness, or associated with issuing
      additional stock, such as dilution of ownership and earnings.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company must also obtain numerous regulatory approvals and permits in order
      to
      construct and operate additional or expanded facilities. These requirements
      may
      not be satisfied in a timely manner or at all. In addition, as described on
      page
      32 under &#8220;&#8212;The Company may be adversely affected by environmental, health and
      safety laws, regulations and liabilities,&#8221; federal and state governmental
      requirements may substantially increase our costs, which could have a material
      adverse effect on the results of our contemplated operations and financial
      position. Our contemplated expansion plans may also result in other
      unanticipated adverse consequences, such as diverting management&#8217;s attention
      from our existing operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      anticipated construction costs may also increase to levels that would make
      a new
      facility too expensive to complete or unprofitable to operate. Contractors,
      engineering firms, construction firms, and equipment suppliers also receive
      requests and orders from other ethanol companies and, therefore, the Company
      may
      not be able to secure their services or products on a timely basis or on
      acceptable financial terms. The Company may suffer significant delays or cost
      overruns as a result of a variety of factors, such as shortages of workers
      or
      materials, transportation constraints, adverse weather, unforeseen difficulties
      or labor issues, any of which could prevent us from commencing operations as
      expected at our facilities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accordingly,
      the Company may not be able to implement our acquisition or expansion strategy
      as planned or at all. We may not find additional appropriate sites for new
      facilities and we may not be able to finance, construct, develop, or operate
      these new or expanded facilities successfully.</font></div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em><strong>Potential
      future acquisitions could be difficult to find and integrate, divert the
      attention of key personnel, disrupt business, dilute stockholder value, and
      adversely affect financial results.</strong></em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      part
      of the Company&#8217;s business strategy, the Company may consider acquisitions of
      building sites, production facilities, storage or distribution facilities and
      selected infrastructure. The Company may not find suitable acquisition
      opportunities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acquisitions
      involve numerous risks, any of which could harm our contemplated business,
      including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">difficulties
                in integrating the operations, technologies, products, existing contracts,
                accounting processes and personnel of the target and realizing the
                anticipated synergies of the combined
                businesses;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">difficulties
                in supporting and transitioning customers, if any, of the target
                company
                or assets;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">diversion
                of financial and management resources from existing
                operations;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
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                price paid or other resources devoted may exceed the value we realize,
                or
                the value to be realized if the Company had allocated the purchase
                price
                or other resources to another
                opportunity;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
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            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">risks
                of entering new markets or areas in which the Company has limited
                or no
                experience; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">potential
                loss of key employees, customers and strategic alliances from the
                Company&#8217;s contemplated business or the business of the
                target;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">assumption
                of unanticipated problems or latent liabilities, such as problems
                with the
                quality of the products of the target;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">inability
                to generate sufficient revenue to offset acquisition
                costs.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acquisitions
      also frequently result in the recording of goodwill and other intangible assets
      which are subject to potential impairments in the future that could harm the
      Company&#8217;s financial results. In addition, if the Company finances acquisitions
      by issuing convertible debt or equity securities, our existing stockholders
      may
      be diluted, which could affect the market price of our common stock. As a
      result, if the Company fails to properly evaluate acquisitions or investments,
      we may not achieve the anticipated benefits of any such acquisitions and we
      may
      incur costs in excess of what we anticipate. The failure to successfully
      evaluate and execute acquisitions or investments or otherwise adequately address
      these risks could materially harm our business and financial
      results.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Growth
      in the sale and distribution of ethanol is dependent on the changes to and
      expansion of related infrastructure which may not occur on a timely basis,
      if at
      all, and the Company&#8217;s contemplated operations could be adversely affected by
      infrastructure disruptions.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Substantial
      development of infrastructure will be required by persons and entities outside
      the Company&#8217;s control for our contemplated operations, and the ethanol industry
      generally, to grow. Areas requiring expansion include, but are not limited
      to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">additional
                rail capacity;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">additional
                storage facilities for ethanol;</font></div>
            </td>
          </tr>

      </table>
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    <div>&#160;</div>
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          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
    </div>
    <div><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">increases
                in truck fleets capable of transporting ethanol within localized
                markets;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">expansion
                of refining and blending facilities to handle ethanol;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">growth
                in service stations equipped to handle ethanol
                fuels.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Substantial
      investments required for these infrastructure changes and expansions may not
      be
      made or they may not be made on a timely basis. Any delay or failure in making
      the changes to or expansion of infrastructure could hurt the demand or prices
      for the Company&#8217;s contemplated products, impede our delivery of those products,
      impose additional costs on us, or otherwise have a material adverse effect
      on
      our results of contemplated operations or financial position. The Company&#8217;s
      contemplated business will be dependent on the continuing availability of
      infrastructure and any infrastructure disruptions could have a material adverse
      effect on our business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>New
      ethanol plants under construction or decreases in the demand for ethanol may
      result in excess U.S. production capacity.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">According
      to the Renewable Fuels Association, domestic ethanol production capacity has
      increased from 1.9 BGY as of January 2001 to an estimated 4.6 BGY at June 30,
      2006. During March and April 2006 ethanol was produced at record and near-record
      levels of 392.2 million gallons and 363.6 million gallons. The Renewable Fuels
      Association estimates that, as of June 30, 2006, approximately 2.2 BGY of
      additional production capacity is under construction. According to the Research
      Institute of America, at the end of 2005, 95 ethanol refineries were in
      production, 14 began operations, 30 began construction and 10 were expanded.
      Certain of the new refineries are being built in California, North Carolina,
      Arizona, Texas and New Mexico. The Research Institute of America has reported
      that, according to information provided to it, in the second quarter of 2006
      there are more than 150 ethanol projects that are seeking financing. Excess
      capacity in the ethanol industry would have an adverse effect on the Company&#8217;s
      contemplated results of operations, cash flows, and financial position. In
      a
      manufacturing industry with excess capacity, producers have an incentive to
      manufacture additional products for so long as the price exceeds the marginal
      cost of production (i.e., the cost of producing only the next unit, without
      regard for interest, overhead or fixed costs). This incentive can result in
      the
      reduction of the market price of ethanol to a level that is inadequate to
      generate sufficient cash flow to cover costs.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><em><strong><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      may not
      be able to compete effectively in the U.S. and foreign ethanol </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">industries</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></strong></em></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      U.S., the Company&#8217;s contemplated business would compete with other corn
      processors, ethanol producers and refiners. As of March 2006, the top 12
      producers accounted for at least 50% of the ethanol production capacity in
      the
      U.S. according to the Renewable Fuels Association.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr>
            <td align="left" valign="bottom" width="47%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Current
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(as
                of March 2006)</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MMGY</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Number
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>plants</strong></font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Share
                of the</strong></font></div>
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            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="47%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Archer
                Daniels Midland</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,070</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">7</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">24</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
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            <td align="left" valign="bottom" width="47%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">VeraSun</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">230</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
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      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Farmer-owned</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      number
      of competitors are divisions of substantially larger enterprises and have
      substantially greater financial resources than the Company plans to have.
      Smaller competitors also pose a threat. Farmer-owned cooperatives and
      independent firms consisting of groups of individual farmers and investors
      have
      been able to compete successfully in the ethanol industry. These smaller
      competitors operate smaller facilities which do not affect the local price
      of
      corn grown in the proximity to the facility as much as larger facilities. In
      addition, many of these smaller competitors are farmer-owned and often require
      their farmer-owners to commit to selling them a certain amount of corn as a
      requirement of ownership. A significant portion of production capacity in the
      ethanol industry consists of smaller-sized facilities. Most new ethanol plants
      under development across the country are individually owned. In addition,
      institutional investors and high net worth individuals could heavily invest
      in
      ethanol production facilities and oversupply the demand for ethanol, resulting
      in lower ethanol price levels that might adversely affect the results of the
      Company&#8217;s contemplated operations and financial position.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      ethanol industry also includes increasing competition from international
      suppliers. Although there is a $0.54 per gallon tariff (which is scheduled
      to
      expire in 2007) on foreign produced ethanol that is approximately equal to
      the
      blenders&#8217; credit, ethanol imports equivalent to up to 7% of total domestic
      production in any given year from various countries were exempted from this
      tariff under the Caribbean Basin Initiative to spur economic development in
      Central America and the Caribbean. Currently, international suppliers produce
      ethanol primarily from sugar cane and have cost structures that may be
      substantially lower than ours.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      increase in domestic or foreign competition could result in reduced ethanol
      prices. As a result, the Company could be forced to take other steps to compete
      effectively, which could adversely affect the results of our contemplated
      operations and financial position.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      U.S. ethanol industry is highly dependent upon federal and state legislation
      and
      regulation and any changes in legislation or regulation could materially and
      adversely affect the results of the Company&#8217;s contemplated operations and
      financial position.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      elimination or significant reduction in the blenders&#8217; credit could have a
      material adverse effect on the results of the Company&#8217;s contemplated operations
      and financial position. The cost of producing ethanol is made significantly
      more
      competitive with regular gasoline by federal tax incentives. Before January
      1,
      2005, the federal excise tax incentive program allowed gasoline distributors
      that blended ethanol with gasoline to receive a federal excise tax rate
      reduction for each blended gallon sold. If the fuel was blended with 10%
      ethanol, the refiner/marketer paid $0.052 per gallon less tax, which equated
      to
      an incentive of $0.52 per gallon of ethanol. The $0.52 per gallon incentive
      for
      ethanol was reduced to $0.51 per gallon in 2005 and is scheduled to expire
      (unless extended) in 2010. The blenders&#8217; credits may not be renewed in 2010 or
      may be renewed on different terms. In addition, the blenders&#8217; credits, as well
      as other federal and state programs benefiting ethanol (such as tariffs),
      generally are subject to U.S. government obligations under international trade
      agreements, including those under the World Trade Organization Agreement on
      Subsidies and Countervailing Measures, and might be the subject of challenges
      thereunder, in whole or in part. The elimination or significant reduction in
      the
      blenders&#8217; credit or other programs benefiting ethanol may have a material
      adverse effect on the results of the Company&#8217;s contemplated operations and
      financial position.</font></div><br>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Ethanol
      can be imported into the U.S. duty-free from some countries, which may undermine
      the ethanol industry in the U.S. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Imported
      ethanol is generally subject to a $0.54 per gallon tariff that was designed
      to
      offset the $0.51 per gallon ethanol incentive available under the federal excise
      tax incentive program for refineries that blend ethanol in their fuel. A special
      exemption from the tariff exists for ethanol imported from 24 countries in
      Central America and the Caribbean Islands, which is limited to a total of 7%
      of
      U.S. production per year. Imports from the exempted countries may increase
      as a
      result of new plants under development. Since production costs for ethanol
      in
      these countries are estimated to be significantly less than what they are in
      the
      U.S., the duty-free import of ethanol through the countries exempted from the
      tariff may negatively affect the demand for domestic ethanol and the price
      at
      which we sell our ethanol. In May 2006, bills were introduced in both the U.S.
      House of Representatives and U.S. Senate to repeal the $0.54 per gallon tariff.
      The Company does not know the extent to which the volume of imports would
      increase or the effect on U.S. prices for ethanol if this proposed legislation
      is enacted or if the tariff is not renewed beyond its current expiration in
      December 2007. Any changes in the tariff or exemption from the tariff could
      have
      a material adverse effect on our results of operations and financial position.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      effect of the renewable fuels standard in the recent Energy Policy Act is
      uncertain. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      use
      of fuel oxygenates, including ethanol, was mandated through regulation, and
      much
      of the forecasted growth in demand for ethanol was expected to result from
      additional mandated use of oxygenates. Most of this growth was projected to
      occur in the next few years as the remaining markets switch from MTBE to
      ethanol. The recently enacted energy bill, however, eliminated the mandated
      use
      of oxygenates and established minimum nationwide levels of renewable fuels
      (ethanol, biodiesel or any other liquid fuel produced from biomass or biogas)
      to
      be included in gasoline. Because biodiesel and other renewable fuels in addition
      to ethanol are counted toward the minimum usage requirements of the renewable
      fuel standard, the elimination of the oxygenate requirement for reformulated
      gasoline may result in a decline in ethanol consumption, which in turn could
      have a material adverse effect on the results of the Company&#8217;s contemplated
      operations and financial condition. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      legislation did not include MTBE liability protection sought by refiners, and
      ethanol producers have generally estimated that this will result in accelerated
      removal of MTBE and increased demand for ethanol. Refineries may use other
      possible replacement additives, such as iso-octane, iso-octene or alkylate.
      Accordingly, the actual demand for ethanol may increase at a lower rate than
      production for estimated demand, resulting in excess production capacity in
      our
      industry, which would negatively affect our results of operations, financial
      position and cash flows. See &#8220;&#8212;New ethanol plants under construction or
      decreases in the demand for ethanol may result in excess U.S. production
      capacity&#8221; on page 30.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Waivers
      of the RFS minimum levels of renewable fuels included in gasoline could have
      a
      material adverse affect on the results of the Company</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#8217;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>s
      contemplated operations. </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      the
      Energy Policy Act, the U.S. Department of Energy, in consultation with the
      Secretary of Agriculture and the Secretary of Energy, may waive the renewable
      fuels mandate with respect to one or more states if the Administrator of the
      EPA, determines that implementing the requirements would severely harm the
      economy or the environment of a state, a region of the U.S., or that there
      is
      inadequate supply to meet the requirement. Any waiver of the RFS with respect
      to
      one or more states would adversely offset demand for ethanol and could have
      a
      material adverse effect on the results of the Company&#8217;s contemplated operations
      and financial condition.</font></div><br>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      Company may be adversely affected by environmental, health and safety laws,
      regulations and liabilities.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      we
      pursue our business plan, we will become subject to various federal, state
      and
      local environmental laws and regulations, including those relating to the
      discharge of materials into the air, water and ground, the generation, storage,
      handling, use, transportation and disposal of hazardous materials, and the
      health and safety of our employees. In addition, some of these laws and
      regulations require our contemplated facilities to operate under permits that
      are subject to renewal or modification. These laws, regulations and permits
      can
      often require expensive pollution control equipment or operational changes
      to
      limit actual or potential impacts to the environment. A violation of these
      laws
      and regulations or permit conditions can result in substantial fines, natural
      resource damages, criminal sanctions, permit revocations and/or facility
      shutdowns. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Furthermore,
      upon effecting our plan, we may become liable for the investigation and cleanup
      of environmental contamination at each of the properties that we own or operate
      and at off-site locations where we may arrange for the disposal of hazardous
      substances. If these substances have been or are disposed of or released at
      sites that undergo investigation and/or remediation by regulatory agencies,
      the
      Company may be responsible under CERCLA, or other environmental laws for all
      or
      part of the costs of investigation and/or remediation, and for damages to
      natural resources. The Company may also be subject to related claims by private
      parties alleging property damage and personal injury due to exposure to
      hazardous or other materials at or from those properties. Some of these matters
      may require expending significant amounts for investigation, cleanup, or other
      costs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, new laws, new interpretations of existing laws, increased governmental
      enforcement of environmental laws, or other developments could require the
      Company to make additional significant expenditures. Continued government and
      public emphasis on environmental issues can be expected to result in increased
      future investments for environmental controls at ethanol production facilities.
      Present and future environmental laws and regulations (and interpretations
      thereof) applicable to ethanol operations, more vigorous enforcement policies
      and discovery of currently unknown conditions may require substantial
      expenditures that could have a material adverse effect on the results of the
      Company&#8217;s contemplated operations and financial position.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      hazards and risks associated with producing and transporting ethanol and DDGS
      (such as fires, natural disasters, explosions, and abnormal pressures and
      blowouts) may also result in personal injury claims or damage to property and
      third parties. As protection against operating hazards, we maintain insurance
      coverage against some, but not all, potential losses. However, the Company
      could
      sustain losses for uninsurable or uninsured risks, or in amounts in excess
      of
      existing insurance coverage. Events that result in significant personal injury
      or damage to our property or third parties or other losses that are not fully
      covered by insurance could have a material adverse effect on the results of the
      Company&#8217;s contemplated operations and financial position.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      Company is dependent upon its officers for management and direction, and the
      loss of any of these persons could adversely affect the Company&#8217;s contemplated
      operations and results.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company is dependent upon our officers, including our Chief Executive Officer,
      Chief Operating Officers, and Executive Chairman, for implementation of our
      proposed expansion strategy and execution of our contemplated business. The
      Company does not maintain &#8220;key person&#8221; life insurance for</font></div><br>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any
      of
      our officers. The loss of any of our officers could delay or prevent the
      achievement of our contemplated business objectives.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      Company&#8217;s contemplated competitive position, financial position and results of
      operations may be adversely affected by technological
      advances.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      development and implementation of new technologies may result in a significant
      reduction in the costs of ethanol production. For instance, any technological
      advances in the efficiency or cost to produce ethanol from inexpensive,
      cellulosic sources such as wheat, oat or barley straw could have an adverse
      effect on our contemplated business, because the facilities we contemplates
      acquiring are designed to produce ethanol from corn, which is, by comparison,
      a
      raw material with other high value uses. The Company cannot predict when new
      technologies may become available, the rate of acceptance of new technologies
      by
      our competitors or the costs associated with new technologies. In addition,
      advances in the development of alternatives to ethanol could significantly
      reduce demand for or eliminate the need for ethanol.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      advances in technology which require significant capital expenditures to remain
      competitive or which reduce demand or prices for ethanol would have a material
      adverse effect on the results of the Company&#8217;s operations and financial
      position.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      </em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Company
      may have liabilities arising from its prior business.
</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Simultaneous
      with the closing of the Merger, NIE acquired the business of the Company and
      will continue the business operations of Ethanex N.A. as a publicly-traded
      company. Although Ethanex N.A. conducted due diligence of NIE, there is a risk
      that the Company could be liable for liability arising from the prior business
      of NIE. The Merger Agreement contains a limited stockholder post-closing
      adjustment to the number of shares of common stock issued to pre-merger Ethanex
      N.A. stockholders as a means of providing a remedy for breaches of
      representations made in the Merger Agreement by NIE, including representations
      related to undisclosed NIE liabilities, however, there is no comparable
      protection offered to our other investors. Any such liabilities of NIE may
      survive the Merger and could harm our revenues, business, prospects, financial
      condition and results of operations upon our acceptance of responsibility for
      such liabilities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Risks
      Related to Our Common Stock</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Shares
      of ethanol companies that trade in the public markets may be
      overvalued.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Recently,
      a number of ethanol companies have entered the public markets. In addition,
      as
      of June 30, 2006, at least two ethanol businesses had filed registration
      statements with the SEC for initial public offerings to be concluded during
      the
      second or third quarter of 2006. As a result of the continuing influx of the
      shares of these companies and the levels at which they trade in comparison
      to
      the current earnings of these companies, the volatility of the price of the
      Company&#8217;s shares may be greater than otherwise. Moreover, adverse movement in
      the market price of shares of other ethanol producers may adversely affect
      the
      value of the Company&#8217;s shares for reasons related or unrelated to Company&#8217;s
      contemplated business. The presence of these competitive share offerings may
      also make it more difficult for the stockholders of the Company to resell their
      shares in the public markets.</font></div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      Company has broad discretion over the use of a significant portion of the net
      proceeds of the Offering. The Company&#8217;s management will determine, with its
      Board of Directors, but without the need for stockholder approval, how to
      allocate a significant portion of these proceeds. If we do not wisely allocate
      the proceeds, our business plan could be seriously
      impacted.</strong></em></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has broad discretion to allocate a significant portion of the net
      proceeds of the Offering, subject to certain limitations imposed by the parties
      arranging the Offering. The timing and amount of the Company&#8217;s actual
      expenditures are subject to change and will be based on many factors,
      including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
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            </td>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">competition,
                market, and other developments;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
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            </td>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                ability of the Company to attract and retain quality
                employees;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
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            <td style="width: 18pt;">
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            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                ability of the Company to implement our sales, marketing, product
                development, manufacturing, and investor/public relations plans;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                on-going accounting, legal, and other costs of being a publicly-traded
                company.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><em><strong><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      is
      no active public market for the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Company</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8217;s
      Common
      Stock, and prospective investors may not be able to resell their shares at
      their
      purchase price, if at all.</font></strong></em></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      the Company&#8217;s Common Stock is currently quoted for trading on the NASD&#8217;s OTC
      Bulletin Board, there currently is no active public market for the Common Stock.
      An active public market for the Common Stock may not develop or be sustained
      after the Merger. The offering price of the Offering is not indicative of future
      market prices.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Investors
      who purchased securities in the Offering purchased at a price that was not
      established in a competitive market. The public market may not agree with or
      accept this valuation, in which case stockholders may not be able to sell their
      Common Stock at or above the offering price, if at all. The market price of
      the
      Common Stock may fluctuate significantly in response to factors, some of which
      are beyond the Company&#8217;s control, including the following:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Actual
                or anticipated variations in operating
                results;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                limited number of holders of the Common Stock, and the limited liquidity
                available through the OTC Bulletin
                Board;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Changes
                in financial estimates by securities
                analysts;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Changes
                in the economic performance and/or market valuations of other energy
                companies;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                Company&#8217;s announcement of significant acquisitions, strategic
                partnerships, joint ventures or capital
                commitments;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additions
                or departures of key personnel; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sales
                or other transactions involving the Company&#8217;s capital
                stock.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Because
      the </em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Company</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>
      became public by means of a reverse merger with an existing company, we may
      not
      be able to attract the attention of major brokerage firms and, as a public
      company, will incur substantial expenses</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>.</em></strong></font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-34-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additional
      risks may exist since the Company became public through a &#8220;reverse merger.&#8221; No
      assurance can be given that brokerage firms will want to conduct any secondary
      offerings on behalf of the Company in the future.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the Merger, the Company is publicly-traded and, accordingly, subject
      to the information and reporting requirements of the U.S. securities laws.
      The
      U.S. securities laws require, among other things, review, audit, and public
      reporting of the Company&#8217;s financial results, business activities, and other
      matters. Recent SEC regulation, including regulation enacted as a result of
      the
      Sarbanes-Oxley Act of 2002, has also substantially increased the accounting,
      legal, and other costs related to becoming and remaining an SEC reporting
      company. The public company costs of preparing and filing annual and quarterly
      reports, and other information with the SEC and furnishing audited reports
      to
      stockholders will cause the Company&#8217;s expenses to be higher than they would be
      if we remained privately-held and did not enter into the Merger. In addition,
      the Company will incur substantial expenses in connection with the preparation
      of the Registration Statement and related documents with respect to the
      registration of the shares issued in the Offering. These increased costs may
      be
      material and may include the hiring of additional employees and/or the retention
      of additional advisors and professionals. Failure by the Company to comply
      with
      the federal securities laws could result in private or governmental legal action
      against the Company and/or our officers and directors, which could have a
      detrimental effect on the Company's business and finances, the value of the
      Company&#8217;s stock, and the ability of stockholders to resell their stock.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Our
      Management Team Does Not Have Extensive Experience in Public Company
      Matters.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      management team has had limited public company management experience or
      responsibilities, which could impair our ability to comply with legal and
      regulatory requirements such as the Sarbanes-Oxley Act of 2002 and applicable
      federal securities laws including filing required reports and other information
      required on a timely basis. There can be no assurance that our management will
      be able to implement and affect programs and policies in an effective and timely
      manner that adequately respond to increased legal, regulatory compliance and
      reporting requirements imposed by such laws and regulations. Our failure to
      comply with such laws and regulations could lead to the imposition of fines
      and
      penalties and further result in the deterioration of our business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      Common Stock may be considered &#8220;a penny stock&#8221; and may be difficult to
      sell.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      SEC
      has adopted regulations which generally define &#8220;penny stock&#8221; to be an equity
      security that has a market price of less than $5.00 per share or an exercise
      price of less than $5.00 per share, subject to specific exemptions. Initially,
      the market price of the Common Stock is likely to be less than $5.00 per share
      and therefore may be designated as a &#8220;penny stock&#8221; according to SEC rules. This
      designation requires any broker or dealer selling these securities to disclose
      certain information concerning the transaction, obtain a written agreement
      from
      the purchaser and determine that the purchaser is reasonably suitable to
      purchase the securities. These rules may restrict the ability of brokers or
      dealers to sell the Common Stock and may affect the ability of investors to
      sell
      their shares. In addition, since the Common Stock is currently traded on the
      NASD&#8217;s OTC Bulletin Board, investors may find it difficult to obtain accurate
      quotations of the Common Stock and may experience a lack of buyers to purchase
      such stock or a lack of market makers to support the stock
      price.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-35-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>A
      significant number of the Company&#8217;s shares will be eligible for sale, and their
      sale could depress the market price of the Company&#8217;s
      stock.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sales
      of
      a significant number of shares of the Common Stock in the public market
      following this Merger could harm the market price of the Common Stock. As
      additional shares of the Common Stock become available for resale in the public
      market pursuant to the registration of the securities issued in the Offering,
      and otherwise, the supply of the Common Stock will increase, which could
      decrease its price. Some or all of the shares of Common Stock may be offered
      from time to time in the open market pursuant to Rule 144, and these sales
      may
      have a depressive effect on the market for the shares of Common Stock. In
      general, a person who has held restricted shares for a period of one year may,
      upon filing with the SEC a notification on Form 144, sell into the market Common
      Stock in an amount equal to the greater of 1% of the outstanding shares or
      the
      average weekly number of shares sold in the last four weeks before such sale.
      Such sales may be repeated once each three months, and any of the restricted
      shares may be sold by a non-affiliate after they have been held two
      years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      securities issued in connection with the Merger are &#8220;restricted&#8221; securities that
      have not been registered under federal or state securities laws and will not
      be
      freely transferable. Holders of these securities must be prepared to bear the
      economic risks of investment for an indefinite period of time since the
      securities cannot be sold unless they are subsequently registered or an
      exemption from registration is available. The Company assumed a Registration
      Rights Agreement pursuant to which certain registration rights were granted
      under the Securities Act with respect to certain shares of the Common Stock.
      See
&#8220;The Offering.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      Company&#8217;s principal stockholders will have significant voting power and may take
      actions that may not be in the best interests of other
      stockholders.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After
      the
      Offering and the Merger, the Company&#8217;s officers, directors, principal
      stockholders, and their affiliates will control a significant percentage of
      the
      outstanding Common Stock. If these stockholders act together, they will be
      able
      to exert significant control over the Company&#8217;s management and affairs requiring
      stockholder approval, including approval of significant corporate transactions.
      This concentration of ownership may have the effect of delaying or preventing
      a
      change in control and might adversely affect the market price of the Common
      Stock. This concentration of ownership may not be in the best interests of
      all
      the Company&#8217;s stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Stockholders</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>
      should not anticipate receiving cash dividends on the Company&#8217;s
      stock.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has never declared or paid any cash dividends or distributions on our
      capital stock. The Company currently intends to retain future earnings to
      support operations and to finance expansion and therefore does not anticipate
      paying any cash dividends on the Common Stock in the foreseeable
      future.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      May Not Be Able To Effectively Manage Our Growth. </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      we
      fail to effectively manage our growth, our financial results could be adversely
      affected. Growth may place a strain on our management systems and resources.
      We
      must continue to refine and expand our business development capabilities, our
      systems and processes and our access to financing sources. As we grow, we must
      continue to hire, train, supervise and manage new employees. We cannot assure
      you that we will be able to: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">meet
                our capital needs; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">expand
                our systems effectively or efficiently or in a timely manner;
                </font></div>
            </td>
          </tr>

      </table>
    </div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-36-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">allocate
                our human resources optimally; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">identify
                and hire qualified employees or retain valued employees; or
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">incorporate
                effectively the components of any business that we may acquire in
                our
                effort to achieve growth. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      we are
      unable to manage our growth and our operations, our financial results could
      be
      adversely affected.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2.&#160;
      MANAGEMENT&#8217;S PLAN OF OPERATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanex
      N.A. was incorporated in 2006 with the objective to participate in the cyclical
      and secular trends in the energy sector. Initially, the Company plans to produce
      two primary products that place the Company in two distinct industries both
      commodities in nature: the ethanol fuel component and livestock
      feed.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      demand for ethanol is increasing. Based on data published by the Renewable
      Fuels
      Association, the industry trade group of ethanol producers, in 2005, 95 ethanol
      plants produced a record 4.0 billion gallons of ethanol, an increase of 17%
      from
      2004 and 126% from 2001. According to the Research Institute of America, at
      the
      end of 2005, 95 ethanol refineries were in production, 14 new refineries began
      operations, 30 began construction and 10 were expanded. Certain of the new
      refineries are being built in California, North Carolina, Arizona, Texas and
      New
      Mexico. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company intends to own and operate ethanol plants and to market both
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">dried
      distillers grain with solubles (&#8220;DDGS&#8221;)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      and
      ethanol. To address the shortfall in production capacity resulting from
      government mandated programs and the recent bans on MTBE, the Company has
      implemented three development programs:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">actively
                market our fractionation technology to smaller existing ethanol producers
                in exchange for equity positions in the existing operations. These
                20-30
                MMGY (millions of gallons per year) ethanol plants will be suitable
                for
                meaningful, near-term expansion and conversion to alternative energy
                source or fuels;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">acquiring
                co-location rights from coal-fired electric utilities for brownfield
                development of new plants; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">actively
                acquiring options on proposed ethanol plants with a significant proportion
                of project development and environmental permits in place with distinct
                alternative energy sources or
                fuels.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By
      2010
      the Company plans to have established production capacity of over 500 MMGY
      of
      denatured, fuel grade ethanol and 1.7 million tons of DDGS. The Company plans
      to
      own and operate four to seven plants in the United States geographically
      dispersed coast to coast. The Company&#8217;s technical abilities and operating model
      will make it one of the industry&#8217;s low cost producers. The Company expects to
      continue to grow through existing plant expansions, new plant development and
      strategic acquisitions. The Company further expects that as a publicly traded
      ethanol company, we will be able to access capital at a lower cost than our
      privately-owned competitors and may be able to use our shares to acquire either
      ethanol producers in properly accretive transactions. </font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-37-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      August
      3, 2006, Ethanex N.A. acquired all of the capital stock of IPT Ethanol, Inc.,
      a
      then-wholly owned subsidiary of IPT. See &#8220;Certain Relationships and Related
      Transactions&#8221; on page 45. Based in Santa Rosa, California, IPT is an engineering
      and power generation project development company with over 22 years of operating
      history in the alternative energy space. IPT has been responsible for the
      successful planning, design and construction of more than 30 energy projects
      utilizing a variety of fuels and energy conversion systems. The fuels produced
      or utilized in IPT&#8217;s projects have included ethanol, natural gas, coal, wellhead
      residual gas, digester gas, urban waste, scrap tires, biomass fuels,
      agricultural waste, and hydropower. IPT has significant experience in the areas
      of siting, regulatory and permitting activities, as well as design, construction
      management, and plant operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      late
      2005, IPT began site selection for a 40 MMGY ethanol processing facility in
      northeast Kansas. In May 2006, IPT entered into a LOU with a NYSE-listed
      electric utility located in the Midwest for the joint evaluation of the
      environmental and operational impact of siting a 132 MMGY ethanol plant at
      a
      large coal-fired generating facility owned by the electric utility. The LOU
      provides IPT with a six-month exclusive study period ending November 30, 2006.
      IPT assigned all of its rights in the LOU to IPT Ethanol, Inc. before the
      acquisition of IPT Ethanol, Inc. by Ethanex N.A.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upon
      the
      receipt of favorable results from the study and upon the satisfactory
      negotiation of business terms between the electric utility and the Company
      for
      the development of the proposed plant, the electric utility and the Company
      intend to enter into a definitive agreement to site the</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ethanol
      plant at the coal-fired generating facility. The Company&#8217;s ability to
      participate in this project is wholly dependent, however, on the successful
      fulfillment of several conditions, including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
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                results for the siting of the
                facility;</font></div>
            </td>
          </tr>

      </table>
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    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
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                of all necessary environmental and other
                permits;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">acquisition
                of capital for the development and construction of the
                plant</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">securing
                acceptable terms from the electric utility;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">&#167;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">review
                and approval of the project by the electric utility's board of
                directors.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      July
      2006, the Company entered into a letter of intent with SEMO Milling, LLC and
      on
      August 4, 2006 entered into a definitive Joint Venture Agreement, and ancillary
      agreements related thereto, to build a 132 MMGY ethanol plant co-located with
      SEMO Milling&#8217;s dry corn mill production facility at the SEMO port authority in
      Scott City, Missouri. The Company intends to build the ethanol plant using
      next
      generation ethanol production fractionation technology . </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company intends to market next generation ethanol production fractionation
      technology - a process that increases the starch concentration of feedstock
      and
      lowers the cost of producing ethanol - to existing ethanol plants as a means
      for
      such plants to lower production costs in exchange for equity interests in those
      existing ethanol plants. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      August
      2006, the Company entered into a Letter of Intent with Star Ethanol, LLC with
      a
      view towards construction and operating a 132MM gallon ethanol production
      facility in Franklin County, Illinois, utilizing fractionation technology in
      the
      production of ethanol and ethanol-related products.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-38-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has identified existing operational ethanol plants with production
      capacity of 30 MMGY or less that meet its selection criteria. The Company
      generally requires that such facilities have acceptable rail access, sufficient
      feedstock sources, strong local demand for DDGS and are suitable for expansion.
      Taking advantage of our industry relationships, the Company has plans to market
      our fractionation process to these existing ethanol producers in exchange for
      equity interests in the existing ethanol plants. The Company estimates that,
      after completion of the Offering, we will enter into two to five of these
      agreements. Our ability to do so, however, is contingent on the willingness
      of
      the current owners of the plants to enter into agreements with the Company
      on
      terms that we consider acceptable. Because of the current high level of both
      ethanol prices on a historical basis and investor interest in the industry,
      and
      because a relatively small number of independently-owned operations, it may
      be
      difficult for the Company to negotiate reasonable terms.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company contemplates the need for additional debt and equity financings during
      2006 in order to be able to successfully complete its developing projects,
      including the building of its anticipated facilities. The Company expects to
      hire employees on an as-needed basis, commensurate with the Company&#8217;s continued
      growth and development. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Off-Balance
      Sheet Arrangements</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has no off-balance sheet arrangements as defined under Item 303(c)
      of
      Regulation S-B promulgated by the SEC. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>3.&#160;
      DESCRIPTION OF PROPERTY</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s principal executive offices are located at 14500 Parallel Road, Suite
      A, Basehor, Kansas 66007 and our phone number is</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      (913)
      724-4106. The Company currently leases this space at a base annual rate of
      $11,100, or $925 per month. The lease expires on July 17, 2007. The offices
      are
      suitable to accommodate the Company&#8217;s space requirements. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company is currently negotiating a lease for executive offices located in South
      Carolina. Also, in connection with the SEMO joint venture, a food grade, dry
      mill corn processing facility is under construction. Upon the completion of
      the
      production facility, the Company will own a 50% interest in such
      facility</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>4.&#160;
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth certain information regarding the beneficial
      ownership of our Common Stock as of September 1, 2006, after the successful
      consummation of the Merger, by (1) each person who, to our knowledge,
      beneficially owns more than 5% of the outstanding shares of the Common Stock;
      (2) each of our directors and executive officers; and (3) all of our executive
      officers and directors as a group. Unless otherwise indicated in the footnotes
      to the following table, each person named in the table has sole voting and
      investment power and that person&#8217;s address is 14500 Parallel Road, Suite A,
      Basehor, KS 66007.</font></div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr>
            <td align="left" valign="bottom" width="30%">&#160;</td>
            <td width="2%">&#160;</td>
            <td colspan="5" valign="bottom" width="26%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="30%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0.8pt" align="left">&#160;</div>
            </td>
            <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td colspan="5" valign="bottom" width="26%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Shares
                Beneficially Owned</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="30%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name
                and Address of Beneficial Owner</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: white solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Number
                of</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Shares
                Beneficially</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Owned</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(1)</sup></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 1.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Percentage</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>of
                Common</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Stock
                Outstanding</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="30%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Albert
                W. Knapp</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(2)</sup></font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">6,000,000</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">9.84</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="30%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Bryan
                J. Sherbacow</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(2)</sup></font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">6,000,000</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">9.84</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="30%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Randall
                L. Rahm</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(2)</sup></font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">6,000,000</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">9.84</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="30%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Robert
                C. Walther</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(2)</sup></font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">6,000,000</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">9.84</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="30%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">John
                Farris Norris Jr.</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
              </div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="30%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Directors
                and Executive Officers as a Group</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">24,000,000</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">39.34</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="30%">
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="11%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="11%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div>
        <hr style="COLOR: black" align="left" noshade size="1" width="15%">
      </div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(1)</sup></font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beneficial
                ownership is calculated based on 61,000,000 shares of Common Stock
                issued
                and outstanding as of the Closing Date. Beneficial ownership is determined
                in accordance with Rule 13d-3 of the SEC. The number of shares
                beneficially owned by a person includes shares of Common Stock underlying
                options or warrants held by that person that are currently exercisable
                or
                exercisable within 60 days of the Closing Date. The shares issuable
                pursuant to the exercise of those options or warrants are deemed
                outstanding for computing the percentage ownership of the person
                holding
                those options and warrants but are not deemed outstanding for the
                purposes
                of computing the percentage ownership of any other person. The persons
                and
                entities named in the table have sole voting and sole investment
                power
                with respect to the shares set forth opposite that person&#8217;s name, subject
                to community property laws, where applicable, unless otherwise noted
                in
                the applicable footnote.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(2)</sup></font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shares
                acquired in Merger as a holder of Class A shares of Ethanex
                N.A.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>5.&#160;
      DIRECTORS AND EXECUTIVE OFFICERS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following persons are the executive officers and directors of the Company
      following the Merger and hold the offices set forth opposite their names.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name</strong></font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="5%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Age</strong></font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="48%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Position</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Albert
                W. Knapp</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">54</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Executive Officer</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Randall
                L. Rahm</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">55</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Co-Chief
                Operating Officer</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Bryan
                J. Sherbacow</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">37</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Co-Chief
                Operating Officer </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Robert
                C. Walther</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">71</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Executive
                Chairman</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">John
                Farris Norris Jr.</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">57</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="48%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Executive
      Officers</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>&amp;
      Directors</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Albert
      W. Knapp, </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>III,
      Chief Executive Officer &amp; Director </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Before
      joining the Company as its Chief Executive Officer in 2006, Albert Knapp was
      the
      Senior Vice President of Business Development at TIC - The Industrial Company
      (TIC). Mr. Knapp was responsible for TIC&#8217;s efforts within the ethanol industry.
      Mr. Knapp has 30 years of management service in a progression of positions
      with
      expertise involving corporate management, business development, project
      execution, operations, estimating, design, and construction management.&#160;As
      Senior Vice President for TIC, Mr. Knapp had spent the last&#160;13 years
      proposing, negotiating, and overseeing execution of Engineer Procure &amp;
Construct (&#8220;EPC&#8221;) projects. Previously, he had been Vice
      President/General</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-39-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Manager
      of TIC Southeast, Inc., and has also served as Central Region and Western Region
      Vice President. In these positions, Mr. Knapp was responsible for marketing,
      as
      well as estimating and executing projects that generated up to 40% of TIC&#8217;s
      revenue.&#160;Mr. Knapp was responsible for developing strategic alliances and
      joint ventures for the pursuit and execution of EPC power and energy projects.
      His responsibilities have included selecting engineering services, evaluating
      equipment vendors, developing contractual teaming/joint venture relationships,
      maintaining client contact, negotiating contract terms and conditions, contract
      administration, partnering, estimating, scheduling, procurement management
      and
      project oversight at the executive level. Mr. Knapp was instrumental in
      establishing TIC&#8217;s diversified marketing strategy that included ethanol. He
      selected Delta T Corporation as TIC&#8217;s Strategic Partner and established the
      Strategic Alliance setting forth the groundwork for the two companies to share
      in an explosive growth market. Mr. Knapp also serves as a director of the
      American Gelbvieh Association, a non-profit organization.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Randall
      Rahm, Co-Chief Operating Officer</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&amp;
      Director</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Before
      joining the Company in 2006, Mr. Rahm was the Director, Fuel Services for Westar
      Energy, Inc. He was responsible for coal procurement and transportation for
      over
      13.5 million tons annually. Before joining Westar Energy he was employed by
      Amax
      Coal West, Inc. for 10 years in Gillette, WY as the Special Projects Manager.
      From 1991 to 1993, Mr. Rahm managed the world&#8217;s largest commercial
      sub-bituminous coal dryer located at the Amax Belle Ayr Mine. Under Mr. Rahm&#8217;s
      management, extensive research was conducted on the Coal Dryer project in the
      areas of reducing the dried PRB coal&#8217;s reactive characteristics, dust
      suppression, explosion characteristics, spontaneous combustion, and coal dust
      fire-fighting procedures. Mr. Rahm was also employed with McNally Pittsburg,
      Inc. for 14 years as a senior project manager, where he has built coal dryers
      and prepared and handled systems throughout the United States and Canada. Mr.
      Rahm has over 30 years experience in the coal industry and is a past chairman
      of
      the ASME&#8217;s Fuels and Combustion Technology (FACT) Division. Mr. Rahm is the
      founder, executive director and former chairman of the PRB Coal Users&#8217; Group, a
      non-profit entity. The PRB Coal Users&#8217; Group has over 1000 members of which 635
      are from 76 operating companies. In 2006, the Secretary of Energy, Samuel W.
      Bodman, appointed Mr. Rahm to the National Coal Council.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Bryan
      Sherbacow, Co-Chief Operating Officer</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>,
      Controller &amp; Director</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Before
      joining the Company in 2006, Bryan Sherbacow was an asset manager, since 1993,
      investing in both public and private companies. He is personally responsible
      for
      over $2.5 billion in transactions comprised primarily of publicly traded equity,
      convertible preferred and high yield bond securities. In 1995, Mr. Sherbacow
      established The Armistead Group, Inc. (TAG) in New York to provide analytical
      and trading services as well as manage its hedge fund business. In 2005, Mr.
      Sherbacow established a private equity group within TAG to invest in coal and
      alternative energy companies. Mr. Sherbacow also serves on the Board of
      Directors for the Charleston Concert Association. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Robert
      C. Walther, Executive Chairman</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Robert
      C.
      Walther joined the Company in 2006 as Executive Chairman. Mr. Walther founded
      Industrial Power Technology in 1983 and is currently its President. As a
      professional engineer and certified plant engineer, he is responsible for the
      strategic planning, design, and construction of power generation and control
      systems. Over the last 35 years, Mr. Walther has been a team leader in
      developing and constructing numerous utility and private sector power generating
      stations and transmission systems. This, along with the understanding of fuel
      and its availability, has lead to programs of effective fuel utilization and
      energy optimization, as well as cost-effective programs of long-term fuel
      acquisition. Mr.</font></div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
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      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Walther
      has personally led Industrial Power Technology&#8217;s international expansion into
      the U.K., Philippines, and the People&#8217;s Republic of China, where Industrial
      Power Technology&#8217;s development team has developed several power projects. Mr.
      Walther also has extensive experience in engineering and construction management
      for roads, utilities, and all associated systems. He is also responsible for
      the
      planning and management of the development and construction of environmental
      systems, including zero discharge of liquid waste streams, and air quality
      clean-up systems. Mr. Walther is President and CEO of IPT Ethanol, Inc, the
      Company&#8217;s subsidiary. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>John</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>
      Farris Norris Jr., Director</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">John
      Farris Norris Jr. joined Duke Power Company in 1982 as an Assistant Engineer,
      progressing through various positions until his departure in 1999 as Senior
      Vice
      President of Duke Energy Corporation and Chairman and Chief Executive Officer
      of
      Duke Energy Global Asset Development. In 1999, Mr. Norris joined the American
      Bureau of Shipping Group as President and Chief Operating Officer, and, in
      the
      same year joined American Electric Power as Senior Vice President, Operations
      and Technical Services. In 2003, Mr. Norris became self employed as a private
      consultant to companies in energy related industries, including Fuel Tech.
      Mr.
      Norris is currently the managing director of Fuel Tech, N.V.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      above-listed officers and directors have neither been convicted in any criminal
      proceeding during the past five years nor parties to any judicial or
      administrative proceeding during the past five years that resulted in a
      judgment, decree or final order enjoining them from future violations of, or
      prohibiting activities subject to, federal or state securities laws or a finding
      of any violation of federal or state securities law or commodities law.
      Similarly, no bankruptcy&#160;petitions have been filed by or against any
      business or property of any of our directors or officers, nor has any bankruptcy
      petition been filed against a partnership or business association in which
      these
      persons were general partners or executive officers. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Changes
      to the Board of Directors</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s Board of Directors will consist of five members, each director serving
      a term of one year. On the Closing Date, Amanda Lamothe and Luke
      Willis,&#160;constituting all of the directors of NIE before the Merger,
      appointed Robert C. Walther, Albert W. Knapp, Bryan J. Sherbacow, Randall L.
      Rahm and John Farris Norris Jr. to fill the vacancies on the Board.&#160;Also on
      the Closing Date, Ms. Lamothe and Mr. Willis resigned from the Board.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Board
      Committees</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Board
      intends to appoint such persons and form such committees as are required to
      meet
      the corporate governance requirements imposed by Sarbanes-Oxley and the national
      securities exchanges. Therefore, we intend that a majority of our directors
      will
      eventually be independent directors and at least one director will qualify
      as an
&#8220;audit committee financial expert.&#8221; Additionally, the Board is expected to
      appoint an audit committee, nominating committee and compensation committee,
      and
      to adopt charters relative to each such committee. Until further determination
      by the Board, the full Board will undertake the duties of the audit committee,
      compensation committee and nominating committee. We do not currently have an
      &#8220;audit committee financial expert&#8221; since we currently do not have an audit
      committee in place.</font></div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Code
      of Ethics</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has not formally adopted a written code of ethics that applies to the
      Company&#8217;s principal executive officer, principal financial officer or
      controller, or persons performing similar functions. Based on the Company&#8217;s
      small size, early development stage and limited financial and human resources,
      NIE did not adopt a written code of ethics before the Merger. We intend to
      formalize and adopt a written code of ethics as soon as practicable following
      the Closing Date. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>6.&#160;
      EXECUTIVE COMPENSATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Executive
      Compensation</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company was formed on May 31, 2006. Accordingly, no compensation was paid to
      its
      executive officers during the fiscal year ended December 31, 2005, or any
      previous fiscal year. Also, no options or freestanding SARs were granted to
      its
      executive officers during the fiscal year ended December 31, 2005, or any
      previous fiscal year. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Compensation
      of Directors</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      currently no compensation arrangements in place for the members of the Board.
      These will be determined once the Company&#8217;s Board is finalized and the
      compensation committee is formed.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Employment
      Agreements</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      the
      Closing Date and in connection with the Merger, the Company assumed the
      employment agreements between Ethanex N.A. and each of Messrs. Knapp, Rahm,
      Sherbacow, and Walther pursuant to which, as of the closing of the Merger,
      they
      shall hold the positions of Chief Executive Officer, Co-Chief Operating Officer,
      Co-Chief Operating Officer and Controller, and Executive Chairman, respectively.
      These Employment Agreements have been attached as Exhibits 10.3, 10.4, 10.5 and
      10.6 to this Current Report on Form 8-K and are incorporated herein by
      reference.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Knapp&#8217;s employment agreement provides for a four year term, with an initial
      annual base salary of $195,000, and the potential increase to $210,000 and
      $270,000 upon achieving certain operational steps in the growth of the Company,
      and an annual bonus subject to the Company achieving its target performance
      levels as approved by the Compensation Committee of the Board. Mr. Knapp also
      is
      entitled to receive an option grant of 250,000 shares from the Company&#8217;s 2006
      Plan, 33.3% of which option shall be exercisable on the first anniversary of
      the
      grant, 33.3% of which option shall become exercisable on the second anniversary
      of the grant, and the remaining 33.4% of which shall become exercisable on
      the
      third anniversary of the grant. Under the agreement, Mr. Knapp will be subject
      to traditional non-competition and employee non-solicitation restrictions while
      he is employed by the Company and for one year thereafter. Mr. Knapp and his
      spouse and dependants will be entitled to participate in the Company&#8217;s benefit
      plans in substantially the same manner, including but not limited to,
      responsibility for the cost thereof, and at substantially the same levels as
      the
      Company makes such opportunities available to all of the Company&#8217;s managerial or
      salaried executive employees and their dependants. Subject to certain notice
      requirements, either of Mr. Knapp or the Company will be entitled to terminate
      the employment agreement at any time. If the Company terminates the employment
      agreement without Cause (as defined in the agreement) or Mr. Knapp terminates
      the employment agreement for Good Reason (as defined in the agreement), then
      Mr.
      Knapp is entitled to receive earned but unpaid base salary, unpaid pro rata
      annual bonus, and unused vacation days accrued through his scheduled termination
      date, plus a one time severance payment equal to his then-current annual base
      salary, as well as continuation, at the Company&#8217;s expense, of Mr. Knapp&#8217;s
      participation in the benefit programs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Rahm&#8217;s employment agreement provides for a four year term, with an initial
      annual base salary of $180,000, with the potential increase to $195,000 and
      $255,000 upon achieving certain operational steps in the growth of the Company,
      and an annual bonus subject to the Company achieving its target performance
      levels as approved by the Compensation Committee of the Board. Mr. Rahm also
      is
      entitled to receive an option grant of 250,000 shares from the Company&#8217;s 2006
      Plan, 33.3% of which option shall be exercisable on first anniversary of the
      grant, 33.3% of which option shall become exercisable on second anniversary
      of
      the grant, and the remaining 33.4% of which shall become exercisable on third
      anniversary of the grant,. Under the agreement, Mr. Rahm will be subject to
      traditional non-competition and employee non-solicitation restrictions while
      he
      is employed by the Company and for one year thereafter. Mr. Rahm and his spouse
      and dependants will be entitled to participate in the Company&#8217;s benefit plans in
      substantially the same manner, including but not limited to, responsibility
      for
      the cost thereof, and at substantially the same levels as the Company makes
      such
      opportunities available to all of the Company&#8217;s managerial or salaried executive
      employees and their dependants. Subject to certain notice requirements, either
      of Mr. Rahm or the Company will be entitled to terminate the employment
      agreement at any time. If the Company terminates the employment agreement
      without Cause (as defined in the agreement) or Mr. Rahm terminates the
      employment agreement for Good Reason (as defined in the agreement), then Mr.
      Rahm is entitled to receive earned but unpaid base salary, unpaid pro rata
      annual bonus, and unused vacation days accrued through his scheduled termination
      date, plus a one time severance payment equal to his then-current annual base
      salary, as well as continuation, at the Company&#8217;s expense, of Mr. Rahm&#8217;s
      participation in the benefit programs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Sherbacow&#8217;s employment agreement provides for a four year term, with an initial
      annual base salary of $180,000, with the potential increase to $195,000 and
      $255,000 upon achieving certain operational steps in the growth of the Company,
      and an annual bonus subject to the Company achieving its target performance
      levels as approved by the Compensation Committee of the Board. Mr. Sherbacow
      also is entitled to receive an option grant of 250,000 shares from the Company&#8217;s
      2006 Plan, 33.3% of</font></div><br>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">which
      option shall be exercisable on the first anniversary of the grant, 33.3% of
      which option shall become exercisable on the second anniversary of the grant,
      and the remaining 33.4% of which shall become exercisable on the third
      anniversary of the grant. Under the agreement, Mr. Sherbacow will be subject
      to
      traditional non-competition and employee non-solicitation restrictions while
      he
      is employed by the Company and for one year thereafter. Mr. Sherbacow and his
      spouse and dependants will be entitled to participate in the Company&#8217;s benefit
      plans in substantially the same manner, including but not limited to,
      responsibility for the cost thereof, and at substantially the same levels as
      the
      Company makes such opportunities available to all of the Company&#8217;s managerial or
      salaried executive employees and their dependants. Subject to certain notice
      requirements, either of Mr. Sherbacow or the Company will be entitled to
      terminate the employment agreement at any time. If the Company terminates the
      employment agreement without Cause (as defined in the agreement) or Mr.
      Sherbacow terminates the employment agreement for Good Reason (as defined in
      the
      agreement), then Mr. Sherbacow is entitled to receive earned but unpaid base
      salary, unpaid pro rata annual bonus, and unused vacation days accrued through
      his scheduled termination date, plus a one time severance payment equal to
      his
      then-current annual base salary, as well as continuation, at the Company&#8217;s
      expense, of Mr. Sherbacow&#8217;s participation in the benefit programs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Walther&#8217;s employment agreement provides for a four year term, with an initial
      annual base salary of $180,000, with the potential increase to $195,000 and
      $255,000 upon achieving certain operational steps in the growth of the Company,
      and an annual bonus subject to the Company achieving its target performance
      levels as approved by the Compensation Committee of the Board. Mr. Walther
      also
      is entitled to receive an option grant of 250,000 shares from the Company&#8217;s 2006
      Plan, 33.3% of which option shall be exercisable on first anniversary of the
      grant, 33.3% of which option shall become exercisable on second anniversary
      of
      the grant, and the remaining 33.4% of which shall become exercisable on third
      anniversary of the grant. Under the agreement, Mr. Walther will be subject
      to
      traditional non-competition and employee non-solicitation restrictions while
      he
      is employed by the Company and for one year thereafter. Mr. Walther and his
      spouse and dependants will be entitled to participate in the Company&#8217;s benefit
      plans in substantially the same manner, including but not limited to,
      responsibility for the cost thereof, and at substantially the same levels as
      the
      Company makes such opportunities available to all of the Company&#8217;s managerial or
      salaried executive employees and their dependants. Subject to certain notice
      requirements, either of Mr. Walther or the Company will be entitled to terminate
      the employment agreement at any time. If the Company terminates the employment
      agreement without Cause (as defined in the agreement) or Mr. Walther terminates
      the employment agreement for Good Reason (as defined in the agreement), then
      Mr.
      Walther is entitled to receive earned but unpaid base salary, unpaid pro rata
      annual bonus, and unused vacation days accrued through his scheduled termination
      date, plus a one time severance payment equal to his then-current annual base
      salary, as well as continuation, at the Company&#8217;s expense, of Mr. Walther&#8217;s
      participation in the benefit programs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2006
      Equity Incentive Plan </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Before
      the Closing Date, our Board and Stockholders approved and adopted the 2006
      Equity Incentive Plan (the &#8220;2006 Plan&#8221;). A copy of the 2006 Plan is attached as
      Exhibit 10.8 to this Current Report on Form 8-K. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      2006
      Plan is intended to promote the interests of the Company by attracting and
      retaining exceptional employees, consultants, and directors (collectively
      referred to as the &#8220;Participants&#8221;), and enabling such Participants to
      participate in the long-term growth and financial success of the Company. Under
      the 2006 Plan, the Company may grant stock options, which are intended to
      qualify as &#8220;incentive</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-44-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">stock
      options&#8221; under Section 422 of the Internal Revenue Code of 1986, as amended (the
&#8220;Incentive Stock Options&#8221;), non-qualified stock options (the &#8220;Nonqualified Stock
      Options&#8221;), and restricted stock awards (the &#8220;Restricted Stock Awards&#8221;), which
      are restricted shares of Common Stock (the Incentive Stock Options, the
      Nonqualified Stock Options and the Restricted Stock Awards are collectively
      referred to as &#8220;Incentive Awards&#8221;). Incentive Awards may be granted pursuant to
      the 2006 Plan for 10 years from the Effective Date.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From
      time
      to time, we may issue Incentive Awards pursuant to the 2006 Plan. Each of the
      awards will be evidenced by and issued under a written agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Board
      reserved a total of 2,000,000 shares of our Common Stock for issuance under
      the
      2006 Plan. If an incentive award granted under the 2006 Plan expires,
      terminates, is unexercised or is forfeited, or if any shares are surrendered
      to
      us in connection with an incentive award, the shares subject to such award
      and
      the surrendered shares will become available for further awards under the
      Plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      number of shares subject to the 2006 Plan, any number of shares subject to
      any
      numerical limit in the 2006 Plan, and the number of shares and terms of any
      Incentive Award may be adjusted in the event of any change in our outstanding
      Common Stock by reason of any stock dividend, spin-off, stock split, reverse
      stock split, recapitalization, reclassification, merger, consolidation,
      liquidation, business combination or exchange of shares, or similar transaction.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      the
      Closing Date, options were granted to Messrs. Knapp, Rahm, Sherbacow and Walther
      on</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      the
      following terms:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table border="1" bordercolor="#000000" cellpadding="10" cellspacing="1" width="100%">

          <tr bgcolor="white">
            <td valign="top" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NAME</strong></font></div>
            </td>
            <td valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>#
                OF SHARES</strong></font></div>
            </td>
            <td valign="top" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXERCISE
                PRICE</strong></font></div>
            </td>
            <td valign="top" width="28%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>VESTING
                SCHEDULE</strong></font></div>
            </td>
            <td valign="top" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXPIRATION</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Albert
                W. Knapp</font></div>
            </td>
            <td align="left" valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">250,000</font></div>
            </td>
            <td align="left" valign="top" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$1.00
                / share</font></div>
            </td>
            <td align="left" valign="top" width="28%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33.33%
                on September 1, 2007</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33.33%
                on September 1, 2008</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33.34%
                on September 1, 200</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9</font></div>
            </td>
            <td align="left" valign="top" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10
                years from date of grant</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Randall
                L. Rahm</font></div>
            </td>
            <td align="left" valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">250,000</font></div>
            </td>
            <td align="left" valign="top" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$1.00
                / share</font></div>
            </td>
            <td align="left" valign="top" width="28%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33.33%
                on September 1, 2007</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33.33%
                on September 1, 2008</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33.34%
                on September 1, 2009</font></div>
            </td>
            <td align="left" valign="top" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10
                years from date of grant</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Bryan
                J. Sherbacow</font></div>
            </td>
            <td align="left" valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">250,000</font></div>
            </td>
            <td align="left" valign="top" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$1.00
                / share</font></div>
            </td>
            <td align="left" valign="top" width="28%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33.33%
                on September 1, 2007</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33.33%
                on September 1, 2008</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33.34%
                on September 1, 2009</font></div>
            </td>
            <td align="left" valign="top" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10
                years from date of grant</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Robert
                C. Walther</font></div>
            </td>
            <td align="left" valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">250,000</font></div>
            </td>
            <td align="left" valign="top" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$1.00
                / share</font></div>
            </td>
            <td align="left" valign="top" width="28%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33.33%
                on September 1, 2007</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33.33%
                on September 1, 2008</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">33.34%
                on September 1, 2009</font></div>
            </td>
            <td align="left" valign="top" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10
                years from date of grant</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>7.
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      August
      3, 2006, Ethanex N.A. acquired all of the issued and outstanding shares of
      IPT
      Ethanol, Inc., a Delaware corporation and a then-wholly owned subsidiary of
      Industrial Power Technology. As a result of the acquisition, IPT Ethanol, Inc.
      became a wholly-owned subsidiary of Ethanex N.A. and Robert C. Walther, the
      President and Chief Executive Officer of IPT Ethanol, Inc.,</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-45-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">received
      $500,000</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">from
      the
      Company as consideration for the acquisition. Mr. Walther&#8217;s employment with
      Ethanex N.A. commenced on August 3, 2006 in connection with the
      acquisition.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Contemporaneously
      with the closing of the Merger, the Company split off its wholly-owned
      subsidiary, New Inverness Leaseco, Inc., a Nevada corporation (&#8220;Leaseco&#8221;),
      through the sale of all of the outstanding capital stock of Leaseco. The Company
      executed a Split Off Agreement with Amanda Lamothe, Luke Willis, Ethanex N.A.
      and Leaseco. Ms. Lamothe was President, Chief Executive Officer, Secretary
      and
      Director of NIE, and Mr. Willis was Treasurer of NIE. In connection with the
      Merger, Ms. Lamothe and Mr. Willis have resigned from NIE. A copy of the Split
      Off Agreement is attached to this Current Report on Form 8-K as Exhibit 10.2
      and
      incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>8.&#160;
      DESCRIPTION OF SECURITIES.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Authorized
      Capital Stock</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Articles of Incorporation of the Company, as amended to date, authorize the
      issuance of 300,000,000 shares of Common Stock and 10,000,000 shares of
      preferred stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Capital
      Stock Issued and Outstanding</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Immediately
      following the consummation of the Merger there were 61,000,000 shares of Common
      Stock issued and outstanding. In addition there were outstanding warrants to
      acquire 20,000,000 shares and options to purchase 1,000,000 shares of Common
      Stock. Further, 1,000,000 shares of Common Stock remain reserved for issuance
      under the 2006 Plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Description
      of Common Stock</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following description of our common stock is derived from various provisions
      of
      our Articles of Incorporation and Bylaws as well as provisions of applicable
      law. Such description is not intended to be complete and is qualified in its
      entirely by reference to the relevant provisions of our Articles of
      Incorporation and Bylaws.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Holders
      of the Common Stock are entitled to one vote for each share on all matters
      submitted to a stockholder vote. Holders of Common Stock do not have cumulative
      voting rights. Therefore, holders of a majority of the shares of Common Stock
      voting for the election of directors can elect all of the directors. Holders
      of
      the Common Stock may vote in person or by proxy at stockholder meetings.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><a name="eolPage61"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Board
      of Directors may declare dividends in its discretion but shares of one class
      or
      series may not be issued as a share dividend to stockholders of another class
      or
      series unless certain conditions are met. Holders of the Common Stock have
      no
      pre-emptive rights, no conversion rights and there are no redemption provisions
      applicable to the Common Stock.</font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Description
      of Preferred Stock</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of the
      Closing Date, the Company was authorized to issue 10,000,000 shares of &#8220;blank
      check&#8221; preferred stock, par value $0.001 per share, none of which, at the
      Merger, will be designated, issued or outstanding. The Board is vested with
      authority to divide the shares of preferred stock into series and to fix and
      determine the relative rights and preferences of the shares of any such
      series.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Description
      of Warrants</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of the
      Closing Date, there were warrants outstanding to purchase 20,000,000 shares
      of
      Common Stock. The warrants are exercisable at a price of $1.50 per share for
      a
      period of five years from the Closing Date and are callable by the Company
      under
      certain circumstances.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Description
      of Options</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of the
      Closing Date, there were options outstanding to purchase 1,000,000</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">shares
      of
      Common Stock at a purchase price of $1.00 per share. Under the terms of the
      2006
      Plan, the Company may issue incentive awards that may include the issuance
      of an
      additional 1,000,000 shares of Common Stock. The 2006 Plan was adopted by the
      Board and NIE Stockholders before the Merger. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PART
      II</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="left">
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>1.&#160;
          </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MARKET
          PRICE OF AND DIVIDENDS ON COMMON EQUITY AND</strong></font></div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>OTHER
          STOCKHOLDER MATTERS</strong></font></div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s Common Stock is currently available for trading in the
      over-the-counter market and is quoted on the OTC Bulletin Board under the symbol
      &#8220;EHNX.OB.&#8221; There currently is no bid history for the Common Stock because it has
      never been traded.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of the
      Closing Date, there were approximately 170</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">holders
      of record of shares of the Common Stock. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Trades
      in
      the Common Stock may be subject to Rule 15g-9 of the Exchange Act, which rule
      imposes certain requirements on broker/dealers who sell securities subject
      to
      the rule to persons other than established customers and accredited investors.
      For transactions covered by the rule, brokers/dealers must make a special
      suitability determination for purchasers of the securities and receive the
      purchaser&#8217;s written agreement to the transaction before the sale. The SEC also
      has rules that regulate broker/dealer practices in connection with transactions
      in &#8220;penny stocks.&#8221; Penny stocks generally are equity securities with a price of
      less than $5.00 (other than securities registered on certain national securities
      exchanges or quoted on the NASDAQ system, provided that current price and volume
      information with respect to transactions in that security is provided by the
      applicable exchange or system). The penny stock rules require a broker/dealer,
      before a transaction in a penny stock not otherwise exempt from the rules,
      to
      deliver a standardized risk disclosure document prepared by the SEC that
      provides information about penny stocks and the nature and level of risks in
      the
      penny stock market. The broker/dealer also must provide the customer with
      current bid and offer quotations for the penny stock, the compensation of the
      broker/dealer and its salesperson in the transaction, and monthly account
      statements showing the market value of each penny stock held in the customer&#8217;s
      account. The bid and offer quotations, and the broker/dealer and salesperson
      compensation information, must be given to the customer orally or in writing
      before effecting the transaction, and must be given to the customer in writing
      before or with the customer&#8217;s confirmation. These disclosure requirements may
      have the effect of reducing the level of trading activity in the secondary
      market for shares of the Common Stock. As a result of these rules, investors
      may
      find it difficult to sell their shares. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of the
      Closing Date, there were 61,000,000 shares of Common Stock issued and
      outstanding with an additional 21,000,000 shares of Common Stock issuable upon
      the exercise of outstanding warrants and options. The shares of Common Stock
      issued in connection with the Transactions, are &#8220;restricted securities&#8221; which
      may be sold or otherwise transferred only if such shares are first registered
      under the Securities Act or are exempt from such registration requirements.
      As
      discussed elsewhere in this Current Report on Form 8-K, we have agreed to file
      a
      registration statement within 90 days of the Closing Date to register certain
      of
      these shares.</font></div><br>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Dividend
      Policy</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After
      the
      Merger, the Company intends to retain earnings, if any, to support the
      development of the business and therefore does not anticipate paying cash
      dividends for the foreseeable future. Payment of future dividends, if any,
      will
      be at the discretion of the Board after taking into account various factors,
      including current financial condition, operating results and current and
      anticipated cash needs. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Securities
      Authorized for Issuance Under Equity Compensation Plans</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company had no securities authorized for issuance under any equity compensation
      plan as of the end of fiscal year 2005, as the 2006 Plan was adopted in fiscal
      year 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2.&#160;
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LEGAL
      PROCEEDINGS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From
      time
      to time the Company may be named in claims arising in the ordinary course of
      business. Currently, no legal proceedings or claims are pending against or
      involve the Company that, in the opinion of management, could reasonably be
      expected to have a material adverse effect on its business and financial
      condition. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>3.&#160;
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CHANGES
      IN ACCOUNTANTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Before
      the Merger, the independent registered public accounting firm for NIE was Stark
      Winter Schenkein &amp; Co., LLP (&#8220;Stark Winter&#8221;), and the independent registered
      public accounting firm for Ethanex N.A. was Bagell, Josephs, Levine &amp;
Company, LLC (&#8220;Baggell Josephs&#8221;). Because the above-described transactions were
      treated as a reverse acquisition for accounting purposes, future historical
      financial reports filed by the Company will be those of Ethanex N.A., the
      accounting acquirer. Accordingly, the Company&#8217;s board of directors determined to
      change its independent registered public accounting firm from Stark Winter
      to
      Baggell Josephs. Stark Winter was dismissed as the independent registered public
      accounting firm of the Company on the Closing Date, and Baggell Josephs was
      engaged as the independent registered public accounting firm of the Company
      on
      the same date. As a result of being the auditors of Ethanex N.A., Baggell
      Josephs consulted with Ethanex N.A. and the Company regarding the
      above-described transactions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      reports of Stark Winter on the Company&#8217;s financial statements for the past two
      fiscal years did not contain an adverse opinion or a disclaimer of opinion
      and
      were not qualified or modified as to uncertainty, audit scope, or accounting
      principles, but did include an explanatory paragraph relating to the Company&#8217;s
      ability to continue as a &#8220;going concern.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the audit of the Company&#8217;s financial statements since inception,
      and through the date of the dismissal, there were no disagreements with Stark
      Winter on any matter of accounting principles or practices, financial statement
      disclosure, or auditing scope or procedure, which, if not resolved to the
      satisfaction of Stark Winter, would have caused Stark Winter to make reference
      to the matter in its reports.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has provided Stark Winter with a copy of this Current Report on Form
      8-K
      and has requested Stark Winter furnish the Company with a letter addressed
      to
      the SEC stating whether it agrees with the above statements and, if not, to
      state the respects in which it does not agree with such statements. A copy
      of
      that letter </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">will
      be
      filed as an amendment to this Current Report on Form 8-K.</font></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><strong><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.&#160;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RECENT
      SALES OF UNREGISTERED SECURITIES </font></strong></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Shares
      Issued in Connection with the Offering by Ethanex N.A.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Previous
      to the Merger, on August 3, 2006, and in contemplation of the Merger, Ethanex
      N.A. closed a private offering of 20,000,000 Units of its securities, each
      Unit
      consisting of one share of Class B common stock of Ethanex N.A. and a warrant
      to
      purchase one share of Class B common stock for a period of five years at an
      exercise price of $1.50 per share. On the PPO Closing Date, the investors in
      the
      Offering collectively purchased 20,000,000 Units for a total consideration
      of
      $20,000,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Shares
      Issued in Connection with the Merger</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      the
      Closing Date, the holders of the Class A shares of Ethanex N.A. surrendered
      all
      of their issued and outstanding shares of Class A common stock of Ethanex N.A.
      and received 26,000,000 shares of Common Stock. Also on the Closing Date, all
      of
      the issued and outstanding Class B shares and Class B warrants of Ethanex N.A.,
      which were purchased in the Offering, were converted into shares of Common
      Stock
      and warrants to purchase Common Stock, on a one for one basis. The NIE
      Stockholders retained 14,000,000 shares of Common Stock and Gamma Capital
      Partners, LLC was issued 1,000,000 shares of Common Stock for finder and
      advisory services in connection with the Merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Concurrently
      with the Merger, the Company granted options for the purchase of 1,000,000
      shares of Common Stock. The options granted expire 10 years from the date of
      grant, are exercisable at a price of $1.00 per share, and vest as follows:
      33.3%
      of such options shall be exercisable on the first anniversary of the grant,
      33.3% of such options shall become exercisable on the second anniversary of
      the
      grant, and the remaining 33.4% of such options shall become exercisable on
      the
      third anniversary of the grant. An additional 1,000,000 shares are reserved
      for
      issuance of stock options and other incentive awards pursuant to the 2006 Equity
      Incentive Plan. The 2006 Equity Incentive Plan has been attached as Exhibit
      10.8
      to this Current Report on Form 8-K and is incorporated herein by reference.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      transactions discussed above are exempt from registration under Section 4(2)
      of
      the Securities Act and Rule 506 of Regulation D as promulgated by the
      SEC.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
      underwriters were involved in the sale of any of the securities described
      above.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.3; MARGIN-RIGHT: 0pt" align="left">
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>5.&#160;
          </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INDEMNIFICATION
          OF DIRECTORS AND OFFICERS</strong></font></div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Nevada
      Revised Statutes (&#8220;NRS&#8221;) Sections 78.7502 and 78.751 provide us with the power
      to indemnify any of our directors and officers. The director or officer must
      have conducted himself/herself in good faith and reasonably believe that his/her
      conduct was in, or not opposed to our best interests. In a criminal action,
      the
      director, officer, employee or agent must not have had reasonable cause to
      believe his/her conduct was unlawful.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      NRS
      Section 78.751, advances for expenses may be made by agreement if the director
      or officer affirms in writing that he/she believes he/she has met the standards
      and will personally repay the expenses if it is determined such officer or
      director did not meet the standards.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      Bylaws include an indemnification provision under which we have the power to
      indemnify our directors, officers and former directors and officers (including
      heirs and personal representatives) against all costs, charges and expenses
      actually and reasonably incurred, including an amount paid to settle an action
      or satisfy a judgment to which the director or officer is made a party by reason
      of being or having been a director or officer of the Company.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-49-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      Articles of Incorporation provide a limitation of liability in that no director
      or officer shall be personally liable to the Company or any of its stockholders
      for damages for breach of fiduciary duty as director or officer involving any
      act or omission of any such director or officer, provided there was no
      intentional misconduct, fraud or a knowing violation of the law, or payment
      of
      dividends in violation of NRS Section 78.300.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      the
      Closing Date, the Company entered into an Indemnity Agreement with John Farris
      Norris Jr. providing for the indemnification of Mr. Norris by reason of the
      fact
      that he is or was an agent of the Company. The Indemnity Agreement provides
      for
      indemnification of certain expenses, judgments, fines, and settlement amounts
      incurred by Mr. Norris in any action or proceeding, including any action by
      or
      in the right of the Company arising out of his services to the Company, to
      any
      of the Company&#8217;s subsidiaries, or to any other company or enterprise to which
      Mr. Norris provides services at the Company&#8217;s request. The Indemnity Agreements
      provide for the advancement of expenses, make indemnification contingent on
      Mr.
      Norris&#8217; good faith in acting or failing to act, and except the obligation to
      indemnify for expenses or liabilities paid directly to Mr. Norris by directors&#8217;
and officers&#8217; insurance. A copy of the form of Indemnity Agreement is attached
      as Exhibit 10.7 to this Current Report on Form 8-K and incorporated by reference
      herein.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Insofar
      as indemnification for liabilities arising under the Securities Act may be
      permitted for our directors, officers and controlling persons pursuant to the
      foregoing provisions, or otherwise, we have been advised that in the opinion
      of
      the SEC such indemnification is against public policy as expressed in the
      Securities Act and is, therefore, unenforceable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Anti-Takeover
      Effects of Provisions of Nevada State Law</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      may be
      or in the future we may become subject to Nevada's control share law. A
      corporation is subject to Nevada's control share law if it has more than 200
      stockholders, at least 100 of whom are stockholders of record and residents
      of
      Nevada, and if the corporation does business in Nevada or through an affiliated
      corporation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      law
      focuses on the acquisition of a &#8220;controlling interest&#8221; which means the ownership
      of outstanding voting shares is sufficient, but for the control share law,
      to
      enable the acquiring person to exercise the following proportions of the voting
      power of the corporation in the election of directors: (1) one-fifth or more
      but
      less than one-third, (2) one-third or more but less than a majority, or (3)
      a
      majority or more. The ability to exercise such voting power may be direct or
      indirect, as well as individual or in association with others.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      effect of the control share law is that the acquiring person, and those acting
      in association with that person, obtain only such voting rights in the control
      shares as are conferred by a resolution of the stockholders of the corporation,
      approved at a special or annual meeting of stockholders. The control share
      law
      contemplates that voting rights will be considered only once by the other
      stockholders. Thus, there is no authority to take away voting rights from the
      control shares of an acquiring person once those rights have been approved.
      If
      the stockholders do not grant voting rights to the control shares acquired
      by an
      acquiring person, those shares do not become permanent non-voting shares. The
      acquiring person is free to sell its shares to others. If the buyers of those
      shares themselves do not acquire a controlling interest, their shares do not
      become governed by the control share law.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      control shares are accorded full voting rights and the acquiring person has
      acquired control shares with a majority or more of the voting power, any
      stockholder of record, other than an acquiring</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-50-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">person,
      who has not voted in favor of approval of voting rights is entitled to demand
      fair value for such stockholder's shares.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Nevada's
      control share law may have the effect of discouraging corporate
      takeovers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition to the control share law, Nevada has a business combination law, which
      prohibits certain business combinations between Nevada corporations and
      "interested stockholders" for three years after the "interested stockholder"
      first becomes an "interested stockholder" unless the corporation's board of
      directors approves the combination in advance. For purposes of Nevada law,
      an
      "interested stockholder" is any person who is (1) the beneficial owner, directly
      or indirectly, of ten percent or more of the voting power of the outstanding
      voting shares of the corporation, or (2) an affiliate or associate of the
      corporation and at any time within the three previous years was the beneficial
      owner, directly or indirectly, of ten percent or more of the voting power of
      the
      then outstanding shares of the corporation. The definition of the term "business
      combination" is sufficiently broad to cover virtually any kind of transaction
      that would allow a potential acquirer to use the corporation's assets to finance
      the acquisition or otherwise to benefit its own interests rather than the
      interests of the corporation and its other stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      effect of Nevada's business combination law is to potentially discourage parties
      interested in taking control of the Company from doing so if it cannot obtain
      the approval of our Board of Directors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PART
      F/S</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 54pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure set forth under Item 9.01 of this Current Report
      on
      Form 8-K, which disclosure is incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PART
      III</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>1.</strong></font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INDEX
                TO EXHIBITS</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">See
      Item
      9.01(d) below, which is incorporated by reference herein.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2.</strong></font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DESCRIPTION
                OF EXHIBITS</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">See
      Exhibit Index below and the corresponding exhibits, which are incorporated
      by
      reference herein.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.02.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Recent
      Sales of Unregistered Securities.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 54pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure set forth under Item 2.01 of this Current Report
      on
      Form 8-K, which disclosure is incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      4.01.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Changes
      in Registrant&#8217;s Certifying Accountant.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure set forth under Item 2.01 of this Current Report
      on
      Form 8-K, which disclosure is incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-51-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.01.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Changes
      in Control of Registrant.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure set forth under Item 2.01 of this Current Report
      on
      Form 8-K, which disclosure is incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.02.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 36.8pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Departure
      of Directors or Principal Officers; Election of Directors; Appointment of
      Principal Officers.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure set forth under Item 2.01 of this Current Report
      on
      Form 8-K, which disclosure is incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.03.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Change
      in Fiscal Year.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Concurrent
      with the closing of the Merger and in accordance with the Company&#8217;s bylaws, the
      Company&#8217;s Board approved a change in the Company&#8217;s fiscal year effective as of
      September 1, 2006 such that the Company&#8217;s fiscal year end is December
      31</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>st</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Company&#8217;s former fiscal year end was July 31, 2006. The Company will file a
      quarterly report on Form 10-QSB for the transition period ending September
      30,
      2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.06.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Change
      in Shell Company Status. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reference
      is made to the disclosure set forth under Item 2.01 of this Current Report
      on
      Form 8-K, which disclosure is incorporated herein by reference. As a result
      of
      the Merger described under Item 2.01 of this Current Report on Form 8-K, the
      registrant believes that it is no longer a &#8220;shell company&#8221; as that term is
      defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange
      Act.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      9.01.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Financial
      Statements and Exhibits.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(a)</strong></font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Financial
                Statements of Businesses
                Acquired.</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(b)</strong></font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Pro
                Forma Financial
                Information.</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      financial statements of Ethanex Energy North America, Inc. for the periods
      and
      dates indicated below are filed with this report.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="justify" valign="top" width="75%">&#160;</td>
            <td valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Page</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="justify" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Audited
                Financial Statements</strong></font></div>
            </td>
            <td valign="top" width="10%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="justify" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Ethanex
                Energy North America, Inc.:</strong></font></div>
            </td>
            <td valign="top" width="10%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="justify" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Report
                of Independent Registered Public Accounting Firm</font></div>
            </td>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-1</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="justify" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Balance
                Sheet as of June 30, 2006</font></div>
            </td>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-3</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="justify" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Statement
                of Operations for the period May 31, 2006 (Inception) to June 30,
                2006</font></div>
            </td>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-4</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="justify" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Statement
                of Stockholders&#8217; Deficit for the Period May 31, 2006 (Inception) to June
                30, 2006</font></div>
            </td>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-5</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="justify" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Statement
                of Cash Flows for the period May 31, 2006 (Inception) to June 30,
                2006</font></div>
            </td>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-6</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="justify" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Notes
                to Financial Statements</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
            </td>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-8</font></div>
              </div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="justify" valign="top" width="75%">&#160;</td>
            <td valign="top" width="10%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="justify" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Unaudited
                Pro Forma Financial Information:</strong></font></div>
            </td>
            <td valign="top" width="10%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="justify" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Ethanex
                Energy, Inc.:</strong></font></div>
            </td>
            <td valign="top" width="10%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="justify" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Introduction</font></div>
            </td>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-15</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="justify" valign="top" width="75%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pro
                Forma Balance Sheet as of June 30, 2006</font></div>
            </td>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-15</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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            </div>
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          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-52-</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="3">
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            <div id="GLHDR" style="WIDTH: 100%" align="right">
            </div>
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      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certified
        Public Accountants</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">High
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Suites
        400-403</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">200
        Haddonfield Berlin Road</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gibbsboro,
        New Jersey 08026</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(856)
        346-2828 Fax (856) 346-2882</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Board
        of
        Directors</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanex
        Energy North America, Inc.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Formerly
        known as Armistead Energy, Inc.)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Basehor,
        KS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
        have
        audited the accompanying balance sheet of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanex
        Energy North America, Inc. (formerly known as Armistead Energy, Inc.) (the
        &#8220;Company&#8221;) </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">as
        of
        June 30, 2006 and the related statements of operations, stockholders&#8217; deficit,
        and cash flows for the period May 31, 2006 (inception) to June 30, 2006.
        These
        financial statements are the responsibility of the Company&#8217;s management. Our
        responsibility is to express an opinion on these financial statements based
        on
        our audit. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
        </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
        have
        conducted our audit in accordance with standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements. An audit also includes assessing the accounting principles used
        and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audit provides a
        reasonable basis for our opinion. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
        </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanex
        Energy North America, Inc. (formerly known as Armistead Energy, Inc.)
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">as
        of
        June 30, 2006 and the results of its operations, changes in stockholders&#8217;
deficit and cash flows for the period May 31, 2006 (inception) to June 30,
        2006
        in conformity with accounting principles generally accepted in the United
        States
        of America. </font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 6, the Company had
        net
        losses and negative cash flows from operations for the period May 31, 2006
        (inception) to June 30, 2006, and as of that date had negative working capital,
        which raises substantial doubt</font><br>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="left">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">F-1</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="3">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right">
            </div>
          </div>
        </div><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">about
        its
        ability to continue as a going concern. Management's plans in regard to these
        matters are also discussed in Note 6. The financial statements do not include
        any adjustments that might result from the outcome of this uncertainty.
</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>BAGELL,
        JOSEPHS, LEVINE &amp; COMPANY, L.L.C. </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">BAGELL,
        JOSEPHS, LEVINE &amp; COMPANY, L.L.C. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certified
        Public Accountants </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gibbsboro,
        New Jersey </font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">September
        5, 2006</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td style="width: 99pt;">
              </td>
              <td align="left" style="width: 81pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MEMBER
                OF:</font></td>
              <td align="left">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">AMERICAN
                  INSTITUTE OF CERTIFIED PUBLIC
                  ACCOUNTANTS</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 180pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NEW
        JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 180pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PENNSYLVANIA
        INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 180pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FLORIDA
        STATE BOARD OF ACCOUNTANCY</font></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">F-2</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ETHANEX
        ENERGY NORTH AMERICA, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(FORMERLY
        KNOWN AS ARMISTEAD ENERGY, INC.)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
        DEVELOPMENT STAGE COMPANY)</strong></font></div>
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        SHEET </strong></font></a><a name="eolPage61"/></div>
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        30, 2006</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
        <div>
          <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>ASSETS</u></strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" colspan="2" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ffffff solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Computer
                    equipment, net</font></div>
                </td>
                <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
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                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
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                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>TOTAL
                    ASSETS</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,793</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
              </tr>
              <tr>
                <td valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>LIABILITIES
                    AND STOCKHOLDERS' (DEFICIT)</u></strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LIABILITIES</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Current
                    Liabilities:</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due
                    to stockholder</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">10,765</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ffffff solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Total
                    Current Liabilities</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">10,765
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Total
                    Liabilities</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">10,765
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>STOCKHOLDERS'
                    (DEFICIT)</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
                    A Common stock, $.01 par value; 70,000,000</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">shares
                    authorized, 400 shares issued and outstanding</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
                    B Common stock, $.01 par value; 60,000,000</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">shares
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                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Deficit)
                    accumulated during</font></div>
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                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                    development stage</font></div>
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                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(7,976</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>TOTAL
                    STOCKHOLDERS' (DEFICIT)</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(7,972</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>TOTAL
                    LIABILITIES AND</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>STOCKHOLDERS'
                    (DEFICIT)</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,793</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="85%">
                </td>
                <td width="2%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="85%">
                </td>
                <td width="2%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
              </tr>

          </table>
        </div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        accompanying notes are an integral part of these financial
        statements</font></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">F-3</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ETHANEX
        ENERGY NORTH AMERICA, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(FORMERLY
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>STATEMENT
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="85%">
                </td>
                <td width="2%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>OPERATING
                    REVENUES</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ffffff solid;">
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                </td>
                <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
                    <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
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                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>GROSS
                    PROFIT</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
                    <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
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                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>OPERATING
                    EXPENSES</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">General
                    and administrative</font></div>
                </td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">7,976
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Total
                    Operating Expenses</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">7,976
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NET
                    (LOSS) BEFORE PROVISION</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FOR
                    INCOME TAXES</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(7,976</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Provision
                    for income taxes</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
                    <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
                  </div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NET
                    (LOSS) APPLICABLE TO</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>COMMON
                    SHARES</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
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              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>OF
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                <td width="2%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
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                <td width="2%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
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        </div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
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      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="HDR">
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                <td align="left" valign="bottom" width="23%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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              <tr>
                <td align="left" valign="bottom" width="23%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="23%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accumulated</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="23%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
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                    The</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="23%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="left" colspan="5" valign="bottom" width="25%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
                    A Common Shares</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: #ffffff solid;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Paid-in</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: #ffffff solid;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Development</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="23%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shares</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
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                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="23%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="23%" style="border-bottom: #ccffcc;">
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                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="23%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
                    <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
                  </div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
                    <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
                  </div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
                    <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
                    <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
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                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
                    <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
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                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="23%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="23%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Issuance
                    of stock</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="23%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">to
                    stockholder</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">400
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
                    <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
                  </div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
                    <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
                  </div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="23%" style="border-bottom: medium none;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
                    (loss) for the</font></div>
                </td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="23%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">period
                    May 31,</font></div>
                </td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="23%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006
                    (inception)</font></div>
                </td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="23%" style="border-bottom: #ffffff solid;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">to
                    June 30, 2006</font></div>
                </td>
                <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">&#160;&#160;&#160;
&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">&#160;&#160;&#160;
&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">&#160;&#160;&#160;
&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(7,976</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(7,976</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="23%" style="border-bottom: #ccffcc solid;">
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">400
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(7,976</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(7,972</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="23%">
                </td>
                <td width="2%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="23%">
                </td>
                <td width="2%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
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        </div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
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                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">
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                <td width="2%" style="border-bottom: medium none;">&#160;</td>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ACTIVITIES:</strong></font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
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              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Adjustments
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                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">
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                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc;">
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                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">80
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ffffff solid;">
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                    adjustments</strong></font></div>
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                <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">80
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
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                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Net
                    cash (used in) operating activities</strong></font></div>
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                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CASH
                    FLOWS FROM INVESTING</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ACTIVITIES</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Purchase
                    of computer equipment</font></div>
                </td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(2,873</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Net
                    cash (used in) investing activities</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(2,873</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CASH
                    FLOWS FROM FINANCING</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ACTIVITIES</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Advances
                    from stockholders, net</font></div>
                </td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">10,769
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Net
                    cash provided by financing activities</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">10,769
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NET
                    INCREASE IN CASH AND</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CASH
                    EQUIVALENTS</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
                    <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
                  </div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CASH
                    AND CASH EQUIVALENTS -</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>BEGINNING
                    OF PERIOD</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
                    <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
                  </div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CASH
                    AND CASH EQUIVALENTS -</strong></font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="75%">
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                <td width="2%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
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          </table>
        </div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
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      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
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        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">F-6</font></div>
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        <div id="HDR">
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              <tr>
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                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
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              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SUPPLEMENTAL
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                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">
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                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc;">
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                <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ffffff solid;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
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                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
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              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc solid;">
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                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
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                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px">
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                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SUPPLEMENTAL
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                </td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NONCASH
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                </td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="75%" style="border-bottom: medium none;">
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                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Issuance
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                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="75%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">to
                    stockholder</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="75%">
                </td>
                <td width="2%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="75%">
                </td>
                <td width="2%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
                <td align="right" valign="bottom" width="11%">&#160;</td>
                <td align="left" valign="bottom" width="1%">&#160;</td>
              </tr>

          </table>
        </div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        accompanying notes are an integral part of these financial
        statements</font></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">F-7</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ETHANEX
        ENERGY NORTH AMERICA, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(FORMERLY
          KNOWN AS ARMISTEAD ENERGY, INC.)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
          DEVELOPMENT STAGE COMPANY)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTES
          TO FINANCIAL STATEMENTS</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FOR
          THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
                1 -</strong></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>NATURE
                  OF BUSINESS AND ORGANIZATION
</u></strong></font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanex
        Energy North America, Inc. (formerly known as Armistead Energy, Inc.) (the
        &#8220;Company&#8221;) was formed on May 31, 2006 in the state of Delaware. The Company is a
        development stage company that plans to engage in the business of cyclical
        and
        secular trends in the energy sector. Specifically, the Company intends to
        own
        and operate ethanol plants. The ethanol expected to be produced by the plants
        is
        intended to be used as a blend component in the U.S. gasoline fuel market
        by
        refineries. Additionally, the Company anticipates that the plants will be
        designed to produce dried distilled grains, which are used in the manufacture
        of
        various animal feeds. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
                2 -</strong></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>SUMMARY
                  OF SIGNIFICANT ACCOUNTING
                  POLICIES</u></strong></font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Use
        of Estimates</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        preparation of the financial statements in conformity with accounting principles
        generally accepted in the United States requires management to make estimates
        and assumptions that affect the reported amounts of assets and liabilities
        and
        disclosure of contingent assets and liabilities at the date of the financial
        statements and the reported amounts of revenues and expenses during the
        reporting period. Actual results could differ from those estimates.
</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Cash
        and Cash Equivalents</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
        financial statement presentation purposes, the Company considers short-term,
        highly liquid investments with an original maturity of three months or less
        to
        be cash and cash equivalents. There were no cash and cash equivalents at
        June
        30, 2006.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Computer
        Equipment</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Computer
        equipment is presented at cost less accumulated depreciation. Depreciation
        is
        computed utilizing the straight-line method over the equipments estimated
        useful
        lives (3 years). Depreciation expense was $80 for the period May 31, 2006
        (inception) to June 30, 2006.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Development
        Stage Company</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        Company is considered to be in the development stage as defined in Statement
        of
        Financial Accounting Standards (SFAS) No. 7, &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Accounting
        and Reporting by Development Stage Enterprises</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;.
        The
        Company has devoted substantially all of its efforts to business planning
        and
        development. Additionally, the Company has allocated a substantial portion
        of
        their time and investment in bringing their product to the market, and the
        raising of capital.</font></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">F-8</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ETHANEX
        ENERGY NORTH AMERICA, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(FORMERLY
          KNOWN AS ARMISTEAD ENERGY, INC.)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
          DEVELOPMENT STAGE COMPANY)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTES
          TO FINANCIAL STATEMENTS</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FOR
          THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
                2 -</strong></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)</strong></font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Income
        Taxes</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        provision for income taxes includes the tax effects of transactions reported
        in
        the financial statements. Deferred taxes would be recognized for differences
        between the basis for assets and liabilities for financial statement and
        income
        tax purposes. The major difference relates to the net operating loss
        carryforwards generated by sustaining deficits during the development
        stage.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Fair
        Value of Financial Instruments</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        carrying amount reported in the balance sheet for due to stockholder (see
        note
        3) approximate fair value because of the immediate or short-term maturity
        of
        these financial instruments.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>(Loss)
        Per Share of Common Stock</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Historical
        net (loss) per common share is computed using the weighted average number
        of
        common shares outstanding. Diluted earnings per share (EPS) include additional
        dilution from common stock equivalents, such as stock issuable pursuant to
        the
        exercise of stock options and warrants. Common stock equivalents are not
        included in the computation of diluted earnings per share when the Company
        reports a loss because to do so would be antidilutive for the periods
        presented.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        following is a reconciliation of the computation for basic and diluted EPS
        for
        the period May 31, 2006 (inception) to June 30, 2006:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <div align="center">
          <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="60%">

              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="40%" style="border-bottom: #ccffcc solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
                    Loss</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(7,976</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="40%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="40%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Weighted-average
                    common shares</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">400
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="40%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">outstanding
                    (basic)</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="40%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="40%" style="border-bottom: medium none;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Weighted-average
                    common stock</font></div>
                </td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="40%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">equivalents:</font></div>
                </td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="40%" style="border-bottom: #ccffcc solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock
                    options and warrants</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="40%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="40%" style="border-bottom: #ccffcc;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Weighted-average
                    common shares</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="40%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">outstanding
                    (diluted)</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">400
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="40%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>

          </table>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
        were no common stock equivalents at June 30, 2006.</font></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">F-9</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ETHANEX
        ENERGY NORTH AMERICA, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(FORMERLY
        KNOWN AS ARMISTEAD ENERGY, INC.)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
        DEVELOPMENT STAGE COMPANY)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTES
        TO FINANCIAL STATEMENTS (CONTINUED)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FOR
        THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
                2 -</strong></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>
                  (CONTINUED)</strong></font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Recent
        Accounting Pronouncements</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        February&#160;2006, the FASB issued SFAS No.&#160;155, &#8220;Accounting for Certain
        Hybrid Financial Instruments, an amendment of FASB Statements No.&#160;133 and
        140.&#8221; SFAS No.&#160;155 resolves issues addressed in SFAS No.&#160;133
        Implementation Issue No.&#160;D1, &#8220;Application of Statement 133 to Beneficial
        Interests in Securitized Financial Assets,&#8221; and permits fair value remeasurement
        for any hybrid financial instrument that contains an embedded derivative
        that
        otherwise would require bifurcation, clarifies which interest-only strips
        and
        principal-only strips are not subject to </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        requirements of SFAS No.&#160;133, establishes a requirement to evaluate
        interests in securitized financial assets to identify interests that are
        freestanding derivatives or that are hybrid financial instruments that contain
        an embedded derivative requiring bifurcation, clarifies that concentrations
        of
        credit risk in the form of subordination are not embedded derivatives and
        amends
        SFAS No.&#160;140 to eliminate the prohibition on a qualifying special-purpose
        entity from holding a derivative financial instrument that pertains to a
        beneficial interest other than another derivative financial instrument. SFAS
        No.&#160;155 is effective for all financial instruments acquired or issued after
        the beginning of the first fiscal year that begins after September&#160;15,
        2006. The adoption of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FAS
        155</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        is not
        anticipated to have a material impact on the Company&#8217;s financial position,
        results of operations or cash flows.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        March&#160;2006, the FASB issued SFAS No.&#160;156, &#8220;Accounting for Servicing of
        Financial Assets, an amendment of FASB Statement No.&#160;140.&#8221; SFAS
        No.&#160;156 requires an entity to recognize a servicing asset or liability each
        time it undertakes an obligation to service a financial asset by entering
        into a
        servicing contract under a transfer of the servicer&#8217;s financial assets that
        meets the requirements for sale accounting, a transfer of the servicer&#8217;s
        financial assets to a qualified special-purpose entity in a guaranteed mortgage
        securitization in which the transferor retains all of the resulting securities
        and classifies them as either available-for-sale or trading securities in
        accordance with SFAS No.&#160;115, &#8220;Accounting for Certain Investments in Debt
        and Equity Securities&#8221; and an acquisition or assumption of an obligation to
        service a financial asset that does not relate to financial assets of the
        servicer or its consolidated affiliates. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additionally,
        SFAS No.&#160;156 requires all separately recognized servicing assets and
        servicing liabilities to be initially measured at fair value, permits an
        entity
        to choose either the use of an amortization or fair value method for subsequent
        measurements, permits at initial adoption a one-time reclassification of
        available-for-sale securities to trading securities by entities with recognized
        servicing rights and requires separate presentation of servicing assets and
        liabilities subsequently measured at fair value and additional disclosures
        for
        all separately recognized servicing assets and liabilities. SFAS No.&#160;156 is
        effective for transactions entered into after the beginning of the first
        fiscal
        year that begins after September&#160;15, 2006. The adoption of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FAS
        156</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        is not
        anticipated to have a material impact on the Company&#8217;s financial position,
        results of operations or cash flows.</font></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">F-10</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ETHANEX
        ENERGY NORTH AMERICA, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(FORMERLY
        KNOWN AS ARMISTEAD ENERGY, INC.)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
        DEVELOPMENT STAGE COMPANY)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTES
        TO FINANCIAL STATEMENTS (CONTINUED)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FOR
        THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
                3 -</strong></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>DUE
                  TO STOCKHOLDER</u></strong></font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due
        to
        stockholder represents non-interest bearing advances due on demand.
</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
                4 -</strong></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>STOCKHOLDERS&#8217;
                  EQUITY</u></strong></font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Common
        Stock </u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        Company incorporated under the laws of the State of Delaware on May 31, 2006.
        In
        accordance with its Certificate of Incorporation, the Company has authorized:
        70,000,000 Class A Common Shares, par value $.01 and 60,000,000 Class B Common
        Shares, $.01 par value.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Class
        A Common Stock</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Class
        A
        Common Stock consisted of 400 shares issued and outstanding at June 30, 2006.
        </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
        holder of Class Common Stock is entitled to receive ratably dividends, if
        any as
        may be declared by the Board of Directors out of funds legally available
        for the
        payment of dividends. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Class
        B Common Stock</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
        of
        June 30, 2006 there were no shares of Class B Common Stock issued or
        outstanding.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
                5 -</strong></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>PROVISION
                  FOR INCOME TAXES</u></strong></font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deferred
        income taxes will be determined using the liability method for the temporary
        differences between the financial reporting basis and income tax basis of
        the
        Company&#8217;s assets and liabilities. Deferred income taxes will be measured based
        on the tax rates expected to be in effect when the temporary differences
        are
        included in the Company&#8217;s tax return. Deferred tax assets and liabilities are
        recognized based on anticipated future tax consequences attributable to
        differences between financial statement carrying amounts of assets and
        liabilities and their respective tax bases.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
        June
        30, 2006, the deferred tax asset approximated the following:</font><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <div align="right">
          <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="90%">

              <tr>
                <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">&#160;</td>
                <td width="2%" style="border-bottom: medium none;">&#160;</td>
                <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deferred
                    tax asset</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,700</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="85%" style="border-bottom: white solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Less:
                    valuation allowance</font></div>
                </td>
                <td width="2%" style="border-bottom: white solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(2,700</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="85%" style="border-bottom: #ccffcc solid;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
                    deferred tax asset</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc solid;">&#160;</td>
              </tr>

          </table>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
        June
        30, 2006, the Company had an accumulated deficit in the amount of $7,976,
        available to offset future taxable income through 2026. The Company established
        a valuation allowance</font></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">F-11</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ETHANEX
        ENERGY NORTH AMERICA, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(FORMERLY
          KNOWN AS ARMISTEAD ENERGY, INC.)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
          DEVELOPMENT STAGE COMPANY)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTES
          TO FINANCIAL STATEMENTS (CONTINUED)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FOR
          THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
                5 -</strong></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>PROVISION
                  FOR INCOME TAXES</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>
                  (CONTINUED)</strong></font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">equal
        to
        the full amount of the deferred tax asset due to the uncertainty of the
        utilization of the operating losses in future periods.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
                6 -</strong></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>GOING
                  CONCERN</u></strong></font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
        shown
        in the accompanying financial statements, as is typical of companies going
        through the development stage, the Company incurred a net (loss) for the
        period
        May 31, 2006 (inception) to June 30, 2006. The Company is currently in the
        development stage, and there is no guarantee whether the Company will be
        able to
        generate enough revenue and/or raise capital to support current operations
        and
        generate anticipated sales. This raises substantial doubt about the Company&#8217;s
        ability to continue as a going concern.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management
        believes that the Company&#8217;s capital requirements will depend on many factors
        including the success of the Company&#8217;s product development and marketing
        efforts. The financial statements do not include any adjustments that might
        result from the outcome of these uncertainties.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
                7 -</strong></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>SUBSEQUENT
                  EVENTS</u></strong></font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Stockholders&#8217;
        Deficit</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        July
        17, 2006, the Company amended its certificate of incorporation to change
        its
        name from Armistead Energy, Inc. to Ethanex Energy North America, Inc.
        Additionally, the Company increased its authorized number of common shares
        to 75
        million, which is divided into two classes: 40 million shares of class A
        common
        stock and 35 million shares of class B common stock. The holders of the class
        A
        and class B common stock have the same voting rights and privileges. Concurrent
        with the filing of the amendment of the certificate of incorporation the
        Company&#8217;s 400 shares of issued and outstanding common stock were converted into
        34 million shares of the Company&#8217;s class A common stock.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        July
        26, 2006, the Company amended its certificate of incorporation to increase
        its
        authorized common shares to 130 million, which is divided into two classes:
        70
        million shares of class A common stock and 60 million shares of class B common
        stock. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Private
        Offering</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        August
        3, 2006, the Company closed a private placement offering of 20 million shares
        of
        the Company&#8217;s class B common stock. Accompanying each share is one warrant to
        purchase one share of class B common stock at an exercise price of $1.50
        per
        share. The warrants expire August 3, 2011. The investors in the offering
        collectively purchased 20 million shares for a total consideration of
        $20,000,000. The proceeds were allocated to the class B common stock and
        the
        warrants based on their relative fair values. The Company paid professional
        fees, commission and a finder&#8217;s fee totaling $699,546 in connection with the
        offering. The Company entered into</font></div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
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      <div>&#160;</div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ETHANEX
        ENERGY NORTH AMERICA, INC.</strong></font></div>
      <div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(FORMERLY
          KNOWN AS ARMISTEAD ENERGY, INC.)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
          DEVELOPMENT STAGE COMPANY)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTES
          TO FINANCIAL STATEMENTS (CONTINUED)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FOR
          THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
                7 -</strong></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>SUBSEQUENT
                  EVENTS</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>
                  (CONTINUED)</strong></font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Private
        Offering</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>
        (Continued)</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        private placement offering as a condition to the consummation of an Agreement
        and Plan of Merger and Reorganization with a publicly held corporation to
        be
        accounted for as a reverse merger (see below). </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        connection with the private placement offering the Company entered into
        Registration Rights Agreements with the investors in the offering. Under
        the
        terms of the Registration Rights Agreements, the Company has committed to
        file a
        registration statement with the SEC covering the class B common stock issued
        in
        the offering within 90 days of its reverse merger with a publicly held
        corporation (see below). If the Company fails to file a registration statement
        within 90 days of a reverse merger with a publicly held corporation or the
        registration statement fails to become effective within 90 days of filing
        the
        Company will become liable for liquated damages at a rate equal to 1% per
        month
        of the investors purchase price in the offering.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Agreement
        and Plan of Merger and Reorganization with Ethanex Energy,
        Inc.</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        September 1, 2006, the Company entered into an Agreement and Plan of Merger
        and
        Reorganization (&#8220;merger&#8221;) with Ethanex Energy, Inc., a publicly held
        corporation, and its wholly owned subsidiary Ethanex North America Acquisition
        Corp. Ethanex Energy, Inc. acquired the Company in the merger and will continue
        its operations as a publicly-traded company. Pursuant to the merger the holders
        of the Company&#8217;s capital stock before the merger surrendered all of their issued
        and outstanding class A and class B common shares in exchange for 46 million
        shares of Ethanex Energy&#8217;s common stock. Specifically, the holders of the
        Company&#8217;s class A common stock received an aggregate of 26 million shares and
        the holders of the Company&#8217;s class B common stock received and aggregate 20
        million shares. The shareholders of Ethanex Energy, Inc. prior to the merger
        retained 14 million shares of common stock in the public company. One million
        shares of Ethanex Energy&#8217;s common stock were issued to a consultant for advisory
        services in connection with the merger.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        above
        transaction has been accounted for as a reverse merger (recapitalization)
        with
        Ethanex Energy North America, Inc. being deemed the accounting acquirer and
        Ethanex Energy, Inc. being deemed the legal acquirer. Accordingly, the
        historical financial information presented in the financial statements is
        that
        of Ethanex Energy North America, Inc. (since May 31, 2006, the date of
        inception) as adjusted to give effect to any difference in the par value
        of the
        issuer&#8217;s and the accounting acquirer&#8217;s stock with an offset to additional paid
        in capital. The basis of the assets and liabilities of Ethanex Energy North
        America, Inc., the accounting acquirer, has been carried over in the
        recapitalization.</font></div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
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      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ETHANEX
        ENERGY NORTH AMERICA, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(FORMERLY
          KNOWN AS ARMISTEAD ENERGY, INC.)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(A
          DEVELOPMENT STAGE COMPANY)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTES
          TO FINANCIAL STATEMENTS (CONTINUED)</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FOR
          THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>NOTE
                7 -</strong></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>SUBSEQUENT
                  EVENTS</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>
                  (CONTINUED)</strong></font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Employment
        Agreements</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><a name="keyword"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        Company has entered into </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">employment
        agreements with certain key personnel which provide for a base salary, yearly
        bonuses subject to the Company achieving certain target performance levels
        as
        set by the board, stock options under the 2006 Stock Option Plan and other
        benefits. Termination of the agreements may be made by either party with
        advance
        notice.</font></a><a name="eolPage61"/></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Operating
        Lease</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        July
        17, 2006, the Company entered into various non-cancelable lease agreements
        for
        its office premises with a one-year term. Under the leasing arrangement the
        Company pays the expenses related to the leased property. The base annual
        rent
        under the operating lease is $11,100. The lease may be renewed by the Company
        at
        the Company&#8217;s option for a period of five years with an annual increase of 3%
        per year in the rent expense.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Agreement
        and Plan of Merger and Reorganization with IPT Ethanol,
        Inc.</u></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        August
        3, 2006, the Company acquired all of the capital stock of IPT Ethanol, Inc.
        from
        Industrial Power Technology, its sole stockholder and a related party. IPT
        Ethanol, Inc. is a privately held corporation formed on July 18, 2006 and
        has
        had no operations from its date of inception through August 3, 2006. Pursuant
        to
        the closing, Industrial Power Technology assigned to IPT Ethanol, Inc. its
        rights to a letter of understanding with an NYSE-listed electric utility
        located
        in the Midwest. The letter of understanding provides for a joint evaluation
        of
        the environmental and operational impact of a site selection for a 132 MMGY
        (millions of gallons per year) ethanol plant located at a large coal-fired
        generating facility owned by the electric utility. Upon the receipt of favorable
        results from the joint evaluation and upon the satisfactory negotiation of
        business terms with the electric utility for the development of the proposed
        plant, the Company intends to enter into a definitive agreement to construct
        an
        ethanol plant at the coal-fired generating facility. The Company paid $500,000
        in cash for the acquisition of IPT Ethanol, Inc. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
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        <div>&#160;</div>
        <div>
          <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanex
            Energy, Inc.</font></div>
          <div align="left">
            <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unaudited
              Pro Forma Balance Sheet</font></div>
            <div align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">June
                30,
                2006</font></div>
              <div align="left">&#160;</div>
              <div align="left">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                  following unaudited pro forma balance sheet gives effect to the
                  Agreement and
                  Plan of Merger and Reorganization entered <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">into
                  between Ethanex Energy, Inc. and Ethanex Energy North America,
                  Inc. on September
                  1, 2006. The unaudited pro forma balance sheet has been prepared
                  from the
                  historical financial statements of Ethanex Energy, Inc. and Ethanex
                  Energy North
<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">America,
                  Inc. and should be read in conjuction
                  therewith.</font></font></font></div>
              </div>
            </div>
          </div>
        </div>
        <div>&#160;</div>
        <div>
          <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
            the
            terms of the Agreement and Plan of Merger and Reorganization, the holders
            of the
            capital stock of Ethanex Energy North America, Inc. surrendered all of
            their
            issued and outstanding shares in exchange for 46 million shares of Ethanex
            Energy, <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Inc.'s
            common shares. The shareholders of Ethanex Energy prior to the agreement
            received 14 million shares of Ethanex <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Energy
            Inc.'s common shares in exchage for their outstanding common shares.
            Additionally, one million common shares of <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanex
            Energy, Inc. was issued to a consultant for advisory services in connection
            with
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        <div>&#160;</div>
        <div><font size="2">Management believes that the assumptions used provide
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</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
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                <td align="right" colspan="2" valign="bottom" width="2%" style="border-bottom: #ffffff solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
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                <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: #ffffff solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
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                <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: #ffffff solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
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                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanex
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                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="right" colspan="2" valign="bottom" width="2%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
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                  <div align="right">&#160;</div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div align="right">&#160;</div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td width="2%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ethanex</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Energy
                    North</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="right" colspan="2" valign="bottom" width="2%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Proforma</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consolidated</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ffffff solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td width="2%" style="border-bottom: #ffffff thin solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Energy,
                    Inc</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">America,
                    Inc.</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="right" colspan="2" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Adjustments</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="right" colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Proforma</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Assets</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Current
                    Assets</font></div>
                </td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">11,368</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,300,454</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white solid;">&#160;</td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(11,368</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,300,454</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
                    Current Assets</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">11,368
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,289,086
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,300,454
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white;">&#160;</td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
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              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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                <td align="left" valign="bottom" width="43%" style="border-bottom: white solid;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Computer
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                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,793
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                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
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              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white solid;">
                  <div style="MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
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                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,793
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,289,086
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                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,303,247
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                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
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              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Liabilities
                    and Stockholders' Equity</font></div>
                </td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Current
                    Liabilities</font></div>
                </td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accrued
                    expenses</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,976
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                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(1,976</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white solid;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Note
                    payable - related party</font></div>
                </td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">20,000
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">10,765
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(20,000</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">10,765
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
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              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white;">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stockholders'
                    Equity</font></div>
                </td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Common
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                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">61,000
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white;">&#160;</td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(4,800</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">200,000
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white;">&#160;</td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(200,004</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">61,000
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additional
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                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">29,700
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-
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                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white;">&#160;</td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">999,000
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                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">&#160;</td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
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                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(29,700</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white;">&#160;</td>
                <td width="2%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">140,004
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">20,239,458
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                <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accumulated
                    deficit</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(45,108</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(7,976</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">45,108
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white solid;">&#160;</td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(1,000,000</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(1,007,976</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
              </tr>
              <tr bgcolor="#ccffcc">
                <td align="left" valign="bottom" width="43%" style="border-bottom: #ccffcc solid;">
                  <div style="MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
                    Stockholders' Equity</font></div>
                </td>
                <td width="2%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(10,608</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">(7,972</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,311,062
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,292,482
                    </font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
              </tr>
              <tr bgcolor="white">
                <td align="left" valign="bottom" width="43%" style="border-bottom: white solid;">
                  <div style="MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
                    Liabilities &amp; Stockholders' Equity</font></div>
                </td>
                <td width="2%" style="border-bottom: white thin solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">11,368</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,793</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="right" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,289,086</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
                </td>
                <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
                  <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,303,247</font></div>
                </td>
                <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
              </tr>

          </table>
        </div>
      </div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><br>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

              <tr valign="top" style="line-height: 1.25;">
                <td align="left" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;</font></font></td>
                <td align="left">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
                    record the private placement of by Ethanex Energy North America,
                    Inc.
                    which was a condition to the consummation of the Agreement and
                    plan of
                    Merger and Reorganization.</font></div>
                </td>
              </tr>

          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

              <tr valign="top" style="line-height: 1.25;">
                <td align="left" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;</font></font></td>
                <td align="left">
                  <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
                    record the reverse merger and recapitalization of Ethanex Energy
                    North
                    America, Inc. including the elimination of Ethanex Energy, Inc.'s
                    accumulated deficit and additional paid-in capital and the issuance
                    of
                    61,000,000 common shares at a par value of
                    $0.001.</font></div>
                </td>
              </tr>

          </table>
        </div>
      </div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">F-15</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(d)</strong></font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibits.</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table border="1" bordercolor="#000000" cellpadding="10" cellspacing="1" width="100%">

          <tr bgcolor="white">
            <td valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibit
                No.</strong></font></div>
            </td>
            <td valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Description</strong></font></div>
            </td>
            <td valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Reference</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.1</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Agreement
                and Plan of Merger and Reorganization, dated as of September 1, 2006,
                by
                and among Ethanex Energy, Inc., a Nevada corporation, Ethanex North
                America Acquisition Corp., a Delaware corporation, and Ethanex Energy
                North America, Inc., a Delaware corporation.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.1</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Articles
                of Incorporation of Ethanex Energy, Inc. (f/k/a New Inverness
                Explorations, Inc.).</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incorporated
                by reference to Exhibit&#160;3.1 to the Registration Statement on Form
                SB-2 filed with the Securities and Exchange Commission on November
                18,
                2005 (File No. 333-129810).</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.2</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
                of Amendment of the Articles of Incorporation of Ethanex Energy,
                Inc.
                (f/k/a New Inverness Explorations, Inc.).</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incorporated
                by reference to Exhibit&#160;3.1 to the Current Report on Form 8-K filed
                with the Securities and Exchange Commission on August 23, 2006 (File
                No.
                333-129810).</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.3</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
                of Amendment of the Articles of Incorporation of Ethanex Energy,
                Inc.
                (f/k/a New Inverness Explorations, Inc.).</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incorporated
                by reference to Exhibit&#160;3.2 to the Current Report on Form 8-K filed
                with the Securities and Exchange Commission on August 23, 2006 (File
                No.
                333-129810).</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.4</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Bylaws
                of Ethanex Energy, Inc. (f/k/a New Inverness Explorations,
                Inc.).</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incorporated
                by reference to Exhibit&#160;3.2 to the Registration Statement on Form
                SB-2 filed with the Securities and Exchange Commission on November
                18,
                2005 (File No. 333-129810).</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Warrant of Ethanex Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.2</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Lock-Up Agreement by and between Tompkins Capital Group and the
                principals of Ethanex Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.1</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registration
                Rights Agreement dated as of August 3, 2006, including the Consent
                and
                Acknowledgment thereto, by and between Ethanex Energy North America,
                Inc.
                and the investors in the Offering, which agreement was assumed by
                Ethanex
                Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.2</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Split
                Off Agreement, dated September 1, 2006, by and among Ethanex Energy,
                Inc.,
                </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amanda
                Lamothe</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
                Luke Willis, Ethanex Energy North America, Inc. and New Inverness
                Leaseco,
                Inc.* </font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.3</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Albert W. Knapp, which agreement was assumed by
                Ethanex
                Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.4</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Randall L. Rahm, which agreement was assumed by
                Ethanex
                Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.5</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Bryan J. Sherbacow, which agreement was assumed
                by
                Ethanex Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.6</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Robert C. Walther, which agreement was assumed
                by
                Ethanex Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.7</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Indemnity
                Agreement by and between Ethanex Energy, Inc. and Outside Directors
                of
                Ethanex Energy, Inc.* </font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.8</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006
                Equity Incentive Plan.* </font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">21.1</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subsidiaries
                of Ethanex Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div>&#160;</div>
      <div>
        <hr style="COLOR: black" align="left" noshade size="1" width="15%">
      </div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Filed
                herewith. </font></div>
            </td>
          </tr>

      </table>
    </div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-53-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      registrant has duly caused this report to be signed on its behalf by the
      undersigned hereunto duly authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 315pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ETHANEX
      ENERGY, INC.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 315pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 315pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font size="2">By:&#160;
/s/&#160;Albert
      W. Knapp </font>
      <div style="MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <hr style="COLOR: black" align="left" noshade size="2" width="60%">
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 333pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Name:&#160;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Albert
      W.
      Knapp</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 333pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Title:&#160;
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
      Executive Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dated:
      September 6, 2006</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">-54-</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      INDEX</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div align="left">
      <table border="1" bordercolor="#000000" cellpadding="10" cellspacing="1" width="100%">

          <tr bgcolor="#ccffcc">
            <td valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibit
                No.</strong></font></div>
            </td>
            <td valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Description</strong></font></div>
            </td>
            <td valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Reference</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.1</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Agreement
                and Plan of Merger and Reorganization, dated as of September 1, 2006,
                by
                and among Ethanex Energy, Inc., a Nevada corporation, Ethanex North
                America Acquisition Corp., a Delaware corporation, and Ethanex Energy
                North America, Inc., a Delaware corporation.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.1</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Articles
                of Incorporation of Ethanex Energy, Inc. (f/k/a New Inverness
                Explorations, Inc.).</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incorporated
                by reference to Exhibit&#160;3.1 to the Registration Statement on Form
                SB-2 filed with the Securities and Exchange Commission on November
                18,
                2005 (File No. 333-129810).</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.2</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
                of Amendment of the Articles of Incorporation of Ethanex Energy,
                Inc.
                (f/k/a New Inverness Explorations, Inc.).</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incorporated
                by reference to Exhibit&#160;3.1 to the Current Report on Form 8-K filed
                with the Securities and Exchange Commission on August 23, 2006 (File
                No.
                333-129810).</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.3</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
                of Amendment of the Articles of Incorporation of Ethanex Energy,
                Inc.
                (f/k/a New Inverness Explorations, Inc.).</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incorporated
                by reference to Exhibit&#160;3.2 to the Current Report on Form 8-K filed
                with the Securities and Exchange Commission on August 23, 2006 (File
                No.
                333-129810).</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.4</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Bylaws
                of Ethanex Energy, Inc. (f/k/a New Inverness Explorations,
                Inc.).</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incorporated
                by reference to Exhibit&#160;3.2 to the Registration Statement on Form
                SB-2 filed with the Securities and Exchange Commission on November
                18,
                2005 (File No. 333-129810).</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Warrant of Ethanex Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.2</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Lock-Up Agreement by and between Tompkins Capital Group and the
                principals of Ethanex Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.1</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registration
                Rights Agreement dated as of August 3, 2006, including the Consent
                and
                Acknowledgment thereto, by and between Ethanex Energy North America,
                Inc.
                and the investors in the Offering, which agreement was assumed by
                Ethanex
                Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.2</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Split
                Off Agreement, dated September 1, 2006, by and among Ethanex Energy,
                Inc.,
                </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amanda
                Lamothe</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
                Luke Willis, Ethanex Energy North America, Inc. and New Inverness
                Leaseco,
                Inc.* </font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.3</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Albert W. Knapp, which agreement was assumed by
                Ethanex
                Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.4</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Randall L. Rahm, which agreement was assumed by
                Ethanex
                Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.5</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Bryan J. Sherbacow, which agreement was assumed
                by
                Ethanex Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.6</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Robert C. Walther, which agreement was assumed
                by
                Ethanex Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.7</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Indemnity
                Agreement by and between Ethanex Energy, Inc. and Outside Directors
                of
                Ethanex Energy, Inc.* </font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.8</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006
                Equity Incentive Plan.* </font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">21.1</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subsidiaries
                of Ethanex Energy, Inc.*</font></div>
            </td>
            <td align="left" valign="top" width="40%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div>&#160;</div>
      <div>
        <hr style="COLOR: black" align="left" noshade size="1" width="15%">
      </div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Filed
                herewith. </font></div>
            </td>
          </tr>

      </table>
    </div>
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      </div>
      <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
    </div>
    <div id="HDR">
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      </div>
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{"company-data": {"conformed-name": "ETHANEX ENERGY, INC.", "cik": "0001343611", "assigned-sic": "1000", "irs-number": "000000000", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "333-129810", "film-number": "061075713"}, "business-address": {"street1": "29 OTTER AVENUE, BOX 634", "city": "MANITOUWADGE", "state": "A6", "zip": "P0T 2C0", "phone": "807-625-6379"}, "mail-address": {"street1": "29 OTTER AVENUE, BOX 634", "city": "MANITOUWADGE", "state": "A6", "zip": "P0T 2C0"}, "former-company": {"former-conformed-name": "New Inverness Explorations, Inc.", "date-changed": "20051107"}}
Unassociated Document
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      D.C. 20549
FORM
      8-K
CURRENT
      REPORT
Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
      of Report (Date of earliest event reported): September 1,
      2006
ETHANEX
      ENERGY, INC.
(f/k/a
      New Inverness Explorations, Inc.)
(Exact
      name of registrant as specified in its charter)
Nevada
333-129810
Pending
(State
                or other jurisdiction
of
                incorporation)
(Commission
                File Number)
(I.R.S.
                Employer
Identification
                Number)
14500
                Parallel Road, Suite A
Basehor,
                KS
66007
(Address
                of principal executive offices)
(Zip
                Code)
(913)
      724-4106
(Registrant's
      telephone number, including area code)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below):
¨
Written
                communications pursuant to Rule 425 under the Securities Act (17
                CFR
                230.425)
¨
Soliciting
                material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                240.14a-12)
¨
Pre-commencement
                communications pursuant to Rule 14d-2(b) under the Exchange Act (17
                CFR
                240.14d-2(b))
¨
Pre-commencement
                communications pursuant to Rule 13e-4(c) under the Exchange Act (17
                CFR
                240.13e-4(c))
FORWARD
      LOOKING STATEMENTS
This
      Current Report on Form 8-K contains forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended. This Current Report
      includes statements regarding our plans, goals, strategies, intent, beliefs
      or
      current expectations. These statements are expressed in good faith and based
      upon a reasonable basis when made, but there can be no assurance that these
      expectations will be achieved or accomplished. These forward looking statements
      can be identified by the use of terms and phrases such as "believe," "plan,"
"intend," "anticipate," "target," "estimate," "expect," and the like, and/or
      future-tense or conditional constructions ("will," "may," "could," "should,"
etc.). Items contemplating or making assumptions about, actual or potential
      future sales, market size, collaborations, and trends or operating results
      also
      constitute such forward-looking statements.
Although
      forward-looking statements in this report reflect
the
      good
      faith judgment of management, forward-looking statements are inherently subject
      to known and unknown risks, business, economic and other risks and uncertainties
      that may cause actual results to be materially different from those discussed
      in
      these forward-looking statements. Readers are urged not to place undue reliance
      on these forward-looking statements, which speak only as of the date of this
      report. We assume no obligation to update any forward-looking statements in
      order to reflect any event or circumstance that may arise after the date of
      this
      report, other than as may be required by applicable law or regulation. Readers
      are urged to carefully review and consider the various disclosures made by
      us in
      our reports filed with the Securities and Exchange Commission ("SEC") which
      attempt to advise interested parties of the risks and factors that may affect
      our business, financial condition, results of operation and cash flows. If
      one
      or more of these risks or uncertainties materialize, or if the underlying
      assumptions prove incorrect, our actual results may vary materially from those
      expected or projected.
EXPLANATORY
      NOTE
On
      August
      21, 2006, New Inverness Explorations, Inc. ("NIE") changed its name to Ethanex
      Energy, Inc. On September 1, 2006, NIE completed a reverse merger (the "Merger")
      with Ethanex North America Acquisition Corp., a wholly-owned subsidiary of
      NIE
      ("Acquisition Sub"), with and into Ethanex Energy North America, Inc., a
      Delaware corporation ("Ethanex N.A."). NIE acquired the business of Ethanex N.A.
      pursuant to the Merger and will continue the existing business operations of
      Ethanex N.A. as a publicly-traded company under the name Ethanex Energy, Inc.
      (the "Company"). Unless otherwise indicated, the terms "the Company," "we,"
"us," and "our" refer to Ethanex Energy, Inc. after giving effect to the Merger,
      unless otherwise stated or the context clearly indicates otherwise. The term
      "NIE" refers to Ethanex Energy, Inc. (f/k/a New Inverness Explorations, Inc.)
      before giving effect to the Merger, and the term "Ethanex N.A." refers to
      Ethanex Energy North America, Inc. before giving effect to the
      Merger.
Item
      1.01.
Entry
      into a Material Definitive Agreement.
On
      September 1, 2006, the Company completed the Merger. For a description of the
      Merger and the material agreements entered into in connection therewith, please
      see Item 2.01 of this Current Report on Form 8-K, which disclosure is
      incorporated herein by reference.
Item
      2.01.
Completion
      of Acquisition or Disposition of Assets.
-2-
THE
      MERGER AND RELATED TRANSACTIONS
The
      Merger
On
      September 1, 2006 (the "Closing Date"), NIE, the Acquisition Sub, and Ethanex
      N.A. entered into an Agreement and Plan of Merger and Reorganization (the
"Merger Agreement"). On the Closing Date, NIE completed the Merger with the
      Acquisition Sub, with and into Ethanex N.A. NIE acquired the business of Ethanex
      N.A. pursuant to the Merger and will continue the existing business operations
      of Ethanex N.A. as a publicly-traded company under the name Ethanex Energy,
      Inc.
      (the "Company"). Before their entry into the Merger Agreement, no material
      relationship existed among the parties to the Merger Agreement. The form of
      Merger Agreement is attached as Exhibit 2.1 to this Current Report on Form
      8-K
      and is incorporated herein by reference.
On
      the
      Closing Date, the holders of Ethanex N.A.'s issued and outstanding capital stock
      before the Merger (the "Ethanex N.A. Stockholders") surrendered all of their
      issued and outstanding capital stock of Ethanex N.A. and received common stock
      of the Company, par value $0.001 per share ("Common Stock"). Specifically, the
      holders of shares of Class A common stock of Ethanex N.A. received an aggregate
      of 26,000,000 shares of the Company's Common Stock, and the holders of shares of
      Class B common stock received an aggregate of 20,000,000 shares of the Company's
      Common Stock as a result of the conversion of their Class B shares (described
      below). The stockholders of NIE before the Merger (the "NIE Stockholders")
      retained 14,000,000 shares of Common Stock. Gamma Capital Partners, LLC was
      issued 1,000,000 shares of Common Stock for finder and advisory services in
      connection with the Merger.
The
      Merger Agreement contains customary representations, warranties and covenants
      of
      NIE, Ethanex N.A. and, as applicable, Acquisition Sub, for like transactions.
      Breaches of representations and warranties are secured by customary
      indemnification provisions. The Merger Agreement contains a post-closing
      adjustment to the number of shares of Common Stock issued to Ethanex N.A.
      Stockholders in an amount up to 2,000,000 shares of Common Stock issued on
      a pro
      rata basis for any breach of the Merger Agreement by NIE discovered during
      the
      two year period following the Closing Date.
The
      Merger will be treated as a recapitalization of the Company for financial
      accounting purposes. Accordingly, the historical financial statements of NIE
      before the Merger will be replaced with the historical financial statements
      of
      Ethanex N.A. before the Merger in all future filings with the SEC.
On
      the
      Closing Date, Amanda Lamothe and Luke Willis, constituting all of the
      directors of NIE before the Merger, appointed Robert C. Walther, Albert W.
      Knapp, Bryan J. Sherbacow, Randall L. Rahm and John Farris Norris Jr. to fill
      the vacancies on the Board of Directors. Also on the Closing Date, Ms.
      Lamothe and Mr. Willis resigned from the Board. Also on the Closing Date, the
      then-current officers of NIE resigned and new executive officers designated
      by
      Ethanex N.A. were appointed. The current officers and directors are identified
      on page 38 under "Directors and Executive Officers."
Before
      the Merger, the 2006 Equity Incentive Plan (the "2006 Plan") was adopted by the
      Board and the NIE Stockholders. Under the Plan, 2,000,000 shares of Common
      Stock
      are reserved for issuance as incentive awards granted to executive officers,
      key
      employees, consultants and directors after the closing of the transactions
      described herein.
The
      parties have taken all actions necessary to ensure the Merger is treated as
      a
"tax free exchange" under Section 368 of the Internal Revenue Code of 1986,
      as amended.
-3-
The
      Offering
Before
      the Merger, on August 3, 2006 (the "PPO Closing Date"), and in contemplation of
      the Merger, Ethanex N.A. closed a private offering (the "Offering") of
      20,000,000 units of its securities (the "Units"), each Unit consisting of one
      share of Class B common stock of Ethanex N.A. and a warrant to purchase one
      share of Class B common stock for a period of five years at an exercise price
      of
      $1.50 per share, which warrants were callable by Ethanex N.A. under certain
      circumstances. On the PPO Closing Date, the investors in the Offering
      collectively purchased 20,000,000 Units for a total consideration of
      $20,000,000.
The
      sale
      of the Units (including the Class B common stock, warrants and the Class B
      common stock underlying the Units) in the Offering was exempt from registration
      under Section 4(2) of the Securities Act of 1933, as amended (the "Securities
      Act") and Rule 506 of Regulation D as promulgated by the SEC. The Merger, the
      Offering and the other transactions related thereto are collectively referred
      to
      herein as the "Transactions."
In
      contemplation of the closing of the Merger, and in connection with the Offering,
      the holders of all of the shares of Class A common stock of Ethanex N.A., and
      the holders of all of the shares of Class B common stock of Ethanex N.A., with
      the exception of 12 Class B holders, executed an irrevocable proxy in favor
      of
      Tompkins Capital Group, or its designee, giving such proxy holder the power,
      until August 31, 2007, to vote their shares of Class A common stock and Class
      B
      common stock in favor of the Merger.
Canaccord
      Capital Corporation and Sanders Morris Harris, Inc. acted as placement agents
      in
      connection with the Offering and received fees of $127,750 and
      $228,750.
On
      the
      Closing Date of the Merger, each share of Class B common stock of Ethanex N.A.
      issued and outstanding before the Merger was converted into one share of the
      Company's Common Stock. Each warrant for the purchase of shares of Class B
      common stock of Ethanex N.A. issued and outstanding before the Merger was
      converted into a warrant to purchase the same number of shares of the Company's
      Common Stock, and on the same terms and conditions as the Class B warrants.
      The
      form of the Company's warrant issued upon the conversion of the Class B warrants
      is attached as Exhibit 4.1 to this Current Report on Form 8-K and is
      incorporated herein by reference.
Restricted
      Securities and Registration Rights
All
      securities issued in connection with the Transactions were "restricted"
securities and are subject to all applicable resale restrictions specified
      by
      federal and state securities laws.
On
      the
      PPO Closing Date, Ethanex N.A. entered into a Registration Rights Agreement
      with
      the investors in the Offering, which Registration Rights Agreement was assumed
      by the Company in connection with the Merger. Under the terms of the
      Registration Rights Agreement, as amended by the Consent and Acknowledgment
      thereto, the Company has committed to file a Registration Statement covering
      the
      resale of the Common Stock underlying the Units (including the Common Stock
      issuable upon exercise of the warrants) within 90 days from the Closing Date
      and
      shall use reasonable efforts to cause such Registration Statement to become
      effective no later than 90 days after the date filed (or 120 days if such
      Registration Statement is subject to a review by the SEC).  The Company
      shall use its best efforts to maintain the effectiveness of this Registration
      Statement through the second anniversary of the date the Registration Statement
      is declared effective by the SEC or until Rule 144(k) of the Securities Act
      is
      available to the investors in the Offering with respect to all of their shares,
      whichever is earlier. The Company will be liable for customary penalties if
      the
      Registration Statement is not effective on the date
-4-
by
      which
      the Company is required to cause it to become effective, consistent with the
      Registration Rights Agreement. The form of Registration Rights Agreement,
      including the Consent and Acknowledgment thereto, assumed by the Company
is
      attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated
      herein by reference.
Split-Off
      Agreement
Contemporaneously
      with the closing of the Merger, the Company split-off its wholly-owned
      subsidiary, New Inverness Leasco, Inc., a Nevada corporation ("Leaseco"),
      through the sale of all of the outstanding capital stock of Leaseco (the
"Split-Off"). The Company executed a Split Off Agreement with Amanda Lamothe,
      Luke Willis, Ethanex N.A. and Leaseco, a copy of which is attached as Exhibit
      10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Lock-Up
      Agreements
Each
      of
      the officers and directors of the Company have agreed not to offer, sell,
      contract to sell or otherwise dispose of or transfer title to any of the shares
      of Common Stock acquired pursuant to or in connection with the Merger Agreement,
      during the period commencing on the Closing Date and ending on the 24-month
      anniversary of the Closing Date (the "Lockup Period"), without the prior written
      consent of the Company and Tompkins Capital Group. Such agreements are set
      forth
      in written Lock-Up Agreements, a form of which is attached as Exhibit 4.2 to
      this Current Report on Form 8-K, executed as of the Closing Date, with the
      Company's officers and directors.
Pro
      Forma Ownership
Immediately
      after giving effect to the Merger, there are issued and outstanding on a fully
      diluted basis (including the shares of Common Stock underlying the warrants
      and
      options, and the shares reserved for issuance under the Company's 2006 Plan),
      83,000,000 shares of Common Stock, as follows:
§
the
                former holders of the Class A shares of Ethanex N.A. held 26,000,000
                shares of Common Stock from the Merger, approximately 31.33% of the
                Company's outstanding common shares on a fully-diluted
                basis;
§
the
                former holders of the Class B shares of Ethanex N.A., who were investors
                in the Offering, held 40,000,000 shares of Common Stock from the
                Merger
                (of which 20,000,000 shares are issuable upon the exercise of warrants),
                approximately 48.19% of the Company's outstanding common shares on a
                fully-diluted basis;
§
the
                existing stockholders of the Company retained 14,000,000 shares of
                Common
                Stock from the Merger, approximately 16.87% of the Company's outstanding
                common shares on a fully-diluted basis;
                and
§
Gamma
                Capital Partners LLC held 1,000,000 shares of Common Stock from the
                Merger, approximately 1.2% of the Company's outstanding common shares on a
                fully-diluted basis.
-5-
PART
      I
1.
      DESCRIPTION OF BUSINESS
Company
      Overview
Immediately
      following the Merger, the business of Ethanex N.A. became the business of the
      Company. Ethanex N.A. was incorporated on May 31, 2006 with the objective to
      participate in the cyclical and secular trends in the energy sector. The members
      of management of the Company have significant experience in the energy field
      including the acquisition, restructuring, and operation of energy assets, as
      well as risk management. Initially, the Company plans to produce ethanol and
      its
      animal feed by-products.
Demand
      for alternative fuels and ethanol in particular has never been greater. Based
      on
      data published by the
Renewable
      Fuels Association
,
      the
      industry trade group of ethanol producers, in 2005, 95 ethanol plants produced
      a
      record 4.0 billion gallons of ethanol, an increase of 17% from 2004 and 126%
      from 2001. According to the Research Institute of America, at the end of 2005,
      95 ethanol refineries were in production, 14 new refineries began operations,
      30
      began construction and 10 were expanded. Certain of the new refineries are
      being
      built in California, North Carolina, Arizona, Texas and New Mexico. Contributing
      factors to the current high interest in ethanol production are:
·
Federal
                and state energy policies;
·
high
                crude oil prices;
·
relatively
                low grain prices;
·
legislative
                bans on the use of MTBE (methyl tertiary butyl ether);
·
the
                August 2005 enactment of a renewable fuels standard in the Energy
                Policy
                Act of 2005; and
·
national
                security concerns due to the reliance on imported crude
                oil.
Favorable
      conditions currently exist for the U.S. ethanol industry, although there is
      no
      certainty that these conditions will continue to exist. During March and April
      2006 ethanol was produced at record and near-record levels of 392.2 million
      gallons and 363.6 million gallons. According to the Renewable Fuels Association,
      in 2005, the U.S. ethanol industry contributed more than $32 billion to Gross
      Domestic Output, $5 billion to household income, nearly $2 billion to federal
      taxes, $1.6 billion to state and local taxes, added $6 billion to net price
      revenue, increased average corn prices by about $0.35 per bushel and was
      responsible for more than 153,000 jobs in all sectors of the economy. In
      addition, ethanol displaced 170 million barrels of oil, at least 65% of which
      would have been imported, and reduced greenhouse gas emissions by 8 million
      tons, the equivalent of taking more than 1 million vehicles off the
      road.
-6-
The
      Company's business plan is to produce fuel grade ethanol and its co-product
      livestock feed as well as food grade quality corn products. If successfully
      executed, the Company will operate primarily as an ethanol producer with
      co-products serving the food and feed industries, each based on these separate
      products.
Using
      the
      proceeds of the Offering, the Company intends to own and operate ethanol plants
      and to market both ethanol and DDGS (dried distillers grain with solubles).
      The
      Company believes that there now exists a shortfall in domestic ethanol
      production capacity resulting from government mandated programs and the recent
      bans on MTBE. To address the business opportunity that may result from the
      shortfall, the Company has plans to acquire:
§
options
                to purchase 20-30 millions of gallons per year ("MMGY") ethanol plants
                each of which may be suitable for expansion in capacity in the near
                term;
§
additional
                co-location rights from coal-fired electric utilities for brownfield
                development of new ethanol plants;
                and
§
additional
                options to acquire rights in proposed ethanol plants that have project
                development and environmental permits in
                place.
After
      four full years of operations, the Company believes that it will have in place
      annual production capacity of over 500 million gallons per year of denatured,
      fuel grade ethanol and 1.7 million tons of dried distillers grain with solubles
      ("DDGS"). If the Company is able to acquire the options and rights referred to
      above, the Company plans to own and operate four to seven ethanol plants
      geographically dispersed in the United States. The Company also believes that
      our technical abilities and operating model may make us one of the industry's
      low cost producers. The Company's business plan also calls for us to grow
      through existing plant expansions, new plant development and strategic
      acquisitions to the extent that we are able to expand, develop and acquire
      business at costs that enable us to operate profitably. The Company further
      expects that as a publicly traded ethanol company, we will be able to access
      capital at a lower cost than our privately-owned competitors and may be able
      to
      use our shares to acquire either ethanol producers in properly accretive
      transactions.
On
      August
      3, 2006, Ethanex N.A. acquired all of the capital stock of IPT Ethanol, Inc.,
      a
      then-wholly owned subsidiary of Industrial Power Technology ("IPT"). See
"Certain Relationships and Related Transactions" on page 45. Based in Santa
      Rosa, California, IPT is an engineering and power generation project development
      company with over 22 years of operating history in the alternative energy space.
      IPT has been responsible for the successful planning, design and construction
      of
      more than 30 energy projects utilizing a variety of fuels and energy conversion
      systems. The fuels produced or utilized in IPT's projects have included natural
      gas, coal, wellhead residual gas, digester gas, urban waste, scrap tires,
      biomass fuels, agricultural waste, and hydropower. IPT has significant
      experience in the areas of siting, regulatory and permitting activities, as
      well
      as design, construction management, and plant operations.
In
      late
      2005, IPT began site selection for a 40 MMGY ethanol processing facility in
      northeast Kansas. In May 2006, IPT entered into a Letter of Understanding (the
      "LOU") with a NYSE-listed electric utility located in the Midwest for the joint
      evaluation of the environmental and operational impact of siting a 132 MMGY
      ethanol plant at a large coal-fired generating facility owned by the electric
      utility. The LOU provides IPT with a six-month exclusive study period ending
      November 30, 2006. IPT
-7-
assigned
      all of its rights in the LOU to IPT Ethanol, Inc. before the acquisition of
      IPT
      Ethanol, Inc. by Ethanex N.A.
Upon
      the
      receipt of favorable results from the study and upon the satisfactory
      negotiation of business terms between the electric utility and the Company
      for
      the development of the proposed plant, the electric utility and the Company
      intend to enter into a definitive agreement to site the
ethanol
      plant at the coal-fired generating facility. The Company's ability to
      participate in this project is wholly dependent, however, on the successful
      fulfillment of several conditions, including:
§
favorable
                results for the siting of the
                facility;
§
receipt
                of all necessary environmental and other
                permits;
§
acquisition
                of capital for the development and construction of the
                plant;
§
securing
                acceptable terms from the electric utility;
                and
§
review
                and approval of the project by the electric utility's board of
                directors.
Furthermore,
      the Company intends to market a next generation ethanol production technology,
      corn fractionation - a process that increases the starch concentration of
      feedstock and lowers the cost of producing ethanol - to existing ethanol plants
      as a means for such plants to lower production costs in exchange for equity
      interests in those existing ethanol plants.
The
      Company has identified existing operational ethanol plants with production
      capacity of 30 MMGY or less that meet its selection criteria. The Company
      generally requires that such facilities have acceptable rail access, sufficient
      feedstock sources, strong local demand for DDGS and are suitable for expansion.
      Taking advantage of our industry relationships, the Company plans to market
      our
      fractionation process to these existing ethanol producers in exchange for equity
      interests in the existing ethanol plants. Our ability to do so, however, is
      contingent on the willingness of the current owners of the plants to enter
      into
      agreements with the Company on terms that we consider acceptable. Because of
      the
      current high level of both ethanol prices on a historical basis and investor
      interest in the industry, and because a relatively small number of
      independently-owned operations, it may be difficult for the Company to negotiate
      reasonable terms.
In
      July
      2006, the Company entered into a letter of intent with SEMO Milling, LLC and
      on
      August 4, 2006 entered into a definitive Joint Venture Agreement, and ancillary
      agreements related thereto, to build a 132 MMGY ethanol plant co-located with
      SEMO Milling's dry corn mill production facility at the SEMO port authority in
      Scott City, Missouri. The Company intends to build the ethanol plant using
      next
      generation ethanol production technology, including corn fractionation. If
      this
      technology proves feasible, the Company intends to market next generation
      fractionation technology to existing ethanol plants as a means for such plants
      to lower their production costs in exchange for equity interests in those
      plants.
In
      August
      2006, the Company entered into a Letter of Intent with Star Ethanol, LLC with
      a
      view towards construction and operating a 132MM gallon ethanol production
      facility in Franklin County, Illinois, utilizing fractionation technology in
      the
      production of ethanol and ethanol-related products.
Industry
      Overview
-8-
Ethanol
Ethanol
      is ethyl alcohol-200-proof grain alcohol. Denatured with 5% unleaded gasoline,
      fuel grade ethanol is a fuel component utilized to enhance gasoline performance
      properties and abate gasoline exhaust emissions. Because it is derived primarily
      from processing corn, an abundant agricultural commodity, ethanol is a renewable
      source of energy.
Ethanol
      is primarily used as a blend component in the U.S. gasoline fuel market;
      refiners and marketers, including some of the major integrated oil companies
      and
      a number of independent refiners and distributors, have blended ethanol with
      gasoline to increase octane and reduce tailpipe emissions. According to the
      U.S.
      Department of Energy, refiners typically blend ethanol at 5.7% to 10.0% of
      volume in over 30% of the U.S. gasoline fuel supply. Major manufacturers of
      power equipment, motorcycles, snowmobiles and outboard motors permit the use
      of
      ethanol blends in their products. Ethanol is also used as the primary blend
      component for E85, a fuel blend composed of up to 85% ethanol. Although E85
      represents an insubstantial portion of the U.S. gasoline supply, approximately
      6.0 million vehicles on the road in the U.S. today are fitted to use E85.
      Ethanol blends of up to 10% are approved for use under the warranties of all
      major motor vehicle manufacturers and are often recommended.
According
      to the Renewable Fuels Association, U.S. production of ethanol in 2005 was
      4.0
      billion gallons (BGY), approximately 3% of the U.S. gasoline fuel supply and
      in
      2005 total U.S. ethanol production capacity increased to more than 4.3 BGY.
      The
      Renewable Fuels Association has also reported that as of June 2006, there are
      98
      ethanol refineries with over 4.6 BGY of capacity with 35 new facilities under
      construction and nine expansions, totaling 2.2 BGY of capacity.
The
      primary uses of ethanol are:
§
To
                enhance octane
.
                Because in contrast, pure ethanol has an average octane rating of
                113,
                compared to an octane rating of 86 to 91 for gasoline, adding ethanol
                to
                gasoline enables refiners to produce greater quantities of suboctane
                fuel.
                Adding ethanol to finished regular grade gasoline produces higher
                octane
                midgrade and premium gasoline.
§
As
                a clean air additive
.
                Because ethanol contains 35% oxygen, approximately twice that of
                MTBE,
                ethanol results in more complete combustion of the fuel in the engine
                cylinder and in reduced tailpipe emissions and volatile organic compound
                emissions. Ethanol also displaces the use of some gasoline components
                like
                benzene, a known carcinogen, since ethanol is non-toxic, water soluble
                and
                quickly biodegradable.
§
To
                extend fuel supplies
.
                Much of the ethanol blending throughout the U.S. today is done for
                the
                purpose of extending the volume of fuel sold at the gas pump. Blending
                therefore reduces the amount of foreign crude oil and refined oil
                products.
§
To
                produce gasoline alternatives
.
                Ethanol is the primary blend component in E85. The number of service
                stations that sell E85 has grown rapidly. As of February 2006, the
                U.S.
                Department of Energy stated that over 500 service stations in the
                U.S.
                sell E85. Vehicles must be specially equipped to use E85 fuel and,
                according to the National Ethanol Vehicle Coalition, approximately
                6.0
                million U.S. vehicles are so equipped. Experience in Brazil suggests
                that
                E85 could capture a much greater portion of the U.S. market in the
                future.
                U.S. automakers receive incentives under federal fuel economy standards
                for producing Flexible Fuel Vehicles ("FFVs"). E85 is generally priced
                lower per gallon than gasoline because most FFVs experience some
                reduction
                in mileage when running on E85.
-9-
Demand
      for Ethanol
We
      believe the ethanol market will grow as a result of:
§
Favorable
                economics.
Under
                current market conditions, ethanol currently represents an economically
                attractive source of fuel. The Company believes that our cost of
                producing
                ethanol is now significantly lower than the cost incurred by refiners
                to
                produce an equivalent volume of gasoline. This favorable balance
                should
                enable ethanol to grow not only as a strategic blend component, but
                also
                as an alternative in the form of
                E85.
§
The
                replacement of MTBE.
Although
                once the preferred oxygenate ingredient used by the petroleum industry
                in
                most reformulated gasoline, in recent years, as a result of health
                and
                environmental concerns, 25 states, representing more than half of
                the MTBE
                consumed in the U.S., have banned or significantly limited the use
                of
                MTBE. Product liability concerns regarding MTBE increased following
                passage of the Energy Policy Act, which did not contain limitations
                on
                product liability claims relating to MTBE use. As a result, refiners
                are
                now expediting the phase-out of MTBE nationwide, creating additional
                demand for ethanol. As MTBE is replaced, ethanol is positioned to
                be the
                most likely substitute for MTBE because of its favorable production
                economics, high octane rating and clean burning
                characteristics.
§
A
                shortage of domestic petroleum refining capacity.
The
                U.S. Energy Information Administration (EIA) reports that the number
                of
                operable U.S. petroleum refineries has decreased from 319 in 1980
                to 148
                in 2005. The EIA also reports that although domestic refining capacity
                decreased approximately 5% from 1980 to 2005, domestic demand increased
                21% over the same period. The EIA expects growth in refining capacity
                to
                average 1.3% per year until 2025, with demand for refined petroleum
                products growing at 1.5% per year over the same period. Because ethanol
                is
                blended with gasoline after the refining process, it directly increases
                domestic fuel capacity.
§
Geopolitical
                concerns.
The
                U.S. is increasingly dependent on foreign oil. According to the Energy
                Information Administration, crude oil imports represented 65% of
                the U.S.
                crude oil supply in 2005 and are estimated to rise to 71% by 2025.
                Political unrest and attacks on oil infrastructure in the major oil
                producing nations have periodically disrupted the flow of oil. Fears
                of
                terrorist attacks have added a "risk premium" to world oil prices. At the
                same time, developing nations such as China and India have increased
                their
                demand for oil. World oil prices topped $70 a barrel at times during
                2005
                and have averaged above $60 a barrel during 2006. As a domestic,
                renewable
                source of energy, ethanol reduces the U.S.'s dependence on foreign oil by
                increasing the availability of domestic fuel supplies. The Renewable
                Fuels
                Association calculates that in 2004 alone, the use of ethanol reduced
                the
                U.S. trade deficit by $5.1 billion by eliminating the need to import
                143.3
                million barrels of oil.
§
Federally
                mandated renewable fuel usage—the renewable fuels standard.
In
                August 2005, President Bush signed the Energy Policy Act establishing
                a
                nationwide renewable fuels standard (RFS) that will double the use
                of
                ethanol and biodiesel by 2012. The RFS eliminated the mandated use
                of
                oxygenates and mandates levels of annual use of renewable fuels in
                the
                U.S. fuel supply. The RFS requires motor fuels sold in the U.S.
                to
-10-
contain
      in the aggregate the following minimum volumes of renewable fuels in future
      years:
Year
Renewable
Fuel
                Usage
(BGY)
2006
4.0
2007
4.7
2008
5.4
2009
6.1
2010
6.8
2011
7.4
2012
7.5
The
      RFS:
§
provides
                for 2.78% by volume renewable fuel use in 2006 if federal regulations
                have
                not yet been promulgated by the U.S. Environmental Protection
                Agency;
§
provides
                that beginning in 2013, a minimum of 250 million gallons a year of
                cellulosic derived ethanol be included in the
                RFS;
§
provides
                refiners flexibility by creating a credit trading program that allows
                refiners to use renewable fuels where and when it is most efficient
                and
                cost-effective for them to do so. The credit trading program will
                result
                in lower costs to refiners and thus, consumers. RFS credits have
                a
                lifespan of 12 months. Every gallon of cellulose-derived ethanol
                is equal
                to 2.5 gallons of renewable fuel;
§
exempts
                small refineries (defined as facilities where the average daily crude
                oil
                throughput does not exceed 75,000 barrels per day) from the RFS program
                until January 1, 2011. Small refineries are able to opt in to the
                program
                and generate credits as do other
                refineries;
§
requires
                annual studies on seasonal variations in renewable fuel use. Requires
                regulations to ensure that at least 25% of the annual renewable fuel
                obligations be met in each season should seasonal variations exist;
§
protects
                consumers with a waiver provision in the event the economy or environment
                would be severely harmed because of the
                RFS;
§
eliminates
                the reformulated gasoline (RFG) 2.0 wt.% oxygenate standard under
                the
                Clean Air Act which had promoted the case of
                MBTE;
§
enhances
                the air quality performance standards established in the RFG
                program;
§
creates
                grant and loan guarantee programs for cellulose ethanol;
                and
§
creates
                grant and loan programs for ethanol production from
                sugar.
The
      Company believes that in general the RFS provides us with a sound basis for
      believing that U.S. ethanol consumption will increase through 2012. During
      this
      period, however, it is likely that substantial amounts of ethanol derived from
      cellulose, biomass, and other organic materials other than corn will come to
      market, providing competition for corn-based ethanol production. It also is
      possible
-11-
that
      the
      actual use of ethanol and other renewable fuels will surpass the mandated
      requirements, especially in the early years of implementation of the
      RFS.
More
      recently, the American Coalition for Ethanol (ACE) has sponsored a bill in
      Congress, known as the "Biofuels Security Act of 2006", to revise the current
      RFS schedule to achieve 12 BGY of ethanol by 2012 and 60 BGY of ethanol demand
      in the future when cellulose becomes cost-effective and technically
      feasible.  This bill may also require that all vehicles sold in the country
      be capable of using E85 by 2017 and that 50 percent of the service stations
      affiliated with major oil companies sell E85 by 2017 or sooner if
      possible.
Production
      of Ethanol
Production
      in the ethanol industry remains fragmented. According to the Renewable Fuels
      Association, although domestic ethanol production increased from 1.3 BGY in
      1997
      to 4.0 BGY in 2005 and 4.6 BGY in June 2006, the top 12 producers accounted
      for
      approximately 50% of the industry's total estimated production capacity as of
      April 2006. More than 50 smaller producers and farmer-owned cooperatives, most
      with production of 50 MMGY or less, generate the remaining production. Since
      a
      typical ethanol facility can be constructed in approximately 14-18 months from
      groundbreaking to operation, the industry is able to forecast capacity additions
      for up to 18 months in the future. The Renewable Fuels Association currently
      estimates that 30 new ethanol facilities and expansion of 10 other facilities
      with capacity of an aggregate of an additional 2.2 BGY are under construction.
      The Renewable Fuels Association also has reported that many other projects
      are
      in the planning, finance and permitting stages.
Although
      the ethanol industry continues to explore production technologies employing
      various feedstocks, such as biomass, corn-based production technologies remain
      the most practical and provide the lowest operating risks. Consequently, most
      U.S. ethanol is produced from corn grown in the Midwest, where corn is abundant.
      In addition to corn, the production process employs natural gas or, in some
      cases, coal to power the facility and dry distillers grains. Proximity to
      sufficient low-cost corn and natural gas supply, therefore, provides a key
      competitive advantage for ethanol producers. Nevertheless, over the next several
      years, it is likely that the production of ethanol from cellulose will increase
      and it is possible that, because of the size of this untapped biomass resource,
      its cost as a feedstock ethanol producer will be less than the cost of corn.
      A
      joint study by the U.S. Departments of Agriculture and Energy has concluded
      that
      the U.S. land resources could produce a sustainable supply of biomass sufficient
      to displace 30% of the country's current gasoline consumption.
More
      than
      half of total U.S. ethanol production is consumed in the east- and west-coast
      markets, primarily as a result of the stricter air quality requirements in
      large
      parts of those markets. The primary means of transporting ethanol from the
      Midwest to the coasts is by rail transportation. As a result, adequate access
      to
      rail transportation is a key consideration for locating ethanol production
      facilities. Furthermore, a producer's ability to form unit trains, consisting
      entirely of ethanol tank cars from one facility, allows for reduced
      transportation costs and faster delivery times. The movement of ethanol via
      pipeline is limited as a result of the tendency of ethanol to absorb water
      and
      other impurities found in the pipelines, logistical limitations of existing
      pipelines and limited volumes of ethanol that need to be transported. Barges
      and
      trucks are also used in the transportation of ethanol.
Imports
      of fuel ethanol from foreign sources, principally Brazil, also affect overall
      supply and pricing. According to a reliable trade source, total foreign imports
      in 2006 may amount to between 210 MMGY and 230 MMGY, or approximately 5% of
      total current U.S. production. Foreign imports of ethanol, except from certain
      Caribbean Basin nations, are subject to a tariff and an ad valorem tax.
-12-
Nevertheless,
      at price levels reached in the second quarter of 2006, prices of imported
      ethanol, including transportation costs, tariff and taxes, were competitive
      with
      domestically produced ethanol. Fuel ethanol imported from Jamaica, Trinidad,
      El
      Salvador, Costa Rica and 17 other nations is not subject to tariff and therefore
      reaches the U.S. at delivered prices below the current market.
The
      Ethanol Production Process
The
      production of ethanol or ethyl alcohol from starch or sugar-based feedstocks
      is
      among the earliest ventures into value-added processing. The process has been
      considerably refined in recent years. There are two production processes: wet
      milling and dry milling. The main difference between the two is in the initial
      treatment of the grain.
Dry
      Milling.
In
      dry
      milling, the entire corn kernel or other starchy grain is first ground into
      flour and the starch in the flour is converted to sugar which is then converted
      to ethanol by means of fermentation. The fermentation process generally takes
      about 40 to 50 hours. The ethanol is concentrated to 190 proof using
      conventional distillation and then is dehydrated to approximately 200 proof
      in a
      molecular sieve system.
The
      anhydrous ethanol is then blended with about 5% denaturant (such as natural
      gasoline) to render it undrinkable and thus not subject to beverage alcohol
      tax.
      It is then ready for shipment to gasoline terminals or retailers.
The
      other
      products of dry milling are carbon dioxide (used to carbonate soft drinks and
      the manufacture of dry ice) and dried distiller grains with solubles ("DDGS"), a
      high quality, nutritious livestock feed.
Dry
      Milling with Next Generation Fractionation Technology
In
      dry
      milling with fractionation, the corn kernel is separated into three distinct
      streams in the fractionation process. These streams are the bran or fiber,
      the
      germ and the endosperm or starch component. As in a typical dry mill, the starch
      is converted to sugar which is then converted to ethanol by means of
      fermentation. The fermentation process generally takes about 40 to 50 hours.
      The
      ethanol is concentrated to 190 proof using conventional distillation and then
      is
      dehydrated to approximately 200 proof in a molecular sieve system.
Wet
      Milling.
In
      wet
      milling, the grain is soaked or "steeped" in water and dilute sulfurous acid for
      24 to 48 hours. This steeping facilitates the separation of the grain into
      its
      many component parts, starch protein, germ and fiber, which are then further
      processed.
The
      products of wet milling include corn oil (which is either extracted on-site
      or
      sold to crushers who extract the corn oil), corn gluten meal co-product (a
      popular feed ingredient in poultry broiler operations), and starch products
      which can be processed in one of three ways: fermented into ethanol, dried
      and
      sold as dried or modified corn starch, or processed into corn syrup. The
      fermentation process for ethanol is very similar to the dry mill process
      described above.
-13-
Ethanol
      Production Economics
Corn
      represents the single largest cost in ethanol production. However, there is
      very
      little relationship between ethanol and corn prices. Ethanol prices most closely
      correlate to conventional gasoline. In fact, the last few years have yielded
      record corn crops with relatively low grain prices and record high ethanol
      prices. The result has been a significant increase in margins. Each bushel
      of
      corn yields approximately 2.8 gallons of denatured fuel ethanol. Moreover,
      to
      date in 2006 prices for ethanol have increased to a 24-year high, with a low
      spread over spot prices for gasoline. Because of the volatility in commodity
      prices, there is no certainty that ethanol prices will remain at these levels.
      In fact, the rise in prices may be resulting in the building of increased
      production capacity, which may well lead to a condition of
      oversupply.
The
      U.S.
      average ethanol price has shown substantial correlation with the price of
      conventional gasoline over the last decade. In contrast, correlations with
      variables pertaining to ethanol production including agricultural commodities
      have been quite weak (Sparks & KSU). Petroleum product prices will drive
      ethanol prices. According to the U.S. Energy Information Administration's Annual
      Energy Outlook 2006, oil prices are not likely to ease in the coming quarter
      century.
The
      National Corn Growers Association has stated there will be sufficient corn
      production to support 15 BGY of ethanol production, consuming approximately
      30%
      of annual corn production. A volume of 15 BGY is approximately 10% of the
      projected annual U.S. gasoline consumption.
At
      4.4
      billion gallons, the ethanol industry currently represents only 3% of the US
      gasoline market. With 10% blends, the market has room to expand to 15 billion
      gallons per year or approximately 3.5 times its current size.
Figure
      1
      Historic U.S. Fuel Ethanol Production
Source:
      U.S. Energy Information Administration / RFA
-14-
Dried
      Distillers Grain
Dried
      distillers grain is an important co-product of drymill ethanol production.
      As
      discussed above, the drymill ethanol production process uses only the starch
      portion of the corn, which is about 70% of the kernel. All the remaining
      nutrients - protein, fat, minerals, and vitamins - are concentrated into
      distillers grain, a valuable feed for livestock. A bushel of corn weighs 56
      pounds and will produce approximately 2.8 gallons of ethanol and 17 pounds
      of
      distillers grain.
Dried
      distillers grain with solubles (DDGS) is the form available to the cattle feed
      industry. The liquid that is separated from the mash during the distilling
      process is partially dehydrated into syrup, and then added back onto the
      distillers grain before drying to create DDGS.
DDGS
      is a
      high quality feedstock ration supplement for dairy cattle, beef cattle, and
      is
      suitable in varying amounts as a protein supplement for swine, poultry, and
      aquaculture. The feed is an economical partial replacement for corn, soybean
      meal, and dicalcium phosphate in livestock and poultry feeds. Historically,
      over
      85% of DDGS has been fed to dairy and beef cattle, and DDGS continues to be
      an
      excellent, economical feed ingredient for use in ruminant diets.
More
      than
      8 million metric tons of DDGS will be produced in the year 2006. Some industry
      experts are predicting that distillers by-product production will reach 10
      to 14
      million metric tons within the next few years.
The
      Company's Proposed
Strategy
The
      Company is focusing our efforts to become the industry's low cost producer. The
      Company anticipates that our acquisition and brownfield development strategies
      and our focus on alternative energy sources will afford us rapid capacity
      development with significant cost advantages. Brownfield development refers
      to
      the co-location of new ethanol plants adjacent to existing sources of steam
      energy. Further, by co-locating new developments at coal-fired electric plants,
      the Company believes that we may be able to take advantage of existing
      infrastructure, creating initial capital cost savings of up to 20%, as well
      as
      meaningful ongoing operating cost savings through less expensive energy
      services.
In
      addition, the Company expects that our use of corn fractionation technology
      will
      contribute to our effort to become a low cost producer in the industry.
      Fractionation is a process that separates the germ and the bran from the
      endosperm, which contains the starch used in making ethanol. Fractionation
      leads
      to increased ethanol productivity and to decreased ethanol production costs
      through increased plant output, decreased water use, decreased energy use and
      creation of a higher protein, higher value DDGS.
Although
      agricultural derivatives create higher value products from commodities, they
      themselves become commodities. Industry rationalization will permit only those
      companies that create operating models enabling low-cost production to survive.
      Traditionally, the most important factor in accomplishing low-cost production
      has been the establishment of significant economies of scale, supplemented
      by
      programs to reduce up-front capital costs and other strategic initiatives to
      reduce ongoing operational costs. Beyond the grain feedstock costs, the second
      highest input cost of ethanol production is energy, traditionally natural gas
      for creation of steam. Strategic location of ethanol plants near large coal
      fired utility plants may result in significant reduction of operating costs
      by
      utilizing waste heat and existing infrastructure from the power plant.
      Furthermore, through the use of alternative energy sources, such as coal or
      biomass, significant cost reductions are possible in other brownfield
      locations.
The
      Company plans to be a low-cost producer by way of alternative energy sources
      and
      applied technology with a goal to move into the top ten ethanol producers over
      the next four years. The Company
-15-
believes
      that we will be able to accomplish these objectives by successfully executing
      our utility co-location brownfield development, and two-part acquisition
      strategies.
Brownfield
      Utility Co-Location
By
      siting
      at an electric utility, the Company believes that we will achieve the following
      benefits and advantages:
§
Established
                railroad infrastructure for shipping ethanol and distillers grain
                and
                receiving feedstock and coal;
§
Water
                availability;
§
Reduced
                cost for electrical supply;
§
Existing
                industrial zoning; and
§
Expedited/Minimal
                permitting risk based on siting and thermal supply
                options.
After
      corn, fuel cost is the second largest production cost component. Accordingly,
      overall production cost changes are most sensitive to fuel cost changes. As
      ethanol plants require large amounts of energy to evaporate the water used
      in
      processing, a small change in energy cost has a significant effect on production
      costs. For example, a 50% rise in fuel price would result in a 20% increase
      in
      total production costs. The majority of plants producing ethanol today in the
      United States are fueled by natural gas. The extraordinary rise in the cost
      of
      natural gas in the last two years has had a meaningful impact on these
      producers' margins. The Company believes that coal will provide us with relative
      price stability. Nonetheless, coal prices, like all commodity prices, are
      volatile and more exposed to factors of supply and demand in the marketplace.
      Since coal is also a desirable alternative to oil and natural gas in other
      industrial processes, including power generation, its price may increase to
      a
      level that does not permit the Company's low-cost production of ethanol.
Acquisition
      of Expandable Existing Plants
The
      Company plans to generate rapid capacity development through acquisitions at
      the
      low end of the existing producer market in terms of plant capacity (20-30 MMGY)
      followed by subsequent unit expansion. This model provides near-term economies
      of scale and cash flow while maintaining a competitive cost structure. Smaller,
      cooperative owned plants located with rail access, water availability, and
      alternative energy access will be the primary target. The Company's plans to
      develop capacity by acquisition and expansion are subject to our ability to
      access capital from banks, investors, and other financial sources with
      acceptable terms and conditions. The availability of financing for acquisition
      and expansion will depend, in part, on market conditions for the fuel ethanol
      industry, including the capacity being created, the construction or expansion
      of
      other ethanol projects and the development of predictable, financeable supply
      requirements. The Research Institute of America has reported that, according
      to
      information provided to it, in the second quarter of 2006 there are more than
      150 ethanol projects that are seeking financing.
Over
      half
      of the ethanol plants operating in the U.S. are farmer-owned. Less than
      one-third of the plants currently being constructed, however, are farmer owned.
      Plants are becoming larger and require more capital to remain competitive.
      As a
      result, the pressure on smaller producers to expand or sell is creating an
      opportunity for the Company. By marketing our fractionation technology to an
      existing 30 MMGY producer in exchange for equity, with the offer to expand
      its output to 60 MMGY with a
-16-
concurrent
      change of power source from natural gas to coal or biomass, the Company believes
      that the annual return would increase from approximately $9.0 million for the
      ethanol and DDGS by-products to approximately $60 million. Total investment
      to
      accomplish the increase would be approximately $65.0 million, and the return
      is
      based upon an ethanol price of $1.60 per gallon. Several, if not many, other
      businesses, however, are attracted by these economics. As a result, the Company
      may not be able to secure acquisition of existing capacity on acceptable terms
      or at all.
Acquisition
      of Projects in Development
The
      Company believes that there are over 100 ethanol production projects currently
      planned. It further believes that many are being developed by inexperienced
      developers without adequate knowledge of the market and cost structures or
      the
      capability to bring the plant to fruition. The Company will target those
      projects in ideal locations with access to rail, water, feedstock, and some
      energy advantage. Energy advantages may come in the way of technology
      advancements resulting in significant energy cost reductions such as
      fractionation technology or high efficiency dried distillers grain with solubles
      ("DDGS") drying. Energy cost reductions may occur with alternative fuel sources
      or the unusual ability to sell DDGS wet thus eliminating the need for
      drying.
The
      Company has commenced discussions with owners of projects in development. It
      currently plans to enter into agreements with some or all of these developers
      within the 3 months after completion of the Offering. Since at least 18 to
      21
      months are required to construct an ethanol production facility and bring it
      to
      operational levels, and since construction cannot commence without full
      permitting and licensing from all required governmental authorities, the Company
      expects that we will not be able to sell production from these sources until
      early 2009. By this time, the current production capacity of the U.S. ethanol
      industry is expected to increase by at least 70%. As a result, if projected
      demand for ethanol does not increase at a similar pace, or if gasoline prices
      do
      not remain at levels that support the increased use of ethanol, prices for
      ethanol may not remain at levels that support a favorable return on the
      Company's investment in these projects.
As
      is the
      case with existing production facilities, the competition to acquire projects
      in
      development may become intense and the Company may not be able to reach
      agreement with sellers on acceptable terms or on any terms at all. Furthermore,
      the Company's ability to finance acquisitions of projects in development may be
      subject to our ability to demonstrate acceptable returns from these
-17-
projects,
      which in turn is subject to market conditions and the willingness of banks
      and
      investors to provide capital on acceptable terms.
Current
      Industry Hurdles
Since
      many new ethanol construction and expenses in projects are currently underway,
      existing ethanol industry resources are in short supply. There are only a few
      experienced ethanol plant construction contractors, all of which are booked
      for
      two years in advance or more. In addition, currently there are many industrial
      projects requiring substantial numbers of construction craft workers. The
      volatility of stainless steel, copper, and other commodities used in the
      construction of ethanol plants makes ethanol plant construction contracting
      difficult at best. The Company plans to seek out contractors outside the ethanol
      industry to provide construction services by way of smaller local subcontractors
      with a craft following. In addition, the Company expects to begin to identify
      procuring long lead equipment and materials required with a view to maintaining
      the shortest construction schedules possible. Despite our efforts, however,
      the
      Company may not be able to secure the services of contractors that are capable
      of providing us with the required services or are willing to provide those
      services on acceptable terms. Similarly, the Company cannot be certain that
      we
      will be able to procure equipment and materials on the terms that we currently
      envision or on any terms. As a result, the Company's ability to commence,
      continue or complete construction or expansion of the contemplated facilities
      may be severely limited and the Company may not be able to achieve its business
      goals.
Marketing
      and Sales
The
      Company plans initially to utilize the services of nationally recognized
      third-party traders for the sales of both ethanol and DDGS as well as the
      procurement of corn feedstock. The Company has existing relationships with
      Cargill, F.C. Stone, Eco-Energy, Nobles America, and Scoular Company and plans
      to rely on those relationships to secure appropriate arrangements for purchases
      and sales. No such arrangements currently exist, however. The Company will
      be
      competing with other producers for corn and other feedstocks and will also
      be
      competing with other producers in the sale of ethanol and DDGS. At this stage
      of
      development, the Company cannot be certain that we will be able to secure
      arrangements for the sale and marketing of ethanol and DDGS or for the purchase
      of feedstock necessary for production.
To
      assist
      us in creating our internal capacity to market our products and buy feedstock,
      the Company is currently seeking an executive with experience as a successful
      commodity trader with specific ethanol experience. If we can employ such an
      individual and if the individual is able to create an effective marketing and
      sales function within the Company, the Company has planned that, in year two
      of
      operations, we will transition these functions in-house to a substantial extent.
      The Company's ability to employ the appropriate executive may, however, be
      limited due to the limited number of qualified candidates or the Company's
      ability to compete with better-established, better-financed ethanol businesses,
      some of whom already are publicly-traded businesses, for talented executives.
      As
      a result, the Company may not be able to employ a qualified executive on
      acceptable terms, or at all, in which case our sales, marketing and purchasing
      functions would rely wholly on third parties. The terms of third party
      arrangements may adversely affect the Company's anticipated financial
      results.
Overview
      of Raw Material Supply, Pricing and Hedging
The
      Company may seek to mitigate our exposure to commodity price fluctuations by
      purchasing forward a portion of our corn requirements on a fixed price basis
      and
      by purchasing corn and natural gas futures contracts. To mitigate ethanol price
      risk, we may sell a portion of our production forward under
-18-
fixed
      price and indexed contracts. The indexed contracts are typically referenced
      to a
      futures contract such as unleaded gasoline on the NYMEX, and we may hedge a
      portion of the price risk associated with index contracts by selling
      exchange-traded unleaded gasoline contracts. It is possible, but not certain,
      that our strategy of managing exposure to commodity price fluctuations will
      reduce somewhat the volatility of our results.
The
      Company may also:
§
purchase
                corn through spot cash, fixed-price forward and delayed pricing contracts;
                and
§
utilize
                hedging positions in the corn futures market to manage the risk of
                excessive corn price fluctuations for a portion of our corn
                requirements.
Coal
      and n
atural
      gas procurement and hedging strategy.
The
      Company may also be subject to market risk with respect to our supply of coal
      and natural gas that will be consumed in our ethanol production process and
      has
      historically been subject to volatile market conditions. Natural gas prices
      and
      availability are affected by weather conditions and overall economic conditions.
      Accordingly, we may hedge a portion of our exposure to natural gas price risk
      from time to time by using fixed price or indexed exchange-traded futures
      contracts.
Unleaded
      gasoline hedging strategy.
If
      a
      substantial number of our contracts to sell ethanol are priced based on the
      price of unleaded gasoline, it is possible that we may establish from time
      to
      time an unleaded gasoline hedge position using exchange-traded futures to reduce
      our exposure to unleaded gasoline price risk.
Competition
The
      U.S.
      ethanol market is highly competitive. According to the Renewable Fuels
      Association, world ethanol production rose to 12 billion gallons in 2005.
      Non-U.S. ethanol accounted for 65% of world production. The U.S. and Brazil
      are
      the world's largest producers of ethanol. As of June 2006, industry capacity in
      the U.S. approximated 4.6 BGY, with an additional 2.2 BGY of capacity under
      new construction or expansion of existing facilities. The ethanol industry
      in
      the U.S. consists of more than 90 production facilities and is primarily corn
      based, while the Brazilian ethanol production is primarily sugar cane based.
According
      the Research Institute of America, the top 12 U.S. producers currently account
      for 50% of the ethanol production capacity in the U.S. as
      follows:
-19-
Current
                capacity
(as
                of March 2006)
MMGY
Number
                of
plants
Share
                of the market
Archer
                Daniels Midland
1,070
7
24
%
VeraSun
230
2
5
Aventine
                Renewable Energy
150
2
3
Cargill
120
2
3
Abengoa
                Bioenergy
110
3
2
Hawkeye
                Renewables
105
2
2
New
                Energy
102
1
2
Midwest
                Grain Processors*
100
1
2
MGP
                Ingredients
78
1
2
Tate
                & Lyle (formerly AE Staley)
67
1
1
Chief
                Ethanol
62
1
1
Sioux
                River Ethanol*
55
1
1
*
Farmer-owned
The
      industry is otherwise highly fragmented, with many small, independent firms
      and
      farmer-owned cooperatives constituting the rest of the market. If we follow
      our
      current business plan, the Company will compete with our competitors primarily
      on a national basis.
The
      Company believes that our ability to compete successfully in the ethanol
      production industry depends on many factors, but we are principally relying
      on
      our strategy to be among the lowest-cost producers.
With
      respect to DDGS, the Company is likely to compete with other ethanol producers,
      as well as a number of large and smaller suppliers of competing animal feed.
      The
      Company believes that we will be able to successfully compete based on our
      product's price, proximity to purchasers and quality.
Legislation
Energy
      Policy Act.
As
      discussed above, the Energy Policy Act established minimum annual volumes of
      renewable fuel to be used by petroleum refiners in the fuel supply and did
      not
      provide liability protection to refiners who use MTBE as a fuel additive. The
      Energy Policy Act also removed the oxygenate requirements that were put in
      place
      by the Clean Air Act. By including anti-backsliding provisions the Energy Policy
      Act requires refiners to maintain emissions quality standards in the fuels
      that
      they produce, thus providing a source for continued need for
      ethanol.
There
      is,
      however, the potential that some or all of the Renewal Fuels Standards may
      be
      waived. Under the Energy Policy Act, the U.S. Department of Energy, in
      consultation with the Secretary of Agriculture and the Secretary of Energy,
      may
      waive the renewable fuels mandate with respect to one or more states if the
      Administrator of the U.S. Environmental Protection Agency ("EPA") determines
      that implementing the requirements would severely harm the economy or the
      environment of a state, a region or the U.S., or that there is inadequate supply
      to meet the requirement.
-20-
The
      Federal blenders' credit.
First
      implemented in 1979, the federal excise tax incentive program allows gasoline
      distributors who blend ethanol with gasoline to receive a federal excise tax
      rate reduction of $0.51 per gallon of ethanol. The incentive program is
      scheduled to expire in 2010 (unless extended).
The
Federal
      Clean Air Act.
Environmental
      regulations partially drive the use of ethanol as an oxygenate. The federal
      Clean Air Act requires the use of oxygenated gasoline during winter months
      in
      areas with unhealthy levels of carbon monoxide.
State
      L
egislation
In
      recent
      years, due to environmental concerns, 25 states have banned, or significantly
      limited, the use of MTBE, including California, Connecticut and New York.
      Ethanol has served as a replacement for much of the discontinued MTBE volumes.
      The Company expects that ethanol will continue to replace future MTBE volumes
      that are removed from the fuel supply.
Federal
      tariff on imported ethanol.
In
      1980,
      Congress imposed a tariff on foreign produced ethanol, made from cheaper sugar
      cane, to encourage the development of a domestic, corn-derived ethanol supply.
      This tariff was designed to prevent the federal tax incentive from benefiting
      non-U.S. producers of ethanol. The tariff is $0.54 per gallon and is scheduled
      to expire in 2007 (unless extended).
Ethanol
      imports from 24 countries in Central America and the Caribbean Islands are
      exempted from the tariff under the Caribbean Basin Initiative, which provides
      that specified nations may export an aggregate of 7.0% of U.S. ethanol
      production per year into the U.S., with additional exemptions from ethanol
      produced from feedstock in the Caribbean region over the 7.0% limit. As a result
      of new plants under development, the Company believes that imports from the
      Caribbean region will continue, subject to the limited nature of the
      exemption.
The
      North
      American Free Trade Agreement ("NAFTA") also allows Canada and Mexico to export
      ethanol to the United States duty-free or at a reduced rate. Canada is exempt
      from duty under the current NAFTA guidelines, while Mexico's duty rate is $0.10
      per gallon.
In
      addition, there is a flat 2.5% ad valorem tariff on all imported
      ethanol.
Federal
      farm legislation.
The
      federal blenders' credits and tariffs, as well as other federal and state
      programs benefiting ethanol, generally are subject to U.S. government
      obligations under international trade agreements, including those under the
      World Trade Organization Agreement on Subsidies and Countervailing Measures.
      Consequently, these credits and tariffs are the subject of challenges
      thereunder, in whole or in part.
Environmental
      Matters
Because
      the Company plans to operate ethanol production facilities, we will be subject
      to various federal, state and local environmental laws and regulations,
      including those relating to the discharge of
-21-
materials
      into the air, water and ground; the generation, storage, handling, use,
      transportation and disposal of hazardous materials; and the health and safety
      of
      our employees. These laws, regulations and permits also can require expensive
      pollution control equipment or operational changes to limit actual or potential
      impacts to the environment. A violation of these laws and regulations or permit
      conditions can result in substantial fines, natural resource damage, criminal
      sanctions, permit revocations and/or facility shutdowns. In August 2006, the
      Company entered into an agreement with Natural Resource Group, Inc., of
      Minneapolis, Minnesota. Natural Resource Group, Inc., an environmental
      consulting firm, will assist the Company in its permitting process.
The
      Company does not anticipate a material adverse effect on our business or
      financial condition as a result of our efforts to comply with these
      requirements.
There
      is
      a risk of liability for the investigation and cleanup of environmental
      contamination at each of the properties that we may own or operate and at
      off-site locations where we may arrange for the disposal of hazardous
      substances. If these substances have been or are disposed of or released at
      sites that undergo investigation and/or remediation by regulatory agencies,
      the
      Company may become responsible under the Comprehensive Environmental Response,
      Compensation and Liability Act of 1980 ("CERCLA") or other environmental laws
      for all or part of the costs of investigation and/or remediation and for damage
      to natural resources. In that case we may also be subject to related claims
      by
      private parties alleging property damage and personal injury due to exposure
      to
      hazardous or other materials at or from these properties. Some of these matters
      may require us to expend significant amounts for investigation and/or cleanup
      or
      other costs.
In
      addition, if we become the owner or operator of any ethanol production
      facilities, new laws, new interpretations of existing laws, increased
      governmental enforcement of environmental laws or other developments could
      require the Company to make additional significant expenditures. Continued
      government and public emphasis on environmental issues can be expected to result
      in increased future investments for environmental controls at its current and
      future environmental laws and regulations (and related interpretations); more
      vigorous enforcement policies and discovery of currently unknown conditions
      may
      require substantial capital and other expenditures. Air emissions from ethanol
      production are subject to the federal Clean Air Act, the federal Clean Air
      Act
      Amendments of 1990 and similar state and local laws and associated regulations.
      The EPA has promulgated National Emissions Standards for Hazardous Air
      Pollutants, or NESHAP, under the federal Clean Air Act that could apply to
      facilities that the Company may come to own or operate if the emissions of
      hazardous air pollutants exceed certain thresholds. If a facility operated
      by
      the Company is authorized to emit hazardous air pollutants above the threshold
      level, then it would be required to comply with the NESHAP related to its
      production process and would be required to come into compliance with another
      NESHAP applicable to boilers and process heaters by September 13, 2007. New
      or
      expanded facilities would be required to comply with both standards upon startup
      if they exceed the hazardous air pollutant threshold. In addition to costs
      for
      achieving and maintaining compliance with these laws, more stringent standards
      may also limit the operating flexibility that the Company expects to achieve.
      Because other domestic ethanol manufacturers will have similar restrictions,
      however, the Company believes that compliance with more stringent air emission
      control or other environmental laws and regulations is not likely to materially
      affect our competitive position.
The
      hazards and risks associated with producing and transporting ethanol and dried
      distillers grain with solubles ("DDGS"), such as fires, natural disasters,
      explosions, abnormal pressures, blowouts and pipeline ruptures also may result
      in personal injury claims or damage to property and third parties. As protection
      against operating hazards, the Company plans to secure and maintain insurance
      coverage against some, but not all, potential losses. The coverage it plans
      will
      include physical damage to assets,
-22-
employer's
      liability, comprehensive general liability, automobile liability and workers'
compensation. Even if our insurance is adequate and customary for our industry,
      losses could occur for uninsurable or uninsured risks or in amounts in excess
      of
      existing insurance coverage. The Company's ability to secure coverage is
      dependent on the successful completion of the Offering and the availability
      of
      insurance. If we are unable to procure adequate insurance, we may not be able
      to
      obtain financing or otherwise execute our business plan.
Employees
As
      of
      September 1, 2006, the Company had approximately six full time employees who
      are
      responsible for companywide management, marketing, project management, logistics
      and administration. All of these employees are located in the U.S. None of
      our
      employees is covered by a collective bargaining agreement. The Company has
      had
      no labor-related work stoppages, none of the Company's employees are represented
      by a labor union and the Company believes that it has positive relations with
      its employees.
Legal
      Proceedings
From
      time
      to time the Company may be named in claims arising in the ordinary course of
      business. Currently, no legal proceedings or claims are pending against or
      involve the Company that, in the opinion of management, could reasonably be
      expected to have a material adverse effect on its business and financial
      condition.
Available
      Information
We
      are
      subject to the reporting requirements of the Securities Exchange Act of 1934,
      as
      amended (the "Exchange Act"). Reports filed with the SEC pursuant to the
      Exchange Act, including proxy statements, annual and quarterly reports, and
      other reports we file, can be inspected and copied at the public reference
      facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549.
      Investors may obtain information on the operation of the public reference room
      by calling the SEC at 1-800-SEC-0330. Investors can request copies of these
      documents upon payment of a duplicating fee by writing to the SEC. The reports
      we file with the SEC are also available on the SEC's Internet site
      (http://www.sec.gov).
-23-
RISK
      FACTORS
An
      investment in shares of Common Stock is highly speculative and involves a high
      degree of risk. Only those investors who can bear the risk of loss of their
      entire investment should participate. Prospective investors should carefully
      consider the following risk factors in evaluating an investment in the
      Company.
Risks
      Related to the Company's Business
The
      Company has had no operating history as a producer of ethanol or dried
      distillers grain with solubles ("DDGS").
The
      Company has no operating history in our contemplated ethanol production business
      and, to date, has not earned any revenues. Accordingly, it may be difficult
      for
      investors to evaluate its business prospects.
The
      Company's business is dependent on the implementation of our business plan,
      including our ability to make future investments. There can be no assurance
      that
      the Company's efforts will ultimately be successful or result in revenues or
      profits. There is no assurance that investors will not lose their entire
      investment.
Moreover,
      the Company's prospects must be considered in light of the risks and
      uncertainties encountered by an early-stage company and in rapidly evolving
      markets, such as the ethanol market, where supply and demand may change
      significantly in a short amount of time.
Some
      of
      these risks relate to the Company's potential inability to:
§
effectively
                manage our contemplated business and
                operations;
§
recruit
                and retain key personnel;
§
successfully
                create and maintain the low-cost structure we envision as we expand
                the
                scale of our business;
§
manage
                rapid growth in personnel and
                operations;
§
develop
                new products that complement our contemplated business;
                and
§
successfully
                address the other risks described throughout this Current
                Report.
If
      the
      Company cannot successfully address these risks, our contemplated business
      and
      the results of our contemplated operations and financial position would
      suffer.
The
      Company's ability to execute our business plan depends on
      conditions
,
      the satisfaction of which are not under our control.
The
      Company's ability to successfully execute our business plan depends on the
      satisfaction of several conditions. The Company's ability to satisfy these
      conditions may be, in part or in whole, beyond our control. The principal
      conditions to be satisfied include:
-24-
§
reaching
                definitive agreements for the development, construction and operation
                of
                the contemplated facilities or, if a contemplated facility is not
                feasible, one or more other sites;
§
entering
                into satisfactory agreements for the acquisition of existing, operational
                ethanol production facilities;
§
entering
                into satisfactory agreements for the expansion of existing ethanol
                facilities that we may be able to
                acquire;
§
obtaining
                all required permits and consents from third parties for our anticipated
                acquisition and expansion of existing facilities, as well as for
                the
                future operation of those
                facilities;
§
entering
                into satisfactory agreements to acquire or otherwise participate
                in
                planned ethanol production facilities which may or may not have sufficient
                permits and consents at the time of acquisition;
                and
§
entering
                into satisfactory agreements, on either a spot market or forward
                basis,
                for the sale of our ethanol production or the purchase of feedstock,
                natural gas and other materials or services needed for
                operation.
Since
      the
      Company has yet to begin full operation as a business, there is no certainty
      that we will be able to achieve satisfaction of any or all of the above
      conditions. Furthermore, to achieve satisfaction, it is likely that the Company
      will be required to raise substantial additional amounts of capital, including
      equity capital. The terms on which such equity capital may be raised, if
      available at all, may be dilutive and otherwise disadvantageous to existing
      Company stockholders.
The
      results of operations, financial position and business outlook of the Company's
      planned business are highly dependent on commodity prices, which are subject
      to
      significant volatility and uncertainty, and the availability of supplies.
      Accordingly, any results of our contemplated business could fluctuate
      substantially.
Anticipated
      results may be substantially dependent on commodity prices, especially prices
      for corn, natural gas, ethanol, and unleaded gasoline.
As
      a
      result of the volatility of the prices for commodities, anticipated results
      may
      fluctuate substantially and the Company may experience periods of declining
      prices for our products and increasing costs for our raw materials, which could
      result in operating losses. Although the Company may attempt to offset a portion
      of the effects of fluctuations in prices by entering into forward contracts
      to
      supply ethanol or purchase corn, natural gas or other items or by engaging
      in
      transactions involving exchange-traded futures contracts, the amount and
      duration of these hedging and other risk mitigation activities may vary
      substantially over time and these activities also involve substantial risks.
      See
"—If the Company engages in hedging transactions and other risk mitigation
      strategies, those strategies could harm our financial results" on page
      27.
The
      Compan
y
'
s
      contemplated business is likely to be highly sensitive to corn prices and we
      generally will be unable to pass on increases in corn prices to our customers.
The
      principal raw material we expect to use to produce ethanol and co-products,
      including dry and wet distillers grains, is corn. As a result, changes in the
      price of corn can significantly affect our contemplated business. In general,
      rising corn prices produce lower profit margins. Because ethanol competes with
      non-corn-based fuels, the Company is not likely to be able to pass along
      increased corn
-25-
costs
      to
      customers. At certain levels, corn prices may make ethanol uneconomical to
      use
      in fuel markets. Over the ten-year period from 1996 through 2005, corn prices
      (based on the Chicago Board of Trade, or CBOT, daily futures data) have ranged
      from a low of $1.75 per bushel in 2000 to a high of $5.48 per bushel in 1996,
      with prices averaging $2.47 per bushel during this period.
Weather
      conditions and other factors affecting crop yields, farmer planting decisions,
      and general economic, market and regulatory factors all influence the price
      of
      corn. Government policies and subsidies with respect to agriculture and
      international trade, and global and local demand and supply also impact the
      price. The significance and relative effects of these factors on the price
      of
      corn are difficult to predict. Any event that tends to negatively affect the
      supply of corn, such as adverse weather or crop disease, could increase corn
      prices and potentially harm our business. In addition, ethanol producers may
      also have difficulty, from time to time, in physically sourcing corn on
      economical terms due to supply shortages. Such a shortage could require the
      Company to suspend our contemplated operations until corn becomes available
      at
      acceptable terms, which would have a material adverse effect on our profits
      and
      revenues, thus affecting our financial position. The price paid for corn at
      a
      facility could increase if an additional ethanol production facility is built
      in
      the same general vicinity.
The
      spread between ethanol and corn prices can vary significantly, and the recent
      high levels of these spreads are unlikely to remain.
The
      gross
      margin of the Company's anticipated business depends principally on the spread
      between ethanol and corn prices. During the five-year period from 2001 to 2005,
      ethanol prices (based on average U.S. ethanol rack prices from Bloomberg, L.P.,
      or Bloomberg) have ranged from a low of $0.94 per gallon to a high of $2.76
      per
      gallon, averaging $1.50 per gallon during this period. In recent periods, the
      spread between ethanol and corn prices has been at a historically high level,
      driven in large part by high oil prices and historically low corn prices. During
      2005, however, this spread fluctuated widely and, because of the unusual degree
      of spread in current markets, fluctuations are likely to continue to occur.
      Any
      reduction in the spread between ethanol and corn prices, whether as a result
      of
      an increase in corn prices or a reduction in ethanol prices, would adversely
      affect the Company's anticipated results of operations and financial
      position.
The
      market for natural gas is subject to market conditions that create uncertainty
      in the price and availability of the natural gas that the Company may use in
      our
      anticipated manufacturing process.
The
      Company's contemplated business may rely upon third parties for supplies of coal
      or natural gas or both, which is consumed in the manufacture of ethanol. The
      prices for and availability of coal and natural gas are subject to volatile
      market conditions. These market conditions often are affected by factors beyond
      our control, such as higher prices resulting from colder than average weather
      conditions and overall economic conditions. Significant disruptions in the
      supply of coal and natural gas could impair our ability to manufacture ethanol
      for our customers. Furthermore, increases in coal and natural gas prices or
      changes in coal and natural gas costs relative to natural gas costs paid by
      competitors could adversely affect our anticipated results of operations and
      financial position. The price fluctuations in natural gas prices over the
      six-year period from December 31, 1999 through December 28, 2005, based on
      the
      NYMEX daily futures data, has ranged from a low of $1.83 per MMBTU in 2001
      to a
      high of $13.91 per MMBTU in 2005, averaging $5.25 per MMBTU during this
      period.
-26-
Fluctuations
      in the selling price and production cost of gasoline may reduce the Company's
      anticipated profit margins, if profits are achieved.
Ethanol
      is marketed both as a fuel additive to reduce vehicle emissions from gasoline
      and as an octane enhancer to improve the octane rating of gasoline with which
      it
      is blended. As a result, ethanol prices are influenced by the supply and demand
      for gasoline and our anticipated results of operations and financial position
      may be materially adversely affected if gasoline demand or price decreases.
      Historically, the price of a gallon of gasoline has been lower than the cost
      to
      produce a gallon of ethanol. In addition, some of the sales contracts into
      which
      the Company may enter may provide for pricing on an indexed basis, so that
      the
      price we may receive for products sold under these arrangements will be adjusted
      as gasoline prices change.
The
      Company
'
s
      anticipated business will be subject to seasonal fluctuations.
The
      Company's anticipated operating results are likely to be influenced by seasonal
      fluctuations in the price of our primary operating inputs, corn and coal or
      natural gas or both, and the price of our primary product, ethanol. The spot
      price of corn tends to rise during the spring planting season in May and June
      and tends to decrease during the fall harvest in October and November. The
      price
      for natural gas, however, tends to move opposite that of corn and tends to
      be
      lower in the spring and summer and higher in the fall and winter. In addition,
      ethanol prices are substantially correlated with the price of unleaded gasoline
      especially in connection with our indexed, gas-plus sales contracts. The price
      of unleaded gasoline tends to rise during each of the summer and winter. Given
      our lack of operating history, the Company does not know yet how these seasonal
      fluctuations will affect our results over time.
If
      the Company engages in hedging transactions and other risk mitigation
      strategies, those strategies could harm our financial
      results.
It
      is
      possible that, in an attempt to partially offset the effects of volatility
      of
      ethanol prices and corn and natural gas costs, the Company will enter into
      contracts to supply a portion of our ethanol production or purchase a portion
      of
      our corn or natural gas requirements on a forward basis and also engage in
      other
      hedging transactions involving exchange-traded futures contracts for corn,
      natural gas and unleaded gasoline from time to time. The price of unleaded
      gasoline also affects the price we receive for our ethanol under indexed
      contracts. The financial statement impact of these activities is dependent
      upon,
      among other things, the prices involved and our ability to sell sufficient
      products to use all of the corn and natural gas for which we have futures
      contracts. Hedging arrangements, if entered into, will also expose us to the
      risk of financial loss in situations where the other party to the hedging
      contract defaults on its contract or, in the case of exchange-traded contracts,
      where there is a change in the expected differential between the underlying
      price in the hedging agreement and the actual prices paid or received by the
      Company. Hedging activities can themselves result in losses when a position
      is
      purchased in a declining market or a position is sold in a rising market. A
      hedge position is often settled in the same time frame as the physical commodity
      is either purchased (corn and natural gas) or sold (ethanol). Hedging losses
      may
      be offset by a decreased cash price for corn and natural gas and an increased
      cash price for ethanol. If we do hedge, the Company may also vary the amount
      of
      hedging or other risk mitigation strategies we undertake, and we may choose
      not
      to engage in hedging transactions at all. As a result, the Company's results of
      operations and financial position may be adversely affected by increases in
      the
      price of corn or natural gas or decreases in the price of ethanol or unleaded
      gasoline.
-27-
The
      Company may be substantially dependent on one or two facilities, and any
      operational disruption could result in a reduction of sales volumes and could
      cause us to incur substantial losses.
Most
      of
      the Company's anticipated revenues are and will continue to be derived from the
      sale of ethanol and the related co-products that we plan to produce. Once
      commenced, our anticipated operations may be subject to significant interruption
      if any of our facilities experience a major accident or are damaged by severe
      weather or other natural disasters. In addition, our operations may be subject
      to labor disruptions and unscheduled downtime, or other operational hazards
      inherent in the ethanol industry, such as equipment failures, fires, explosions,
      abnormal pressures, blowouts, pipeline ruptures, transportation accidents and
      natural disasters. Some of these operational hazards may cause personal injury
      or loss of life, severe damage to or destruction of property and equipment
      or
      environmental damage, and may result in suspension of operations and the
      imposition of civil or criminal penalties. The insurance that the Company plans
      to obtain, if obtained, may not be adequate to fully cover the potential
      operational hazards described above.
The
      Company may not be able to implement business plan for acquisition and expansion
      as planned or at all.
The
      Company plans to grow our contemplated business by investing in new or existing
      facilities. We believe that there is increasing competition for suitable sites.
      Therefore, we may not find suitable additional sites for construction of new
      facilities or other suitable expansion opportunities.
The
      Company may need financing to implement our business strategies and we may
      not
      have access to the funding required or such funding may not be available to
      us
      on acceptable terms. We may finance the expansion of our business with
      additional indebtedness or by issuing additional equity securities. We could
      face financial risks associated with incurring additional indebtedness, such
      as
      reducing our liquidity and access to financial markets and increasing the amount
      of cash flow required to service such indebtedness, or associated with issuing
      additional stock, such as dilution of ownership and earnings.
The
      Company must also obtain numerous regulatory approvals and permits in order
      to
      construct and operate additional or expanded facilities. These requirements
      may
      not be satisfied in a timely manner or at all. In addition, as described on
      page
      32 under "—The Company may be adversely affected by environmental, health and
      safety laws, regulations and liabilities," federal and state governmental
      requirements may substantially increase our costs, which could have a material
      adverse effect on the results of our contemplated operations and financial
      position. Our contemplated expansion plans may also result in other
      unanticipated adverse consequences, such as diverting management's attention
      from our existing operations.
Our
      anticipated construction costs may also increase to levels that would make
      a new
      facility too expensive to complete or unprofitable to operate. Contractors,
      engineering firms, construction firms, and equipment suppliers also receive
      requests and orders from other ethanol companies and, therefore, the Company
      may
      not be able to secure their services or products on a timely basis or on
      acceptable financial terms. The Company may suffer significant delays or cost
      overruns as a result of a variety of factors, such as shortages of workers
      or
      materials, transportation constraints, adverse weather, unforeseen difficulties
      or labor issues, any of which could prevent us from commencing operations as
      expected at our facilities.
Accordingly,
      the Company may not be able to implement our acquisition or expansion strategy
      as planned or at all. We may not find additional appropriate sites for new
      facilities and we may not be able to finance, construct, develop, or operate
      these new or expanded facilities successfully.
-28-
Potential
      future acquisitions could be difficult to find and integrate, divert the
      attention of key personnel, disrupt business, dilute stockholder value, and
      adversely affect financial results.
As
      part
      of the Company's business strategy, the Company may consider acquisitions of
      building sites, production facilities, storage or distribution facilities and
      selected infrastructure. The Company may not find suitable acquisition
      opportunities.
Acquisitions
      involve numerous risks, any of which could harm our contemplated business,
      including:
§
difficulties
                in integrating the operations, technologies, products, existing contracts,
                accounting processes and personnel of the target and realizing the
                anticipated synergies of the combined
                businesses;
§
difficulties
                in supporting and transitioning customers, if any, of the target
                company
                or assets;
§
diversion
                of financial and management resources from existing
                operations;
§
the
                price paid or other resources devoted may exceed the value we realize,
                or
                the value to be realized if the Company had allocated the purchase
                price
                or other resources to another
                opportunity;
§
risks
                of entering new markets or areas in which the Company has limited
                or no
                experience;
§
potential
                loss of key employees, customers and strategic alliances from the
                Company's contemplated business or the business of the
                target;
§
assumption
                of unanticipated problems or latent liabilities, such as problems
                with the
                quality of the products of the target;
                and
§
inability
                to generate sufficient revenue to offset acquisition
                costs.
Acquisitions
      also frequently result in the recording of goodwill and other intangible assets
      which are subject to potential impairments in the future that could harm the
      Company's financial results. In addition, if the Company finances acquisitions
      by issuing convertible debt or equity securities, our existing stockholders
      may
      be diluted, which could affect the market price of our common stock. As a
      result, if the Company fails to properly evaluate acquisitions or investments,
      we may not achieve the anticipated benefits of any such acquisitions and we
      may
      incur costs in excess of what we anticipate. The failure to successfully
      evaluate and execute acquisitions or investments or otherwise adequately address
      these risks could materially harm our business and financial
      results.
Growth
      in the sale and distribution of ethanol is dependent on the changes to and
      expansion of related infrastructure which may not occur on a timely basis,
      if at
      all, and the Company's contemplated operations could be adversely affected by
      infrastructure disruptions.
Substantial
      development of infrastructure will be required by persons and entities outside
      the Company's control for our contemplated operations, and the ethanol industry
      generally, to grow. Areas requiring expansion include, but are not limited
      to:
§
additional
                rail capacity;
§
additional
                storage facilities for ethanol;
-29-
§
increases
                in truck fleets capable of transporting ethanol within localized
                markets;
§
expansion
                of refining and blending facilities to handle ethanol;
                and
§
growth
                in service stations equipped to handle ethanol
                fuels.
Substantial
      investments required for these infrastructure changes and expansions may not
      be
      made or they may not be made on a timely basis. Any delay or failure in making
      the changes to or expansion of infrastructure could hurt the demand or prices
      for the Company's contemplated products, impede our delivery of those products,
      impose additional costs on us, or otherwise have a material adverse effect
      on
      our results of contemplated operations or financial position. The Company's
      contemplated business will be dependent on the continuing availability of
      infrastructure and any infrastructure disruptions could have a material adverse
      effect on our business.
New
      ethanol plants under construction or decreases in the demand for ethanol may
      result in excess U.S. production capacity.
According
      to the Renewable Fuels Association, domestic ethanol production capacity has
      increased from 1.9 BGY as of January 2001 to an estimated 4.6 BGY at June 30,
      2006. During March and April 2006 ethanol was produced at record and near-record
      levels of 392.2 million gallons and 363.6 million gallons. The Renewable Fuels
      Association estimates that, as of June 30, 2006, approximately 2.2 BGY of
      additional production capacity is under construction. According to the Research
      Institute of America, at the end of 2005, 95 ethanol refineries were in
      production, 14 began operations, 30 began construction and 10 were expanded.
      Certain of the new refineries are being built in California, North Carolina,
      Arizona, Texas and New Mexico. The Research Institute of America has reported
      that, according to information provided to it, in the second quarter of 2006
      there are more than 150 ethanol projects that are seeking financing. Excess
      capacity in the ethanol industry would have an adverse effect on the Company's
      contemplated results of operations, cash flows, and financial position. In
      a
      manufacturing industry with excess capacity, producers have an incentive to
      manufacture additional products for so long as the price exceeds the marginal
      cost of production (i.e., the cost of producing only the next unit, without
      regard for interest, overhead or fixed costs). This incentive can result in
      the
      reduction of the market price of ethanol to a level that is inadequate to
      generate sufficient cash flow to cover costs.
The
      Company
may not
      be able to compete effectively in the U.S. and foreign ethanol
industries
.
In
      the
      U.S., the Company's contemplated business would compete with other corn
      processors, ethanol producers and refiners. As of March 2006, the top 12
      producers accounted for at least 50% of the ethanol production capacity in
      the
      U.S. according to the Renewable Fuels Association.
Current
                capacity
(as
                of March 2006)
MMGY
Number
                of
plants
Share
                of the
market
Archer
                Daniels Midland
1,070
7
24
%
VeraSun
230
2
5
Aventine
                Renewable Energy
150
2
3
Cargill
120
2
3
Abengoa
                Bioenergy
110
3
2
Hawkeye
                Renewables
105
2
2
New
                Energy
102
1
2
Midwest
                Grain Processors*
100
1
2
MGP
                Ingredients
78
1
2
Tate
                & Lyle (formerly AE Staley)
67
1
1
Chief
                Ethanol
62
1
1
Sioux
                River Ethanol*
55
1
1
*
Farmer-owned
A
      number
      of competitors are divisions of substantially larger enterprises and have
      substantially greater financial resources than the Company plans to have.
      Smaller competitors also pose a threat. Farmer-owned cooperatives and
      independent firms consisting of groups of individual farmers and investors
      have
      been able to compete successfully in the ethanol industry. These smaller
      competitors operate smaller facilities which do not affect the local price
      of
      corn grown in the proximity to the facility as much as larger facilities. In
      addition, many of these smaller competitors are farmer-owned and often require
      their farmer-owners to commit to selling them a certain amount of corn as a
      requirement of ownership. A significant portion of production capacity in the
      ethanol industry consists of smaller-sized facilities. Most new ethanol plants
      under development across the country are individually owned. In addition,
      institutional investors and high net worth individuals could heavily invest
      in
      ethanol production facilities and oversupply the demand for ethanol, resulting
      in lower ethanol price levels that might adversely affect the results of the
      Company's contemplated operations and financial position.
The
      ethanol industry also includes increasing competition from international
      suppliers. Although there is a $0.54 per gallon tariff (which is scheduled
      to
      expire in 2007) on foreign produced ethanol that is approximately equal to
      the
      blenders' credit, ethanol imports equivalent to up to 7% of total domestic
      production in any given year from various countries were exempted from this
      tariff under the Caribbean Basin Initiative to spur economic development in
      Central America and the Caribbean. Currently, international suppliers produce
      ethanol primarily from sugar cane and have cost structures that may be
      substantially lower than ours.
Any
      increase in domestic or foreign competition could result in reduced ethanol
      prices. As a result, the Company could be forced to take other steps to compete
      effectively, which could adversely affect the results of our contemplated
      operations and financial position.
The
      U.S. ethanol industry is highly dependent upon federal and state legislation
      and
      regulation and any changes in legislation or regulation could materially and
      adversely affect the results of the Company's contemplated operations and
      financial position.
The
      elimination or significant reduction in the blenders' credit could have a
      material adverse effect on the results of the Company's contemplated operations
      and financial position. The cost of producing ethanol is made significantly
      more
      competitive with regular gasoline by federal tax incentives. Before January
      1,
      2005, the federal excise tax incentive program allowed gasoline distributors
      that blended ethanol with gasoline to receive a federal excise tax rate
      reduction for each blended gallon sold. If the fuel was blended with 10%
      ethanol, the refiner/marketer paid $0.052 per gallon less tax, which equated
      to
      an incentive of $0.52 per gallon of ethanol. The $0.52 per gallon incentive
      for
      ethanol was reduced to $0.51 per gallon in 2005 and is scheduled to expire
      (unless extended) in 2010. The blenders' credits may not be renewed in 2010 or
      may be renewed on different terms. In addition, the blenders' credits, as well
      as other federal and state programs benefiting ethanol (such as tariffs),
      generally are subject to U.S. government obligations under international trade
      agreements, including those under the World Trade Organization Agreement on
      Subsidies and Countervailing Measures, and might be the subject of challenges
      thereunder, in whole or in part. The elimination or significant reduction in
      the
      blenders' credit or other programs benefiting ethanol may have a material
      adverse effect on the results of the Company's contemplated operations and
      financial position.
-30-
Ethanol
      can be imported into the U.S. duty-free from some countries, which may undermine
      the ethanol industry in the U.S.
Imported
      ethanol is generally subject to a $0.54 per gallon tariff that was designed
      to
      offset the $0.51 per gallon ethanol incentive available under the federal excise
      tax incentive program for refineries that blend ethanol in their fuel. A special
      exemption from the tariff exists for ethanol imported from 24 countries in
      Central America and the Caribbean Islands, which is limited to a total of 7%
      of
      U.S. production per year. Imports from the exempted countries may increase
      as a
      result of new plants under development. Since production costs for ethanol
      in
      these countries are estimated to be significantly less than what they are in
      the
      U.S., the duty-free import of ethanol through the countries exempted from the
      tariff may negatively affect the demand for domestic ethanol and the price
      at
      which we sell our ethanol. In May 2006, bills were introduced in both the U.S.
      House of Representatives and U.S. Senate to repeal the $0.54 per gallon tariff.
      The Company does not know the extent to which the volume of imports would
      increase or the effect on U.S. prices for ethanol if this proposed legislation
      is enacted or if the tariff is not renewed beyond its current expiration in
      December 2007. Any changes in the tariff or exemption from the tariff could
      have
      a material adverse effect on our results of operations and financial position.
The
      effect of the renewable fuels standard in the recent Energy Policy Act is
      uncertain.
The
      use
      of fuel oxygenates, including ethanol, was mandated through regulation, and
      much
      of the forecasted growth in demand for ethanol was expected to result from
      additional mandated use of oxygenates. Most of this growth was projected to
      occur in the next few years as the remaining markets switch from MTBE to
      ethanol. The recently enacted energy bill, however, eliminated the mandated
      use
      of oxygenates and established minimum nationwide levels of renewable fuels
      (ethanol, biodiesel or any other liquid fuel produced from biomass or biogas)
      to
      be included in gasoline. Because biodiesel and other renewable fuels in addition
      to ethanol are counted toward the minimum usage requirements of the renewable
      fuel standard, the elimination of the oxygenate requirement for reformulated
      gasoline may result in a decline in ethanol consumption, which in turn could
      have a material adverse effect on the results of the Company's contemplated
      operations and financial condition.
The
      legislation did not include MTBE liability protection sought by refiners, and
      ethanol producers have generally estimated that this will result in accelerated
      removal of MTBE and increased demand for ethanol. Refineries may use other
      possible replacement additives, such as iso-octane, iso-octene or alkylate.
      Accordingly, the actual demand for ethanol may increase at a lower rate than
      production for estimated demand, resulting in excess production capacity in
      our
      industry, which would negatively affect our results of operations, financial
      position and cash flows. See "—New ethanol plants under construction or
      decreases in the demand for ethanol may result in excess U.S. production
      capacity" on page 30.
Waivers
      of the RFS minimum levels of renewable fuels included in gasoline could have
      a
      material adverse affect on the results of the Company
'
s
      contemplated operations.
Under
      the
      Energy Policy Act, the U.S. Department of Energy, in consultation with the
      Secretary of Agriculture and the Secretary of Energy, may waive the renewable
      fuels mandate with respect to one or more states if the Administrator of the
      EPA, determines that implementing the requirements would severely harm the
      economy or the environment of a state, a region of the U.S., or that there
      is
      inadequate supply to meet the requirement. Any waiver of the RFS with respect
      to
      one or more states would adversely offset demand for ethanol and could have
      a
      material adverse effect on the results of the Company's contemplated operations
      and financial condition.
-31-
The
      Company may be adversely affected by environmental, health and safety laws,
      regulations and liabilities.
As
      we
      pursue our business plan, we will become subject to various federal, state
      and
      local environmental laws and regulations, including those relating to the
      discharge of materials into the air, water and ground, the generation, storage,
      handling, use, transportation and disposal of hazardous materials, and the
      health and safety of our employees. In addition, some of these laws and
      regulations require our contemplated facilities to operate under permits that
      are subject to renewal or modification. These laws, regulations and permits
      can
      often require expensive pollution control equipment or operational changes
      to
      limit actual or potential impacts to the environment. A violation of these
      laws
      and regulations or permit conditions can result in substantial fines, natural
      resource damages, criminal sanctions, permit revocations and/or facility
      shutdowns.
Furthermore,
      upon effecting our plan, we may become liable for the investigation and cleanup
      of environmental contamination at each of the properties that we own or operate
      and at off-site locations where we may arrange for the disposal of hazardous
      substances. If these substances have been or are disposed of or released at
      sites that undergo investigation and/or remediation by regulatory agencies,
      the
      Company may be responsible under CERCLA, or other environmental laws for all
      or
      part of the costs of investigation and/or remediation, and for damages to
      natural resources. The Company may also be subject to related claims by private
      parties alleging property damage and personal injury due to exposure to
      hazardous or other materials at or from those properties. Some of these matters
      may require expending significant amounts for investigation, cleanup, or other
      costs.
In
      addition, new laws, new interpretations of existing laws, increased governmental
      enforcement of environmental laws, or other developments could require the
      Company to make additional significant expenditures. Continued government and
      public emphasis on environmental issues can be expected to result in increased
      future investments for environmental controls at ethanol production facilities.
      Present and future environmental laws and regulations (and interpretations
      thereof) applicable to ethanol operations, more vigorous enforcement policies
      and discovery of currently unknown conditions may require substantial
      expenditures that could have a material adverse effect on the results of the
      Company's contemplated operations and financial position.
The
      hazards and risks associated with producing and transporting ethanol and DDGS
      (such as fires, natural disasters, explosions, and abnormal pressures and
      blowouts) may also result in personal injury claims or damage to property and
      third parties. As protection against operating hazards, we maintain insurance
      coverage against some, but not all, potential losses. However, the Company
      could
      sustain losses for uninsurable or uninsured risks, or in amounts in excess
      of
      existing insurance coverage. Events that result in significant personal injury
      or damage to our property or third parties or other losses that are not fully
      covered by insurance could have a material adverse effect on the results of the
      Company's contemplated operations and financial position.
The
      Company is dependent upon its officers for management and direction, and the
      loss of any of these persons could adversely affect the Company's contemplated
      operations and results.
The
      Company is dependent upon our officers, including our Chief Executive Officer,
      Chief Operating Officers, and Executive Chairman, for implementation of our
      proposed expansion strategy and execution of our contemplated business. The
      Company does not maintain "key person" life insurance for
-32-
any
      of
      our officers. The loss of any of our officers could delay or prevent the
      achievement of our contemplated business objectives.
The
      Company's contemplated competitive position, financial position and results of
      operations may be adversely affected by technological
      advances.
The
      development and implementation of new technologies may result in a significant
      reduction in the costs of ethanol production. For instance, any technological
      advances in the efficiency or cost to produce ethanol from inexpensive,
      cellulosic sources such as wheat, oat or barley straw could have an adverse
      effect on our contemplated business, because the facilities we contemplates
      acquiring are designed to produce ethanol from corn, which is, by comparison,
      a
      raw material with other high value uses. The Company cannot predict when new
      technologies may become available, the rate of acceptance of new technologies
      by
      our competitors or the costs associated with new technologies. In addition,
      advances in the development of alternatives to ethanol could significantly
      reduce demand for or eliminate the need for ethanol.
Any
      advances in technology which require significant capital expenditures to remain
      competitive or which reduce demand or prices for ethanol would have a material
      adverse effect on the results of the Company's operations and financial
      position.
The
Company
      may have liabilities arising from its prior business.
Simultaneous
      with the closing of the Merger, NIE acquired the business of the Company and
      will continue the business operations of Ethanex N.A. as a publicly-traded
      company. Although Ethanex N.A. conducted due diligence of NIE, there is a risk
      that the Company could be liable for liability arising from the prior business
      of NIE. The Merger Agreement contains a limited stockholder post-closing
      adjustment to the number of shares of common stock issued to pre-merger Ethanex
      N.A. stockholders as a means of providing a remedy for breaches of
      representations made in the Merger Agreement by NIE, including representations
      related to undisclosed NIE liabilities, however, there is no comparable
      protection offered to our other investors. Any such liabilities of NIE may
      survive the Merger and could harm our revenues, business, prospects, financial
      condition and results of operations upon our acceptance of responsibility for
      such liabilities.
Risks
      Related to Our Common Stock
Shares
      of ethanol companies that trade in the public markets may be
      overvalued.
Recently,
      a number of ethanol companies have entered the public markets. In addition,
      as
      of June 30, 2006, at least two ethanol businesses had filed registration
      statements with the SEC for initial public offerings to be concluded during
      the
      second or third quarter of 2006. As a result of the continuing influx of the
      shares of these companies and the levels at which they trade in comparison
      to
      the current earnings of these companies, the volatility of the price of the
      Company's shares may be greater than otherwise. Moreover, adverse movement in
      the market price of shares of other ethanol producers may adversely affect
      the
      value of the Company's shares for reasons related or unrelated to Company's
      contemplated business. The presence of these competitive share offerings may
      also make it more difficult for the stockholders of the Company to resell their
      shares in the public markets.
-33-
The
      Company has broad discretion over the use of a significant portion of the net
      proceeds of the Offering. The Company's management will determine, with its
      Board of Directors, but without the need for stockholder approval, how to
      allocate a significant portion of these proceeds. If we do not wisely allocate
      the proceeds, our business plan could be seriously
      impacted.
The
      Company has broad discretion to allocate a significant portion of the net
      proceeds of the Offering, subject to certain limitations imposed by the parties
      arranging the Offering. The timing and amount of the Company's actual
      expenditures are subject to change and will be based on many factors,
      including:
§
competition,
                market, and other developments;
§
the
                ability of the Company to attract and retain quality
                employees;
§
the
                ability of the Company to implement our sales, marketing, product
                development, manufacturing, and investor/public relations plans;
                and
§
the
                on-going accounting, legal, and other costs of being a publicly-traded
                company.
There
      is
      no active public market for the
Company
's
      Common
      Stock, and prospective investors may not be able to resell their shares at
      their
      purchase price, if at all.
Although
      the Company's Common Stock is currently quoted for trading on the NASD's OTC
      Bulletin Board, there currently is no active public market for the Common Stock.
      An active public market for the Common Stock may not develop or be sustained
      after the Merger. The offering price of the Offering is not indicative of future
      market prices.
Investors
      who purchased securities in the Offering purchased at a price that was not
      established in a competitive market. The public market may not agree with or
      accept this valuation, in which case stockholders may not be able to sell their
      Common Stock at or above the offering price, if at all. The market price of
      the
      Common Stock may fluctuate significantly in response to factors, some of which
      are beyond the Company's control, including the following:
§
Actual
                or anticipated variations in operating
                results;
§
The
                limited number of holders of the Common Stock, and the limited liquidity
                available through the OTC Bulletin
                Board;
§
Changes
                in financial estimates by securities
                analysts;
§
Changes
                in the economic performance and/or market valuations of other energy
                companies;
§
The
                Company's announcement of significant acquisitions, strategic
                partnerships, joint ventures or capital
                commitments;
§
Additions
                or departures of key personnel; and
§
Sales
                or other transactions involving the Company's capital
                stock.
Because
      the
Company
became public by means of a reverse merger with an existing company, we may
      not
      be able to attract the attention of major brokerage firms and, as a public
      company, will incur substantial expenses
.
-34-
Additional
      risks may exist since the Company became public through a "reverse merger." No
      assurance can be given that brokerage firms will want to conduct any secondary
      offerings on behalf of the Company in the future.
As
      a
      result of the Merger, the Company is publicly-traded and, accordingly, subject
      to the information and reporting requirements of the U.S. securities laws.
      The
      U.S. securities laws require, among other things, review, audit, and public
      reporting of the Company's financial results, business activities, and other
      matters. Recent SEC regulation, including regulation enacted as a result of
      the
      Sarbanes-Oxley Act of 2002, has also substantially increased the accounting,
      legal, and other costs related to becoming and remaining an SEC reporting
      company. The public company costs of preparing and filing annual and quarterly
      reports, and other information with the SEC and furnishing audited reports
      to
      stockholders will cause the Company's expenses to be higher than they would be
      if we remained privately-held and did not enter into the Merger. In addition,
      the Company will incur substantial expenses in connection with the preparation
      of the Registration Statement and related documents with respect to the
      registration of the shares issued in the Offering. These increased costs may
      be
      material and may include the hiring of additional employees and/or the retention
      of additional advisors and professionals. Failure by the Company to comply
      with
      the federal securities laws could result in private or governmental legal action
      against the Company and/or our officers and directors, which could have a
      detrimental effect on the Company's business and finances, the value of the
      Company's stock, and the ability of stockholders to resell their stock.
Our
      Management Team Does Not Have Extensive Experience in Public Company
      Matters.
Our
      management team has had limited public company management experience or
      responsibilities, which could impair our ability to comply with legal and
      regulatory requirements such as the Sarbanes-Oxley Act of 2002 and applicable
      federal securities laws including filing required reports and other information
      required on a timely basis. There can be no assurance that our management will
      be able to implement and affect programs and policies in an effective and timely
      manner that adequately respond to increased legal, regulatory compliance and
      reporting requirements imposed by such laws and regulations. Our failure to
      comply with such laws and regulations could lead to the imposition of fines
      and
      penalties and further result in the deterioration of our business.
The
      Common Stock may be considered "a penny stock" and may be difficult to
      sell.
The
      SEC
      has adopted regulations which generally define "penny stock" to be an equity
      security that has a market price of less than $5.00 per share or an exercise
      price of less than $5.00 per share, subject to specific exemptions. Initially,
      the market price of the Common Stock is likely to be less than $5.00 per share
      and therefore may be designated as a "penny stock" according to SEC rules. This
      designation requires any broker or dealer selling these securities to disclose
      certain information concerning the transaction, obtain a written agreement
      from
      the purchaser and determine that the purchaser is reasonably suitable to
      purchase the securities. These rules may restrict the ability of brokers or
      dealers to sell the Common Stock and may affect the ability of investors to
      sell
      their shares. In addition, since the Common Stock is currently traded on the
      NASD's OTC Bulletin Board, investors may find it difficult to obtain accurate
      quotations of the Common Stock and may experience a lack of buyers to purchase
      such stock or a lack of market makers to support the stock
      price.
-35-
A
      significant number of the Company's shares will be eligible for sale, and their
      sale could depress the market price of the Company's
      stock.
Sales
      of
      a significant number of shares of the Common Stock in the public market
      following this Merger could harm the market price of the Common Stock. As
      additional shares of the Common Stock become available for resale in the public
      market pursuant to the registration of the securities issued in the Offering,
      and otherwise, the supply of the Common Stock will increase, which could
      decrease its price. Some or all of the shares of Common Stock may be offered
      from time to time in the open market pursuant to Rule 144, and these sales
      may
      have a depressive effect on the market for the shares of Common Stock. In
      general, a person who has held restricted shares for a period of one year may,
      upon filing with the SEC a notification on Form 144, sell into the market Common
      Stock in an amount equal to the greater of 1% of the outstanding shares or
      the
      average weekly number of shares sold in the last four weeks before such sale.
      Such sales may be repeated once each three months, and any of the restricted
      shares may be sold by a non-affiliate after they have been held two
      years.
The
      securities issued in connection with the Merger are "restricted" securities that
      have not been registered under federal or state securities laws and will not
      be
      freely transferable. Holders of these securities must be prepared to bear the
      economic risks of investment for an indefinite period of time since the
      securities cannot be sold unless they are subsequently registered or an
      exemption from registration is available. The Company assumed a Registration
      Rights Agreement pursuant to which certain registration rights were granted
      under the Securities Act with respect to certain shares of the Common Stock.
      See
"The Offering."
The
      Company's principal stockholders will have significant voting power and may take
      actions that may not be in the best interests of other
      stockholders.
After
      the
      Offering and the Merger, the Company's officers, directors, principal
      stockholders, and their affiliates will control a significant percentage of
      the
      outstanding Common Stock. If these stockholders act together, they will be
      able
      to exert significant control over the Company's management and affairs requiring
      stockholder approval, including approval of significant corporate transactions.
      This concentration of ownership may have the effect of delaying or preventing
      a
      change in control and might adversely affect the market price of the Common
      Stock. This concentration of ownership may not be in the best interests of
      all
      the Company's stockholders.
Stockholders
should not anticipate receiving cash dividends on the Company's
      stock.
The
      Company has never declared or paid any cash dividends or distributions on our
      capital stock. The Company currently intends to retain future earnings to
      support operations and to finance expansion and therefore does not anticipate
      paying any cash dividends on the Common Stock in the foreseeable
      future.
We
      May Not Be Able To Effectively Manage Our Growth.
If
      we
      fail to effectively manage our growth, our financial results could be adversely
      affected. Growth may place a strain on our management systems and resources.
      We
      must continue to refine and expand our business development capabilities, our
      systems and processes and our access to financing sources. As we grow, we must
      continue to hire, train, supervise and manage new employees. We cannot assure
      you that we will be able to:
§
meet
                our capital needs;
§
expand
                our systems effectively or efficiently or in a timely manner;
-36-
§
allocate
                our human resources optimally;
§
identify
                and hire qualified employees or retain valued employees; or
§
incorporate
                effectively the components of any business that we may acquire in
                our
                effort to achieve growth.
If
      we are
      unable to manage our growth and our operations, our financial results could
      be
      adversely affected.
2. 
      MANAGEMENT'S PLAN OF OPERATION
Ethanex
      N.A. was incorporated in 2006 with the objective to participate in the cyclical
      and secular trends in the energy sector. Initially, the Company plans to produce
      two primary products that place the Company in two distinct industries both
      commodities in nature: the ethanol fuel component and livestock
      feed.
The
      demand for ethanol is increasing. Based on data published by the Renewable
      Fuels
      Association, the industry trade group of ethanol producers, in 2005, 95 ethanol
      plants produced a record 4.0 billion gallons of ethanol, an increase of 17%
      from
      2004 and 126% from 2001. According to the Research Institute of America, at
      the
      end of 2005, 95 ethanol refineries were in production, 14 new refineries began
      operations, 30 began construction and 10 were expanded. Certain of the new
      refineries are being built in California, North Carolina, Arizona, Texas and
      New
      Mexico.
The
      Company intends to own and operate ethanol plants and to market both
dried
      distillers grain with solubles ("DDGS")
and
      ethanol. To address the shortfall in production capacity resulting from
      government mandated programs and the recent bans on MTBE, the Company has
      implemented three development programs:
§
actively
                market our fractionation technology to smaller existing ethanol producers
                in exchange for equity positions in the existing operations. These
                20-30
                MMGY (millions of gallons per year) ethanol plants will be suitable
                for
                meaningful, near-term expansion and conversion to alternative energy
                source or fuels;
§
acquiring
                co-location rights from coal-fired electric utilities for brownfield
                development of new plants; and
§
actively
                acquiring options on proposed ethanol plants with a significant proportion
                of project development and environmental permits in place with distinct
                alternative energy sources or
                fuels.
By
      2010
      the Company plans to have established production capacity of over 500 MMGY
      of
      denatured, fuel grade ethanol and 1.7 million tons of DDGS. The Company plans
      to
      own and operate four to seven plants in the United States geographically
      dispersed coast to coast. The Company's technical abilities and operating model
      will make it one of the industry's low cost producers. The Company expects to
      continue to grow through existing plant expansions, new plant development and
      strategic acquisitions. The Company further expects that as a publicly traded
      ethanol company, we will be able to access capital at a lower cost than our
      privately-owned competitors and may be able to use our shares to acquire either
      ethanol producers in properly accretive transactions.
-37-
On
      August
      3, 2006, Ethanex N.A. acquired all of the capital stock of IPT Ethanol, Inc.,
      a
      then-wholly owned subsidiary of IPT. See "Certain Relationships and Related
      Transactions" on page 45. Based in Santa Rosa, California, IPT is an engineering
      and power generation project development company with over 22 years of operating
      history in the alternative energy space. IPT has been responsible for the
      successful planning, design and construction of more than 30 energy projects
      utilizing a variety of fuels and energy conversion systems. The fuels produced
      or utilized in IPT's projects have included ethanol, natural gas, coal, wellhead
      residual gas, digester gas, urban waste, scrap tires, biomass fuels,
      agricultural waste, and hydropower. IPT has significant experience in the areas
      of siting, regulatory and permitting activities, as well as design, construction
      management, and plant operations.
In
      late
      2005, IPT began site selection for a 40 MMGY ethanol processing facility in
      northeast Kansas. In May 2006, IPT entered into a LOU with a NYSE-listed
      electric utility located in the Midwest for the joint evaluation of the
      environmental and operational impact of siting a 132 MMGY ethanol plant at
      a
      large coal-fired generating facility owned by the electric utility. The LOU
      provides IPT with a six-month exclusive study period ending November 30, 2006.
      IPT assigned all of its rights in the LOU to IPT Ethanol, Inc. before the
      acquisition of IPT Ethanol, Inc. by Ethanex N.A.
Upon
      the
      receipt of favorable results from the study and upon the satisfactory
      negotiation of business terms between the electric utility and the Company
      for
      the development of the proposed plant, the electric utility and the Company
      intend to enter into a definitive agreement to site the
ethanol
      plant at the coal-fired generating facility. The Company's ability to
      participate in this project is wholly dependent, however, on the successful
      fulfillment of several conditions, including:
§
favorable
                results for the siting of the
                facility;
§
receipt
                of all necessary environmental and other
                permits;
§
acquisition
                of capital for the development and construction of the
                plant
§
securing
                acceptable terms from the electric utility;
                and
§
review
                and approval of the project by the electric utility's board of
                directors.
In
      July
      2006, the Company entered into a letter of intent with SEMO Milling, LLC and
      on
      August 4, 2006 entered into a definitive Joint Venture Agreement, and ancillary
      agreements related thereto, to build a 132 MMGY ethanol plant co-located with
      SEMO Milling's dry corn mill production facility at the SEMO port authority in
      Scott City, Missouri. The Company intends to build the ethanol plant using
      next
      generation ethanol production fractionation technology .
The
      Company intends to market next generation ethanol production fractionation
      technology - a process that increases the starch concentration of feedstock
      and
      lowers the cost of producing ethanol - to existing ethanol plants as a means
      for
      such plants to lower production costs in exchange for equity interests in those
      existing ethanol plants.
In
      August
      2006, the Company entered into a Letter of Intent with Star Ethanol, LLC with
      a
      view towards construction and operating a 132MM gallon ethanol production
      facility in Franklin County, Illinois, utilizing fractionation technology in
      the
      production of ethanol and ethanol-related products.
-38-
The
      Company has identified existing operational ethanol plants with production
      capacity of 30 MMGY or less that meet its selection criteria. The Company
      generally requires that such facilities have acceptable rail access, sufficient
      feedstock sources, strong local demand for DDGS and are suitable for expansion.
      Taking advantage of our industry relationships, the Company has plans to market
      our fractionation process to these existing ethanol producers in exchange for
      equity interests in the existing ethanol plants. The Company estimates that,
      after completion of the Offering, we will enter into two to five of these
      agreements. Our ability to do so, however, is contingent on the willingness
      of
      the current owners of the plants to enter into agreements with the Company
      on
      terms that we consider acceptable. Because of the current high level of both
      ethanol prices on a historical basis and investor interest in the industry,
      and
      because a relatively small number of independently-owned operations, it may
      be
      difficult for the Company to negotiate reasonable terms.
The
      Company contemplates the need for additional debt and equity financings during
      2006 in order to be able to successfully complete its developing projects,
      including the building of its anticipated facilities. The Company expects to
      hire employees on an as-needed basis, commensurate with the Company's continued
      growth and development.
Off-Balance
      Sheet Arrangements
The
      Company has no off-balance sheet arrangements as defined under Item 303(c)
      of
      Regulation S-B promulgated by the SEC.
3. 
      DESCRIPTION OF PROPERTY
The
      Company's principal executive offices are located at 14500 Parallel Road, Suite
      A, Basehor, Kansas 66007 and our phone number is
(913)
      724-4106. The Company currently leases this space at a base annual rate of
      $11,100, or $925 per month. The lease expires on July 17, 2007. The offices
      are
      suitable to accommodate the Company's space requirements.
The
      Company is currently negotiating a lease for executive offices located in South
      Carolina. Also, in connection with the SEMO joint venture, a food grade, dry
      mill corn processing facility is under construction. Upon the completion of
      the
      production facility, the Company will own a 50% interest in such
      facility
4. 
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
      following table sets forth certain information regarding the beneficial
      ownership of our Common Stock as of September 1, 2006, after the successful
      consummation of the Merger, by (1) each person who, to our knowledge,
      beneficially owns more than 5% of the outstanding shares of the Common Stock;
      (2) each of our directors and executive officers; and (3) all of our executive
      officers and directors as a group. Unless otherwise indicated in the footnotes
      to the following table, each person named in the table has sole voting and
      investment power and that person's address is 14500 Parallel Road, Suite A,
      Basehor, KS 66007.
Shares
                Beneficially Owned
Name
                and Address of Beneficial Owner
Number
                of
Shares
                Beneficially
Owned
(1)
Percentage
of
                Common
Stock
                Outstanding
Albert
                W. Knapp
(2)
6,000,000
9.84
%
Bryan
                J. Sherbacow
(2)
6,000,000
9.84
%
Randall
                L. Rahm
(2)
6,000,000
9.84
%
Robert
                C. Walther
(2)
6,000,000
9.84
%
John
                Farris Norris Jr.
—
—
Directors
                and Executive Officers as a Group
24,000,000
39.34
%
(1)
Beneficial
                ownership is calculated based on 61,000,000 shares of Common Stock
                issued
                and outstanding as of the Closing Date. Beneficial ownership is determined
                in accordance with Rule 13d-3 of the SEC. The number of shares
                beneficially owned by a person includes shares of Common Stock underlying
                options or warrants held by that person that are currently exercisable
                or
                exercisable within 60 days of the Closing Date. The shares issuable
                pursuant to the exercise of those options or warrants are deemed
                outstanding for computing the percentage ownership of the person
                holding
                those options and warrants but are not deemed outstanding for the
                purposes
                of computing the percentage ownership of any other person. The persons
                and
                entities named in the table have sole voting and sole investment
                power
                with respect to the shares set forth opposite that person's name, subject
                to community property laws, where applicable, unless otherwise noted
                in
                the applicable footnote.
(2)
Shares
                acquired in Merger as a holder of Class A shares of Ethanex
                N.A.
5. 
      DIRECTORS AND EXECUTIVE OFFICERS
The
      following persons are the executive officers and directors of the Company
      following the Merger and hold the offices set forth opposite their names.
Name
Age
Position
Albert
                W. Knapp
54
Chief
                Executive Officer
Director
Randall
                L. Rahm
55
Co-Chief
                Operating Officer
Director
Bryan
                J. Sherbacow
37
Co-Chief
                Operating Officer
Director
Robert
                C. Walther
71
Executive
                Chairman
John
                Farris Norris Jr.
57
Director
Executive
      Officers
&
      Directors
Albert
      W. Knapp,
III,
      Chief Executive Officer & Director
Before
      joining the Company as its Chief Executive Officer in 2006, Albert Knapp was
      the
      Senior Vice President of Business Development at TIC - The Industrial Company
      (TIC). Mr. Knapp was responsible for TIC's efforts within the ethanol industry.
      Mr. Knapp has 30 years of management service in a progression of positions
      with
      expertise involving corporate management, business development, project
      execution, operations, estimating, design, and construction management. As
      Senior Vice President for TIC, Mr. Knapp had spent the last 13 years
      proposing, negotiating, and overseeing execution of Engineer Procure &
Construct ("EPC") projects. Previously, he had been Vice
      President/General
-39-
Manager
      of TIC Southeast, Inc., and has also served as Central Region and Western Region
      Vice President. In these positions, Mr. Knapp was responsible for marketing,
      as
      well as estimating and executing projects that generated up to 40% of TIC's
      revenue. Mr. Knapp was responsible for developing strategic alliances and
      joint ventures for the pursuit and execution of EPC power and energy projects.
      His responsibilities have included selecting engineering services, evaluating
      equipment vendors, developing contractual teaming/joint venture relationships,
      maintaining client contact, negotiating contract terms and conditions, contract
      administration, partnering, estimating, scheduling, procurement management
      and
      project oversight at the executive level. Mr. Knapp was instrumental in
      establishing TIC's diversified marketing strategy that included ethanol. He
      selected Delta T Corporation as TIC's Strategic Partner and established the
      Strategic Alliance setting forth the groundwork for the two companies to share
      in an explosive growth market. Mr. Knapp also serves as a director of the
      American Gelbvieh Association, a non-profit organization.
Randall
      Rahm, Co-Chief Operating Officer
&
      Director
Before
      joining the Company in 2006, Mr. Rahm was the Director, Fuel Services for Westar
      Energy, Inc. He was responsible for coal procurement and transportation for
      over
      13.5 million tons annually. Before joining Westar Energy he was employed by
      Amax
      Coal West, Inc. for 10 years in Gillette, WY as the Special Projects Manager.
      From 1991 to 1993, Mr. Rahm managed the world's largest commercial
      sub-bituminous coal dryer located at the Amax Belle Ayr Mine. Under Mr. Rahm's
      management, extensive research was conducted on the Coal Dryer project in the
      areas of reducing the dried PRB coal's reactive characteristics, dust
      suppression, explosion characteristics, spontaneous combustion, and coal dust
      fire-fighting procedures. Mr. Rahm was also employed with McNally Pittsburg,
      Inc. for 14 years as a senior project manager, where he has built coal dryers
      and prepared and handled systems throughout the United States and Canada. Mr.
      Rahm has over 30 years experience in the coal industry and is a past chairman
      of
      the ASME's Fuels and Combustion Technology (FACT) Division. Mr. Rahm is the
      founder, executive director and former chairman of the PRB Coal Users' Group, a
      non-profit entity. The PRB Coal Users' Group has over 1000 members of which 635
      are from 76 operating companies. In 2006, the Secretary of Energy, Samuel W.
      Bodman, appointed Mr. Rahm to the National Coal Council.
Bryan
      Sherbacow, Co-Chief Operating Officer
,
      Controller & Director
Before
      joining the Company in 2006, Bryan Sherbacow was an asset manager, since 1993,
      investing in both public and private companies. He is personally responsible
      for
      over $2.5 billion in transactions comprised primarily of publicly traded equity,
      convertible preferred and high yield bond securities. In 1995, Mr. Sherbacow
      established The Armistead Group, Inc. (TAG) in New York to provide analytical
      and trading services as well as manage its hedge fund business. In 2005, Mr.
      Sherbacow established a private equity group within TAG to invest in coal and
      alternative energy companies. Mr. Sherbacow also serves on the Board of
      Directors for the Charleston Concert Association.
Robert
      C. Walther, Executive Chairman
Robert
      C.
      Walther joined the Company in 2006 as Executive Chairman. Mr. Walther founded
      Industrial Power Technology in 1983 and is currently its President. As a
      professional engineer and certified plant engineer, he is responsible for the
      strategic planning, design, and construction of power generation and control
      systems. Over the last 35 years, Mr. Walther has been a team leader in
      developing and constructing numerous utility and private sector power generating
      stations and transmission systems. This, along with the understanding of fuel
      and its availability, has lead to programs of effective fuel utilization and
      energy optimization, as well as cost-effective programs of long-term fuel
      acquisition. Mr.
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Walther
      has personally led Industrial Power Technology's international expansion into
      the U.K., Philippines, and the People's Republic of China, where Industrial
      Power Technology's development team has developed several power projects. Mr.
      Walther also has extensive experience in engineering and construction management
      for roads, utilities, and all associated systems. He is also responsible for
      the
      planning and management of the development and construction of environmental
      systems, including zero discharge of liquid waste streams, and air quality
      clean-up systems. Mr. Walther is President and CEO of IPT Ethanol, Inc, the
      Company's subsidiary.
John
Farris Norris Jr., Director
John
      Farris Norris Jr. joined Duke Power Company in 1982 as an Assistant Engineer,
      progressing through various positions until his departure in 1999 as Senior
      Vice
      President of Duke Energy Corporation and Chairman and Chief Executive Officer
      of
      Duke Energy Global Asset Development. In 1999, Mr. Norris joined the American
      Bureau of Shipping Group as President and Chief Operating Officer, and, in
      the
      same year joined American Electric Power as Senior Vice President, Operations
      and Technical Services. In 2003, Mr. Norris became self employed as a private
      consultant to companies in energy related industries, including Fuel Tech.
      Mr.
      Norris is currently the managing director of Fuel Tech, N.V.
Our
      above-listed officers and directors have neither been convicted in any criminal
      proceeding during the past five years nor parties to any judicial or
      administrative proceeding during the past five years that resulted in a
      judgment, decree or final order enjoining them from future violations of, or
      prohibiting activities subject to, federal or state securities laws or a finding
      of any violation of federal or state securities law or commodities law.
      Similarly, no bankruptcy petitions have been filed by or against any
      business or property of any of our directors or officers, nor has any bankruptcy
      petition been filed against a partnership or business association in which
      these
      persons were general partners or executive officers.
Changes
      to the Board of Directors
The
      Company's Board of Directors will consist of five members, each director serving
      a term of one year. On the Closing Date, Amanda Lamothe and Luke
      Willis, constituting all of the directors of NIE before the Merger,
      appointed Robert C. Walther, Albert W. Knapp, Bryan J. Sherbacow, Randall L.
      Rahm and John Farris Norris Jr. to fill the vacancies on the Board. Also on
      the Closing Date, Ms. Lamothe and Mr. Willis resigned from the Board.
Board
      Committees
The
      Board
      intends to appoint such persons and form such committees as are required to
      meet
      the corporate governance requirements imposed by Sarbanes-Oxley and the national
      securities exchanges. Therefore, we intend that a majority of our directors
      will
      eventually be independent directors and at least one director will qualify
      as an
"audit committee financial expert." Additionally, the Board is expected to
      appoint an audit committee, nominating committee and compensation committee,
      and
      to adopt charters relative to each such committee. Until further determination
      by the Board, the full Board will undertake the duties of the audit committee,
      compensation committee and nominating committee. We do not currently have an
      "audit committee financial expert" since we currently do not have an audit
      committee in place.
-41-
Code
      of Ethics
The
      Company has not formally adopted a written code of ethics that applies to the
      Company's principal executive officer, principal financial officer or
      controller, or persons performing similar functions. Based on the Company's
      small size, early development stage and limited financial and human resources,
      NIE did not adopt a written code of ethics before the Merger. We intend to
      formalize and adopt a written code of ethics as soon as practicable following
      the Closing Date.
6. 
      EXECUTIVE COMPENSATION
Executive
      Compensation
The
      Company was formed on May 31, 2006. Accordingly, no compensation was paid to
      its
      executive officers during the fiscal year ended December 31, 2005, or any
      previous fiscal year. Also, no options or freestanding SARs were granted to
      its
      executive officers during the fiscal year ended December 31, 2005, or any
      previous fiscal year.
Compensation
      of Directors
There
      are
      currently no compensation arrangements in place for the members of the Board.
      These will be determined once the Company's Board is finalized and the
      compensation committee is formed.
Employment
      Agreements
On
      the
      Closing Date and in connection with the Merger, the Company assumed the
      employment agreements between Ethanex N.A. and each of Messrs. Knapp, Rahm,
      Sherbacow, and Walther pursuant to which, as of the closing of the Merger,
      they
      shall hold the positions of Chief Executive Officer, Co-Chief Operating Officer,
      Co-Chief Operating Officer and Controller, and Executive Chairman, respectively.
      These Employment Agreements have been attached as Exhibits 10.3, 10.4, 10.5 and
      10.6 to this Current Report on Form 8-K and are incorporated herein by
      reference.
-42-
Mr.
      Knapp's employment agreement provides for a four year term, with an initial
      annual base salary of $195,000, and the potential increase to $210,000 and
      $270,000 upon achieving certain operational steps in the growth of the Company,
      and an annual bonus subject to the Company achieving its target performance
      levels as approved by the Compensation Committee of the Board. Mr. Knapp also
      is
      entitled to receive an option grant of 250,000 shares from the Company's 2006
      Plan, 33.3% of which option shall be exercisable on the first anniversary of
      the
      grant, 33.3% of which option shall become exercisable on the second anniversary
      of the grant, and the remaining 33.4% of which shall become exercisable on
      the
      third anniversary of the grant. Under the agreement, Mr. Knapp will be subject
      to traditional non-competition and employee non-solicitation restrictions while
      he is employed by the Company and for one year thereafter. Mr. Knapp and his
      spouse and dependants will be entitled to participate in the Company's benefit
      plans in substantially the same manner, including but not limited to,
      responsibility for the cost thereof, and at substantially the same levels as
      the
      Company makes such opportunities available to all of the Company's managerial or
      salaried executive employees and their dependants. Subject to certain notice
      requirements, either of Mr. Knapp or the Company will be entitled to terminate
      the employment agreement at any time. If the Company terminates the employment
      agreement without Cause (as defined in the agreement) or Mr. Knapp terminates
      the employment agreement for Good Reason (as defined in the agreement), then
      Mr.
      Knapp is entitled to receive earned but unpaid base salary, unpaid pro rata
      annual bonus, and unused vacation days accrued through his scheduled termination
      date, plus a one time severance payment equal to his then-current annual base
      salary, as well as continuation, at the Company's expense, of Mr. Knapp's
      participation in the benefit programs.
Mr.
      Rahm's employment agreement provides for a four year term, with an initial
      annual base salary of $180,000, with the potential increase to $195,000 and
      $255,000 upon achieving certain operational steps in the growth of the Company,
      and an annual bonus subject to the Company achieving its target performance
      levels as approved by the Compensation Committee of the Board. Mr. Rahm also
      is
      entitled to receive an option grant of 250,000 shares from the Company's 2006
      Plan, 33.3% of which option shall be exercisable on first anniversary of the
      grant, 33.3% of which option shall become exercisable on second anniversary
      of
      the grant, and the remaining 33.4% of which shall become exercisable on third
      anniversary of the grant,. Under the agreement, Mr. Rahm will be subject to
      traditional non-competition and employee non-solicitation restrictions while
      he
      is employed by the Company and for one year thereafter. Mr. Rahm and his spouse
      and dependants will be entitled to participate in the Company's benefit plans in
      substantially the same manner, including but not limited to, responsibility
      for
      the cost thereof, and at substantially the same levels as the Company makes
      such
      opportunities available to all of the Company's managerial or salaried executive
      employees and their dependants. Subject to certain notice requirements, either
      of Mr. Rahm or the Company will be entitled to terminate the employment
      agreement at any time. If the Company terminates the employment agreement
      without Cause (as defined in the agreement) or Mr. Rahm terminates the
      employment agreement for Good Reason (as defined in the agreement), then Mr.
      Rahm is entitled to receive earned but unpaid base salary, unpaid pro rata
      annual bonus, and unused vacation days accrued through his scheduled termination
      date, plus a one time severance payment equal to his then-current annual base
      salary, as well as continuation, at the Company's expense, of Mr. Rahm's
      participation in the benefit programs.
Mr.
      Sherbacow's employment agreement provides for a four year term, with an initial
      annual base salary of $180,000, with the potential increase to $195,000 and
      $255,000 upon achieving certain operational steps in the growth of the Company,
      and an annual bonus subject to the Company achieving its target performance
      levels as approved by the Compensation Committee of the Board. Mr. Sherbacow
      also is entitled to receive an option grant of 250,000 shares from the Company's
      2006 Plan, 33.3% of
-43-
which
      option shall be exercisable on the first anniversary of the grant, 33.3% of
      which option shall become exercisable on the second anniversary of the grant,
      and the remaining 33.4% of which shall become exercisable on the third
      anniversary of the grant. Under the agreement, Mr. Sherbacow will be subject
      to
      traditional non-competition and employee non-solicitation restrictions while
      he
      is employed by the Company and for one year thereafter. Mr. Sherbacow and his
      spouse and dependants will be entitled to participate in the Company's benefit
      plans in substantially the same manner, including but not limited to,
      responsibility for the cost thereof, and at substantially the same levels as
      the
      Company makes such opportunities available to all of the Company's managerial or
      salaried executive employees and their dependants. Subject to certain notice
      requirements, either of Mr. Sherbacow or the Company will be entitled to
      terminate the employment agreement at any time. If the Company terminates the
      employment agreement without Cause (as defined in the agreement) or Mr.
      Sherbacow terminates the employment agreement for Good Reason (as defined in
      the
      agreement), then Mr. Sherbacow is entitled to receive earned but unpaid base
      salary, unpaid pro rata annual bonus, and unused vacation days accrued through
      his scheduled termination date, plus a one time severance payment equal to
      his
      then-current annual base salary, as well as continuation, at the Company's
      expense, of Mr. Sherbacow's participation in the benefit programs.
Mr.
      Walther's employment agreement provides for a four year term, with an initial
      annual base salary of $180,000, with the potential increase to $195,000 and
      $255,000 upon achieving certain operational steps in the growth of the Company,
      and an annual bonus subject to the Company achieving its target performance
      levels as approved by the Compensation Committee of the Board. Mr. Walther
      also
      is entitled to receive an option grant of 250,000 shares from the Company's 2006
      Plan, 33.3% of which option shall be exercisable on first anniversary of the
      grant, 33.3% of which option shall become exercisable on second anniversary
      of
      the grant, and the remaining 33.4% of which shall become exercisable on third
      anniversary of the grant. Under the agreement, Mr. Walther will be subject
      to
      traditional non-competition and employee non-solicitation restrictions while
      he
      is employed by the Company and for one year thereafter. Mr. Walther and his
      spouse and dependants will be entitled to participate in the Company's benefit
      plans in substantially the same manner, including but not limited to,
      responsibility for the cost thereof, and at substantially the same levels as
      the
      Company makes such opportunities available to all of the Company's managerial or
      salaried executive employees and their dependants. Subject to certain notice
      requirements, either of Mr. Walther or the Company will be entitled to terminate
      the employment agreement at any time. If the Company terminates the employment
      agreement without Cause (as defined in the agreement) or Mr. Walther terminates
      the employment agreement for Good Reason (as defined in the agreement), then
      Mr.
      Walther is entitled to receive earned but unpaid base salary, unpaid pro rata
      annual bonus, and unused vacation days accrued through his scheduled termination
      date, plus a one time severance payment equal to his then-current annual base
      salary, as well as continuation, at the Company's expense, of Mr. Walther's
      participation in the benefit programs.
2006
      Equity Incentive Plan
Before
      the Closing Date, our Board and Stockholders approved and adopted the 2006
      Equity Incentive Plan (the "2006 Plan"). A copy of the 2006 Plan is attached as
      Exhibit 10.8 to this Current Report on Form 8-K.
The
      2006
      Plan is intended to promote the interests of the Company by attracting and
      retaining exceptional employees, consultants, and directors (collectively
      referred to as the "Participants"), and enabling such Participants to
      participate in the long-term growth and financial success of the Company. Under
      the 2006 Plan, the Company may grant stock options, which are intended to
      qualify as "incentive
-44-
stock
      options" under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Incentive Stock Options"), non-qualified stock options (the "Nonqualified Stock
      Options"), and restricted stock awards (the "Restricted Stock Awards"), which
      are restricted shares of Common Stock (the Incentive Stock Options, the
      Nonqualified Stock Options and the Restricted Stock Awards are collectively
      referred to as "Incentive Awards"). Incentive Awards may be granted pursuant to
      the 2006 Plan for 10 years from the Effective Date.
From
      time
      to time, we may issue Incentive Awards pursuant to the 2006 Plan. Each of the
      awards will be evidenced by and issued under a written agreement.
The
      Board
      reserved a total of 2,000,000 shares of our Common Stock for issuance under
      the
      2006 Plan. If an incentive award granted under the 2006 Plan expires,
      terminates, is unexercised or is forfeited, or if any shares are surrendered
      to
      us in connection with an incentive award, the shares subject to such award
      and
      the surrendered shares will become available for further awards under the
      Plan.
The
      number of shares subject to the 2006 Plan, any number of shares subject to
      any
      numerical limit in the 2006 Plan, and the number of shares and terms of any
      Incentive Award may be adjusted in the event of any change in our outstanding
      Common Stock by reason of any stock dividend, spin-off, stock split, reverse
      stock split, recapitalization, reclassification, merger, consolidation,
      liquidation, business combination or exchange of shares, or similar transaction.
On
      the
      Closing Date, options were granted to Messrs. Knapp, Rahm, Sherbacow and Walther
      on
the
      following terms:
NAME
#
                OF SHARES
EXERCISE
                PRICE
VESTING
                SCHEDULE
EXPIRATION
Albert
                W. Knapp
250,000
$1.00
                / share
33.33%
                on September 1, 2007
33.33%
                on September 1, 2008
33.34%
                on September 1, 200
9
10
                years from date of grant
Randall
                L. Rahm
250,000
$1.00
                / share
33.33%
                on September 1, 2007
33.33%
                on September 1, 2008
33.34%
                on September 1, 2009
10
                years from date of grant
Bryan
                J. Sherbacow
250,000
$1.00
                / share
33.33%
                on September 1, 2007
33.33%
                on September 1, 2008
33.34%
                on September 1, 2009
10
                years from date of grant
Robert
                C. Walther
250,000
$1.00
                / share
33.33%
                on September 1, 2007
33.33%
                on September 1, 2008
33.34%
                on September 1, 2009
10
                years from date of grant
7.
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On
      August
      3, 2006, Ethanex N.A. acquired all of the issued and outstanding shares of
      IPT
      Ethanol, Inc., a Delaware corporation and a then-wholly owned subsidiary of
      Industrial Power Technology. As a result of the acquisition, IPT Ethanol, Inc.
      became a wholly-owned subsidiary of Ethanex N.A. and Robert C. Walther, the
      President and Chief Executive Officer of IPT Ethanol, Inc.,
-45-
received
      $500,000
from
      the
      Company as consideration for the acquisition. Mr. Walther's employment with
      Ethanex N.A. commenced on August 3, 2006 in connection with the
      acquisition.
Contemporaneously
      with the closing of the Merger, the Company split off its wholly-owned
      subsidiary, New Inverness Leaseco, Inc., a Nevada corporation ("Leaseco"),
      through the sale of all of the outstanding capital stock of Leaseco. The Company
      executed a Split Off Agreement with Amanda Lamothe, Luke Willis, Ethanex N.A.
      and Leaseco. Ms. Lamothe was President, Chief Executive Officer, Secretary
      and
      Director of NIE, and Mr. Willis was Treasurer of NIE. In connection with the
      Merger, Ms. Lamothe and Mr. Willis have resigned from NIE. A copy of the Split
      Off Agreement is attached to this Current Report on Form 8-K as Exhibit 10.2
      and
      incorporated herein by reference.
8. 
      DESCRIPTION OF SECURITIES.
Authorized
      Capital Stock
The
      Articles of Incorporation of the Company, as amended to date, authorize the
      issuance of 300,000,000 shares of Common Stock and 10,000,000 shares of
      preferred stock.
Capital
      Stock Issued and Outstanding
Immediately
      following the consummation of the Merger there were 61,000,000 shares of Common
      Stock issued and outstanding. In addition there were outstanding warrants to
      acquire 20,000,000 shares and options to purchase 1,000,000 shares of Common
      Stock. Further, 1,000,000 shares of Common Stock remain reserved for issuance
      under the 2006 Plan.
Description
      of Common Stock
The
      following description of our common stock is derived from various provisions
      of
      our Articles of Incorporation and Bylaws as well as provisions of applicable
      law. Such description is not intended to be complete and is qualified in its
      entirely by reference to the relevant provisions of our Articles of
      Incorporation and Bylaws.
Holders
      of the Common Stock are entitled to one vote for each share on all matters
      submitted to a stockholder vote. Holders of Common Stock do not have cumulative
      voting rights. Therefore, holders of a majority of the shares of Common Stock
      voting for the election of directors can elect all of the directors. Holders
      of
      the Common Stock may vote in person or by proxy at stockholder meetings.
The
      Board
      of Directors may declare dividends in its discretion but shares of one class
      or
      series may not be issued as a share dividend to stockholders of another class
      or
      series unless certain conditions are met. Holders of the Common Stock have
      no
      pre-emptive rights, no conversion rights and there are no redemption provisions
      applicable to the Common Stock.
Description
      of Preferred Stock
As
      of the
      Closing Date, the Company was authorized to issue 10,000,000 shares of "blank
      check" preferred stock, par value $0.001 per share, none of which, at the
      Merger, will be designated, issued or outstanding. The Board is vested with
      authority to divide the shares of preferred stock into series and to fix and
      determine the relative rights and preferences of the shares of any such
      series.
-46-
Description
      of Warrants
As
      of the
      Closing Date, there were warrants outstanding to purchase 20,000,000 shares
      of
      Common Stock. The warrants are exercisable at a price of $1.50 per share for
      a
      period of five years from the Closing Date and are callable by the Company
      under
      certain circumstances.
Description
      of Options
As
      of the
      Closing Date, there were options outstanding to purchase 1,000,000
shares
      of
      Common Stock at a purchase price of $1.00 per share. Under the terms of the
      2006
      Plan, the Company may issue incentive awards that may include the issuance
      of an
      additional 1,000,000 shares of Common Stock. The 2006 Plan was adopted by the
      Board and NIE Stockholders before the Merger.
PART
      II
1.
MARKET
          PRICE OF AND DIVIDENDS ON COMMON EQUITY AND
OTHER
          STOCKHOLDER MATTERS
The
      Company's Common Stock is currently available for trading in the
      over-the-counter market and is quoted on the OTC Bulletin Board under the symbol
      "EHNX.OB." There currently is no bid history for the Common Stock because it has
      never been traded.
As
      of the
      Closing Date, there were approximately 170
holders
      of record of shares of the Common Stock.
Trades
      in
      the Common Stock may be subject to Rule 15g-9 of the Exchange Act, which rule
      imposes certain requirements on broker/dealers who sell securities subject
      to
      the rule to persons other than established customers and accredited investors.
      For transactions covered by the rule, brokers/dealers must make a special
      suitability determination for purchasers of the securities and receive the
      purchaser's written agreement to the transaction before the sale. The SEC also
      has rules that regulate broker/dealer practices in connection with transactions
      in "penny stocks." Penny stocks generally are equity securities with a price of
      less than $5.00 (other than securities registered on certain national securities
      exchanges or quoted on the NASDAQ system, provided that current price and volume
      information with respect to transactions in that security is provided by the
      applicable exchange or system). The penny stock rules require a broker/dealer,
      before a transaction in a penny stock not otherwise exempt from the rules,
      to
      deliver a standardized risk disclosure document prepared by the SEC that
      provides information about penny stocks and the nature and level of risks in
      the
      penny stock market. The broker/dealer also must provide the customer with
      current bid and offer quotations for the penny stock, the compensation of the
      broker/dealer and its salesperson in the transaction, and monthly account
      statements showing the market value of each penny stock held in the customer's
      account. The bid and offer quotations, and the broker/dealer and salesperson
      compensation information, must be given to the customer orally or in writing
      before effecting the transaction, and must be given to the customer in writing
      before or with the customer's confirmation. These disclosure requirements may
      have the effect of reducing the level of trading activity in the secondary
      market for shares of the Common Stock. As a result of these rules, investors
      may
      find it difficult to sell their shares.
As
      of the
      Closing Date, there were 61,000,000 shares of Common Stock issued and
      outstanding with an additional 21,000,000 shares of Common Stock issuable upon
      the exercise of outstanding warrants and options. The shares of Common Stock
      issued in connection with the Transactions, are "restricted securities" which
      may be sold or otherwise transferred only if such shares are first registered
      under the Securities Act or are exempt from such registration requirements.
      As
      discussed elsewhere in this Current Report on Form 8-K, we have agreed to file
      a
      registration statement within 90 days of the Closing Date to register certain
      of
      these shares.
-47-
Dividend
      Policy
After
      the
      Merger, the Company intends to retain earnings, if any, to support the
      development of the business and therefore does not anticipate paying cash
      dividends for the foreseeable future. Payment of future dividends, if any,
      will
      be at the discretion of the Board after taking into account various factors,
      including current financial condition, operating results and current and
      anticipated cash needs.
Securities
      Authorized for Issuance Under Equity Compensation Plans
The
      Company had no securities authorized for issuance under any equity compensation
      plan as of the end of fiscal year 2005, as the 2006 Plan was adopted in fiscal
      year 2006.
2.
LEGAL
      PROCEEDINGS
From
      time
      to time the Company may be named in claims arising in the ordinary course of
      business. Currently, no legal proceedings or claims are pending against or
      involve the Company that, in the opinion of management, could reasonably be
      expected to have a material adverse effect on its business and financial
      condition.
3.
CHANGES
      IN ACCOUNTANTS
Before
      the Merger, the independent registered public accounting firm for NIE was Stark
      Winter Schenkein & Co., LLP ("Stark Winter"), and the independent registered
      public accounting firm for Ethanex N.A. was Bagell, Josephs, Levine &
Company, LLC ("Baggell Josephs"). Because the above-described transactions were
      treated as a reverse acquisition for accounting purposes, future historical
      financial reports filed by the Company will be those of Ethanex N.A., the
      accounting acquirer. Accordingly, the Company's board of directors determined to
      change its independent registered public accounting firm from Stark Winter
      to
      Baggell Josephs. Stark Winter was dismissed as the independent registered public
      accounting firm of the Company on the Closing Date, and Baggell Josephs was
      engaged as the independent registered public accounting firm of the Company
      on
      the same date. As a result of being the auditors of Ethanex N.A., Baggell
      Josephs consulted with Ethanex N.A. and the Company regarding the
      above-described transactions.
The
      reports of Stark Winter on the Company's financial statements for the past two
      fiscal years did not contain an adverse opinion or a disclaimer of opinion
      and
      were not qualified or modified as to uncertainty, audit scope, or accounting
      principles, but did include an explanatory paragraph relating to the Company's
      ability to continue as a "going concern."
In
      connection with the audit of the Company's financial statements since inception,
      and through the date of the dismissal, there were no disagreements with Stark
      Winter on any matter of accounting principles or practices, financial statement
      disclosure, or auditing scope or procedure, which, if not resolved to the
      satisfaction of Stark Winter, would have caused Stark Winter to make reference
      to the matter in its reports.
The
      Company has provided Stark Winter with a copy of this Current Report on Form
      8-K
      and has requested Stark Winter furnish the Company with a letter addressed
      to
      the SEC stating whether it agrees with the above statements and, if not, to
      state the respects in which it does not agree with such statements. A copy
      of
      that letter
will
      be
      filed as an amendment to this Current Report on Form 8-K.
-48-
4.
RECENT
      SALES OF UNREGISTERED SECURITIES
Shares
      Issued in Connection with the Offering by Ethanex N.A.
Previous
      to the Merger, on August 3, 2006, and in contemplation of the Merger, Ethanex
      N.A. closed a private offering of 20,000,000 Units of its securities, each
      Unit
      consisting of one share of Class B common stock of Ethanex N.A. and a warrant
      to
      purchase one share of Class B common stock for a period of five years at an
      exercise price of $1.50 per share. On the PPO Closing Date, the investors in
      the
      Offering collectively purchased 20,000,000 Units for a total consideration
      of
      $20,000,000.
Shares
      Issued in Connection with the Merger
On
      the
      Closing Date, the holders of the Class A shares of Ethanex N.A. surrendered
      all
      of their issued and outstanding shares of Class A common stock of Ethanex N.A.
      and received 26,000,000 shares of Common Stock. Also on the Closing Date, all
      of
      the issued and outstanding Class B shares and Class B warrants of Ethanex N.A.,
      which were purchased in the Offering, were converted into shares of Common
      Stock
      and warrants to purchase Common Stock, on a one for one basis. The NIE
      Stockholders retained 14,000,000 shares of Common Stock and Gamma Capital
      Partners, LLC was issued 1,000,000 shares of Common Stock for finder and
      advisory services in connection with the Merger.
Concurrently
      with the Merger, the Company granted options for the purchase of 1,000,000
      shares of Common Stock. The options granted expire 10 years from the date of
      grant, are exercisable at a price of $1.00 per share, and vest as follows:
      33.3%
      of such options shall be exercisable on the first anniversary of the grant,
      33.3% of such options shall become exercisable on the second anniversary of
      the
      grant, and the remaining 33.4% of such options shall become exercisable on
      the
      third anniversary of the grant. An additional 1,000,000 shares are reserved
      for
      issuance of stock options and other incentive awards pursuant to the 2006 Equity
      Incentive Plan. The 2006 Equity Incentive Plan has been attached as Exhibit
      10.8
      to this Current Report on Form 8-K and is incorporated herein by reference.
The
      transactions discussed above are exempt from registration under Section 4(2)
      of
      the Securities Act and Rule 506 of Regulation D as promulgated by the
      SEC.
No
      underwriters were involved in the sale of any of the securities described
      above.
5.
INDEMNIFICATION
          OF DIRECTORS AND OFFICERS
Nevada
      Revised Statutes ("NRS") Sections 78.7502 and 78.751 provide us with the power
      to indemnify any of our directors and officers. The director or officer must
      have conducted himself/herself in good faith and reasonably believe that his/her
      conduct was in, or not opposed to our best interests. In a criminal action,
      the
      director, officer, employee or agent must not have had reasonable cause to
      believe his/her conduct was unlawful.
Under
      NRS
      Section 78.751, advances for expenses may be made by agreement if the director
      or officer affirms in writing that he/she believes he/she has met the standards
      and will personally repay the expenses if it is determined such officer or
      director did not meet the standards.
Our
      Bylaws include an indemnification provision under which we have the power to
      indemnify our directors, officers and former directors and officers (including
      heirs and personal representatives) against all costs, charges and expenses
      actually and reasonably incurred, including an amount paid to settle an action
      or satisfy a judgment to which the director or officer is made a party by reason
      of being or having been a director or officer of the Company.
-49-
Our
      Articles of Incorporation provide a limitation of liability in that no director
      or officer shall be personally liable to the Company or any of its stockholders
      for damages for breach of fiduciary duty as director or officer involving any
      act or omission of any such director or officer, provided there was no
      intentional misconduct, fraud or a knowing violation of the law, or payment
      of
      dividends in violation of NRS Section 78.300.
On
      the
      Closing Date, the Company entered into an Indemnity Agreement with John Farris
      Norris Jr. providing for the indemnification of Mr. Norris by reason of the
      fact
      that he is or was an agent of the Company. The Indemnity Agreement provides
      for
      indemnification of certain expenses, judgments, fines, and settlement amounts
      incurred by Mr. Norris in any action or proceeding, including any action by
      or
      in the right of the Company arising out of his services to the Company, to
      any
      of the Company's subsidiaries, or to any other company or enterprise to which
      Mr. Norris provides services at the Company's request. The Indemnity Agreements
      provide for the advancement of expenses, make indemnification contingent on
      Mr.
      Norris' good faith in acting or failing to act, and except the obligation to
      indemnify for expenses or liabilities paid directly to Mr. Norris by directors'
and officers' insurance. A copy of the form of Indemnity Agreement is attached
      as Exhibit 10.7 to this Current Report on Form 8-K and incorporated by reference
      herein.
Insofar
      as indemnification for liabilities arising under the Securities Act may be
      permitted for our directors, officers and controlling persons pursuant to the
      foregoing provisions, or otherwise, we have been advised that in the opinion
      of
      the SEC such indemnification is against public policy as expressed in the
      Securities Act and is, therefore, unenforceable.
Anti-Takeover
      Effects of Provisions of Nevada State Law
We
      may be
      or in the future we may become subject to Nevada's control share law. A
      corporation is subject to Nevada's control share law if it has more than 200
      stockholders, at least 100 of whom are stockholders of record and residents
      of
      Nevada, and if the corporation does business in Nevada or through an affiliated
      corporation.
The
      law
      focuses on the acquisition of a "controlling interest" which means the ownership
      of outstanding voting shares is sufficient, but for the control share law,
      to
      enable the acquiring person to exercise the following proportions of the voting
      power of the corporation in the election of directors: (1) one-fifth or more
      but
      less than one-third, (2) one-third or more but less than a majority, or (3)
      a
      majority or more. The ability to exercise such voting power may be direct or
      indirect, as well as individual or in association with others.
The
      effect of the control share law is that the acquiring person, and those acting
      in association with that person, obtain only such voting rights in the control
      shares as are conferred by a resolution of the stockholders of the corporation,
      approved at a special or annual meeting of stockholders. The control share
      law
      contemplates that voting rights will be considered only once by the other
      stockholders. Thus, there is no authority to take away voting rights from the
      control shares of an acquiring person once those rights have been approved.
      If
      the stockholders do not grant voting rights to the control shares acquired
      by an
      acquiring person, those shares do not become permanent non-voting shares. The
      acquiring person is free to sell its shares to others. If the buyers of those
      shares themselves do not acquire a controlling interest, their shares do not
      become governed by the control share law.
If
      control shares are accorded full voting rights and the acquiring person has
      acquired control shares with a majority or more of the voting power, any
      stockholder of record, other than an acquiring
-50-
person,
      who has not voted in favor of approval of voting rights is entitled to demand
      fair value for such stockholder's shares.
Nevada's
      control share law may have the effect of discouraging corporate
      takeovers.
In
      addition to the control share law, Nevada has a business combination law, which
      prohibits certain business combinations between Nevada corporations and
      "interested stockholders" for three years after the "interested stockholder"
      first becomes an "interested stockholder" unless the corporation's board of
      directors approves the combination in advance. For purposes of Nevada law,
      an
      "interested stockholder" is any person who is (1) the beneficial owner, directly
      or indirectly, of ten percent or more of the voting power of the outstanding
      voting shares of the corporation, or (2) an affiliate or associate of the
      corporation and at any time within the three previous years was the beneficial
      owner, directly or indirectly, of ten percent or more of the voting power of
      the
      then outstanding shares of the corporation. The definition of the term "business
      combination" is sufficiently broad to cover virtually any kind of transaction
      that would allow a potential acquirer to use the corporation's assets to finance
      the acquisition or otherwise to benefit its own interests rather than the
      interests of the corporation and its other stockholders.
The
      effect of Nevada's business combination law is to potentially discourage parties
      interested in taking control of the Company from doing so if it cannot obtain
      the approval of our Board of Directors.
PART
      F/S
Reference
      is made to the disclosure set forth under Item 9.01 of this Current Report
      on
      Form 8-K, which disclosure is incorporated herein by reference.
PART
      III
1.
INDEX
                TO EXHIBITS
See
      Item
      9.01(d) below, which is incorporated by reference herein.
2.
DESCRIPTION
                OF EXHIBITS
See
      Exhibit Index below and the corresponding exhibits, which are incorporated
      by
      reference herein.
Item
      3.02.
Recent
      Sales of Unregistered Securities.
Reference
      is made to the disclosure set forth under Item 2.01 of this Current Report
      on
      Form 8-K, which disclosure is incorporated herein by reference.
Item
      4.01.
Changes
      in Registrant's Certifying Accountant.
Reference
      is made to the disclosure set forth under Item 2.01 of this Current Report
      on
      Form 8-K, which disclosure is incorporated herein by reference.
-51-
Item
      5.01.
Changes
      in Control of Registrant.
Reference
      is made to the disclosure set forth under Item 2.01 of this Current Report
      on
      Form 8-K, which disclosure is incorporated herein by reference.
Item
      5.02.
Departure
      of Directors or Principal Officers; Election of Directors; Appointment of
      Principal Officers.
Reference
      is made to the disclosure set forth under Item 2.01 of this Current Report
      on
      Form 8-K, which disclosure is incorporated herein by reference.
Item
      5.03.
Change
      in Fiscal Year.
Concurrent
      with the closing of the Merger and in accordance with the Company's bylaws, the
      Company's Board approved a change in the Company's fiscal year effective as of
      September 1, 2006 such that the Company's fiscal year end is December
      31
st
.
      The
      Company's former fiscal year end was July 31, 2006. The Company will file a
      quarterly report on Form 10-QSB for the transition period ending September
      30,
      2006.
Item
      5.06.
Change
      in Shell Company Status.
Reference
      is made to the disclosure set forth under Item 2.01 of this Current Report
      on
      Form 8-K, which disclosure is incorporated herein by reference. As a result
      of
      the Merger described under Item 2.01 of this Current Report on Form 8-K, the
      registrant believes that it is no longer a "shell company" as that term is
      defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange
      Act.
Item
      9.01.
Financial
      Statements and Exhibits.
(a)
Financial
                Statements of Businesses
                Acquired.
(b)
Pro
                Forma Financial
                Information.
The
      financial statements of Ethanex Energy North America, Inc. for the periods
      and
      dates indicated below are filed with this report.
Page
Audited
                Financial Statements
Ethanex
                Energy North America, Inc.:
Report
                of Independent Registered Public Accounting Firm
F-1
Balance
                Sheet as of June 30, 2006
F-3
Statement
                of Operations for the period May 31, 2006 (Inception) to June 30,
                2006
F-4
Statement
                of Stockholders' Deficit for the Period May 31, 2006 (Inception) to June
                30, 2006
F-5
Statement
                of Cash Flows for the period May 31, 2006 (Inception) to June 30,
                2006
F-6
Notes
                to Financial Statements
F-8
Unaudited
                Pro Forma Financial Information:
Ethanex
                Energy, Inc.:
Introduction
F-15
Pro
                Forma Balance Sheet as of June 30, 2006
F-15
-52-
BAGELL,
        JOSEPHS, LEVINE & COMPANY, L.L.C.
Certified
        Public Accountants
High
        Ridge Commons
Suites
        400-403
200
        Haddonfield Berlin Road
Gibbsboro,
        New Jersey 08026
(856)
        346-2828 Fax (856) 346-2882
REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board
        of
        Directors
Ethanex
        Energy North America, Inc.
(Formerly
        known as Armistead Energy, Inc.)
Basehor,
        KS
We
        have
        audited the accompanying balance sheet of
Ethanex
        Energy North America, Inc. (formerly known as Armistead Energy, Inc.) (the
        "Company")
as
        of
        June 30, 2006 and the related statements of operations, stockholders' deficit,
        and cash flows for the period May 31, 2006 (inception) to June 30, 2006.
        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 audit.
We
        have
        conducted our audit in accordance with standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements. An audit also includes assessing the accounting principles used
        and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audit provides 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
Ethanex
        Energy North America, Inc. (formerly known as Armistead Energy, Inc.)
as
        of
        June 30, 2006 and the results of its operations, changes in stockholders'
deficit and cash flows for the period May 31, 2006 (inception) to June 30,
        2006
        in conformity with accounting principles generally accepted in the United
        States
        of America.
The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 6, the Company had
        net
        losses and negative cash flows from operations for the period May 31, 2006
        (inception) to June 30, 2006, and as of that date had negative working capital,
        which raises substantial doubt
F-1
about
        its
        ability to continue as a going concern. Management's plans in regard to these
        matters are also discussed in Note 6. The financial statements do not include
        any adjustments that might result from the outcome of this uncertainty.
BAGELL,
        JOSEPHS, LEVINE & COMPANY, L.L.C.
BAGELL,
        JOSEPHS, LEVINE & COMPANY, L.L.C.
Certified
        Public Accountants
Gibbsboro,
        New Jersey
September
        5, 2006
MEMBER
                OF:
AMERICAN
                  INSTITUTE OF CERTIFIED PUBLIC
                  ACCOUNTANTS
NEW
        JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
PENNSYLVANIA
        INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
FLORIDA
        STATE BOARD OF ACCOUNTANCY
F-2
ETHANEX
        ENERGY NORTH AMERICA, INC.
(FORMERLY
        KNOWN AS ARMISTEAD ENERGY, INC.)
(A
        DEVELOPMENT STAGE COMPANY)
BALANCE
        SHEET
JUNE
        30, 2006
ASSETS
Computer
                    equipment, net
$
2,793
TOTAL
                    ASSETS
$
2,793
LIABILITIES
                    AND STOCKHOLDERS' (DEFICIT)
LIABILITIES
Current
                    Liabilities:
Due
                    to stockholder
$
10,765
Total
                    Current Liabilities
10,765
Total
                    Liabilities
10,765
STOCKHOLDERS'
                    (DEFICIT)
Class
                    A Common stock, $.01 par value; 70,000,000
shares
                    authorized, 400 shares issued and outstanding
4
Class
                    B Common stock, $.01 par value; 60,000,000
shares
                    authorized, -0- shares issued and outstanding
—
(Deficit)
                    accumulated during
the
                    development stage
(7,976
)
TOTAL
                    STOCKHOLDERS' (DEFICIT)
(7,972
)
TOTAL
                    LIABILITIES AND
STOCKHOLDERS'
                    (DEFICIT)
$
2,793
The
        accompanying notes are an integral part of these financial
        statements
F-3
ETHANEX
        ENERGY NORTH AMERICA, INC.
(FORMERLY
        KNOWN AS ARMISTEAD ENERGY, INC.)
(A
        DEVELOPMENT STAGE COMPANY)
STATEMENT
        OF OPERATIONS
FOR
        THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006
OPERATING
                    REVENUES
$
—
COST
                    OF SALES
—
GROSS
                    PROFIT
—
OPERATING
                    EXPENSES
General
                    and administrative
7,976
Total
                    Operating Expenses
7,976
NET
                    (LOSS) BEFORE PROVISION
FOR
                    INCOME TAXES
(7,976
)
Provision
                    for income taxes
—
NET
                    (LOSS) APPLICABLE TO
COMMON
                    SHARES
$
(7,976
)
NET
                    (LOSS) PER BASIC AND
DILUTED
                    SHARES
$
(19.94
)
WEIGHTED
                    AVERAGE NUMBER
OF
                    SHARES OUTSTANDING
400
The
        accompanying notes are an integral part of these financial
        statements
F-4
ETHANEX
        ENERGY NORTH AMERICA, INC.
(FORMERLY
        KNOWN AS ARMISTEAD ENERGY, INC.)
(A
        DEVELOPMENT STAGE COMPANY)
STATEMENT
        OF STOCKHOLDERS' DEFICIT
FOR
        THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006
(Deficit)
Accumulated
Additional
During
                    The
Class
                    A Common Shares
Paid-in
Development
Shares
Amount
Capital
Stage
Total
Balance,
                    May 31,
2006
—
$
—
$
—
$
—
$
—
Issuance
                    of stock
to
                    stockholder
400
4
—
—
4
Net
                    (loss) for the
period
                    May 31,
2006
                    (inception)
to
                    June 30, 2006
(7,976
)
(7,976
)
400
$
4
$
—
$
(7,976
)
$
(7,972
)
The
        accompanying notes are an integral part of these financial
        statements
F-5
ETHANEX
        ENERGY NORTH AMERICA, INC.
(FORMERLY
        KNOWN AS ARMISTEAD ENERGY, INC.)
(A
        DEVELOPMENT STAGE COMPANY)
STATEMENT
        OF CASH FLOWS
FOR
        THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006
CASH
                    FLOWS FROM OPERATING
ACTIVITIES:
Net
                    (Loss)
$
(7,976
)
Adjustments
                    to reconcile net (loss) to
net
                    cash (used in) operating activities:
Depreciation
80
Total
                    adjustments
80
Net
                    cash (used in) operating activities
(7,896
)
CASH
                    FLOWS FROM INVESTING
ACTIVITIES
Purchase
                    of computer equipment
(2,873
)
Net
                    cash (used in) investing activities
(2,873
)
CASH
                    FLOWS FROM FINANCING
ACTIVITIES
Advances
                    from stockholders, net
10,769
Net
                    cash provided by financing activities
10,769
NET
                    INCREASE IN CASH AND
CASH
                    EQUIVALENTS
—
CASH
                    AND CASH EQUIVALENTS -
BEGINNING
                    OF PERIOD
—
CASH
                    AND CASH EQUIVALENTS -
END
                    OF PERIOD
$
—
The
        accompanying notes are an integral part of these financial
        statements
F-6
ETHANEX
        ENERGY NORTH AMERICA, INC.
(FORMERLY
        KNOWN AS ARMISTEAD ENERGY, INC.)
(A
        DEVELOPMENT STAGE COMPANY)
STATEMENT
        OF CASH FLOWS (CONTINUED)
FOR
        THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006
SUPPLEMENTAL
                    CASH FLOW
INFORMATION
Cash
                    paid during the period for:
Interest
$
—
Income
                    taxes
$
—
SUPPLEMENTAL
                    SCHEDULE OF
NONCASH
                    INVESTING AND
FINANCING
                    ACTIVITY
Issuance
                    of common stock
to
                    stockholder
$
4
The
        accompanying notes are an integral part of these financial
        statements
F-7
ETHANEX
        ENERGY NORTH AMERICA, INC.
(FORMERLY
          KNOWN AS ARMISTEAD ENERGY, INC.)
(A
          DEVELOPMENT STAGE COMPANY)
NOTES
          TO FINANCIAL STATEMENTS
FOR
          THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006
NOTE
                1 -
NATURE
                  OF BUSINESS AND ORGANIZATION
Ethanex
        Energy North America, Inc. (formerly known as Armistead Energy, Inc.) (the
        "Company") was formed on May 31, 2006 in the state of Delaware. The Company is a
        development stage company that plans to engage in the business of cyclical
        and
        secular trends in the energy sector. Specifically, the Company intends to
        own
        and operate ethanol plants. The ethanol expected to be produced by the plants
        is
        intended to be used as a blend component in the U.S. gasoline fuel market
        by
        refineries. Additionally, the Company anticipates that the plants will be
        designed to produce dried distilled grains, which are used in the manufacture
        of
        various animal feeds.
NOTE
                2 -
SUMMARY
                  OF SIGNIFICANT ACCOUNTING
                  POLICIES
Use
        of Estimates
The
        preparation of the financial statements in conformity with accounting principles
        generally accepted in the United States requires management to make estimates
        and assumptions that affect the reported amounts of assets and liabilities
        and
        disclosure of contingent assets and liabilities at the date of the financial
        statements and the reported amounts of revenues and expenses during the
        reporting period. Actual results could differ from those estimates.
Cash
        and Cash Equivalents
For
        financial statement presentation purposes, the Company considers short-term,
        highly liquid investments with an original maturity of three months or less
        to
        be cash and cash equivalents. There were no cash and cash equivalents at
        June
        30, 2006.
Computer
        Equipment
Computer
        equipment is presented at cost less accumulated depreciation. Depreciation
        is
        computed utilizing the straight-line method over the equipments estimated
        useful
        lives (3 years). Depreciation expense was $80 for the period May 31, 2006
        (inception) to June 30, 2006.
Development
        Stage Company
The
        Company is considered to be in the development stage as defined in Statement
        of
        Financial Accounting Standards (SFAS) No. 7, "
Accounting
        and Reporting by Development Stage Enterprises
".
        The
        Company has devoted substantially all of its efforts to business planning
        and
        development. Additionally, the Company has allocated a substantial portion
        of
        their time and investment in bringing their product to the market, and the
        raising of capital.
F-8
ETHANEX
        ENERGY NORTH AMERICA, INC.
(FORMERLY
          KNOWN AS ARMISTEAD ENERGY, INC.)
(A
          DEVELOPMENT STAGE COMPANY)
NOTES
          TO FINANCIAL STATEMENTS
FOR
          THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006
NOTE
                2 -
SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)
Income
        Taxes
The
        provision for income taxes includes the tax effects of transactions reported
        in
        the financial statements. Deferred taxes would be recognized for differences
        between the basis for assets and liabilities for financial statement and
        income
        tax purposes. The major difference relates to the net operating loss
        carryforwards generated by sustaining deficits during the development
        stage.
Fair
        Value of Financial Instruments
The
        carrying amount reported in the balance sheet for due to stockholder (see
        note
        3) approximate fair value because of the immediate or short-term maturity
        of
        these financial instruments.
(Loss)
        Per Share of Common Stock
Historical
        net (loss) per common share is computed using the weighted average number
        of
        common shares outstanding. Diluted earnings per share (EPS) include additional
        dilution from common stock equivalents, such as stock issuable pursuant to
        the
        exercise of stock options and warrants. Common stock equivalents are not
        included in the computation of diluted earnings per share when the Company
        reports a loss because to do so would be antidilutive for the periods
        presented.
The
        following is a reconciliation of the computation for basic and diluted EPS
        for
        the period May 31, 2006 (inception) to June 30, 2006:
Net
                    Loss
$
(7,976
)
Weighted-average
                    common shares
400
outstanding
                    (basic)
Weighted-average
                    common stock
equivalents:
Stock
                    options and warrants
0
Weighted-average
                    common shares
outstanding
                    (diluted)
400
There
        were no common stock equivalents at June 30, 2006.
F-9
ETHANEX
        ENERGY NORTH AMERICA, INC.
(FORMERLY
        KNOWN AS ARMISTEAD ENERGY, INC.)
(A
        DEVELOPMENT STAGE COMPANY)
NOTES
        TO FINANCIAL STATEMENTS (CONTINUED)
FOR
        THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006
NOTE
                2 -
SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent
        Accounting Pronouncements
In
        February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
        Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and
        140." SFAS No. 155 resolves issues addressed in SFAS No. 133
        Implementation Issue No. D1, "Application of Statement 133 to Beneficial
        Interests in Securitized Financial Assets," and permits fair value remeasurement
        for any hybrid financial instrument that contains an embedded derivative
        that
        otherwise would require bifurcation, clarifies which interest-only strips
        and
        principal-only strips are not subject to
the
        requirements of SFAS No. 133, establishes a requirement to evaluate
        interests in securitized financial assets to identify interests that are
        freestanding derivatives or that are hybrid financial instruments that contain
        an embedded derivative requiring bifurcation, clarifies that concentrations
        of
        credit risk in the form of subordination are not embedded derivatives and
        amends
        SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose
        entity from holding a derivative financial instrument that pertains to a
        beneficial interest other than another derivative financial instrument. SFAS
        No. 155 is effective for all financial instruments acquired or issued after
        the beginning of the first fiscal year that begins after September 15,
        2006. The adoption of
FAS
        155
is not
        anticipated to have a material impact on the Company's financial position,
        results of operations or cash flows.
In
        March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
        Financial Assets, an amendment of FASB Statement No. 140." SFAS
        No. 156 requires an entity to recognize a servicing asset or liability each
        time it undertakes an obligation to service a financial asset by entering
        into a
        servicing contract under a transfer of the servicer's financial assets that
        meets the requirements for sale accounting, a transfer of the servicer's
        financial assets to a qualified special-purpose entity in a guaranteed mortgage
        securitization in which the transferor retains all of the resulting securities
        and classifies them as either available-for-sale or trading securities in
        accordance with SFAS No. 115, "Accounting for Certain Investments in Debt
        and Equity Securities" and an acquisition or assumption of an obligation to
        service a financial asset that does not relate to financial assets of the
        servicer or its consolidated affiliates.
Additionally,
        SFAS No. 156 requires all separately recognized servicing assets and
        servicing liabilities to be initially measured at fair value, permits an
        entity
        to choose either the use of an amortization or fair value method for subsequent
        measurements, permits at initial adoption a one-time reclassification of
        available-for-sale securities to trading securities by entities with recognized
        servicing rights and requires separate presentation of servicing assets and
        liabilities subsequently measured at fair value and additional disclosures
        for
        all separately recognized servicing assets and liabilities. SFAS No. 156 is
        effective for transactions entered into after the beginning of the first
        fiscal
        year that begins after September 15, 2006. The adoption of
FAS
        156
is not
        anticipated to have a material impact on the Company's financial position,
        results of operations or cash flows.
F-10
ETHANEX
        ENERGY NORTH AMERICA, INC.
(FORMERLY
        KNOWN AS ARMISTEAD ENERGY, INC.)
(A
        DEVELOPMENT STAGE COMPANY)
NOTES
        TO FINANCIAL STATEMENTS (CONTINUED)
FOR
        THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006
NOTE
                3 -
DUE
                  TO STOCKHOLDER
Due
        to
        stockholder represents non-interest bearing advances due on demand.
NOTE
                4 -
STOCKHOLDERS'
                  EQUITY
Common
        Stock
The
        Company incorporated under the laws of the State of Delaware on May 31, 2006.
        In
        accordance with its Certificate of Incorporation, the Company has authorized:
        70,000,000 Class A Common Shares, par value $.01 and 60,000,000 Class B Common
        Shares, $.01 par value.
Class
        A Common Stock
Class
        A
        Common Stock consisted of 400 shares issued and outstanding at June 30, 2006.
Each
        holder of Class Common Stock is entitled to receive ratably dividends, if
        any as
        may be declared by the Board of Directors out of funds legally available
        for the
        payment of dividends.
Class
        B Common Stock
As
        of
        June 30, 2006 there were no shares of Class B Common Stock issued or
        outstanding.
NOTE
                5 -
PROVISION
                  FOR INCOME TAXES
Deferred
        income taxes will be determined using the liability method for the temporary
        differences between the financial reporting basis and income tax basis of
        the
        Company's assets and liabilities. Deferred income taxes will be measured based
        on the tax rates expected to be in effect when the temporary differences
        are
        included in the Company's tax return. Deferred tax assets and liabilities are
        recognized based on anticipated future tax consequences attributable to
        differences between financial statement carrying amounts of assets and
        liabilities and their respective tax bases.
At
        June
        30, 2006, the deferred tax asset approximated the following:
Deferred
                    tax asset
$
2,700
Less:
                    valuation allowance
(2,700
)
Net
                    deferred tax asset
$
-
At
        June
        30, 2006, the Company had an accumulated deficit in the amount of $7,976,
        available to offset future taxable income through 2026. The Company established
        a valuation allowance
F-11
ETHANEX
        ENERGY NORTH AMERICA, INC.
(FORMERLY
          KNOWN AS ARMISTEAD ENERGY, INC.)
(A
          DEVELOPMENT STAGE COMPANY)
NOTES
          TO FINANCIAL STATEMENTS (CONTINUED)
FOR
          THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006
NOTE
                5 -
PROVISION
                  FOR INCOME TAXES
(CONTINUED)
equal
        to
        the full amount of the deferred tax asset due to the uncertainty of the
        utilization of the operating losses in future periods.
NOTE
                6 -
GOING
                  CONCERN
As
        shown
        in the accompanying financial statements, as is typical of companies going
        through the development stage, the Company incurred a net (loss) for the
        period
        May 31, 2006 (inception) to June 30, 2006. The Company is currently in the
        development stage, and there is no guarantee whether the Company will be
        able to
        generate enough revenue and/or raise capital to support current operations
        and
        generate anticipated sales. This raises substantial doubt about the Company's
        ability to continue as a going concern.
Management
        believes that the Company's capital requirements will depend on many factors
        including the success of the Company's product development and marketing
        efforts. The financial statements do not include any adjustments that might
        result from the outcome of these uncertainties.
NOTE
                7 -
SUBSEQUENT
                  EVENTS
Stockholders'
        Deficit
On
        July
        17, 2006, the Company amended its certificate of incorporation to change
        its
        name from Armistead Energy, Inc. to Ethanex Energy North America, Inc.
        Additionally, the Company increased its authorized number of common shares
        to 75
        million, which is divided into two classes: 40 million shares of class A
        common
        stock and 35 million shares of class B common stock. The holders of the class
        A
        and class B common stock have the same voting rights and privileges. Concurrent
        with the filing of the amendment of the certificate of incorporation the
        Company's 400 shares of issued and outstanding common stock were converted into
        34 million shares of the Company's class A common stock.
On
        July
        26, 2006, the Company amended its certificate of incorporation to increase
        its
        authorized common shares to 130 million, which is divided into two classes:
        70
        million shares of class A common stock and 60 million shares of class B common
        stock.
Private
        Offering
On
        August
        3, 2006, the Company closed a private placement offering of 20 million shares
        of
        the Company's class B common stock. Accompanying each share is one warrant to
        purchase one share of class B common stock at an exercise price of $1.50
        per
        share. The warrants expire August 3, 2011. The investors in the offering
        collectively purchased 20 million shares for a total consideration of
        $20,000,000. The proceeds were allocated to the class B common stock and
        the
        warrants based on their relative fair values. The Company paid professional
        fees, commission and a finder's fee totaling $699,546 in connection with the
        offering. The Company entered into
F-12
ETHANEX
        ENERGY NORTH AMERICA, INC.
(FORMERLY
          KNOWN AS ARMISTEAD ENERGY, INC.)
(A
          DEVELOPMENT STAGE COMPANY)
NOTES
          TO FINANCIAL STATEMENTS (CONTINUED)
FOR
          THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006
NOTE
                7 -
SUBSEQUENT
                  EVENTS
(CONTINUED)
Private
        Offering
(Continued)
the
        private placement offering as a condition to the consummation of an Agreement
        and Plan of Merger and Reorganization with a publicly held corporation to
        be
        accounted for as a reverse merger (see below).
In
        connection with the private placement offering the Company entered into
        Registration Rights Agreements with the investors in the offering. Under
        the
        terms of the Registration Rights Agreements, the Company has committed to
        file a
        registration statement with the SEC covering the class B common stock issued
        in
        the offering within 90 days of its reverse merger with a publicly held
        corporation (see below). If the Company fails to file a registration statement
        within 90 days of a reverse merger with a publicly held corporation or the
        registration statement fails to become effective within 90 days of filing
        the
        Company will become liable for liquated damages at a rate equal to 1% per
        month
        of the investors purchase price in the offering.
Agreement
        and Plan of Merger and Reorganization with Ethanex Energy,
        Inc.
On
        September 1, 2006, the Company entered into an Agreement and Plan of Merger
        and
        Reorganization ("merger") with Ethanex Energy, Inc., a publicly held
        corporation, and its wholly owned subsidiary Ethanex North America Acquisition
        Corp. Ethanex Energy, Inc. acquired the Company in the merger and will continue
        its operations as a publicly-traded company. Pursuant to the merger the holders
        of the Company's capital stock before the merger surrendered all of their issued
        and outstanding class A and class B common shares in exchange for 46 million
        shares of Ethanex Energy's common stock. Specifically, the holders of the
        Company's class A common stock received an aggregate of 26 million shares and
        the holders of the Company's class B common stock received and aggregate 20
        million shares. The shareholders of Ethanex Energy, Inc. prior to the merger
        retained 14 million shares of common stock in the public company. One million
        shares of Ethanex Energy's common stock were issued to a consultant for advisory
        services in connection with the merger.
The
        above
        transaction has been accounted for as a reverse merger (recapitalization)
        with
        Ethanex Energy North America, Inc. being deemed the accounting acquirer and
        Ethanex Energy, Inc. being deemed the legal acquirer. Accordingly, the
        historical financial information presented in the financial statements is
        that
        of Ethanex Energy North America, Inc. (since May 31, 2006, the date of
        inception) as adjusted to give effect to any difference in the par value
        of the
        issuer's and the accounting acquirer's stock with an offset to additional paid
        in capital. The basis of the assets and liabilities of Ethanex Energy North
        America, Inc., the accounting acquirer, has been carried over in the
        recapitalization.
F-13
ETHANEX
        ENERGY NORTH AMERICA, INC.
(FORMERLY
          KNOWN AS ARMISTEAD ENERGY, INC.)
(A
          DEVELOPMENT STAGE COMPANY)
NOTES
          TO FINANCIAL STATEMENTS (CONTINUED)
FOR
          THE PERIOD MAY 31, 2006 (INCEPTION) TO JUNE 30, 2006
NOTE
                7 -
SUBSEQUENT
                  EVENTS
(CONTINUED)
Employment
        Agreements
The
        Company has entered into
employment
        agreements with certain key personnel which provide for a base salary, yearly
        bonuses subject to the Company achieving certain target performance levels
        as
        set by the board, stock options under the 2006 Stock Option Plan and other
        benefits. Termination of the agreements may be made by either party with
        advance
        notice.
Operating
        Lease
On
        July
        17, 2006, the Company entered into various non-cancelable lease agreements
        for
        its office premises with a one-year term. Under the leasing arrangement the
        Company pays the expenses related to the leased property. The base annual
        rent
        under the operating lease is $11,100. The lease may be renewed by the Company
        at
        the Company's option for a period of five years with an annual increase of 3%
        per year in the rent expense.
Agreement
        and Plan of Merger and Reorganization with IPT Ethanol,
        Inc.
On
        August
        3, 2006, the Company acquired all of the capital stock of IPT Ethanol, Inc.
        from
        Industrial Power Technology, its sole stockholder and a related party. IPT
        Ethanol, Inc. is a privately held corporation formed on July 18, 2006 and
        has
        had no operations from its date of inception through August 3, 2006. Pursuant
        to
        the closing, Industrial Power Technology assigned to IPT Ethanol, Inc. its
        rights to a letter of understanding with an NYSE-listed electric utility
        located
        in the Midwest. The letter of understanding provides for a joint evaluation
        of
        the environmental and operational impact of a site selection for a 132 MMGY
        (millions of gallons per year) ethanol plant located at a large coal-fired
        generating facility owned by the electric utility. Upon the receipt of favorable
        results from the joint evaluation and upon the satisfactory negotiation of
        business terms with the electric utility for the development of the proposed
        plant, the Company intends to enter into a definitive agreement to construct
        an
        ethanol plant at the coal-fired generating facility. The Company paid $500,000
        in cash for the acquisition of IPT Ethanol, Inc.
F-14
Ethanex
            Energy, Inc.
Unaudited
              Pro Forma Balance Sheet
June
                30,
                2006
The
                  following unaudited pro forma balance sheet gives effect to the
                  Agreement and
                  Plan of Merger and Reorganization entered
into
                  between Ethanex Energy, Inc. and Ethanex Energy North America,
                  Inc. on September
                  1, 2006. The unaudited pro forma balance sheet has been prepared
                  from the
                  historical financial statements of Ethanex Energy, Inc. and Ethanex
                  Energy North
America,
                  Inc. and should be read in conjuction
                  therewith.
Under
            the
            terms of the Agreement and Plan of Merger and Reorganization, the holders
            of the
            capital stock of Ethanex Energy North America, Inc. surrendered all of
            their
            issued and outstanding shares in exchange for 46 million shares of Ethanex
            Energy,
Inc.'s
            common shares. The shareholders of Ethanex Energy prior to the agreement
            received 14 million shares of Ethanex
Energy
            Inc.'s common shares in exchage for their outstanding common shares.
            Additionally, one million common shares of
Ethanex
            Energy, Inc. was issued to a consultant for advisory services in connection
            with
            the merger.
Management believes that the assumptions used provide
          a
          reasonable basis on which to present the unaudited pro forma financial
          data.
The
          unaudited pro forma financial data may not be indicative of the financial
          position or results that would have occurred if the acquisition
had
          been
          in effect on the dates indicated or which may be obtained in the
          future.
Historical
Ethanex
Ethanex
Energy
                    North
Proforma
Consolidated
Energy,
                    Inc
America,
                    Inc.
Adjustments
Proforma
Assets
Current
                    Assets
Cash
$
11,368
$
-
1
$
19,300,454
2
$
(11,368
)
$
19,300,454
Total
                    Current Assets
11,368
-
19,289,086
19,300,454
Computer
                    equipment, net
-
2,793
2,793
Total
                    Assets
11,368
2,793
19,289,086
19,303,247
Liabilities
                    and Stockholders' Equity
Current
                    Liabilities
Accrued
                    expenses
1,976
-
2
(1,976
)
Note
                    payable - related party
20,000
10,765
2
(20,000
)
10,765
Total
                    Liabilities
21,976
10,765
(21,976
)
10,765
Stockholders'
                    Equity
Common
                    stock
4,800
4
2
61,000
2
(4,800
)
2
200,000
2
(200,004
)
61,000
Additional
                    paid-in capital
29,700
-
1
19,100,454
2
999,000
2
(29,700
)
2
140,004
20,239,458
Accumulated
                    deficit
(45,108
)
(7,976
)
2
45,108
2
(1,000,000
)
(1,007,976
)
Total
                    Stockholders' Equity
(10,608
)
(7,972
)
19,311,062
19,292,482
Total
                    Liabilities & Stockholders' Equity
$
11,368
$
2,793
$
19,289,086
$
19,303,247
1
To
                    record the private placement of by Ethanex Energy North America,
                    Inc.
                    which was a condition to the consummation of the Agreement and
                    plan of
                    Merger and Reorganization.
2
To
                    record the reverse merger and recapitalization of Ethanex Energy
                    North
                    America, Inc. including the elimination of Ethanex Energy, Inc.'s
                    accumulated deficit and additional paid-in capital and the issuance
                    of
                    61,000,000 common shares at a par value of
                    $0.001.
F-15
(d)
Exhibits.
Exhibit
                No.
Description
Reference
2.1
Agreement
                and Plan of Merger and Reorganization, dated as of September 1, 2006,
                by
                and among Ethanex Energy, Inc., a Nevada corporation, Ethanex North
                America Acquisition Corp., a Delaware corporation, and Ethanex Energy
                North America, Inc., a Delaware corporation.*
3.1
Articles
                of Incorporation of Ethanex Energy, Inc. (f/k/a New Inverness
                Explorations, Inc.).
Incorporated
                by reference to Exhibit 3.1 to the Registration Statement on Form
                SB-2 filed with the Securities and Exchange Commission on November
                18,
                2005 (File No. 333-129810).
3.2
Certificate
                of Amendment of the Articles of Incorporation of Ethanex Energy,
                Inc.
                (f/k/a New Inverness Explorations, Inc.).
Incorporated
                by reference to Exhibit 3.1 to the Current Report on Form 8-K filed
                with the Securities and Exchange Commission on August 23, 2006 (File
                No.
                333-129810).
3.3
Certificate
                of Amendment of the Articles of Incorporation of Ethanex Energy,
                Inc.
                (f/k/a New Inverness Explorations, Inc.).
Incorporated
                by reference to Exhibit 3.2 to the Current Report on Form 8-K filed
                with the Securities and Exchange Commission on August 23, 2006 (File
                No.
                333-129810).
3.4
Bylaws
                of Ethanex Energy, Inc. (f/k/a New Inverness Explorations,
                Inc.).
Incorporated
                by reference to Exhibit 3.2 to the Registration Statement on Form
                SB-2 filed with the Securities and Exchange Commission on November
                18,
                2005 (File No. 333-129810).
4.1
Form
                of Warrant of Ethanex Energy, Inc.*
4.2
Form
                of Lock-Up Agreement by and between Tompkins Capital Group and the
                principals of Ethanex Energy, Inc.*
10.1
Registration
                Rights Agreement dated as of August 3, 2006, including the Consent
                and
                Acknowledgment thereto, by and between Ethanex Energy North America,
                Inc.
                and the investors in the Offering, which agreement was assumed by
                Ethanex
                Energy, Inc.*
10.2
Split
                Off Agreement, dated September 1, 2006, by and among Ethanex Energy,
                Inc.,
Amanda
                Lamothe
,
                Luke Willis, Ethanex Energy North America, Inc. and New Inverness
                Leaseco,
                Inc.*
10.3
Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Albert W. Knapp, which agreement was assumed by
                Ethanex
                Energy, Inc.*
10.4
Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Randall L. Rahm, which agreement was assumed by
                Ethanex
                Energy, Inc.*
10.5
Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Bryan J. Sherbacow, which agreement was assumed
                by
                Ethanex Energy, Inc.*
10.6
Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Robert C. Walther, which agreement was assumed
                by
                Ethanex Energy, Inc.*
10.7
Indemnity
                Agreement by and between Ethanex Energy, Inc. and Outside Directors
                of
                Ethanex Energy, Inc.*
10.8
2006
                Equity Incentive Plan.*
21.1
Subsidiaries
                of Ethanex Energy, Inc.*
*
Filed
                herewith.
-53-
SIGNATURES
Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      registrant has duly caused this report to be signed on its behalf by the
      undersigned hereunto duly authorized.
ETHANEX
      ENERGY, INC.
By: 
/s/ Albert
      W. Knapp
Name:
Albert
      W.
      Knapp
Title:
Chief
      Executive Officer
Dated:
      September 6, 2006
-54-
EXHIBIT
      INDEX
Exhibit
                No.
Description
Reference
2.1
Agreement
                and Plan of Merger and Reorganization, dated as of September 1, 2006,
                by
                and among Ethanex Energy, Inc., a Nevada corporation, Ethanex North
                America Acquisition Corp., a Delaware corporation, and Ethanex Energy
                North America, Inc., a Delaware corporation.*
3.1
Articles
                of Incorporation of Ethanex Energy, Inc. (f/k/a New Inverness
                Explorations, Inc.).
Incorporated
                by reference to Exhibit 3.1 to the Registration Statement on Form
                SB-2 filed with the Securities and Exchange Commission on November
                18,
                2005 (File No. 333-129810).
3.2
Certificate
                of Amendment of the Articles of Incorporation of Ethanex Energy,
                Inc.
                (f/k/a New Inverness Explorations, Inc.).
Incorporated
                by reference to Exhibit 3.1 to the Current Report on Form 8-K filed
                with the Securities and Exchange Commission on August 23, 2006 (File
                No.
                333-129810).
3.3
Certificate
                of Amendment of the Articles of Incorporation of Ethanex Energy,
                Inc.
                (f/k/a New Inverness Explorations, Inc.).
Incorporated
                by reference to Exhibit 3.2 to the Current Report on Form 8-K filed
                with the Securities and Exchange Commission on August 23, 2006 (File
                No.
                333-129810).
3.4
Bylaws
                of Ethanex Energy, Inc. (f/k/a New Inverness Explorations,
                Inc.).
Incorporated
                by reference to Exhibit 3.2 to the Registration Statement on Form
                SB-2 filed with the Securities and Exchange Commission on November
                18,
                2005 (File No. 333-129810).
4.1
Form
                of Warrant of Ethanex Energy, Inc.*
4.2
Form
                of Lock-Up Agreement by and between Tompkins Capital Group and the
                principals of Ethanex Energy, Inc.*
10.1
Registration
                Rights Agreement dated as of August 3, 2006, including the Consent
                and
                Acknowledgment thereto, by and between Ethanex Energy North America,
                Inc.
                and the investors in the Offering, which agreement was assumed by
                Ethanex
                Energy, Inc.*
10.2
Split
                Off Agreement, dated September 1, 2006, by and among Ethanex Energy,
                Inc.,
Amanda
                Lamothe
,
                Luke Willis, Ethanex Energy North America, Inc. and New Inverness
                Leaseco,
                Inc.*
10.3
Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Albert W. Knapp, which agreement was assumed by
                Ethanex
                Energy, Inc.*
10.4
Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Randall L. Rahm, which agreement was assumed by
                Ethanex
                Energy, Inc.*
10.5
Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Bryan J. Sherbacow, which agreement was assumed
                by
                Ethanex Energy, Inc.*
10.6
Employment
                Agreement, dated August 3, 2006, by and between Ethanex Energy North
                America, Inc. and Robert C. Walther, which agreement was assumed
                by
                Ethanex Energy, Inc.*
10.7
Indemnity
                Agreement by and between Ethanex Energy, Inc. and Outside Directors
                of
                Ethanex Energy, Inc.*
10.8
2006
                Equity Incentive Plan.*
21.1
Subsidiaries
                of Ethanex Energy, Inc.*
*
Filed
                herewith.