Continental Fuels 1012B Registration of securities

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

Under Section 12(b) or (g) of The Securities Exchange Act of 1934

Commission file number: 33-33042-NY

CONTINENTAL FUELS, INC.

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(Exact name of registrant as specified in its charter)

Nevada	22-3161629
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(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

600 Travis, Suite 6910, Houston, Texas 77002

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(Address of principal executive offices)

Registrant’s telephone number: (713) 231-0330

Securities to be registered under Section 12(b) of the Act:

Title of each class	Name of each exchange on which
to be so registered	each class is to be registered
________________________________	_______________________________

________________________________	_______________________________

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

Common Stock, par value $.001 per share

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

Large accelerated filer: ____	Accelerated filer: ____

Non-accelerated filer: ____	Smaller reporting company: X

CONTINENTAL FUELS, INC.

Form 10

		Page

Item 1.	Description of Business.	3
Item 1A.	Risk Factors.	8
Item 2.	Management’s Discussion and Analysis of Plan of Operation.	15
Item 3.	Description of Property.	18
Item 4.	Security Ownership of Certain Beneficial Owners and Management.	18
Item 5.	Directors and Executive Officers, Promoters and Control Persons.	19
Item 6.	Executive Compensation.	21
Item 7.	Certain Relationships and Related Transactions.	22
Item 8.	Legal Proceedings.	23
Item 9.	Market Price of and Dividends on Registrant’s Common Equity.	23
Item 10.	Recent sales of Restricted Securities.	24
Item 11.	Description of Registrant’s Securities to be Registered	25
Item 12.	Indemnification of Directors and Officers.	25
Item 13.	Financial Statements.	27
Item 14.	Changes in and Disagreements with Accountants.	27
Item 15.	Financial Statements and Exhibits.	28

SIGNATURES		30

SUPPLEMENTAL INFORMATION AND EXHIBITS		31

Special Note on Forward-Looking Statements

Except for historical information contained herein, this document contains forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”,
“potential” or “continue” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain
such identifying words. Forward-looking statements involve risks and uncertainties and include, but are not limited to, statements regarding
future events and the Registrant’s plans and expectations. The Registrant’s actual results may differ materially from such statemen ts.
Although the Registrant believes that the assumptions underlying the forward-looking statements herein are reasonable, any of the
assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in such forward-looking
statements will be realized. In addition, the business and operations of the Registrant are subject to substantial risks which increase the
uncertainties inherent in the forward-looking statements included in this document. The inclusion of such forward-looking information
should not be regarded as a representation by the Registrant or any other person that the future events, plans or expectations contemplated by
the Registrant will be achieved.

Unless the context otherwise requires, references in this Annual Report to “Continental”, "registrant", "issuer ", "we", "us", "our", "the
Company" or "ours" refer to Continental Fuels, Inc.

Item 1.

Description of Business.

Historical Background

Continental Fuels, Inc. was incorporated under the name First Lloyd Funding, Inc. pursuant to the laws of the State of New York on
December 21, 1989. In January 1997, we closed a re-incorporation merger with our wholly-owned subsidiary and became a Nevada
corporation of the same name. On February 27, 2007, we changed our name to Continental Fuels, Inc. and our common stock currently
trades on the OTC Bulletin Board under the trading symbol “CFUL.OB”.

Change Of Control

On April 23, 2007, we closed a business combination transaction pursuant to a Stock Purchase Agreement (the “SPA”) dated April 20, 2007,
by and among the Company and Universal Property Development and Acquisition Corporation (“UPDA”), a publicly held Nevada
corporation. Pursuant to the SPA, we acquired one hundred percent (100%) of the capital stock of US Petroleum Depot, Inc. and Continental
Trading Enterprizes, Inc. (the “Subsidiaries”), two private Nevada corporations and wholly-owned subsidiaries of UPDA. The consideration
we paid for the Subsidiaries consisted of $2,500,000 in cash, payable within 30 days of the Effective Date, and shares of our Series A
Convertible Preferred Stock valued at $5,000,000 (the “Preferred Stock”). The Preferred Stock was convertible into 500,000,000 shares of
our common stock on the closing date and UPDA has the right to vote the shares of Preferred Stock on an “as converted” basis in any matters
for which the holders of our common stock are entitled to vote. On April 22, 2008, we had 101,479,897 shares of common stock issued and
outstanding. As of that date UPDA had the power to control the vote of approximately 83% of our common stock. The issuance of the
Preferred Stock to UPDA constituted a change of control transaction for the Company, as UPDA owns a majority of our outstanding voting
capital stock.

Subsequent to the closing of the SPA transaction, the Company and UPDA mutually agreed to extend the due date for the payment of the
$2,500,000 cash portion of the consideration described above. In connection with the agreement to extend the due date, we paid $150,000 in
cash to UPDA and executed a promissory note payable that was due to be paid on June 18, 2007 to UPDA for $2,350,000. The note is now
due and payable on demand and bears an interest rate of 5%. As of December 31, 2007, $1,800,000, plus interest, is due to be paid to UPDA.

Business of Issuer

Overview

Through January 26, 2007, the Company was a holding company and all business operations were conducted through our three wholly-
owned subsidiaries; Ophthalmic International, Inc., American Glaucoma, Inc., and OI, LLC. On January 26, 2007, each of these subsidiaries
and all of our assets related to these operations, except for certain European distribution agreements, were sold to G. Richard Smith, the
Company’s then Chairman, for $300,000 in cash and the assumption of certain trade debts. In February 2007, we began to execute an
acquisition strategy in the oil storage and transport segments.

Since the closing of the business combination transaction with UPDA on April 23, 2007, and the closing of subsequent transactions, our
business operations have principally been the purchase, transportation, storage and resale of petroleum products.

The Company conducts all of its operations through the following operating subsidiaries, which are referred to as the "Operating
Subsidiaries":

•	US Petroleum Depot, Inc., a wholly owned subsidiary of the Company, at December 31, 2007 held a long-term lease on a petroleum products terminal and storage facility located in Brownsville, Texas (the “Brownsville facility”).

•	Continental Trading Enterprizes, Inc., a wholly owned subsidiary of the Company, conducts our petroleum products resale operations, which consist of the purchase and resale of various petroleum products.

•	Geer Tank Trucks, Inc., a wholly owned subsidiary of the Company, whose primary business operations are the purchase, transport, and sale of crude oil in the State of Texas.

Business Developments

Beginning in the 2007 fiscal year, we substantially expanded our business operations through the following business and asset acquisitions:

2007 Acquisitions

On April 23, 2007, we closed the business combination transaction with UPDA under the terms of the SPA, pursuant to which, the Company
acquired one hundred percent (100%) of the capital stock of US Petroleum Depot, Inc. and Continental Trading Enterprizes, Inc.

On December 19, 2007, we completed our acquisition of Geer Tank Trucks, Inc. ("Geer"), a privately held Texas corporation, pursuant to the
terms and conditions of a Stock Purchase Agreement, dated as of December 11, 2007 (the "Geer SPA"). We acquired one hundred percent
(100%) of the outstanding capital stock of Geer, for an aggregate purchase price o f $5,500,000. The purchase price was paid by the Company
in cash. We financed the acquisition of Geer with the proceeds of a Term Loan from Sheridan Asset Management LLC (“Sheridan”).

Business Activities

The following discussion describes the business activities of our operating segments. Detailed information regarding revenues, operating
income and total assets of each segment can be found in our consolidated financial statements.

Petroleum Products Resale and Blending Operations

US Petroleum Depot, Inc. and Continental Trading Enterprizes, Inc., two of our Operating Subsidiaries, conduct our petroleum products
storage, blending and purchase and sale operations. US Petroleum Depot, Inc. and Continental Trading Enterprizes, Inc. (hereinafter referred
to as the “Trading Subsidiaries”), were formed under the laws of the State of Nevada in 2006. The following is a description of these
operations.

General

Through the Trading Subsidiaries, the operations of the Company will primarily be the national and international wholesale distribution of
petroleum products. We intend to use the facilities of our Trading Subsidiaries to expand our petroleum products purchase and sales
operati ons and expand our distribution activities.

US Petroleum Depot, Inc., one of the Trading Subsidiaries, entered into an agreement to acquire the lease to an oil blending and distribution
facility located at 32 Espiritu, Brownsville, Texas in 2006. US Petroleum closed on the lease acquisition for the storage facility in the first
quarter of 2007. The property leased and operated by US Petroleum consists of, but is not limited to: (i) approximately 5.45 acres of real
property, (ii) six oil storage tanks with an aggregate capacity of 62,000 barrels, (iii) ship channel access via two 8 inch diameter oil pipelines
that measure 2,000 feet each, (iv) a railroad spur to receive or load oil via rail cars with a capacity of up to 800 barrels each and (v)
equipment to allow the loading and unloading of oil from tanker trucks (collectively, the “Brownsville facility”).

U.S. Petroleum intends to use the Brownsville facility in the operation of its business of receiving, storing and distributing petroleum
products. The Brownsville facility will allow U.S. Petroleum to receive and to load barges of diverse capacities, and to receive and load rail
cars. US Petroleum is currently receiving shipments of petroleum via truck transport. U.S. Petroleum has obtained all the operational permits
required for its business operations from regulators such as the United States Coast Guard, OSHA, and the EPA.

The Company utilizes the Brownsville facility to gather and store smaller shipments of petroleum products and to aggregate those shipments
into larger, more economically viable batches for wholesale shipment using its barge loading facilities. By doing so, the Registrant will be
able to take advantage of economies of scale and reduce the per barrel transportation costs for its products.

Product Offerings

During 2007, the Brownsville terminal facility received small batch shipments of petroleum products. These products were then resold into
the US market. The Company gathers and stores these small batches of petroleum products at its Brownsville facility until a large enough
quantity is available to ship via barge. As we continue to develop this supply source, refine the operation of the Brownsville facility and
acquire additional storage facilities, we expect to be able to ship approximately 20,000 barrels per week of petroleum products over the short
term.

During 2007, US Petroleum completed the delivery of approximately 39,410 barrels of light crude product per month.

Beginning in late November 2007, US Petroleum experienced an interruption of its supply of petroleum products from its supplier. As of the
date of the filing of this report, we are negotiating with this supplier to re-establish the supply of petroleum products that make up our resale
operations. We cannot be certain that this supply of products will be available to us in the future. In such event, we shall seek to replace our
prior suppliers with an alternative source of product.

During this period, US Petroleum took several of its tanks offline and eventually, in December 2007, took all tanks offline for maintenance
and upgrades, including the addition of storage tanks, work on the rail spur, and work on the pipes and pump manifolds. Work began in
December and continued as more work was determined to be required to ensure that the facili ty does not require significant maintenance or
repairs for several years to come.

The rail spur work was considered pivotal and an urgent need as it gives US Petroleum greater flexibility and significant cost savings when
transporting product to certain markets. Additionally, during hurricanes, bad weather, and other circumstance that prevent the shipment of
product by water, rail is rarely affected. In addition, US Petroleum can transport smaller net loads of product more cost effectively by rail.

This work continued through the first quarter of 2008 as more needed repairs and retrofits became apparent. The majority of this work was
planned from the inception of the US Petroleum acquisition; in major part to make the facility more flexible, efficient and safer.

Growth and Profitability Strategy

Through the Trading Subsidiaries, we intend to expand our current petroleum products purchase and sal es operations, enter into new
distribution relationships and enter into the fuel blending and wholesale distribution markets. We intend to increase the volume of these
operations and we anticipate the acquisition by US Petroleum of additional storage and blending facilities to facilitate this business area.

Petroleum Products Transportation Operations

As a result of the closing of the Geer acquisition on December 11, 2007, Geer became a wholly-owned Operating Subsidiary of the
Company. Geer will, among other things, conduct our petroleum products transportation operations. Geer is a private Texas corporation that
was incorporated in 1965 and has been in operation since 1945. We acquired all of the capital stock of Geer through the closing of the Geer
SPA. The main business operations of Geer are the purchase, transpo rt, and sale of crude oil in the State of Texas. The following is a brief
description of these operations.

General

Through Geer, the operations of the Company will be expanded into the purchase, ground transport and sale of crude oil in the State of
Texas. We also intend to use the Geer facilities to expand our petroleum products trading operations and distribution activities into the area of
purchasing petroleum products directly from the producers and re-selling those products to wholesalers, refiners and other end-users.

Geer operates out of five (5) locations in the State of Texas. Geer owns two salt water disposal wells and four pipeline terminals with yards
located in Jacksboro, Mineral Wells, Graham, Cisco and Bowie, Texas. Geer also owns and operates approximately twenty (20) tank trucks
for transporting oil with capacities of one hundred and eighty (180) bbl, and approximately fifty (50) frac tanks. In addition to oil shipping
and trading, Geer provides oil well services such as salt and fresh water removal services and frac tank rentals. On the Geer SPA closing date,
Geer had approximately twenty-five (25) employees.

Continental Fuels A.V.V.

On August 8, 2007, we established a 100% wholly owned foreign subsidiary, Agencia Fiduciaria Aequitas N.V. (“Continental Fuels
A.V.V.”), in Aruba for the purpose of developing a presence in Latin America.

On September 9, 2007, Continental Fuels A.V.V. established a joint venture company, Combustibles Continental De LatinoAmerica
(“Combustibles”), and invested $9,320 in the new entity. Continental Fuels A.V.V. owns 75% of the equity of Combustibles. Combustibles
was created for the purposes of investment in the general energy sector, the commercialization of hydrocarbon by-products, and the
investment and financing of industrial projects and energy infrastructure. On September 9, 2007, Combustibles appointed Timothy Brink as
president, Luis Bautista as vice-president, and Ernesto Haberer as director of its board.

Combustibles presently has no operations or operating assets other than a nominal local cash account totaling approximately $3,000.

Governmental Regulations

Regulation of Storage and Transportation of Oil

Sales of crude oil and other petroleum products are not currently regulated and are made at negotiated prices. Our sales of petroleum products
are affected by the availability, terms and cost of transportation. Insofar as effective interstate and intrastate rates are equally applicable to all
comparable shippers, we believe that the regulation of oil transportation rates will not affect our operations in any way that is of material
difference from those of our competitors. Further, interstate and intrastate common carrier oil pipelines must provide service on a non-
discriminatory basis. Under this open access standard, common carriers must offer service to all shippers requesting service on the same
terms and under the same rates. When oil pipelines operate at full capacity, access is governed by pro-rationing provisions set forth in the
pipelines’ published tariffs. Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the
same extent as to our competitors.

Environmental Regulations

Our operations are subject to various federal, state and local governmental regulations. The handling, storage, transportation and disposal of
oil, by-products thereof, and other substances and materials produced or used in connection with oil operations are subject to regulation under
federal, state and local laws and regulations relating primarily to the protection of human health and the environment. To date, we have not
incurred any extraordinary costs related to complying with these laws, for remediation of existing environmental contamination and for other
related matters. The requirements imposed by such laws and regulations are frequently changed and subject to interpretation, and we are
unable to predict the ultimate cost of compliance with these requirements or their effect on our operations.

At the federal level, among the more significant laws and regulations that may affect our business and the oil industry are: The
Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as “CERCLA” or Superfund; the Oil
Pollution Act of 1990; the Resource Conservation and Recovery Act, also known as “RCRA”; the Clean Air Act; Federal Water Pollution
Control Act of 1972, or the Clean Water Act; and the Safe Drinking Water Act of 1974.

Compliance wit h these regulations may constitute a significant cost and effort for us. No specific accounting for environmental compliance
has been maintained or projected by us at this time. We are not presently aware of any environmental demands, claims, or adverse actions,
litigation or administrative proceedings in which either us or our acquired properties are involved or subject to, or arising out of any
predecessor operations.

In the event of a breach of environmental regulations, these environmental regulatory agencies have a broad range of alternative or
cumulative remedies which include: ordering a clean-up of any spills and restoration of the soil or water to conditions existing prior to the
environmental violation, or fines. In certain egregious situations the agencies may also pursue criminal remedies against us or our principal
officers.

Competition

We operate in a highly competitive environment. The majority of our competitors possess and employ financial, technical and personnel
resources substantially greater than ours, which can be particularly important in the areas in which we operate. Also, there is substantial
competition for capital available for investment in the oil and natural gas industry.

Current competitive factors in the domestic oil and gas industry are unique. The actual price range of crude oil is largely established by major
international producers. Pricing for natural gas is more regional. Because the current domestic demand for oil and gas exceeds supply, we
believe there is little risk that all current production will not be sold at relatively fixed prices. The risk of domestic overproduction at current prices is not deemed significant. However, more favorable prices can usually be negotiated for larger quantities of oil and/or gas product. In
this respect, while we believe we have a price disadvantage when compared to larger competitors, we view our primary pricing risk to be
related to a potential decline in international prices to a level which could render our current production uneconomical.

Major Customers

For the fiscal year 2007, two purchasers were responsible for purchasing 100% of our petroleum product sales. However, we believe that
the loss of either of these purchasers would not materially impact our business, because we could readily find other purchasers for our
products.

Employees

As of December 31, 2007, the Company had 36 full-time employees. As necessary for our operations, we or our subsidiaries select and
engage personnel on a contract or fee basis.

Item 1A.

Risk Factors.

Our business, operations and financial condition are subject to various risks. You should consider carefully the following risk factors, in
addition to the other information set forth in this report. The factors set forth below, however, are generally applicable to our operations and
securities.

We Have a Limited Operating History.

Because our business plan was only recently adopted we have a limited operating history. Such limited operating history makes it more
difficult to predict whether or not we will be successful in the future. Our future financial and operational success is subject to the risks,
uncertainties, expenses, delays and difficulties associated with managing a new business, many of which may be beyond our control. In
addition, we compete in a volatile and highly price sensitive industry and we may face many uncertainties. Our success will depend on many
factors, including those described in this Risk Factors section.

We Have a History of Losses and May Need Additional Financing.

We have experienced operating losses, as well as net losses, for each of the years during which we have operated. We anticipate future losses
and negative cash flow to continue for the foreseeable future.

To date, we have received only limited revenue from our operations. We have incurred significant costs in connection with the development
of our business and there is no assurance that we will achieve sufficient revenues to offset anticipated operating costs. Although we anticipate
deriving revenues from transportation and terminal related operations, no assurance can be given that these businesses will operate on a net
profit basis. We anticipate that our losses will continue until we are able to generate sufficient revenues to support our operations. If we
achieve profitability, we cannot give any assurance that we would be able to sustain or increase profitability on a quarterly or annual basis in
the future.

Similarly, in the future, we may not generate sufficient revenue from operations to pay our operating expenses. If we fail to generate
sufficient cash from operations to pay these expenses, our management will need to identify other sources of funds. We may not be able to
borrow money or issue more shares of common or preferred stock to meet our cash needs. Even if we can complete such transactions, they
may not be on terms that are favorable or reasonable from our perspective.

The Profitability Of Our Operations Depends On The Availability To Us Of Supplies Of Petroleum Products. A Significant Decrease In
Available Supplies For Any Reason Could Adversely Affect Our Sales And Results Of Operations.

The availability of supplies of various petroleum products is essential to our operations. A material decline in such petroleum product
supplies could adversely affect our revenues from bulk, contract and rack product sales. Such a material decline in product supplies may be
caused by natural disasters, adverse weather conditions, terrorist attacks and other events beyond our control. Furthermore, we do not have
long-term supply contracts with refiners and our suppliers could cease selling product to us for any one of several reasons, including a lack of
crude oil supplies, price or volume competition and external economic or political events. Such a shortage could have a material adverse
effect on our supplies of product and hinder our ability to earn throughput fees or sales revenues.

A Substantial Or Extended Decline In Oil Prices May Adversely Affect Our Business, Financial Condition Or Results Of Operations And
Our Ability To Meet Our Financial Commitments.

The price we receive for our petroleum products heavily influences our revenue, profitability, access to capital and future rate of growth. Oil
is a commodity and, therefore, its price is subject to wide fluctuations in response to relatively minor changes in supply and demand.
Historically, the markets for oil have been volatile. These markets will likely continue to be volatile in the future. The prices we receive for
our products, and the levels of demand for our products, depend on numerous factors beyond our control. These factors include, but are not
limited to, the following:

changes in global supply and demand for oil;
the actions of the Organization of Petroleum Exporting Countries, or OPEC;
the price and quantity of imports of foreign oil;
political conditions, including embargoes, in or affecting other oil-producing activity;
the level of global oil exploration and production activity;
the level of global oil inventories;
weather conditions;
technological advances affecting energy consumption; and
the price and availability of alternative fuels.

Lower oil prices may not only decrease the demand for our products but also may reduce the available supply of the petroleum product that is
our primary product. A substantial or extended decline in oil prices may materially and adversely affect our future business, financial
condition, results of operations, liquidity or ability to finance planned capital expenditures.

We Depend Upon A Relatively Small Number Of Customers For A Substantial Majority Of Our Revenue. A Substantial Reduction Of
Those Revenues Would Have A Material Adverse Effect On Our Financial Condition And Results Of Operations.

We expect to derive a substantial majority of our revenue from a small number of significant customers for the foreseeable future. Events that
adversely affect the business operations of any one or more of our s ignificant customers may adversely affect our financial condition or
results of operations. Therefore, we are indirectly subject to the business risks of our significant customers, many of which are similar to the
business risks we face. For example, a material decline in refined petroleum product supplies available to our customers, or a significant
decrease in our customers’ ability to negotiate marketing contracts on favorable terms, could result in a material decline in the use of our tank
capacity or throughput of product at our terminal facilities, which would likely cause our revenue and results of operations to decline.

In addition, if any of our significant customers were unable to meet its contractual commitments to us for any reason, then our revenue and
cash flow would decline.

A Significant Decreas e In Demand For Products In The Areas Served By Our Terminal And Trucking Operations Would Adversely
Affect Our Financial Condition And Results Of Operations.

A sustained decrease in demand for products in the areas served by our terminal and pipeline could significantly reduce our revenue. Factors
that could lead to a decrease in market demand include:

•	a recession or other adverse condition that results in lower spending by consumers on gasoline, distillates, and travel;
•	an increase in the market price of crude oil that leads to higher refined product prices;
•	higher fuel taxes or other governmental or regulatory actions that increase, directly or indirectly, the cost of gasoline or other refined products; and
•	a shift by consumers to more fuel-efficient or alternative fuel vehicles or an increase in fuel economy, whether as a result of technological advances by manufacturers, pending legislation proposing to mandate higher fuel economy or otherwise.

Because Of Our Lack Of Asset Diversification, Adverse Developments In Our Terminal Or Trucking Operations Could Adversely Affect
Our Revenue And Cash Flows.

We rely exclusively on the revenue generated from our terminal and trucking operations. Because of our lack of diversification in asset type,
an adverse development in these businesses would have a significantly greater impact on our financial condition and results of operations
than if we maintained more diverse assets.

Our Debt Levels May Limit Our Flexibility In Obtaining Additional Financing And In Pursuing Other Business Opportunities.
Our level of debt could have important consequences to us. For example our level of debt could:

•	impair our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes;
•	require us to dedicate a substantial portion of our cash flow to make principal and interest payments on our debt, reducing the funds that would otherwise be available for operations and future business opportunities;
•	make us more vulnerable to competitive pressures, changes in interest rates or a downturn in our business or the economy generally;
•	impair our ability to make distributions to our shareholders; and
•	limit our flexibility in responding to changing business and economic conditions.

If our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing or
delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or
seeking additional equity capital. We may not be able to effect any of these actions on satisfactory terms, or at all.

Our senior secured credit facility also contains covenants limiting our ability to make distributions to shareholders in certain circumstances.
In addition, our senior secured credit facility contains various covenants that limit, among other things, our ability to incur indebtedness,
grant liens or enter into a merger, consolidation or sale of assets. Furthermore, our senior secured credit facility contains covenants requiring
us to maintain certain financial ratios and tests. Any future breach of any of these covenants or our failure to meet any of these ratios or
conditions could result in a default under the terms of our senior secured credit facility, which could result in acceleration of our debt and
other financial obligations. If we were unable to repay those amounts, the lenders could initiate a bankruptcy proceeding or liquidation
proceeding or proceed against the collateral.

We Face Intense Competition In Our Supply, Distribution And Marketing Activities, As Well As In Our Terminal And Trucking
Activities And Our Results Of Operations May Suffer If We Are Not Able To Compete Effectively.

We compete with other petroleum companies, national, regional and local pipeline and terminal companies, the major integrated oil
companies, their marketing affiliates, and independent brokers and marketers of widely varying sizes, financial resources and experience. In
particular, our ability to compete could be harmed by factors we cannot control, including:

•	price competition from major oil companies or other independent refined product companies, some of which are substantially larger than we are, have greater financial resources and control substantially greater supplies of petroleum products than we do;
•	abundance of supply of petroleum products keeping petroleum prices low or unchanging;
•	the perception that another company can provide better service; and
•	the availability of alternative supply points, or supply points located closer to our customers’ operations.

If we are unable to compete with services offered by other petroleum enterprises, our results of operations may be adversely affected.

Our Operations And Sales Volumes Are Dependent Upon Demand For Petroleum Products By Distributors, Marketers, Wholesalers And
Commercial End Users. Any Decrease In This Demand Could Adversely Affect Our Business.

Our business depends in large part on the demand for refined petroleum products in the markets served by our transportation and storage
facilities. Our earnings and cash flow are dependent on high sales volumes. The volumes of our sales can be adversely affected by the prices
of refined products, which are subject to significant fluctuation depending upon numerous factors beyond our control, including the supply of
and demand for gasoline and other refined produ cts. The supply of and demand for refined products can be affected by, among other things,
changes in domestic and foreign economies, political affairs, terrorism and the threat of terrorism, production levels, industry-wide inventory
levels, the availability of imports, the marketing of gasoline and other refined products by competitors, the marketing of competitive fuels,
the impact of energy conservation efforts and government regulation.

Sales volumes also are affected by regional factors, such as local market conditions, the availability of transportation systems with adequate
capacity, transportation costs, fluctuating and seasonal demands for products, changes in transportation and travel patterns, variations in
weather patterns from year to year and the operations of companies providing competing services.

We May Not Be Successful In Growing Through Acquisitions Or Integrating Effectively And Efficiently Any Businesses And Operations
We May Acquire. Any Future Acquisitions May Substantially Increase The Levels Of Our Indebtedness.

Part of our business strategy includes acquiring additional terminal and storage facilities that complement our existing asset base and
distribution capabilities. In order to expand our business through the selective acquisitions of new or expanded facilities, we must identify
those opportunities. We may not be able to identify appropriate opportunities for expansion which will satisfy our target rates of return,
obtain financing on acceptable terms, negotiate satisfactory terms of such acquisitions, or that any such acquisitions will improve our
operating results.

Acquisi tions may require substantial capital or the incurrence of substantial indebtedness. As a result, our capitalization and results of
operations may change significantly as a result of future acquisitions. Any additional debt financing could significantly increase our interest
expense and involve restrictive covenants. Furthermore, you may not have the opportunity to evaluate the economic, financial and other
relevant information that we will consider in connection with any future acquisitions.

Unexpected costs or challenges may arise whenever businesses with different operations and management are combined. Inefficiencies and
difficulties may arise because of unfamiliarity with new assets and new geographic areas of any acquired businesses. We believe that
successful business combinations will require our management and other personnel to devote signifi cant amounts of time to integrating the
acquired businesses with our existing operations. These efforts may temporarily distract their attention from day-to-day business and other
business opportunities. In addition, the management of the acquired business may not join our management team. Any change in
management may make it more difficult to integrate an acquired business with our existing operations. Following an acquisition, we may
discover previously unknown liabilities associated with the acquired business for which we may have no recourse under applicable
indemnification provisions.

Any Acquisitions We Make Are Subject To Substantial Risks, Which Could Adversely Affect Our Financial Condition And Results Of
Operations.

Any acquisition involves potential risks, including risks that we may:

•	fail to realize anticipated benefits, such as cost-savings or cash flow enhancements;
•	decrease our liquidity by using a significant portion of our available cash or borrowing capacity to finance acquisitions;
•	significantly increase our interest expense or financial leverage if we incur additional debt to finance acquisitions;
•	encounter difficulties operating in new geographic areas or new lines of business;
•	incur or assume unanticipated liabilities, losses or costs associated with the business or assets acquired for which we are not indemnified or for which the indemnity is inadequate;
•	be unable to hire, train or retain qualified personnel to manage and operate our growing business and assets;
•	less effectively manage our historical assets, because of the diversion of management’s attention; or
•	incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.

If any acquisitions we ultimately consummate result in one or more of these outcomes, our financial condition and results of operations may
be adversely affected.

Managing Growth and Expansion.

We currently anticipate a period of growth as a result of the recent changes in our corporate structure and the sale of products by our
subsidiaries. The resulting strain on our managerial, operational, financial and other resources could be significant. Success in managing any
such expansion and growth will depend, in part, upon the ability of senior management to manage effectively. Any failure to manage the
anticipated growth and expansion could have a material adverse effect on our business.

Our Business Involves Many Hazards And Operational Risks, Including Adverse Weather Conditions, Wh ich Could Cause Us To Incur
Substantial Liabilities And Increased Operating Costs.

Our operations are subject to the many hazards inherent in the storage and transportation of products, including:

•	leaks or accidental releases of products or other materials into the environment, whether as a result of human error or otherwise;
•	extreme weather conditions, such as hurricanes, tropical storms, and rough seas, which are common along the Gulf Coast;
•	explosions, fires, accidents, mechanical malfunctions, faulty measurement and other operating errors; and
•	acts of terrorism or vandalism.

If any of these events were to occur, we could suffer substantial losses because of personal injury or loss of life, severe damage to and
destruction of storage tanks, pipelines and related property and equipment, and pollution or other environmental damage resulting in
curtailment or suspension of our related operations and potentially substantial unanticipated costs for the repair or replacement of property
and environmental cleanup. In addition, if we suffer accidental releases or spills of products at our terminals or pipelines, we could be faced
with material third-party costs and liabilities, including those relating to claims for damages to property and persons. Furthermore, events like
hurricanes can affect large geographical areas which can cause us to suffer additional costs and delays in connection with subsequent repairs
and operations because contractors and other resources are not available, or are only available at substantially increased costs following
widespread catastrophes.

Our Operations Are Subject To Governmental Laws And Regulations Relating To The Protection Of The Environment That May Expose
Us To Significant Costs And Liabilities.

The risk of substantial environmental costs and liabilities is inherent in transport and terminal operations and we may incur substantial
environmental costs and liabilities. Our operations and activities are subject to significant federal, state and local laws and regulations relating
to the protection of the environment. These include, for example, the Federal Clean Air Act and analogous state laws, which impose
obligations related to air emissions and the Federal Water Pollution Control Act, commonly referred to as the Clean Water Act, and
analogous state laws, which regulate discharge of wastewaters from our facilities to state and fe deral waters. In addition, our operations are
also subject to the federal Comprehensive Environmental Response, Compensation, and Liability Act, also known as CERCLA or the
Superfund law, the Resource Conservation and Recovery Act, also known as RCRA, and analogous state laws in connection with the cleanup
of hazardous substances that may have been released at properties currently or previously owned or operated by us or locations to which we
have sent wastes for disposal. Various governmental authorities including the U.S. Environmental Protection Agency, or the EPA, have the
power to enforce compliance with these regulations and the permits issued under them, and violators are subject to administrative, civil and
criminal penalties, including civil fines, injunctions or both. Liability may be incurred without regard to fault under CERCLA, RCRA, and
analogous state laws for the remediation of contaminated areas. Private parties, including the owners of properties located near our terminal
facilities or through which our pipeline systems pass, also may have the right to pursue legal actions to enforce compliance, as well as to seek
damages for non-compliance with environmental laws and regulations or for personal injury or property damage.

In addition, the possibility exists that new, stricter laws, regulations or enforcement policies could significantly increase our compliance costs
and the cost of any remediation that may become necessary, some of which may be material. Our insurance may not cover all environmental
risks and costs or may not provide sufficient coverage in the event an environmental claim is made against us. Our business may be adversely
affected by increase d costs because of stricter pollution control requirements or liabilities resulting from non-compliance with required
operating or other regulatory permits. New environmental regulations might adversely affect our products and activities, including
processing, storage and transportation, as well as waste management and air emissions. Federal and state agencies also could impose
additional safety requirements, any of which could affect our profitability.

We currently own or lease, and have owned or leased, many properties that have been used for many years to terminal or store refined
petroleum products or other chemicals. Owners, tenants or users of these properties have disposed of or released hydrocarbons or solid
wastes on or under them. Additionally, some sites we operate are located near current or former refining and terminal operations. The re is a
risk that contamination has migrated from those sites to ours. Increasingly strict environmental laws, regulations and enforcement policies
and claims for damages and other similar developments could result in substantial costs and liabilities.

Federal Energy Regulatory Commission And Department Of Transportation Regulations May Change Important Aspects Of Our
Industry And Could Reduce Our Ability To Compete And Impose Significant Costs On Us Or Affect Our Ability To Ship Product In The
Quantities We Need, Which Could Adversely Affect Our Revenues.

The Federal Energy Regulatory Commission, or FERC, regulates the tariff rates for interstate common carrier operations. Tariff rates are
subject to periodic changes and the FERC may approve higher tariff rates for transport of pr oduct on the principal pipelines we utilize. The
FERC also may change the manner in which tariffs apply, such as changing from tariffs based on shipping history to tariffs based on
competitive bidding or some other methodology. Substantial increases or changes in the tariff rates on the principal pipelines we utilize could
adversely affect our ability to ship the quantities of product we need or to ship product at economical rates. As a result, we could lose sales or
suffer higher transportation expenses, which could adversely affect our results of operations.

In addition, refined petroleum product pipeline operations are subject to regulation by the Department of Transportation. These regulations
require, among other things, that pipeline operators engage in a regular program of pipeline integrity testing to assess, evaluate, repair and
validate the integrity of their pipelines, which could result in service interruptions or significant and unexpected expenditures either with
respect to pipelines we own or on pipelines owned by others that we use. We may have to bear those interruptions and expenses through the
prices we pay to transport product, and the prices we charge when selling product that we purchase and market. The resulting price increases
might not be entirely recoverable from our customers or could lower demand for product. We transport a large amount of product on
common car rier pipelines that we do not own, and spurs of those pipelines supply our terminals. If the Department of Transportation
determines that a spur of a common carrier pipeline that supplies our terminals requires repair to maintain its integrity, the owner of the
pipeline may decide to abandon the spur to our terminal instead of completing the repair work, or could require us to pay for the repair work,
either of which would adversely affect our operations at that terminal or force us to close the terminal.

We Are Subject To Strict Regulations At Many Of Our Facilities Regarding Employee Safety, And Failure To Comply With These
Regulations Could Adversely Affect Us.

The workplaces associated with the processing and storage facilities and the pipelines we operate are subject to the requirements of the
federal Occupational Safety and Health Act, or OSHA, and comparable state statutes that regulate the protection of the health and safety of
workers. In addition, the OSHA hazard communication standard requires that we maintain information about hazardous materials used or
produced in our operations and that we provide this information to our employees, state and local government authorities, and local residents.
Failure to comply with OSHA requirements, including general industry standards, record keeping requirements and monitoring of
occupational exposure to regulated substances, could adversely affect our results of operations if we are subjected to fines or significant
additional compliance costs.

The Loss Of Any Of Our Key Executive Officers Could Harm Our Business.

Our future success depends largely o n the efforts of our executive management team. The loss of any members of our executive management
team could have a material adverse effect on our business. If we experience vacancies in any of these key roles, it could have a material
adverse impact on our ability to properly conduct our business operations and pursue our growth initiatives and, as a result, could have a
material adverse impact on our overall business, financial condition and results of operations. We do not carry key-man insurance on the life
of any of our executive officers.

Risks Relating to Our Common Stock

The Market Price Of Our Stock May Be Affected By The Issuance Of Additional Shares Of Our Common Stock Upon The Conversion Of
Shares Of Our Preferred Stock.

As of April 15, 2008, we had an aggregate of 48,000 shares of preferred stock outstanding, which are convertible into an aggregate of
480,000,000 restricted shares of our common stock. Substantial sales of our common stock, including shares issued upon the conversion of
our preferred shares and debts, in the public market, or the perception that these sales could occur, may have a depressive effect on the
market price of our common stock. Such sales or the perception of such sales could also impair our ability to raise capital or make
acquisitions through the issuance of our common stock.

We Have No Plans To Pay Dividends On Our Common Stock. You May Not Receive Funds Without Selling Your Stock.

We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain future earnings,
if any, to finance the expansion of our business. Our future dividend policy is within the discretion of our board of directors and will depend
upon various factors, including our business, financial condition, results of operations, capital requirements and investment opportunities.

Our Common Stock Is Subject To "Penny Stock" Restrictions Under Federal Securities Laws, Which Could Reduce The Liquidity Of
Our Common Stock

The Securities and Exchange Commission has adopted regulations, which generally define penny stocks to be an equity security that has a
market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Our common stock is
designated a "Penny Stock." As a penny stock, our common stock may become subject to Rule 15g-9 under the Exchange Act or the Penny
Stock Rules. These rules include, but are not limited to, Rules 3a5l-l, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities
Exchange Act of 1934, as amended. These rules impose additional sales practice requirements on broker-dealers that sel l such securities to
persons other than established customers and "accredited investors" (generally, individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must
make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As
a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our
securities in the secondary market.

The rules may further affect the ability of owners of our shares to sell their securities in any market that may develop for them. There may be
a limited market for penny stocks, due to the regulatory burdens on broker-dealers. The market among dealers may not be active. Investors in
penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-
dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock
immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock may fall quickly in value.
Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all.

For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a
disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market. Disclosure is also required to
be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities.
Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stock.

The penny stock restrictions will no longer apply to our common stock if we become listed on a national exchange. In any event, even if our
common stock were exempt from the penny stock restrictions, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives
the Securities and Exchange Commission the authority to restrict any person from participating in a distribution of penny stock, if the
Securities and Exchange Commission finds that such a restriction would be in the public interest.

The Ownership Of Our Voting Capital Stock Is Closely Held By Our Parent Company, UPDA, Making UPDA The Major Shareholder In
Our Company.

Approximately 83% of our outstanding voting capital stock is currently held by UPDA. Consequently, UPDA currently controls the business
decisions of the Company, including, but not limited to, the election of the members of our Board of Directors.

Item 2.

Management’s Discussion and Analysis or Plan of Operation.

The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and notes appearing
elsewhere in this report.

Critical Accounting Policies

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” discusses our consolidated financial statements
that have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of
these financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of
the financial statements, the 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. On an on-going basis, we evaluate our estimates and judgments, including those related to
revenue recognition, valuation allowances for inventory and accounts receivable, a nd impairment of long-lived assets. We base our estimates
and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The result of
these estimates and judgments form the basis for making conclusions about the carrying value of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The SEC suggests that
all registrants list their most “critical accounting policies” in Management’s Discussion and Analysis. A critical accounting policy is one
which is both important to the portrayal of the Company’s financial condition and results of operations and requires management’s most
difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently
uncertain. Management believes the following critical accounting policies affect its more significant judgments and estimates in the
preparation of its consolidated financial statements.

These policies include, but are not limited to, the carrying value of the inventory and fixed assets, the life of fixed assets, the expensing of the
costs relating to FDA and European licensing activities, and the valuation of common stock related to compensation and other services.
Complex judgments and estimates underlie these critical accounting policies, such as the estimated life of fixed assets for depreciation
purposes, the market valuation of inventory in reporting inventory at the lower of cost or market, dividing consultants’ compensation between
expense categories of F DA licensing activities and sales activities, dividing compensation and payments to third parties between cost of
goods sold category and general and administrative expense, and the determination of the market value of restricted stock when issued as
compensation or as repayment for loans.

For the Years Ended December 31, 2007 and 2006

Operations.

Pursuant to the Sale of Assets to G. Richard Smith on January 26, 2007, all of the Coronado’s subsidiaries and all assets of Coronado, except
for the European distribution agreements, were sold to Smith for $300,000 in cash and the assumption of certain trade debts. Therefore, the
Company had no operations in the first quarter of 2007.

For the years ended December 31, 2007 and 2006, total revenue was $26,975,568 and $90,076, res pectively, with a cost of goods sold of
$24,351,151 and $58,614, respectively. Registrant continued delivery of its PNT products to its European distributors in 2006. Registrant’s
gross margin on its products sold was approximately 34.9% in 2006, but its marketing expenses for these European sales far exceeded the
gross sales. Registrant sold its operations to its former Chairman in January 2007. Registrant’s gross margin on its products sold was
approximately 9.7% in 2007.

For the year ended December 31, 2007, the Company experienced a net loss of $95,084,605 which comprised primarily of general and
administrative expenses of $1,041,278, stock option expense of $3,213,908, consulting fees and services of $612,822, interest expense of
$569,965, payroll expenses of $580,040, selling and marketing expenses of $ 531,000, $100,000 due to an escrow deposit lost on delay, and
debt conversion costs of $91,056,436, partially offset by a gain on sale incurred from the Sale of Assets of $114,963 as part of the proceeds
from the sale of restricted common stock sold in private placement to Karen Sandhu for $200,000.

For the year ended December 31, 2006, the Company experienced a net loss of $3,964,637 which comprised primarily general and
administrative expenses incurred at the corporate level of $699,127, consulting fees and services of $286,090, stock based compensation
expense of $1,398,350, selling and marketing expenses of $513,611, payroll expenses of $1,012,660, and interest expense of $83,968.

Liquidity and Capital Resources.

As shown in the consolidated financial statements, at December 31, 2007, the Company had cash on hand of $1,820,220, compared to none
at December 31, 2006. We had a net loss of $95,084,605. Net cash used in operating activities was $3,223,036 for the year ended
December 31, 2007. This was mainly due to a non-cash item of $114,963 due to a gain on sale of assets, $634,765 due to an increase in
accounts receivable, $128,343 due to an increase in inventory, $1,892,071 due to a decrease in accounts payable and accrued expenses
payable, offset by $91,056,436 due to loss on settlement of notes payable, $3,213,908 due to stock option expense, $47,384 of depreciation
expenses, $17,568 due to amortization of loan origination fees incurred to Sheridan, $48,876 due to amortization of the cos t of warrants
issued to Sheridan to purchase the Company’s common stock, $164,453 due to an increase in state oil taxes payable and $143,430 due to an
increase in income taxes payable.

Net cash used in operating activities was $318,486 for the twelve months ended December 31, 2006. We had a net loss of $3,964,367. We
had non-cash charges of $229,756 in forgiveness of officer salaries, $1,714,938 due to stock and options issued for salaries, $1,967,940
related to stock and options issued for bonuses, and $2,023 related to depreciation, offset by net changes in operating assets and liabilities of
$301,124.

Cash flows provided by investing activities was $4,913,693 during the year ended December 31, 2007, consisting of $5,858,192 cash
acquired as part of the acquisitions of the subsidiaries off set by $48,400 related to the purchase of a surety bond, $250,000 due to an advance
made under a note receivable from UPDA-parent entity and $646,099 for the purchase of property and equipment.

There was no cash flow provided by or used in investing during the twelve months ended December 31, 2006.

The cash flows provided by financing activities of $129,563 during the year ended December 31, 2007, consisted of $200,000 of proceeds
from the sale of our common stock, $517,651 proceeds from notes payable to others, $66,625 proceeds from notes payable to other related
parties, $857,261 due to advances received under a former line of credit, offset by a note payable repayment of $700,000 to UPDA and
payment of deferred debt costs on the financing of the Geer acquisition of $811,859.

The cash flows provided by financing activ ities of $306,146 during the twelve months ended December 31, 2006, consisted of proceeds from
borrowings of $381,200, offset by a loan repayment of $50,000.

On April 1, 2007, the Company obtained financing in the form of a note from Kamal Abdallah for $110,000 at an interest rate of 10% per
year commencing on April 30, 2007. As of March, 31, 2007, the Company received $60,000 on this note. The remaining amount was
received in April 2007. On May 31, 2007 the Company obtained an additional note from Kamal Abdallah for $50,000 at an interest rate of
10% per year commencing on June 1, 2007. This note, along with all related interests, was settled on July 30, 2007. On July 31, 2007, the
Company also repaid the $110,000 note to Kamal Abdallah and all related interest.

On April 1, 2007, the Company also obtained financing in t he form of a note from Brainard Management Associates for $550,000 at an
interest rate of 10% per year commencing on April 30, 2007. As of March, 31, 2007, the Company received $150,000 on this note. The
remaining amount was received in April 2007.

On May 31, 2007, the Company obtained financing in the form of a note from Aztec Well Services, Inc., for $547,952 at an interest rate of
5% per annum payable on demand. On August 13, 2007, the Company repaid the full $547,952 note due to Aztec Wells Services, Inc, along
with all related interests.

On December 12, 2007, the Company obtained financing in the form of a term loan from Sheridan in the amount of $5,500,000 at an interest
rate of 15% per annum commencing on January 1, 2008 and payment-in-kind interest of 5% per annum for the purchase of Geer Tank
Trucks, Inc. On the same date, the Company also obtained financing in the form of a revolving loan in the amount of $3,000,000 at an
interest rate of 20% per annum on the amount used and 10% per annum on the unused portion commencing on January 1, 2008. As of
December 31, 2007, $2,207,261 of the revolving amount was used.

We have historically incurred recurring losses from operations. Our continuation is dependent upon a successful program of acquisitions and
achieving a profitable level of operations. We will need $3 million of additional financing for ongoing operations and acquisitions. The
issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders.
Obtaining loans, assuming those loans would be available, would increase our liabilities and future cash commitments. We cannot assure that
we will be able to obtain further funds we desire for our continuing operations or, if available, that funds can be obtained on commercially
reasonable terms. If we are not able to obtain additional financing on a timely basis, we would cease our operations.

Because of the Registrant& #8217;s cash position at 2005 year-end and general and administrative expenses totaling approximately $3,900,000 per
year, the Registrant suffered from a liquidity shortage during 2006. From January 1, 2006 to December 31, 2006 Registrant borrowed a total
of $323,200 from its three Directors. After Registrant’s transactions on January 26, 2007, all loans to Registrant’s former Directors were
repaid except $15,775 owed to G. Richard Smith, $12,600 owed to Gary R. Smith, and $5,000 owed to Dr. LiVecchi, all of which are the
liability of Registrant’s former Chairman.

Item 3.

Description of Property.

On August 22, 2006, US Petroleum Depot, Inc., a subsidiary, entered into a rental lease agreement with Brownsville Navigation District of
Cameron County, Texas for a term of five years payable semi-annually in installments of $9,801. The leased property is for the sole purpose
of shipping and receiving petroleum products.

In April 2007, the Registrant entered into a one-year lease for two office spaces at an aggregate monthly rent of $3,100. The address for this
office is San Felipe Plaza, 5847 San Felipe, Houston, Texas 77057.

In July 2007, the Registrant entered into an agreement with Serafina De Los Santos and Rosi Chavez to lease a condominium at South Padre
Island, Texas from August 1, 2007 to March 1, 2008 for a monthly rent of $3,000.

In December 2007, the Registrant entered into a five year lease with Texas Tower Limited for 3,044 square feet of office space at varying
monthly rents ranging from $5,327 in the first year to $6,342 in the fifth year. The Registrant’s address is 600 Travis, Suite 6910, Houston,
Texas 77002.

Geer is headquartered in Jacksboro, TX where it owns a 12.7 acre industrial fee-simple property, supporting an office building and a
commercial yard for trucks and equipment, along with a licensed water disposal well. Geer’s address is P.O. Drawer J, 1136 S. Main Street,
Jacksboro, TX 76458.

Item 4.

Security Ownership of Certain Beneficial Owners and Management.

As of March 31, 2008, there were 97,463,409 shares of the Company’s $0.001 par value per share common stock outstanding. The following
table sets forth the name, address, number of shares beneficially owned, and the percentage of the Registrant’s total outstanding common
stock shares owned by: (i) each of the Registrant’s Officers and Directors; (ii) the Registrant’s Officers and Directors as a group; and (iii)
other shareholders of 5% or more of the Registrant’s total outstanding common stock shares.

		Number of	Percent of
Name and Address of Beneficial Owner ⁽¹⁾	Company Position	Shares Owned	Class
Timothy Brink ⁽²⁾	Chief Executive Officer	10,000,000	1.7%
Christopher McCauley ⁽³⁾	Director & Secretary	551,889	0.1%
Kamal Adballah ⁽³⁾	Director & Chairman	1,852,312	0.3%
UPDA ⁽⁴⁾		481,822,082	80.8%
Karen Sandhu ⁽⁵⁾		31,000,000	5.2%
Sheridan Asset Management LP ⁽⁶⁾		8,500,000	1.4%
Gerlach & Company ⁽⁷⁾		7,702,266	1.3%

Officers and Directors as a Group (3 persons)		12,404,201	2.1%

(1)

As used in this table, a beneficial owner of a security includes any person who, directly or indirectly, through contract, arrangement, understanding, relationship or otherwise has or shares (a) the power to vote, or direct the voting of, such security or (b) investment power which includes the power to dispose, or to direct the disposition of, such security. In addition, a person is deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership of such security within 60 days.

(2)	Mr. Brinks’ address is c/o Continental Fuels, Inc., 600 Travis, Suite 6910, Houston, Texas 77002. Mr. Brink currently holds options to purchase 10,000,000 shares of the Company’s common stock, all of which are currently exercisable.

(3)

On April 23, 2007, Kamal Abdallah, the CEO, President and board member of UPDA, and Christopher McCauley, the Vice-President, Secretary and board member of UPDA, were appointed as members of the Board of Directors of the Company to fill vacancies thereon. Mr. Abdallah was also appointed to serve as Chairman of the board, while Mr. Christopher McCauley was appointed Secretary. Mr. Abdallah’s address is 8 Links Green, San Antonio, Texas 78257. Mr. McCauley’s address is 5408 Valley Parkway, Brecksville, OH 44141.

(4)

Universal Property Development and Acquisition Corporation (“UPDA”) currently owns 48,000 shares of the Company’s Series A Convertible Preferred Stock which are currently convertible into 480,000,000 shares of our common stock and UPDA has the right to vote the shares of Preferred Stock on an “as converted” basis in any matters for which the holders of the common stock are entitled to vote. UPDA also owns 1,822,082 shares of our common stock. Therefore, UPDA has the power to control the vote of approximately 81% of our voting capital stock. UPDA has its principal executive offices at 14255 U.S. Highway 1, Suite 209, Juno Beach, Florida 33408.

(5)	Karen Sandhu has a residence at 43111 University Place, Miami, Florida 33146.

(6)

Sheridan Asset Management LLC is a private investment limited liability company. Sheridan currently holds warrants to purchase 8,500,000 shares of the Company’s common stock, all of which were exercisable on the date of issuance. Sheridan’s principal executive offices are located at 1025 Westchester Avenue, Suite 311, White Plains, NY 10604.

(7)	Gerlach Company was issued stock under the predecessor company.

Item 5.

Directors and Executive Officers, Promoters and Control Persons.

The directors and executive officers of the Registrant as of March 19, 2008 were as follows:

Name and Address	Position	Tenure

Timothy Brink	Chief Executive Officer, President and Chief Financial Officer, Director	February 26, 2007
600 Travis, Suite 6910		to
Houston, Texas 77002		present

Kamal Abdallah	Director & Chairman	April 23, 2007
8 Links Green		to
San Antonio, Texas 78257		present

Christopher McCauley	Director & Secretary	April 23, 2007
5408 Valley Parkway		to
Brecksville, OH 44141		present

Timothy Brink, age 44, has over 15 years experience in petroleum retail operations. Mr. Brink has worked as an operational manager for
several large companies including Southland Corp., Circle K, and Amerada Hess, Inc. Mr. Brink has also been employed as an Operations
Manager by Garb-Ko, a 7-11 franchise chain in Michigan, Indiana, and Ohio. Mr. Brink specializes in developing marketing strategies to
promote sales and overall profitability to meet long-term financial goals. While employed at Amerada Hess Mr. Brink was promoted into
franchise operations (also called the Branded Retailer program). The Branded Retailer program helped Amerada Hess establish their desired
market share. In 2001, Mr. Brink started his own chain of petroleum retail outlets in Florida. Mr. Brink sold his interest in the company in
January of 2005. Si nce 2005, Mr. Brink has been actively involved in oil trading and consulting. Mr. Brink was employed by Universal
Property Development and Acquisition Corporation from July 2006 to February 2007.

Prior to 1990, Mr. Brink served 6 years in the United States Air Force. He was an electrical avionics communications and navigation
specialist. While serving as a Non-Commission Officer in the United States Air Force, Mr. Brink was a full time student. He attended the
Community College of the Air Force, Florida State University, and Troy State University. Mr. Brink received a degree in Avionics System
Technology, Electrical Engineering Technology, and a Masters in Business Management.

Kamal Abdallah, age 43, has over fifteen years experience in commercial real estate investment and development. From 2000 to the prese nt,
Mr. Abdallah has been self-employed as a real estate development entrepreneur and he has developed a very successful real estate investment
business, concentrated in the structuring and financing of a variety of real property transactions. Mr. Abdallah has been the Chief Executive
Officer, President and a Director of Universal Property Development and Acquisition Corporation (“UPDA”), a publicly traded Nevada
corporation, since March 2005. In February 2007, UPDA acquired a majority of the outstanding stock of Heartland Oil and Gas Corp. In
April 2007, UPDA acquired a majority of the outstanding stock of the Company. Mr. Abdallah is also a member of the Board of Directors of
Heartland Oil and Gas Corp., a publicly traded Nevada corporation. Mr. Abdallah attended Oakland Community College and Oakland
University in Michigan where he focused his studies in the area of accounting and finance.

Christopher J. McCauley, age 47, has over twenty years experience in the areas of real estate and commercial law and over 8 years
experience in oil and gas acquisitions and operations. From 1990 to July 2005, Mr. McCauley was in private practice in the state of Ohio as a
sole practitioner. Mr. McCauley now devotes all of his professional efforts to the growth and management of the Company. Mr. McCauley is
a member of the Board of directors of Universal Property Development and Acquisition Corporation, a publicly traded Nevada corporation.
Mr. McCauley is also a member of the Board of Directors of Heartland Oil and Gas Corp., a publicly traded Nevada corporation. In 1982,
Mr. McCauley graduated from The Ohio State University and in 1986 Mr. McCauley received his J.D. degree from Cleveland-Marshall
College of Law.

In August, 2007, Mr. McCauley was suspended indefinitely from the practice of law in the State of Ohio as a result of a disciplinary action
brought by Office of Disciplinary Counsel in the Ohio Supreme Court. The action was based upon allegations of commingling of client funds
and possible misuse of such funds. Mr. McCauley accepted full responsibility for the actions of his employees, voluntarily stipulated to the
suspension imposed in such action and fully reimbursed all claimants for any funds alleged to have been commingled or misused.

The Board of Directors of the Company currently consists of three members, Mr. Kamal Abdallah, Mr. Timothy Brink, and Mr. Christopher
McCauley. The full Board of Directors of the Registrant consists of five seats. Currently, two seats of t he Registrant’s Board of Directors are
vacant.

On November 29, 2007, the Board of Directors of the Company approved and adopted the Continental Fuels, Inc. 2007 Stock Option/Stock
Issuance Plan (the "2007 Plan") and reserved 20,000,000 shares of the Company’s common stock for future issuance under the terms of the
2007 Plan. The purpose of the 2007 Plan is to provide a means through which the Company and its subsidiaries may attract, retain and
compensate the able and talented employees and consultants that the Company will need to execute its business plan and bring its products to
market. On November 30, 2007, the shareholders of the registrant approved the 2007 Plan.

On December 1, 2007, the Company entered into a three year Employment Agreement with Timothy Brink to continue serving as the
Company’s president and CEO for the annual base salary of $180,000 adju stable at any time, a discretionary bonus of up to $600,000 a year,
and the option to purchase 10 million shares of Continental’s common stock. On each successive anniversary of the Employment
Agreement, Mr. Brink shall be granted additional options as the Board determines.

On December 1, 2007, the Company granted Timothy Brink, CEO, options to purchase 10,000,000 shares of the Company’s common stock
under the terms and conditions of the Company’s 2007 Stock Option/Stock Issuance Plan (the “Brink Options”). The Brink Options have a
term of 10 years and an exercise price of $0.33 per share, the closing per share market price for the Registrant’s common stock on the date of
grant. The shares of common stock underlying the Brink Options shall be restricted shares on issuance.

Item 6.

Executive Compensation.

The following table sets forth the salaries of the Company’s executive officer for the fiscal year ending December 31, 2007.

Name and									Annual		Stock		Underlying		LTIP		All other
Principal			Salary			Bonus			Compensation		Award(s)		Options/		Payouts		Compensation
Position	Year		($)			($)			($)		($)		SARs (#)		($)		($)

G. Richard
Smith,	2007	⁽⁷⁾	$	-		$	-		$	-	$	-	-		$	-	$	-
Former
Chairman	2006			187,500	⁽¹⁾		332,500	⁽²⁾		-		-	200,000	⁽³⁾		-		-
Gary R.
Smith,	2007	⁽⁷⁾		-			-			-		-	-			-		-
Former
President	2006			187,500	⁽¹⁾		332,500	⁽²⁾		-		-	200,000	⁽³⁾		-		-
Timothy
Brink,	2007			115,000	⁽⁴⁾		7,500	⁽⁵⁾		-		-	3,300,000	⁽⁶⁾		-		-
CEO	2006	⁽⁷⁾		-			-			-		-	-			-		-

_______________
(1)	$120,834 of this salary was paid in 294,717 shares of restricted common stock in August 2006. The remaining $66,668 of salary was waived and forfeited in November 2006.

(2)	$238,500 of this amount was paid in 45,000 shares of restricted common stock in March 2006, $84,000 of this amount was paid in 35,000 shares of restricted stock in August 2006, and $10,000 of this amount was paid in 50,000 shares of restricted common stock in December 2006.

(3)	Stock options for 200,000 shares of restricted common stock with an exercise price of $5.30 were granted in March 2006, but were forfeited and waived in August 2006.

(4)

On December 1, 2007, the Company entered into an employment agreement with Timothy that has an initial term of three (3) years. Under the Brink Employment Agreement, Mr. Brink will continue to serve as our President and Chief Executive Officer and a member of our board of directors. Mr. Brink will receive a base salary of $180,000 per year and will be entitled to a discretionary bonus of up to $600,000 per year.

(5)	This bonus was paid in cash.

(6)

On December 1, 2007, the Company granted Mr. Brink options to purchase 10,000,000 shares of the Company’s common stock under the terms and conditions of the Company’s 2007 Stock Option/Stock Issuance Plan (the “Brink Options”). The Brink Options have a term of 10 years and an exercise price of $0.33 per share, the closing per share market price for the Registrant’s common stock on the date of grant. The shares of common stock underlying the Brink Options shall be restricted shares on issuance.

(7)	This person was not employed by the Company during this period.

The following table sets forth certain information concerning the stock options granted during the 2007 fiscal year to the Company’s chief
executive officer and each other executive officer.

		% of Total
		Options/
		SARs
	Number of	Granted
	Securities	to	Exercise
	Underlying	Employees	or Base
	Options/SARs	in Fiscal	Price	Expiration
Name	Granted (#)	Year	($/Sh)	Date
Timothy
Brink, CEO	10,000,000 ⁽¹⁾	100%	$0.33	12/1/2017

_______________
(1)	As of December 31, 2007, there have been no exercises under the Company’s 2007 Plan.

The Company currently has no pension, retirement, annuity, savings or similar benefit plan which provides compensation to its executive
officers or directors.

The Company currently does not have a Compensation Committee to the board of directors. All of the current members of the board of
directors are responsible for setting the compensation amounts and terms for the executives, employees and directors of the Company. If a
director is also an employee of the Company, such person shall not be involved in negotiating the compensation amounts to be paid by the
Company to that person, or any other terms of such employment, and such person shall not participate in the vote of the board of directors on
the approval of such compensation. The members of the Company’s board of directors are not currently independently compensated for
holding seats on the board of directors or for their attendance and participation at board meetings.

Item 7.

Certain Relationships and Related Transactions.

On January 26, 2007, the Registrant and G. Richard Smith, the then Chairman and a member of the Registrant’s board of directors, entered
into an Asset Sales Agreement (the “ASA”) dated as of January 24, 2007, pursuant to which the Registrant agreed to sell and Mr. Smith
agreed to purchase substantially all of the Registrant’s assets, except for certain European distribution agreements (collectively the “Assets”).
The purchase price for the Assets pursuant to the ASA was $300,000 in cash (the “Purchase Price”). Under the terms of the ASA, Mr. Smith
assumed certain of the existing debts and liabilities of the Registrant and its subsidiaries that existed on the date of execution of the ASA,
which remained unpaid after the Purchase Price. An additional $200,000 was paid out by the Registrant to satisfy such outstanding deb ts and
liabilities. The Board of Directors of the Registrant determined that the Purchase Price for the Assets was fair to the shareholders of the
Registrant based on the recent market prices of Registrant’s common stock and Registrant’s past performance.

On November 11, 2007, Kamal Abdallah, the Registrant’s Chairman and member of the board of directors, loaned the Registrant $100,000 at
an interest rate of 5% per annum from December 11, 2007, with all principal and accrued interest payable on demand after February 1, 2008.

Item 8.

Legal Proceedings.

No legal proceedings are currently pending against or by the Registrant.

Item 9.

Market Price of and Dividends on the Registrant’s Common Equity and Related
Stockholder Matters.

Market Information

The principal U.S. market in which the Registrant’s common shares (all of which are one class, $.001 par value) are traded is the over-the-
counter bulletin board. The Company’s common stock trades under the symbol “CFUL.OB” The over-the-counter market quotations shown
below reflect inter-dealer prices without retail markup, markdown or commission and may not necessarily represent actual transactions. The
following table shows the low and the high closing trading prices during the 2007 and 2006 fiscal years, and for the interim period ended
March 31, 2008. The share prices shown below have been adjusted for the 1-for-10 reverse stock split on February 21, 2006, the 1-for-100
reverse stock split on February 5, 2007, and the 3-for-1 forward stock split on April 20, 2007.

After the reverse split on February 5, 2007, Registrant’s shares traded under the symbol “CFUL.OB”

Period	Low	High

January 1, 2006 - March 31, 006	$5.50	$14.00
April 1, 2006 - June 30, 2006	$2.70	$5.50
July 1, 2006 - September 30, 2006	$0.50	$2.70
October 1, 2006 - December 31, 2006	$0.20	$0.80

January 1, 2007 - March 31, 2007	$0.24	$7.69
April 1, 2007 - June 30, 2007	$1.92	$9.79
July 1, 2007 - September 30, 2007	$0.77	$3.92
October 1, 2007 - December 31, 2007	$0.27	$0.85

January 1, 2008 - March 31, 2008	$0.02	$0.40

Registrant’s common stock is also traded on the Frankfurt and Hamburg, Germany exchanges.

Stockholders

The Registrant has approximately 1,000 stockholders of record, including nominee firms for securities dealers, at December 31, 2007.

Dividends

The Registrant has not paid or declared any dividends upon its common shares since its inception and, by reason of its present financial status
and its contemplated financial requirements, does not intend to pay or declare any dividends upon its common shares within the foreseeable
future.

Preferred Stock

The Registrant is authorized to issue 100,000,000 shares of preferred stock, par value $.001 per share, of which 48,000 shares were issued
and outstanding at the date of this report. The preferred stock shares shall have the rights, limitations and obligations which the Board of
Directors shall determine at the time the preferred stock is issued.

On April 23, 2007, the Board of Directors of the Company adopted a resolution providing for the desi gnation, rights, powers and preferences
and the qualifications, limitation and restrictions of 500,000 shares of Series A Convertible Preferred Stock (the “Series A Preferred”). Each
share of the Series A Preferred is convertible into 10,000 shares of the Company’s common stock. In the event of a stock dividend, stock
split, reclassification, reorganization, consolidation or merger, adjustments in the conversion ratio will be made in a manner which will
provide the preferred holders, upon full conversion into common stock, the same percentage ownership of the Company that existed
immediately prior to such action. The Series A Preferred has the same voting rights as the common stock, on an as converted basis, with the
preferred holders having one vote for each share of common stock into which their Series A Preferred is convertible. The S eries A Preferred
has a liquidation preference over the Company’s common stock up to the one-hundred dollar ($100) per share.

On April 23, 2007, the Company issued 50,000 shares of the Company’s Series A Preferred stock to UPDA in connection with the closing of
the SPA transaction. On August 1, 2007, UPDA converted 2,000 shares of its Series A Preferred stock into 20,000,000 shares of the
Company’s common stock, of which 18,177,918 shares were distributed to the common shareholders of UPDA as a special distribution of
assets. The 48,000 outstanding shares of Series A Preferred Stock are currently convertible into 480,000,000 shares of our common stock and
UPDA has the right to vote the shares of Series A Preferred Stock on an “as converted” basis in any matters for which the holders of our
common stock are entitled to vote. Therefore, UPDA has the power to control the vote of approximately 81% of our voting capital stock.

Shares Authorized for Issuance Under the Company’s Equity Compensation Plans

Please refer to the information contained herein in “Note 8 - Shareholder’s Equity” of the Company’s audited financial statements for
information related to the number of shares of the Company’s common stock reserved for issuance under the Company’s equity
compensation plans, and the number of options outstanding under those plans.

Item 10.

Recent Sales of Restricted Securities

On February 25, 2007, our Board of Directors approved the conversion of outstanding promissory notes of the Registrant with an aggregate
face value of three hundred thousand dollars (the “Notes”) payable to Mathews Investment, LLC (“Mathews”) into shares of our common
stock. The Registrant is in the process of issuing an aggregate of 32,042,928 shares of our common stock to Mathews as a result of the
ongoing conversion of the Notes. Through March 31, 2008, the Company had issued a total of 28,026,440 shares of common stock, out of the
32,042,928 total, to Mathews as a result of theses conversions.

On February 6, 2007, Registrant completed the sale of 47,000,000 restricted shares of its common stock to Ms. Karen Sandhu in a private
transaction with gross proceeds to the Registrant from the sale equaling $200,000. Ms. Sandhu is an accredited investor (as defined in Rule
501 of Regulation D). The purchase price of the shares was paid in cash.

On August 1, 2007, UPDA converted 2,000 shares of its Series A Preferred stock into 20,000,000 shares of the Registrant’s common stock,
of which 18,169,545 shares were distributed to the common shareholders of UPDA as a special distribution of assets.

The shares of common stock issued as described above were restricted shares and cannot be resold unless they are subsequently registered
pursuant to the Securities Act of 1933, as amended, or such sale is pursuant to a valid exemption from such registration. The transactions
referred to above did not involve an underwriter or placement agent and there were no underwriter’s discounts or commissions, or placement
agent fees or commissions, paid in connection with the transaction. The transactions referred to above were exempt transactions in
accordance with the provision s of Section 4(2) of the Securities Act of 1933, as amended, as transactions by an issuer not involving any
public offering. We did not engage in any public solicitations in connection with the above transactions.

Item 11.

Description of Registrant’s Securities to be Registered.

Common Stock

The Registrant’s Articles of Incorporation, as amended, authorize the issuance of 900,000,000 shares of par value $.001 per share common
stock.

As of April 22, 2008, there were 101,479,897 shares of common stock issued and outstanding.

Holders of common stock are entitled to one vote for each share held on each matter to be acted upon by stockholders of the Registrant.
Stockholders do not have preemptive rights or the right to cumulate votes for the election of directors. Shares are not subject to redemption
nor to any liability for further calls. All shares of common stock issued and outstanding are entitled to receive such dividends, if any, as may
be declared by the Board of Directors in its discretion out of funds legally available for that purpose, and to participate pr o rata in any
distribution of the Registrant’s assets upon liquidation or dissolution.

In the event of liquidation or dissolution of the Registrant, all assets available for distribution after satisfaction of all debts and other
liabilities and after payment or provision for any liquidation preference on any issued Preferred Stock are distributable among the holders of
the common stock on a pro-rata basis.

The transfer agent for the Registrant’s common stock is Integrity Stock Transfer, 2920 N. Green Valley Parkway, Building 5 - Suite 527,
Henderson, Nevada 89014.

Item 12.

Indemnification of Officers and Directors.

The Registrant’s Articles of Incorporation contain provisions for the indemnification of its officers and directors to the fullest extent
permitted by the laws of the State of Nevada; in addition, Sections 78.7502 and 78.751 of the Nevada General Corporation Laws provides as
follows:

NRS 78.7502 Discretionary and mandatory indemnification of officers, directors, employees and agents: General provisions.

1. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the
corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against
expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection
with the action, suit or proceeding if he:

         a. Is not liable pursuant to NRS 78.138; or

         b. Acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, does not, of itself, create a presumption that the person is liable pursuant to NRS 78.138 or did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best interests of the corporation, or that, with respect to any criminal
action or proceeding, he had r easonable cause to believe that his conduct was unlawful.

2. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and
attorneys’ fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he:

         a. Is not liable pursuant to NRS 78.138; or

         b. Acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests
of the corporation.

Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the
court deems proper.

3. To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in subsections 1 and 2, or in defense of any claim, issue or matter therein, the corporation shall
indemnify him against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.

NRS 78.751 Authorization required for discretionary indemnification; advancement of expenses; limitation on indemnification and
advancement of expenses.

1. Any discretionary indemnification pursuant to NRS 78.7502, unless ordered by a court or advanced pursuant to subsection 2, may
be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circ umstances. The determination must be made:

         a. By the stockholders;

         b. By the board of directors by majority vote of a quorum consisting of directors who were not parties to the
action, suit or proceeding;

         c. If a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so
orders, by independent legal counsel in a written opinion; or

         d. If a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by
independent legal counsel in a written opinion.

2. The articles of incorporation, the bylaws or an agreement made by the corporation may provide that the expenses of officers and
directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in
advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to
repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or otherwise by law.

3. The indemnification pursuant to NRS 78.7502 and advancement of expenses authorized in or ordered by a court pursuant to this
section:

a. Does not exclude any other rights to which a person seeking indemnification or advancement of expenses may
be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either
an action in his official capacity or an action in another capacity while holding his office, except that indemnification, unless ordered by a
court pursuant to NRS 78.7502 or for the advancement of expenses made pursuant to subsection 2, may not be made to or on behalf of any
director or officer if a final adjudication establishes that his acts or omissions involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of acti on.

b. Continues for a person who has ceased to be a director, officer, employee or agent and inures to the benefit of
the heirs, executors and administrators of such a person.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Item 13.

Financial Statements.

See Financial Statements starting on page F-1 for this information.

Item 14.

Changes In and Disagreements with Accountants.

On April 17, 2007, the board of directors of the Registrant appointed KBL, LLP (“KBL”) as the Registrant’s independent auditors for the
fiscal year ended December 31, 2007, and dismissed Semple, Marchal & Cooper, LLP (“Semple, Marchal & Cooper”), which had audited the
Registrant’s financial statements for the fiscal years ended December 31, 2006, and December 31, 2005.

The Registrant’s board of directors believes that the appointment of KBL to audit the Registrant’s financial statements for the fiscal year
ended December 31, 2007, and thereafter, is in the best interest of the Registrant and its shareholders. During the last two fiscal years, the
Registrant did not consult KBL on any matters requiring disclosure.

The reports of Semple, Marchal & Cooper, LLP on the financ ial statements of the Registrant for the fiscal years ended December 31, 2006
and December 31, 2005, did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles, except for the going concern emphasis paragraphs previously reported in the Registrant’s Annual
Reports on Form 10-KSB filed with the Securities and Exchange Commission on April 17, 2007, and April 17, 2006. Through the date of
this filing, the Registrant has had no disagreements with Semple, Marchal & Cooper on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which, if not resolved to Semple, Marchal & Cooper’s satisfaction, would
have caused them to make reference to the subject matter of the disagreement in connection with its report.

Item 15.

Financial Statements and Exhibits.

(a)	Financial Statements. The following financial statements are filed herewith:

		- Consolidated Balance Sheets as of December 31, 2007 and 2006
		- Consolidated Statements of Operations for the Years Ended December 31, 2007 and 2006
		- Consolidated Statements Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2007 and 2006
		- Consolidated Statements of Cash Flows for the Years Ended December 31, 2007 and 2006

(b)	Exhibits: The following exhibits are filed herewith:

Exhibit Number	Description
2.1#	Form of the Stock Purchase Agreement by and among Continental Fuels, Inc. and Universal Property Development and Acquisition Corporation dated as of April 23, 2007. Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on April 26, 2007.

2.2#	Stock Purchase Agreement, dated as of December 11, 2007 by and between Charles Randall Geer, Jana Geer Douglas, Donna Osteen Reich, Jerrye Geer Faltyn, Lori Geer Smith and Continental Fuels, Inc., a Nevada corporation. Incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on December 17, 2007.

3.1 #	Articles of Incorporation of Continental Fuels Inc. Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form SB-2 of the Registrant filed with the Securities and Exchange Commission on August 24, 1998.

3.2#	By-laws of Continental Fuels, Inc. Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form SB-2 of the Registrant filed with the Securities and Exchange Commission on August 24, 1998.

4.1#	Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of Continental Fuels, Inc. Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on April 26, 2007.

10.1#	Promissory Note with Confessed Judgment Provision, dated as of June 1, 2007, by and between Continental Fuels, Inc. and Universal Property Development and Acquisition Corporation, as executed on June 18, 2007. Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on June 20, 2007.

10.2#	Commercial Contract-Improved Property by and between International Trades & Forwarding LLC as the Seller and U.S. Petroleum Depot, Inc. as the Buyer, dated as of December 1, 2006. Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on April 26, 2007.

10.3#	Loan Agreement, dated as of December 11, 2007, between Continental Fuels, Inc., Universal Property Development and Acquisition Corporation, a Nevada corporation, Timothy Brink and Sheridan Asset Management, LLC, a Delaware limited liability company. Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on December 17, 2007.

10.4#	Senior Secured Promissory Note of Continental Fuels, Inc., a Nevada corporation, dated December 11, 2007. Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on December 17, 2007.

10.5#	Senior Secured Revolving Promissory Note of Continental Fuels, Inc., a Nevada corporation, dated December 11, 2007. Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on December 17, 2007.


10.6#	Security Agreement, dated as of December 11, 2007, by and among Continental Fuels, Inc., a Nevada corporation (the “Company”), the subsidiaries listed on Schedule A hereto (the “Subsidiaries”), Universal Property Development and Acquisition Corporation, a Nevada corporation (“UPDA and the Subsidiaries, collectively, the “Guarantors”) (the Company and the Guarantors are collectively referred to as the “Debtors”), and Sheridan Asset Management LLC, a Delaware limited liability company (“Sheridan” and collectively with each of its endorsees, transferees and assigns, the “Secured Party”), as the holder of the Company’s Secured Term Promissory Note due December 11, 2010 (the “Term Note”) in the original aggregate principal amount of $5,500,000 (the “Term Loan”) and the Company’s Secured Revolving Promissory Note due December 11, 2010 (the “Revolving Note” and collecti vely with the Term Note, the “Notes”) in the aggregate principal amount of $3,000,000 (the “Revolving Loan” and collectively with the Term Loan, the “Loans”). Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on December 17, 2007.

10.7#	Registration Rights Agreement, made and entered into as of December 11, 2007, between Continental Fuels, Inc., a Nevada corporation, and Sheridan Asset Management, LLC. Incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on December 17, 2007.

10.8#	Common Stock Purchase Warrant, with an issue date of December 11, 2007, for the purchase of 5.5 million shares of the Registrant’s common stock issued to Sheridan Asset Management, LLC, a Delaware limited liability company. Incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on December 17, 2007.

10.9#	Common Stock Purchase Warrant, with an issue date of December 11, 2007, for the purchase of 3 million shares of the Registrant’s common stock issued to Sheridan Asset Management, LLC, a Delaware limited liability company. Incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on December 17, 2007.

10.10#@	Employment Agreement made as of December 1, 2007 by and between Continental Fuels, Inc., a Nevada corporation, and Tim Brink, a resident of the State of Texas. Incorporated by reference to Exhibit 10.12 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on December 17, 2007.

10.11#@	Continental Fuels, Inc. 2007 Stock Option/Stock Issuance Plan. Incorporated by reference to Exhibit 10.13 to the Current Report on Form 8-K of the Registrant filed with the Securities and Exchange Commission on December 17, 2007.

21.1*	Subsidiaries of Continental Fuels, Inc.
______________

#	Incorporated by reference.
@	Management contract or compensatory plan.
*	Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf on April 28, 2008 by the undersigned, thereunto duly authorized.

	CONTINENTAL FUELS, INC.


	By:	/s/ Timothy Brink
		Timothy Brink
		Chief Executive Officer, President ,Chief Financial Officer and
		Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the
Registrant and in the capacities on the date(s) indicated.

Name	Title	Date

/s/ Timothy Brink	Chief Executive Officer, President,	April 28, 2008
Timothy Brink	Chief Financial Officer, and
	Director


/s/ Kamal Abdallah	Chairman of the Board; Director	April 28, 2008
Kamal Abdallah




/s/ Christopher McCauley	Secretary; Director	April 28, 2008
Christopher McCauley

SUPPLEMENTAL INFORMATION AND EXHIBITS

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT
TO SECTION 12 OF THE ACT.

The Registrant’s fiscal year ended December 31, 2007. The Registrant currently has not held its Annual Meeting of Stockholders.

Four copies of all material to be mailed to stockholders with respect to such meeting will be furnished to the Securities and Exchange
Commission but such documents, when furnished, will not be deemed to be filed with the Securities and Exchange Commission or otherwise
subject to liabilities of Section 18 of the Act (except to the extent that the Registrant specifically incorporates such material by reference in
any subsequent Form 10-KSB); it is expected that such documents will consist of a Form of Proxy, Notice of Annual Meeting, Information
Statement with Schedules and/or Exhibits annexed thereto.

INDEX TO FINANCIAL STATEMENTS

	Page

Report of Independent Registered Public Accounting Firm - 2007	F-1
Report of Independent Registered Public Accounting Firm - 2006	F-2
Consolidated Balance Sheets as of December 31, 2007 and 2006	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2007 and 2006	F-4
Consolidated Statements Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2007 and 2006	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007 and 2006	F-8
Notes to Consolidated Financial Statements	F-11

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Continental Fuels, Inc.

We have audited the accompanying consolidated balance sheet of Continental Fuels, Inc. as of December 31, 2007 and the related
consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the year then ended. These financial
statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements
based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Continental Fuels, Inc. at December 31, 2007, and the results of its operations, changes in stockholders’ equity (deficit) and its cash flows for
the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been pre pared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the consolidated financial statements, the Company’s significant operating losses raise substantial doubt about its
ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

/s/ KBL, LLP

New York, NY
April 10, 2008

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Continental Fuels, Inc. (formerly Coronado Industries, Inc.)

We have audited the accompanying consolidated balance sheet of Continental Fuels, Inc. (formerly Coronado Industries, Inc.) as of
December 31, 2006 and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the
year then ended. 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 conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether t he 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Continental Fuels, Inc. (formerly Coronado Industries, Inc.) at December 31, 2006, and the results of its operations, changes in stockholders’
equity (deficit) and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United State s of
America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the consolidated financial statements, the Company’s significant operating losses and negative working capital raise
substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

/s/ Semple, Marchal & Cooper, LLP

Phoenix, Arizona
March 22, 2007

F-2

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2007 AND 2006

	December 31, 2007		December 31, 2006
ASSETS
Current Assets:
Cash	$	1,820,220	$	-
Accounts receivable, net of allowance for doubtful accounts of $60,387
and none, respectively	4,528,915		24,478
Inventory	259,599		12,206
Prepaid expenses	173,386		14,866

Total Current Assets	6,782,120		51,550

Property, plant and equipment, at cost, net of accumulated
depreciation of $4,310,969 and $70,948, respectively,	3,328,002		6,098

OTHER ASSETS
Surety bonds	48,400		-
Note receivable - UPDA parent entity	250,402		-
Rent security deposit	38,001		-
Goodwill	3,281,490		-
Other deposits	-		4,520

TOTAL ASSETS	$	13,728,415	$	62,168

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts and accrued expenses payable	$	6,084,825	$	355,543
Bank overdraft	-		1,770
Notes and loans payable:
Current portion of Sheridan term loan and revolving loan	728,001		-
Others	744,197		132,349
Related parties:
UPDA and certain of its wholly-owned subsidiaries, net of
loss on recapitalization of $2,736,541 (reserve for liabilities to UPDA parent
with payment contingent on future profitability of Continental)	2,295		-
Other relationships	100,000		333,375
State oil taxes payable	164,435		-
Income taxes payable	143,430		-
Total current liabilities	7,967,183		823,037

Long-Term Debt
Sheridan term loan and revolving loan	3,399,993		-
Total liabilities	11,367,176		823,037
Minority Interest
25% minority interest in Agencia Fiduciaria Aequitas N.V. (Continental A.V.V.) subsidiary	849		-
Minority Interest	849		-

TOTAL LIABILITIES	11,368,025		823,037

STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock - $.001 par value; 99,500,000 shares authorized, none issued
or outstanding at December 31, 2007 and December 31, 2006, respectively	-		-
Series A convertible preferred stock - $.001 par value; 500,000 shares authorized,
48,000 and none issued and outstanding at December 31, 2007 and December 31, 2006
respectively	48		-
Common stock - $.001 par value; 900,000,000 shares authorized;
92,688,409 and 8,436,969 shares issued and outstanding, respectively	92,689		8,437
Common stock to be issued of 8,791,488 shares	8,791		-
Additional paid-in capital	117,514,932		19,402,792
Accumulated deficit	(115,256,070)		(20,172,098)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)	2,360,390		(760,869)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	13,728,415	$	62,168

See accompanying notes to the consolidated financials statements.

F-3

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

		For the Years Ended		December 31,
		2007		2006
REVENUE
Product revenue	$	26,975,568	$	90,076

COST OF SALES
Cost of product revenue		24,351,151		58,614
GROSS PROFIT		2,624,417		31,462

General & administrative expenses:
Consulting fees and services		612,822		286,090
Payroll and related benefits		580,040		1,012,660
Selling and marketing expenses		531,000		513,611
Stock based compensation		3,213,908		1,398,350
Depreciation expense		47,384		2,023
General & administrative expenses		1,041,278		699,127
Total operating expenses		6,026,432		3,911,861

LOSS FROM OPERATIONS		(3,402,015)		(3,880,399)

Other (losses) gains:
Amortization of deferred loan costs:
Loan origination fees incurred to Sheridan
and legal and other costs to others		(17,568)		-
Warrants to purchase Company common stock issued
to Sheridan on Geer Tank Trucks, Inc. acquisition		(48,876)		-
Interest expense, net		(569,965)		(83,968)
Debt conversion costs		(91,056,436)		-
Gain on sale of Company net assets to a former officer/director predecessor entity		114,963		-
Escrow deposit lost on delay in completing original Geer Tanks
acquisition		(100,000)
Other expense		(3,227)		-
Total other (losses) gains		(91,681,109)		(83,968)

Loss before provision for income taxes		(95,083,124)		(3,964,367)
Provision for income taxes		-		-
Net loss		(95,083,124)		(3,964,367)
Add, 25% minority interest in net loss of Agencia Fiduciaria Aequitas N.V.
(Continental A.V.V.) subsidiary		(1,481)		-
NET LOSS AFTER MINORITY INTEREST	$	(95,084,605)	$	(3,964,367)

Basic and diluted net loss per weighted-average shares common stock	$	(1.14)	$	(1.27)

Weighted-average number of shares of common stock outstanding		83,597,428		3,110,820

See accompanying notes to the consolidated financials statements.

F-4

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

	Common	Common	Preferred	Series A
	Stock(issued)	Stock (to be issued)	Stock	Convertible Preferred
	Shares	Shares	Shares	Shares
Balance December 31, 2005	836,388	-	-	-
Stock issued for services	4,029,768	-	-	-
Stock and options issued for bonuses	1,396,500	-	-	-
Reverse stock split - Fractional shares	6	-	-	-
Forgiveness of officer salaries	-	-	-	-
Stock issued for debt and interest	2,174,307	-	-	-
Net loss for the year ended December 31, 2006	-	-	-	-
Balance December 31, 2006	8,436,969	-	-	-
Restricted common stock sold in private placement	141,000,000	-	-	-
Common Stock held by Karen Sandhu retired in exchange for Class B Convertible Preferred stock of UPDA - See Notes 7 and 8	(100,000,000)	-	-	-
Common stock issued to settle debt (Mathews Investment - See Note 7,8 and 12)	23,251,440	-	-	-
Common stock to be issued (Mathews Investment - See Note 7,8 and 12)	-	8,791,488	-	-
Series A convertible preferred shares issued to UPDA for acquisition	-	-	-	50,000
Series A convertible preferred shares held by UPDA converted into Company common stock, of which UPDA distributed 18,169,545 were distributed to UPDA’s common stock holders by UPDA - See Note 8	20,000,000	-	-	(2,000)
Officer stock based compensation expense for shares vested immediately (See Note 9)	-	-	-	-
Warrants to purchase Company common stock issued to Sheridan for financing Geer acquisition (See Note 1)	-	-	-	-
25 % minority interest in initial investment in Combustibles - See Note 1	-	-	-	-
Unilateral reduction in the original purchase price to the Company for the
UPDA subsidiaries, principally storage facility, assets originally
transferred to the Company by UPDA - See Note 14	-	-	-	-
Net loss for the year ended December 31, 2007	-	-	-	-
Balance December 31, 2007	92,688,409	8,791,488	-	48,000

See accompanying notes to the consolidated financials statements.

F-5

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(Continued)

	Common		Common		Preferred		Series A
	Stock		Stock (to be issued)		Stock		Convertible Preferred
	Par Value		Par Value		Par Value		Par Value
Balance December 31, 2005	$	836	$	-	$	-	$	-
Stock issued for services	4,030		-		-		-
Stock and options issued for bonuses	1,397		-		-		-
Reverse stock split - Fractional shares	-		-		-		-
Forgiveness of officer salaries	-		-		-		-
Stock issued for debt and interest	2,174		-		-		-
Net loss for the year ended December 31, 2006	-		-		-		-
Balance December 31, 2006	$	8,437	$	-	$	-	$	-
Restricted common stock sold in private placement	141,000		-		-		-
Common Stock held by Karen Sandhu retired in exchange for Class B Convertible Preferred stock of UPDA -See Notes 7 and 8	(100,000)		-		-		-
Common stock issued to settle debt (Mathews Investment - See Note 7,8 and 12)	23,252		-		-		-
Common stock to be issued to settle debt (Mathews Investment - See Note 7,8 and 12)	-		8,791				-
Series A convertible preferred shares issued
to UPDA for acquisition	-		-		-		50
Series A convertible preferred shares held by UPDA converted into Company common stock, of which UPDA distributed 18,169,545 were distributed to UPDA’s common stock holders by UPDA - See Note 8	20,000		-		-		(2)
Officer stock based compensation expense for shares vested immediately (See Note 9)	-		-		-		-
Warrants to purchase Company common stock issued to Sheridan for financing Geer acquisition (See Note 1)	-		-		-		-
25 % minority interest in initial investment in Combustibles - See Note 1	-		-		-		-
Unilateral reduction in the original purchase price to the Company for the
UPDA subsidiaries, principally storage facility, assets originally
transferred to the Company by UPDA - See Note 14	-		-		-		-
Net loss for the year ended December 31, 2007	-		-		-		-
Balance December 31, 2007	$	92,689	$	8,791	$	-	$	48

See accompanying notes to the consolidated financials statements.

F-6

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(Continued)

	Additional
	Paid-in		Accumulated
	Capital		Deficit		Total
Balance December 31, 2005	$	15,216,760	$	(16,207,731)	$	(990,135)
Stock issued for services	1,694,751		-		1,698,781
Stock and options issued for bonuses	1,966,543		-		1,967,940
Reverse stock split - Fractional shares	-		-		-
Forgiveness of officer salaries	229,756		-		229,756
Stock issued for debt and interest	294,982		-		297,156
Net loss for the year ended December 31, 2006	-		(3,964,367)		(3,964,367)
Balance December 31, 2006	$	19,402,792	$	(20,172,098)	$	(760,869)
Restricted common stock sold in private placement	59,000		-		200,000
Common Stock held by Karen Sandhu retired in exchange for Class B Convertible Preferred stock of UPDA -See Notes 7 and 8	100,000		-		-
Common stock issued to settle debt (Mathews Investment - See Note 7,8 and 12)	64,538,042		-		64,561,294
Common stock to be issued to settle debt (Mathews Investment - See Note 7,8 and 12)	26,805,247		-		26,814,038
Series A convertible preferred shares issued
to UPDA for acquisition	-		-		50
Series A convertible preferred shares held by UPDA converted into Company common stock, of which UPDA distributed 18,169,545 were distributed to UPDA’s common stock holders by UPDA - See Note 8	(19,998)		-		-
Officer stock based compensation expense for shares vested immediately (See Note 9)	3,213,908		-		3,213,908
Warrants to purchase Company common stock issued to Sheridan for financing Geer acquisition (See Note 1)	2,675,941		-		2,675,941
25 % minority interest in initial investment in Combustibles - See Note 1	-		633		633
Unilateral reduction in the original purchase price to the Company for the
UPDA subsidiaries, principally storage facility, assets originally
transferred to the Company by UPDA - See Note 14	740,000		-		740,000
Net loss for the year ended December 31, 2007	-		(95,084,605)		(95,084,605)
Balance December 31, 2007	$	117,514,932	$	(115,256,070)	$	2,360,390

See accompanying notes to the consolidated financials statements.

F-7

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

		Years Ended December 31,
		2007		2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(95,084,605)	$	(3,964,367)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation expenses		47,384		2,023
Loan origination fees incurred to Sheridan
and legal and other costs to others		17,568		-
Warrants to purchase Company common stock issued
to Sheridan on Geer Tank Trucks, Inc. acquisition		48,876		-
Minority interest in (loss) of Combustibles Continental De Latino America		1,481		-
Gain on sale of assets		(114,963)		-
Debt conversion costs		91,056,436		-
Stock based compensation		3,213,908		-
Forgiveness of officer salaries		-		229,756
Stock and options issued for salaries, consulting and interest				1,714,938
Stock and options issued for bonuses		-		1,967,940
Accrued interest income added to note receivable - UPDA parent entity		(402)		-
Accounts payable converted to debt		-		32,348
Changes in operating assets and liabilities:
Increase in accounts receivable		(634,765)		(10,463)
(Increase) decrease in inventory		(128,343)		12,083
Increase in prepaid expenses		(23,404)		(788)
Increase in rent security deposit		(38,001)		-
(Decrease) increase in accounts and accrued expenses payable		(1,892,071)		100,534
Increase in state oil taxes payable		164,435		-
Increase in income taxes payable		143,430		-
Decrease in accrued salaries		-		(455,500)
Increase in accrued interest		-		5,038
Increase in accrued taxes		-		47,972
NET CASH USED IN OPERATING ACTIVITIES		(3,223,036)		(318,486)

CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired as part of acquisition of Geer Tanks Trucks, Inc., UPDA Texas Trading, Inc.
and US Petroleum Depot, Inc.		5,858,192		-
Purchases of property and equipment		(646,099)		-
Advances made via notes receivable-UPDA parent entity		(250,000)		-
Surety bond		(48,400)		-
NET CASH PROVIDED BY INVESTING ACTIVITIES		4,913,693		-

CASH FLOWS FROM FINANCING ACTIVITIES
Reduction in bank overdraft		(1,770)		1,770
Payment of deferred debt costs by Company on financing of Geer acquisition,
including $734,773 of reimbursements to Sheridan		(811,859)		-
Advances received under line of credit		857,261		-
Proceeds from borrowings		-		381,200
Proceeds (repayment) of notes and loans payable, others		517,651		(50,000)
Proceeds (repayment) of notes and loans payable, Companies’ parent entity and certain of its
wholly-owned subsidiaries:
Note payable to UPDA, as parent entity, for acquisition of the Company		(700,000)		-
Loan payable to UPDA-Operators, wholly-owned subsidiary of UPDA		1,655		-
Proceeds (repayment) of notes and loans payable, other related party relationships		66,625		(26,824)
Sale of common stock		200,000		-
NET CASH PROVIDED BY FINANCING ACTIVITIES		129,563		306,146

NET INCREASE IN CASH		1,820,220		(12,340)
Cash, beginning of period		-		12,340
Cash, END OF PERIOD	$	1,820,220	$	-

See accompanying notes to the consolidated financials statements.

F-8

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(Continued)

Supplementary disclosures of cash flow information
Cash paid during the period for:
	Income taxes		$	-	$	-

	Interest expense		$	-	$	-

	Interest paid		$	-	$	56,262

NON-CASH TRANSACTIONS:
	Issuance of common stock & options for salaries		$	-	$	-
	Issuance of common stock for services			-		1,698,781
	Issuance of common stock & options for bonuses			-		1,967,940
	Issuance of common stock for interest			-		16,155
	Issuance of common stock for debt					281,000
	Forgiveness of officers salaries			-		229,756
	Accounts payable converted to debt			-		32,348

	Acquisition of UPDA Texas Trading, Inc. and US Petroleum Depot, Inc.:
		Assets acquired:
		Cash	$	879,020
		Accounts receivable		913,047
		Property and equipment		1,124,577
		Prepaid expenses		8,549
		Total assets acquired		2,925,193
		Liabilities acquired:
		Line of credit payable		1,350,000
		Accounts and accrued expenses payable		134,503
				1,484,503

		Intercompany account non-interest bearing balance payable to UPDA		1,022,560
		Intercompany account non-interest bearing balance payable to
		UPDA-Operators, a wholly-owned subsidiary of UPDA		654,621
		Note payable to UPDA, as parent entity, for acquisition of the Company		2,500,000
		Less: Loss on recapitalization (reserve for liabilities to UPDA parent
		contingent on future profitability on Continental)		(2,736,541)
				1,440,640
		Total liabilities acquired		2,925,143
		Net assets acquired		50

		Change in Company’s Stockholders’ Equity:
		50,000 shares issued of Series A convertible preferred stock at $.001 par value		50


See accompanying notes to the consolidated financials statements.

F-9

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

(Continued)

	Common stock issued and to be issued	$	32,043
	Additional paid-in capital		91,343,286

		$	91,375,329

Notes and loans payable, other (Mathew) converted into Company common stock:
Debt converted		$	300,000
Accrued interest payable on debt			18,893
			318,893
Excess of fair value of stock issued over debt converted -
debt conversion costs		$	91,056,436

Acquisition of Geer Tank Trucks, Inc.:
	Assets acquired:
	Cash	$	4,979,172
	Accounts receivable		2,956,625
	Inventory		119,050
	Prepaid expenses		126,567
			8,181,414
	Property, plant and equipment, net		1,527,666

	Total assets acquired		9,709,080
	Liabilities acquired:
	Accounts and accrued expenses payable		7,490,570
			7,490,570

	Net assets acquired	$	2,218,510
	Purchase price paid to Geer financed by proceeds of
	Sheridan term loan (See Note 12)	$	5,500,000
	Goodwill (Excess of consideration paid over
	net assets acquired)	$	3,281,490

Financed as follows:
	Deferred debt costs incurred to Sheriden Asset Management to make Geer acquisition	$	734,773
	Company reimbursement made back to Sheridan		(734,773)
	Deferred debt costs incurred in form of Warrants to purchase Company Common Stock
	issued to Sheridan to finance Geer acquisition		2,675,941
	Simultaneously credited to additional paid-in capital		(2,675,941)
			-
	Cash paid by Sheridan Asset Management under term loan to seller of Geer		5,500,000
	Obligation under Sheridan Asset Management second term loan payable	$	5,500,000

	Inter National Bank line of credit paid off by Company borrowing from Sheridan under
	Revolving Line (See Note 12 and 16)	$	2,207,261

See accompanying notes to the consolidated financials statements.

F-10

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

ORGANIZATION
Continental Fuels, Inc. (the “Company”) was incorporated under the name First Lloyd Funding, Inc. pursuant to the laws of the State of New
York on December 21, 1989. The effective date of the Company’s public offering was March 13, 1990. The Offering closed on May 1, 1990.
For further information concerning the Registration Statement, see File No. 33-33042-NY at the Securities and Exchange Commission’s
Regional Office in New York City or at its principal office in Washington, D.C. In January 1997, the New York corporation at that time
named Coronado Industries, Inc. (“Coronado”) merged into and became a Nevada corporation of the same name.

On January 26, 2007, all of the Coronado’s subsidiaries and all assets of Coronado, except for the European distribution agreements, were
sold to G. Richard Smith, the former Chairman, for $300,000 in cash and the assumption of certain trade debts (the “Sale of Assets”).

Shortly thereafter, on February 15, 2007, the Board of Directors unanimously approved the adoption of an Amendment to the Articles of
Incorporation to i) change the Company’s name from Coronado Industries, Inc. to Continental Fuels, Inc. and ii) to increase the authorized
capital stock of the Company from 400,000,000 shares of $.001 par value per common share common stock and 50,000,000 shares of $.001
par value per share preferred stock to 900,000,000 shares of $.001 par value per common share common stock and 100,000,000 shares of
$.001 par value per share preferred stock. The Amendment became effective Febr uary 16, 2007 through a filing with the Nevada Secretary of
State.

On January 19, 2007, the Company’s Board of Directors approved a 1-for-100 stock split (the “Reverse Stock Split”) of all of the Company’s
issued common stock, par value $0.001 per share (“Common Stock”) effective February 5, 2007. In addition, on February 16, 2007, the
Company filed an amendment to its Restated Certificate of Incorporation to effect an increase in the authorized capital stock from
400,000,000 shares of $.001 par value common stock and 50,000,000 shares of $.001 par value preferred stock to 900,000,000 shares of
$.001 par value common stock and 100,000,000 shares of $.001 par value preferred stock. Prior to the filing, the amendment was approved
by the Company’s shareholders at a special mee ting and by the Company’s Board of Directors. All share and per share information included
in these consolidated financial statements has been adjusted to give retroactive effect of the Reverse Stock Split.

On April 13, 2007, the Company’s Board of Directors approved a 3-for-1 stock split (the “Forward Stock Split”) of all of the Company’s
common stock. Pursuant to the terms of the Forward Stock Split, each share of the Company’s common stock held by shareholders of record
on April 13, 2007 shall on April 20, 2007 (the “Effective Date”) automatically become the equivalent of 3 shares of post-split common stock
of the Company. The Forward Stock Split did not change the number of shares of common stock authorized under the Company’s Articles of
Incorporation or change the par value per share of its co mmon stock. All share and per share information included in these consolidated
financial statements has been adjusted to give retroactive effect of the Forward Stock Split.

On April 23, 2007, the Board of Directors of the Company adopted a resolution providing for the designation, rights, powers and preferences
and the qualifications, limitation and restrictions of 500,000 shares of Series A Convertible Preferred Stock (the “Preferred Stock”). Each
share of the Preferred Stock is convertible into 10,000 shares of the Company’s Common Stock. In the event of a stock dividend, stock split,
reclassification, reorganization, consolidation or merger, adjustments in the conversion ratio will be made in a manner which will provide the
preferred holders, upon full conversion into common stock, the same percentage ownership of the Company that existed immediately prior to
such action. The Preferred Stock has the same voting rights as the common stock, on an as converted basis, with the preferred holders having
one vote for each share of common stock into which their Preferred Stock is convertible. The Preferred Stock has a liquidation preference
over the Company’s common stock up to the one-hundred dollar ($100) per share issuance price of the Preferred Stock.

F-11

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION (continued)

CHANGE OF CONTROL

On April 23, 2007, the Company completed the issuance of 50,000 shares of our Series A Convertible Preferred Stock (the "Preferred
Stock") to UPDA in a private transaction (the "Issuance"). The 50,000 shares of our Preferred Stock issued in the Issuance were valued at
$5,000,000 under the terms of SPA. On that date, the Company had approximately 149,815,833 shares of common stock issued and
outstanding. As a result of the issuance of the Preferred Stock to UPDA, on an "as converted" basis, UPDA has the power to vote
500,000,000 shares of our common stock. Therefore, on that date UPDA had the power to control the vote of approximately 77% of the
common stock of the Company.

The Issuance of the Preferred Stock to UPDA therefore constitutes a change of control transaction for the Company as UPDA now owns a
majority of the outstanding voting securities of the Company. Although the Company is now a majority owned subsidiary of UPDA, the
Company intends to continue to comply with its public reporting obligations.

Continental serves as the petroleum products trading segment for UPDA. Continental owns and operates UPDA’s port facilities, as well as
the blending and distribution businesses. The management of Continental, in executing its business plan, has reorganized operations,
increased petroleum products sales and developed additional supply contacts and top tier customers. In addition, Continental is pursuing the
acquisition of oil and gas marketing companies and other operations consistent with its goals.

CONTINENTAL FUELS A.V.V.

On August 8, 2007 the Company established a 100% wholly owned foreign subsidiary, Agencia Fiduciaria Aequitas N.V. (“Continental
Fuels A.V.V.”), in Aruba for the purpose of developing a presence in Latin America.

On September 9, 2007, Continental Fuels A.V.V. established a joint venture and invested $9,320 in a new entity, Combustibles Continental
De LatinoAmerica (“Combustibles”), for 75% ownership in the company. Combustibles was created for the purposes of investment in the
general energy sector, the commercialization of hydrocarbon by-products, and the investment and financing of industrial projects and energy
infrastructure. On September 9, 2007, Combustibles appointed Timothy Brink as president, Luis Bautista as vice-president, and Ernesto
Haberer as director of its board.

Combustibles presently has no operations or operating assets other than a nominal local cash account totaling approximately $3,000.

GEER TANK TRUCKS, INC.

As further discussed in Note 3, on December 19, 2007, the Company completed its acquisition of Geer Tank Trucks, Inc. ("Geer"), a
privately held Texas corporation, pursuant to the terms and conditions of the Stock Purchase Agreement, dated as of December 11, 2007 (the
"Geer SPA"), whereby Continental purchased one hundred percent (100%) of the outstanding capital stock of Geer, for an aggregate
purchase price of $5,500,000. The purchase price was paid by the Company in cash. The Company financed the acquisition with the proceeds
of a long-term secured Term Loan from Sheridan Asset Management, LLC, which term loan is discussed in detai l in Note12.

BASIS OF PRESENTATION - GOING CONCERN

The Company’s financial statements are presented on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has a deficiency in working capital of $1,185,063 and a positive net worth of
$2,360,390. The Company’s currently constituted business operations and product revenues as a result of those operations commenced on
April 23, 2007 with the Company’s acquisition of a port facility. The Company incurred a “Loss from operations” of $3,402,015 for the year
ended December 31, 2007 and a “Net loss” of $95,084,605 during that same year.

F-12

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION (continued)

BASIS OF PRESENTATION - GOING CONCERN (continued)

The Company’s continuation as a going concern is dependent upon receiving additional financing. The Company anticipates that during its
2008 fiscal year it will need to raise substantial funds to support its working capital needs and to continue to execute the requirements of its
business plan. Management of the Company is currently in a process of trying to secure additional capital. There can be no assurance that the
Company will be successful in this capital raise or with other attempts to raise sufficient capital.

The financial statements do not include any adjustments to reflect the possible future effects of the recoverability and classification of assets
or th e amounts and classifications of liabilities that may result from the uncertainty of the Company’s ability to continue as a going concern

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the activity of Continental Fuels, Inc., together with its wholly-owned subsidiaries, US
Petroleum Depot, Inc., Continental Trading Enterprizes, Inc. f/k/a UPDA Texas Trading, Geer Tank Trucks, Inc. and Agencia Fiduciaria
Aequitas N.V. All significant inter-company accounts and transactions have been eliminated.

RECLASSIFICATIONS

We have reclassified certain data in the financial statements of the prior year to conform to the current year presentation.

USE OF ESTI MATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally accepted accounting principles 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

Cash and cash equivalents are considered to be all highly liquid investments purchased with an initial maturity of three (3) months or less.

FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

The Company’s functional currency is the U.S. dollar. In those instances where t he Company has foreign currency transactions, the financial
statements are translated to U.S. dollars in accordance with Statement 52 of the Financial Accounting Standards Board (FASB), Foreign
Currency Translation. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at
the balance sheet date. Gains and losses arising on translation or settlement of foreign-currency-denominated transactions or balances are
included in the determination of income. The Company’s primary foreign currency transactions are in Venezuelan dollars. The Company has
not entered into derivative instruments to offset the impact of foreign currency fluctuations. The Company has had no translation or
transactions gains or losses of substance to reflect during either the years ended December 31, 2007 and 2006.

INVENTORIES

Inventories consist primarily of materials and parts and are stated at the lower of cost, as determined on a first-in, first-out (FIFO) basis, or
market (See Note 6).

F-13

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ACCOUNTS RECEIVABLE

The Company follows the allowance method of recognizing uncollectible accounts receivable. The allowance method recognized bad debt
expense as a percentage of accounts receivable based on a review of the individual accounts outstanding and the Company’s prior history of
uncollectible accounts receivable. As of December 31, 2007 and 2006, the Company has established an allowance for uncollectible accounts
receivable of $60,387 and $0, respectively. The Company does not record interest income on delinquent accounts receivable balances until it
is received.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Maintenance and repairs that neit her materially add to the value of the property nor
appreciably prolong its life are charged to operations as incurred. Betterments or renewals are capitalized when incurred. Depreciation is
provided using the straight line method over the estimated useful lives of the particular assets class of from 3 to 35 years (See Note 5).

LONG LIVED ASSETS

Long lived assets are accounted for in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”
The statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Assets to be disposed of are reported at the lower of carrying amount or fair value less
cost to sell. At December 31, 2007 and 2006, no prov ision for impairment of long-live assets consisting of property, plant and equipment
(See Note 5) is required.

INCOME TAXES

Deferred income taxes are provided on an asset and liability method, whereby deferred tax assets are recognized for deductible temporary
differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are
reduced by a valuation allowance when in the opinion of management, it is more likely than not that some portion or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of
enactment.

Effective January 1, 2007, the Company adopted Financial Accounting Standard Board Interpretation No. 48 Accounting for Uncertainty in
Income Taxes (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements
in accordance with SFAS Statement No. 109 Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement
attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in tax return. FIN 48 also
provides guidance on derecognition, classification, interest and penalties, accounting interim period, disclosure and transition. There were no
adjustments required upon adoption of FIN 48.

BASIC AND DILUTED LOSS PER SHARE

Basic and diluted net loss per share information for all periods is presented under the requirements of SFAS No. 128, Earnings Per Share.
Basic loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average common shares
outstanding during the period. Diluted loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-
average common shares outstanding. The dilutive effect of preferred stock, warrants and options convertible into an aggregate of
approximately 498,500,000 and 132,058 of common shares as of December 31, 2007 and 2006 respectively, are not included because the
inclusion of such would be anti-dilutive for all periods presented.

F-14

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

REVENUE RECOGNITION

The Company recognizes net operating revenues from oil and natural gas at the time of delivery, that is, once the oil and gas purchasers have
taken delivery.

GOODWILL AND OTHER INTANGIBLE ASSETS

Under Statement of Financial Accounting Standards No. 142, goodwill is reviewed at least annually for impairment. In assessing the
recoverability of the Company’s goodwill, the Company must make assumptions regarding estimated future cash flows and other factors to
determine the fair value of the respective assets and liabilities of the reporting unit. Upon adoption and again as a result of the Company’s
annual impairment test, there was no indication of impairment f or goodwill acquired in prior business combinations. If the Company’s
estimates or its related assumptions change in the future, the Company may be required to record impairment charges related to its goodwill.
Goodwill amounting to $3,281,490 at December 31, 2007 consists of the excess of cash consideration paid over net assets acquired arising
from the acquisition of Geer Tank Trucks, Inc. (See Note 3.)

The Company reviews its intangible assets at least annually to evaluate potential impairment by comparing the carrying value of the
intangible assets with expected future net operating cash flows from the related operations. If the expected future net operating cash flows are
less than the carrying value, the Company recognizes an impairment loss equal to the amount by which the carrying value exceeds the
discounted e xpected future net operating cash flows from the related operations.

STOCK BASED COMPENSATION

Prior to January 1, 2006, the Company had applied APB Opinion No. 25 and related interpretations in accounting for its stock-based plans as
was permitted under SFAS No. 123, “Accounting for Stock-Based Compensation.” Under SFAS No. 123, companies could, but were not
required to, elect to recognize compensation expense for all stock-based awards using a fair value methodology. The Company had adopted
the disclosure-only provisions, as permitted by SFAS No. 123.

In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment (Revised 2004).” SFAS No. 123R establishes standards for the
accounting for transactions in which an entity (i) exchanges its equity instruments for goods or services, or (ii) incurs liabilities in exchange
for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of the equity
instruments. SFAS No. 123R eliminates the ability to account for stock-based compensation using APB 25 and requires that such
transactions be recognized as compensation cost in the income statement based on their fair values on the date of the grant.

Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS 123R “Share-Based Payment” (“SFAS
123R”) using the modified prospective approach. SFAS No. 123R applies to new awards and to awards modified, repurchased, or cancelled
after December 15, 2005. Additionally, compensation cost for the portion of awards for which the requisite service has not been rendered
(generally referring to non-vested awards) that are outstanding as of December 15, 2005 must be recognized as the remaining requisite
service is rendered during the period of and/or the periods after the adoption of SFAS No. 123R. The attribution of compensation cost for
those earlier awards will be based on the same method and on the same grant-date fair values previously determined for the pro forma
disclosures required for companies that did not adopt the fair value accounting method for stock-based employee compensation. For
purposes of estimating the grant date fair value of stock options, the Company uses the Black-Scholes options pricing model.

F-15

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

STOCK BASED COMPENSATION (continued)

Assumptions used to determine compensation expense are determined as follows:

·	Expected term is determined using a weighted average of the contractual term of the award;

·	Expected volatility of award grants is measured using the weighted average of historical daily changes in the market price of the Company’s common stock over the expected term of the award;

·	Risk-free interest rate is equivalent to the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards; and

·	Forfeitures are based on the history of cancellations of awards granted and management’s analysis of potential forfeitures.

AMORTIZATION OF DEFERRED DEBT COSTS

In December 2007, the Company incurred deferred debt costs in conjunction with $7,707,261 of debt to Sheridan, consisting of a secured
Long-Term Loan of $5,500,000 to complete the Geer Tank Trucks, Inc. acquisition (See Note 3), and a Revolving Loan of $2,207,261. Both
loans are discussed in detail in Note 12. The deferred debt costs of $3,645,711 are being accreted/amortized as an expense over the life of the
loans which mature on December 11, 2010.

Below is a summary of these costs, which were incurred in conjunction with loans made by Sheridan Asset Management under the loan
agreements, as follows:

		Sheridan Secured	Sheridan Secured
		Long-Term Loan	Revolving Loan	Total
Fair value of Warrants to purchase Common Stock of the Company
granted to Sheridan (A) as inducement to make loan to UPDA for Geer
Tank Trucks Inc. acquisition (See Note 3)		1,731,492	944,449	2,675,941
Loan origination fees incurred to Sheridan and legal costs and
investment banking fees incurred to others to facilitate the loan		627,499	342,271	969,770

Total deferred debt costs	$	2,358,991	1,286,720	3,645,711
Less, accreted/amortized since inception of loan	$	42,994	23,450	66,444
Total	$	2,315,997	1,263,270	3,579,267

Sheridan received warrants that are immediately exercisable to purchase 8,500,000 shares of the Company’s Common Stock at a purchase
price of $.2465 per share expiring on December 11, 2013.

FAIR VALUE OF FINANCIAL INSTRUMENTS

For financial statement instruments including cash, accounts receivable, accounts and accrued expenses payable, the carrying amounts
approximated fair value because of their short maturity. The fair value of long-term notes payable and lease obligations is based on current
rates at which we could borrow funds with similar remaining maturities.

MAJOR CUSTOMERS

During the years ended December 31, 2007 and 2006, the Company had two and one major customer(s) representing approximately 100.0%
and 97.2% of total revenues, respectively.

F-16

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

SIGNIFICANT SUPPLIERS

During the years ended December 31, 2007 and 2006, the Company had three and no significant supplier(s) representing approximately
100% and 0% of total revenues, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued SFAS No.160, “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB
No. 51”. SFAS No.160 requires that the ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled,
and presented in the consolidated statement of financial position within equity, in the amount of consolidated net income attributable to the
parent and to the noncontrolling interest on the face of the consolidated statement of income, and that Entities provide sufficient disclosures
that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No.160 is
effective for fiscal years, beginning on or after December 15, 2008 and cannot be applied earlier.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(revised 2007), “Business Combinations,”
(“FASB 141R”). This standard requires that entities recognize the assets acquired, liabilities assumed, contractual contingencies and
contingent consideration measured at their fair value at the acquisition date for any business combination consummated after the effective
date. It further requires that acquisition-related costs are to be recognized separately from the acquisition and expensed as incurred. FASB
141R is effective for fiscal years beginning after December 15, 2008.

The Company does not anticipate that the adoption of SFAS No. 141R and No. 160 will have an impact on the Company’s overall results of
operations or financial position, unless the Company makes a business acquisition in which there is a noncontrolling interest.

In December 2007, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 110, “Use of a Simplified Method in
Developing Expected Term of Share Options” (“SAB 110”). SAB 110 expresses the current view of the staff that it will accept a company’s
election to use the simplified method discussed in Staff Accounting Bulletin 107, Share Based Payment, (“SAB 107”), for estimating the
expected term of “plain vanilla” share options regardless of whether the company has sufficient information to make more refined estimates.
SAB 110 became effective for the Company on January 1, 2008. The adoption of SAB 110 is not expected to have a material impact on the
Company’s financial position.

In February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.159, “The Fair Value Option for Financial Assets
and Financial Liabilities - Including an amendment of FASB Statement No.115”. SFAS No.159 permits entities to choose to measure eligible
financial instruments and other items at fair value at specified election dates. A business entity shall report unrealized gains and losses on
items for which the fair value option has been elected in earnings at each subsequen t reporting date. The fair value option may be applied
instrument by instrument but only upon the entire instrument - not portions of the instrument. Unless a new election date occurs, the fair
value option is irrevocable. SFAS No.159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007.
The Company does not expect that the adoption of SFAS No. 159 will have a material effect on the Company’s consolidated financial
statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The statement standardizes the definition of fair value,
establishes a framework for measuring in generally accepted accounting principles and sets forth the disclosures about fair value
measurements. SFAS No. 157 is effective for the beginning of an en tity’s fiscal year that begins after November 15, 2007. The Company
does not expect SFAS No. 157 will have a material effect on its financial statements.

F-17

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. ACQUISITION OF THE CAPITAL STOCK OF GEER TANK TRUCKS, INC.

On December 19, 2007, the Company completed its acquisition of Geer Tank Trucks, Inc. ("Geer"), a privately held Texas corporation,
pursuant to the terms and conditions of the Stock Purchase Agreement, dated as of December 11, 2007 (the "Geer SPA"), whereby
Continental purchased one hundred percent (100%) of the outstanding capital stock of Geer, for an aggregate purchase price of $5,500,000.
The purchase price was paid by the Company in cash. The Company financed the acquisition with the proceeds of a Term Loan from
Sheridan Asset Management, LLC.

As part of the terms of the Geer SPA, at the closing of the Stock Purchase transaction Messrs. Kamal Abdallah, Christopher McCauley and
Timothy Brink were each appointed to the board of directors of Geer to fill vacancies on that board caused by the resignations of previous
board members. Mr. Brink is the Company’s Chief Executive Officer and a member of its board of directors, and Messrs. Abdallah and
McCauley are each members of the Company’s board of directors.

Geer was incorporated in the State of Texas in September 1965. The main business operations of the Company are the purchase, transport,
and sale of oil in the State of Texas. The Company operates out of five locations. The Company owns two salt water disposal wells and four
pipeline terminals with yards located in Jacksboro, Mineral Wells, Graham, Cisco, and Bowie, Texas. In addition to oil shipping and trading,
the Company provides oil well services such as salt and fresh water removal services and frac tank rentals.

The following table presents the assets and liabilities acquired during the transaction:

Acquisition of Geer Tank Trucks, Inc.:
	Assets acquired:
	Cash	$	4,979,172
	Accounts receivable		2,956,625
	Inventory		119,050
	Prepaid expenses		126,567
			8,181,414
	Property, plant and equipment, net		1,527,666

	Total assets acquired		9,709,080
	Liabilities acquired:
	Accounts and accrued expenses payable		7,490,570
			7,490,570

	Net assets acquired	$	2,218,510
	Purchase price paid to Geer financed by proceeds of
	Sheridan term loan (See Note 12)	$	5,500,000
	Goodwill (Excess of consideration paid over
	net assets acquired)	$	3,281,490

Financed as follows:
	Deferred debt costs incurred to Sheriden Asset Management to make Geer acquisition	$	734,773
	Company reimbursement made back to Sheriden		(734,773)
	Deferred debt costs incurred in form of Warrants to purchase Company Common Stock
	issued to Sheridan to finance Geer acquisition		2,675,941
	Simultaneously credited to additional paid-in capital		(2,675,941)
			-
	Cash paid by Sheriden Asset Management under term loan to seller of Geer		5,500,000
	Obligation under Sheriden Asset Management second term loan payable	$	5,500,000

	Inter National Bank line of credit paid off by Company borrowing from Sheridan under
	Revolving Line (See Note 12 and 16)	$	2,207,261

F-18

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. NOTE RECEIVABLE - UPDA PARENT

On December 20, 2007, UPDA executed a promissory note receivable of $250,000 to Geer bearing interest of 5% per annum and payable on
demand for funds received by UPDA from Geer. As of December 31, 2007, the balance to be received by Geer is $250,402, which includes
accrued interest.

NOTE 5. PROPERTY, PLANT & EQUIPMENT

At December 31, 2007 & 2006, property and equipment consists of the following:

				Estimated
	2007		2006	useful lives

Port storage facility	$	1,795,931	-	30 years
Trucks		1,586,555	-	5 years
Tanks		1,319,656	-	5 years
Trailers and float		855,607	-	5 years
Production equipment		568,680	-	7 years
Other equipment		729,132	-	3-7 years
Field office		81,522	-	15-35 years
Fence		13,375	-	3 years
Welling machine and cart		19,550	-	3 years
Office furniture and
equipment		5,117	58,433	5-7 years
Machinery and equipment		-	15,613	5-7 years
Land		36,652	-
Building		526,766		35 years
Leasehold improvements		100,428	3,000	15 years
		7,638,971	77,046
Less: accumulated
depreciation		(4,310,969)	(70,948)
Net property and equipment	$	3,328,002	6,098

Depreciation expense was $47,384 and $2,023, for the years ended December 31, 2007 and 2006, respectively.

NOTE 6. INVENTORY

As of December 31, 2007 and 2006, inventory consisted of the following:

	2007		2006

Raw materials	$	-	$	8,405
Finished goods		259,599		3,801
	$	259,599	$	12,206

F-19

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7. RELATED PARTY TRANSACTIONS

On January 26, 2007, all of the Company’s subsidiaries and all assets of the Company, except for the European distribution agreements, were
sold to G. Richard Smith, Company’s former Chairman, for $300,000 in cash and the assumption of certain trade debts (the “Sale of Assets”),
resulting in a gain on the sale of these net assets of $114,963 reflected in the Statement of Operations for the three months ended March 31,
2007.

Consulting fees and services for the year ended December 31, 2007 and 2006 includes $25,000 and $0, respectively, incurred to Timothy
Brink, respectively.

Consulting fees and services for the year ended December 31, 2007 and 2006 includes $25,000 and $0, respectively, incurred to current Chief
Executive Officer of the Company, Ernesto Haberer, respectively.

Consulting fees and services for the year ended December 31, 2007 and 2006 includes $5,000 and $0, respectively, incurred to Ernesto
Haberer, current Vice President of Business Development.

Consulting fees and services for the year ended December 31, 2007 includes $61,480 incurred to Luis Bautista, a member of the Board of
Directors for Combustibles and Continental Fuels, A.V.V., subsidiary of the Registrant.

On April 23, 2007, the Company and UPDA closed the SPA business combination transaction. Pursuant to the SPA, the Company acquired
one hundred percent (100%) of the capital stock of US Petroleum Depot, Inc. and Continental Trading Enterprizes, Inc. f/k/a UPDA Texas
Trading, two wholly-owned subsidiaries of UPDA. The consideration received by UPDA f or the Subsidiary Shares consisted of $2,500,000
in cash, receivable within 30 days of the Effective Date, and 50,000 shares of the Company’s Series A Preferred stock valued at $5,000,000
(the “Preferred Stock”). On April 23, 2007, the Company had 149,815,833 shares of common stock issued and outstanding. As a result of the
issuance of the Preferred Stock to UPDA, on an “as converted” basis UPDA had the power to vote 500,000,000 shares of our common stock.
Therefore, UPDA has the power to control the vote of a majority of our voting capital stock.

Subsequent to the closing of the SPA transaction, the Company and UPDA mutually agreed to extend the due date for the payment of the
$2,500,000 cash portion of the consideration described above. In connection with the agreement to extend the due date, the Company paid $150,000 in cash to UPDA and executed a promissory note payable that was due to be paid on June 18, 2007 to UPDA for $2,350,000. The
note is now due and payable on demand and bears an interest rate of 5%. As of December 31, 2007, $1,800,000, plus interest, is due to be
paid to UPDA (See Note 12).

On May 31, 2007, the Company executed a promissory note payable of $547,952 to Aztec Wells Services, a wholly-owned subsidiary of
UPDA, bearing interest of 5% per annum and payable on demand. The funds were used by the Company to pay for the operations of its
subsidiaries. On August 13, 2007, the Company repaid the full $547,952 note due to Aztec Wells Services, Inc, along with all related
interest.

On August 13, 2007, UPDA acquired 100,000,000 shares of the Company’s common stock in a private transaction with Karen Sandhu in
exchange for 10,000 shares of UPDA’s $1,000.00 Par Value Class B Convertible Preferred Stock having an aggregate value at par of
$10,000,000. This transaction brought Ms. Sandhu’s ownership down from 141,000,000 common shares to 41,000,000 common shares as of
December 31, 2007. On August 13, 2007, UPDA returned the 100,000,000 acquired shares to the Company and those shares were cancelled
by the Company.

The UPDA Class B Convertible Preferred Stock received by Karen Sandhu had a fair value based on the underlying UPDA Common Stock
trade price of $.04 on August 13, 2007 of $8,000,000, assuming this Preferred Stock was converted. Based upon the Common Stock of
UPDA outstanding at September 30, 2007, Karen Sandhu would have held approximately 200,000,000 of UPDA’s Common Stock if the
10,000 B Convertible Preferred Shares were converted by her. If the Preferred Stock had been converted to UPDA Common Stock as of
December 31, 2007 she would have controlled approximately 19% of UPDA’s Common Stock outstanding on that date. The reader of these
Company financial statements should consult UPDA’s 10KSB filing to better understand the exchange transaction, which the Parent Entity
has accounted for as an additional step in a “Step Acquisition” of its Continental Fuels, Inc. subsidiary.

F-20

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7. RELATED PARTY TRANSACTIONS (continued)

On September 9, 2007, Continental Fuels, A.V.V. appointed Timothy Brink as president, Luis Bautista as vice-president, and Ernesto
Haberer as director of its board.

On October 12, 2007, the Company repaid $500,000, representing the full amount of the $400,000 note plus the related $100,000 of interest
on a note owed to Triple Crown Consulting, a minority shareholder in a UPDA subsidiary. On October 23, 2007, the Company repaid
$500,000, representing the full amount of a demand note payable in the amount of $400,000 to RAKJ Holdings, Inc. plus interest of
$100,000, which interest was due within 30 days of the execution date of the note. The shareholders of RAKJ Holdings, Inc. also provided,
through Benka Partners and Joan Partners, a pledge of collatera l in the form of a certificate of deposit for lines of credit aggregating
$1,800,000 (See Note 16).

On December 20, 2007, UPDA executed a promissory note receivable of $250,000 to Geer bearing interest of 5% per annum and payable on
demand for funds received by UPDA from Geer. As of December 31, 2007, the balance to be received by Geer is $250,402, which includes
accrued interest.

NOTE 8. SHAREHOLDERS’ EQUITY

On February 6, 2007, the Company issued 141,000,000 restricted shares of its $.001 Par Value Common Stock to Ms. Karen Sandhu for
$200,000 in cash. The trading price on the date of issuance was $.34. The Company used the proceeds from this offering to pay outstanding
debts and liabilities of the predecessor entity, Coronado Industries, Inc. in contemplation of the re-organiz ation of the Company and its
consolidation and merger with Universal Property Development Acquisition, Inc. and its subsidiaries as discussed in Note 14.

On February 25, 2007, the Board of Directors approved the conversion of an aggregate of three hundred thousand dollars ($300,000) of an
outstanding note of the Company payable to Mathews Investment, LLC (the “Note”) into shares of the Company’s common stock. The
conversion price of the shares of common stock to be issued was valued at $0.001 per share by the Company’s Board of Directors. In March
2007 Company’s Board of Directors cancelled the conversion of the Note with the consent of the Noteholder and terminated plans to issue
25,000,000 shares of common stock. The Company is in the process of issuing an aggregate of 32,042,928 shares of its $.001 Par Value
Common Stock to Mathews Investment, LLC from the conversion of notes payable with a face value of $300,000. The fair value of the
Company Common Stock to be received by Mathews Investment, LLC, which is based upon the trading price of Company Common Stock
on the dates the Company agreed to convert each $100,000 portion of the notes payable totaled $91,375,329. Accordingly, the conversion of
the aforementioned notes payable into Common Stock has resulted in a total “Debt Conversion Costs” of $91,056,436 being charged to
Operations during the year ended December 31, 2007. As of December 31, 2007, all outstanding notes owed to Mathews Investment, LLC
were settled. Through December 31, 2007, the Company issued 23,251,440 out of the aggregate of 32,042,928 of its $.001 Par Value
Common Stock that the Company is committed to issuing to Mathews Investments LLC.

On April 13, 2007, the Company’s Board of Directors approved a 3-for-1 stock split (the “Forward Stock Split”) of all of the Company’s
common stock. Pursuant to the terms of the Forward Stock Split, each share of the Company’s common stock held by shareholders of record
on April 13, 2007, on April 20, 2007 automatically became the equivalent of 3 shares of post-Forward Stock Split common stock of the
Company. The Forward Stock Split did not change the number of shares of common stock authorized under the Company’s Articles of
Incorporation or change the par value per share of its common stock. All share and per share information included in these consolidated
financial statements have been adjusted to give retroactive effect of the Forward Stock Split.

On Apri l 23, 2007, the Board of Directors of the Company adopted a resolution providing for the designation, rights, powers and preferences
and the qualifications, limitation and restrictions of 500,000 shares of Series A Convertible Preferred Stock (the “Series A Preferred”). Each
share of the Series A Preferred is convertible into 10,000 shares of the Company’s common stock. In the event of a stock dividend, stock
split, reclassification, reorganization, consolidation or merger, adjustments in the conversion ratio will be made in a manner which will
provide the preferred holders, upon full conversion into common stock, the same percentage ownership of the Company that existed
immediately prior to such action. The Series A Preferred has the same voting rights as the common stock, on an as converted basis, with the
preferred holders having one vote for each share of common stock into which their Series A Preferred is convertible. The Series A Preferred
has a liquidation preference over the Company’s common stock up to the one-hundred dollars ($100) per share.

F-21

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. SHAREHOLDERS’ EQUITY (continued)

On April 23, 2007, the Company closed a business combination transaction pursuant to a Stock Purchase Agreement (the "SPA") dated April
20, 2007, by and among the Company and UPDA. Pursuant to the SPA, the Company acquired one hundred percent (100%) of the capital
stock of US Petroleum Depot, Inc. and Continental Trading Enterprizes, Inc. f/k/a UPDA Texas Trading (the "Subsidiaries"), two private
Nevada Corporations and wholly-owned subsidiaries of UPDA. The consideration paid by the Company for the Subsidiaries consisted of
$2,500,000 in cash, payable within 30 days, and 50,000 shares of our Series A Preferred stock valued at $5,000,000 (the "Preferred Stock").
The Preferred Stock is currently convertible into 500,000,000 shares of our common stock and UPDA has the right to v ote the shares of
Preferred Stock on an "as converted" basis in any matters for which the holders of our common stock are entitled to vote.

Subsequent to the closing of the SPA transaction, the Company and UPDA mutually agreed to extend the due date for the payment of the
$2,500,000 cash portion of the consideration described above. In connection with the agreement to extend the due date, the Company paid
$150,000 in cash to UPDA and executed a promissory note payable that was due to be paid on June 18, 2007 to UPDA for $2,350,000. The
note is now due and payable on demand and bears an interest rate of 5%. As of December 31, 2007, $1,800,000, plus interest, is due to be
paid to UPDA (See Note 12).

Also on April 23, 2007, the Company completed the issuance of 50,000 shares of our Series A Convertible Preferred Stock (the "P referred
Stock") to UPDA in a private transaction (the "Issuance"). The 50,000 shares of the Company’s Preferred Stock issued were valued at
$5,000,000 under the terms of the SPA. On that date, the Company had approximately 149,815,833 shares of common stock issued and
outstanding. As a result of the issuance of the Preferred Stock to UPDA, on an "as converted" basis, UPDA had the power to vote
500,000,000 shares of our common stock. Therefore, UPDA currently has the power to control the vote of approximately 81% of the
common stock of the Company.

The issuance of the Preferred Stock to UPDA therefore constitutes a change of control transaction for the Company as UPDA owns a
majority of the outstanding voting securities of the Company. Although the Company is now a majority owned subsidiary of UPDA, the
Company intends to continue to comply with its public reporting obligations.

Pursuant to the terms of the SPA on April 23, 2007, Kamal Abdallah, the CEO, President and board member of UPDA, and Christopher
McCauley, the Vice-President, Secretary and board member of UPDA, were appointed as members of the Board of Directors of the Company
to fill vacancies thereon.

On April 25, 2007, the Board of Directors approved the conversion of $100,000 of the $300,000 outstanding Notes owed to Mathew
Investments LLC into shares of the Company’s common stock. Based upon the assets and capitalization of the Company on April 25, 2007,
the conversion price of the shares of common stock to be issued upon this conversion of the Notes were valued at $0.012 per share by the
Company’s Board of Directors. This conversion of N otes to common stock will result in the issuance by the Company of an aggregate of
8,326,115 shares of its common stock. (See Notes 12 and 15).

On June 14, 2007, the Board of Directors approved the conversion of an additional $100,000 of the $300,000 outstanding Notes owed to
Mathew Investments LLC into shares of the Company’s common stock. Based upon the assets and capitalization of the Company on June 14,
2007, the conversion price of the shares of common stock to be issued upon this conversion of the Notes were valued at $0.009 per share by
the Company’s Board of Directors. This conversion of Notes to common stock will result in the issuance by the Company of an aggregate of
11,101,487 shares of its common stock. (See Notes 12 and 15).

F-22

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. SHAREHOLDERS’ EQUITY (continued)

On August 1, 2007, UPDA converted 2,000 shares of its Series A Preferred stock into 20,000,000 shares of the Company’s common stock, of
which 18,177,918 shares were distributed to the common shareholders of UPDA as a special distribution of assets. The remaining 1,822,082
shares were issued to UPDA. The management and directors of UPDA received 2,621,464 shares of the distributed Continental shares for
their prorated common share ownership in UPDA.

On August 13, 2007, UPDA acquired 100,000,000 shares of the Company’s common stock in a private transaction with Karen Sandhu in
exchange for 10,000 shares of UPDA’s $1,000.00 Par Value Class B Convertible Preferred Stock having an aggregate value at par of
$10,000,000. On August 13 , 2007, UPDA returned the 100,000,000 acquired shares to the Company and those shares were cancelled by the
Company. As a result of the aforementioned transaction, Karen Sandhu held 41,000,000 shares restricted Company’s Common Stock on
August 13, 2007 after the transaction. At December 31, 2007, Karen Sandhu continued to hold those 41,000,000 of the Company’s Common
Stock. As of March 31, 2008, Karen Sandhu has disposed of 10,000,000 shares and now holds 31,000,000 of the Company’s Common Stock.

The UPDA Class B Convertible Preferred Stock received by Karen Sandhu had a fair value based on the underlying UPDA Common Stock
trade price of $.04 on August 13, 2007 of $8,000,000, assuming this Preferred Stock was converted. Based upon the Common Stock of
UPDA outstanding at December 31, 2007, Karen Sandhu would have held approximately 20 0,000,000 of UPDA’s Common Stock if the
10,000 B Convertible Preferred Shares were converted by her. However, none were converted as of December 31, 2007. As of March 31,
2008, Karen Sandhu converted 3,000 out of the 10,000 UPDA Class B Convertible Preferred Shares into 60,000,000 of its Common Stock
shares. The reader of these Company financial statements should consult UPDA’s 10KSB filing to better understand the exchange
transaction, which the Parent Entity has accounted for as an additional step in a "Step Acquisition" of its Continental Fuels, Inc. subsidiary.
(See Note 17.)

On August 17, 2007, the Board of Directors approved the conversion of $100,000 of outstanding notes owed to Mathew Investments LLC
into shares of the Company’s common stock. Based upon the assets and capitalization of the Company, the conversion price of the shares of
common stock to be issued upon this conversion of the Notes was valued at $0.009 per share by the Company’s Board of Directors. This
conversion of Notes to common stock will result in the issuance by the Company of an aggregate of 12,615,326 shares of its common stock.
As of December 31, 2007, all outstanding Notes owed to Mathews Investments LLC were settled. (See Notes 12 and 15).

NOTE 9. STOCK OPTIONS PLANS

On January 13, 2003 the Board of Directors approved the 2002 Coronado Industries, Inc. Management Stock Option Plan, effective
December 31, 2002. The Plan authorizes the Company to grant stock options to key employees of the Company. Under the aforementioned
Plan, 90,000 (post-split) shares of common stock were reserved for issuance. During January 2007, all of the options were cancelled or
forfeited.

On September 19, 2003 the Board of Directors approved the 2003 Coronado Industries, Inc. Executive Stock Option Plan. The Plan
authorizes the Company to grant stock options to key employees of the Company. Under the aforementioned Plan, 50,894 (post-split) shares
of common stock were reserved for issuance. During January 2007, all of the options were cancelled or forfeited.

On March 24, 2006 the Board of Directors approved the 2006 Coronado Industries, Inc. Employee Stock Option Plan. The Plan authorizes
the Company to grant stock options to key employees of the Company. Under the aforementioned Plan, 96,000 (post-split) shares of common
stock were reserved for issuance. During January 2007, all of the 96,000 options were cancelled.

On July 20, 2006, the Board of Directors approved the 2006 Coronado Industries, Inc. Employee and Consultant Stock Option Plan. The Plan
authorizes the Company to grant stock options to key employees of the Company. Under the aforementioned Plan, 15,000 (post-split) shares
of common stock were reserved for issuance. During January 2007, all of the 15,000 options were cancelled or forfeited.

F-23

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. STOCK OPTIONS PLANS (continued)

On December 1, 2007, the Board of Directors approved the Continental Fuels, Inc. 2007 Stock Option/Stock Issuance Plan. The Plan
authorized the Company to grant stock and stock options to (i) employees, (ii) non-employee members of the Board or the non-employee
members of the board of directors of any Parent or Subsidiary, and (iii) consultants and other independent advisors who provide services to
the Corporation (or any Parent or Subsidiary). Under the aforementioned Plan, 20,000,000 shares of common stock were reserved for
issuance. On December 1, 2007 the Board of Directors granted Timothy Brink 10,000,000 in stock options at the exercise price of $.33 per
share.

The following table sets forth certain information concerning the stock options granted du ring the 2007 fiscal year to the Company’s chief
executive officer.

Exercise

Average

Price

Contractual

Fair

Intrinsic

Shares

per Share

Term (1)

Value

Value (2)

Outstanding December 1, 2007

Granted	10,000,000	0.33	10	3,213,908
Exercised	-	-	-	-	-
Forfeited or expired	-	-	-	-	-


Outstanding December 31, 2007	10,000,000	$	0.33	10	$	3,213,908	$	-

Exercisable December 31, 2007	-	$	-	-	$	-	$	-

________________

(1)	Remaining contractual term is presented in years.

(2)	The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of our common stock as of December 31, 2007, for those awards that have an exercise price currently below the closing price as of December 31, 2007. Awards with an exercise price above the closing price as of December 31, 2007 are considered to have no intrinsic value.

NOTE 10. INCOME TAXES

As of December 31, 2007 and 2006, the components of deferred income taxes are as follows:

Net operating loss carryforward	$	40,570,359

Differences resulting from use of cash basis for tax purposes		-

Total deferred tax assets		40,570,359

Less valuation allowance		(40,570,359)

Net deferred tax assets	$	-

The Company has provided a full valuation allowance on its deferred tax asset as of December 31, 2007.

F-24

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. INCOME TAXES (continued)

Reconciliation of the differences between the statutory tax rate and the effective tax rate is:

		December 31,
		2007
Federal statutory tax rate		34.0%
State Tax Rate		1.2%
Effective Tax Rate		35.2%
Valuation Allowance		(35.2)%
Net Effective Tax Rate		--

As of December 31, 2007, the Company has a net operating loss carryforward of $115,256,070 expiring through 2027. The Company has
provided a valuation allowance against the full amount of the deferred tax asset due to management’s uncertainty about its realization.
Furthermore, the net operating loss carry forward may be subject to further limitation pursuant to Section 382 of the Internal Revenue Code.

NOTE 11. COMMITMENTS

Operating Leases

The Company moved operations to new facilities in November 2004 at which time the Company entered into a new non-cancelable lease
agreement for office space in Fountain Hills, Arizona commencing December 1, 2004 through December 15, 2009. Monthly rent payments
are $4,520. In January 2007, as part of the sale of the Registrant’s assets, th is lease was assigned to G. Richard Smith.

On August 22, 2006 US Petroleum Depot, Inc. entered into a rental lease agreement with Brownsville Navigation District of Cameron
County, Texas for a term of five years payable semi-annually in installments of $9,801. The leased property is for the sole purpose of
shipping and receiving oil products.

In April 2007, the Registrant entered into a one year lease for approximately 430 square feet of space at a monthly rent of $1,988. The
Registrant’s address is 9901 IH 10 West, Suite 800, San Antonio, Texas 78230.

In April 2007, the Registrant entered into a one year lease for two offices spaces at an aggregate monthly rent of $3,100. The Registrant’s
address is San Felipe Plaza, 5847 San Felipe, Houston, Texas 77057.

In Ju ly 2007, the Company entered into an agreement with Serafina De Los Santos and Rosi Chavez to lease a condominium at South Padre
Island, Texas from August 1, 2007 to March 1, 2008 for a monthly rent of $3,000.

In December 2007, the Registrant entered into a five year lease with Texas Tower Limited for 3,044 square feet of office space at varying
monthly rents ranging from $5,327 in the first year to $6,342 in the fifth year. The Registrant’s address is 600 Travis, Suite 6910, Houston,
Texas 77002.

Future minimum lease payments under the Company’s operating leases as of December 31, 2007 are as follows:

Years Ending December 31,		Amounts
2008	$	88,172
2009		86,063
2010		89,107
2011		85,617
2012 and after		88,276
	$	437,235

F-25

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. COMMITMENTS (continued)

For the years ended December 31, 2007 and 2006, rent expense under the lease agreements was $110,476 and $54,260, respectively.

Company Promotion Program

On March 15, 2007, the Company entered into an agreement with Crosscheck Capital, LLC (“Crosscheck”) to pay $525,000 to prepare and
distribute to no less than 500,000 US residents an informational mailing package that prominently features a report on the company. As of
December 31, 2007, the Company has remitted the full amount of the advance retainers due to Crosscheck.

Employment Agreements

On December 12, 2007, the Company entered into an employment agreement with Ms. Lori Geer Smith. Under the terms of her Employment
Agreement, Ms. Smith shall have such title and responsibilities as are determined by the Geer board of directors. Ms. Smith’s Employment
Agreement has an initial term of one (1) year and a base salary of $80,000 per year.

On December 12, 2007, the Company also entered into an employment agreement with Mr. Ronnie Smith. Under the terms of his
Employment Agreement, Mr. Smith shall have such title and responsibilities as are determined by the Geer board of directors. Mr. Smith’s
Employment Agreement has an initial term of one (1) year and a base salary of $80,000 per year.

On December 1, 2007, the Company entered into a three year Employment Agreement with Timothy Brink to continue serving as the
Company’s president and CEO for the annual base salary of $180,000 adjustable at any time, a discretionary bonus of up to $600,000 a yea r,
and the option to purchase 10 million shares of Continental’s common stock. On each successive anniversary of the Employment
Agreement, Mr. Brink shall be granted additional options as the Board determines.

Future minimum payments under the Company’s employment agreements as of December 31, 2007 are as follows:

Years Ending December 31,		Amounts
2008	$	333,333
2009		180,000
2010		165,000
	$	678,333

F-26

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. NOTES AND LOANS PAYABLE

As of December 31, 2007 and December 31, 2006, notes payable consist of the following:

Secured Sheridan Asset Management Loans
Terms and to Whom Payable		December 31,		December 31,
Term Loan		2007		2006
15% per annum term loan payable and 5% payment-in-kind interest to Sheridan Asset Management LLC long-term promissory note dated December 11, 2007, in the original amount of $5,500,000 and due December 11, 2010, net of deferred cost of $2,315,997. The promissory note arose out of the Geer Tank Trucks, Inc. acquisition described in Note 3. The promissory note requires 6 monthly principal payments of $100,000 each commencing on January 01, 2008; and 30 monthly principal payments of $150,000 each commencing on July 1, 2008; with a principal payment at maturity of $400,000. The 15% per annum interest and the 5% payment-in-kind interest are also payable monthly at the same time the payment of principal is due.	$	3,184,003		-
Revolving Loan
20% per annum revolving promissory note payable in the original amount of $2,207,261 borrowed on December 11, 2007. The loan, which is due on December 11, 2010, net of deferred cost of $1,263,270, is provided by Sheridan under a $3,000,000 line of credit expiring on December 11, 2010. The Company is required to pay Sheridan a 10% unused line fee to the extent that borrowings outstanding under the line by the Company to Sheridan are less than $3,000,000.
Both the 20% per annum interest on the revolving loan and the 10% unused line fees are payable on a monthly basis to Sheridan. Advances received by the Company under the line are tied by formula to a borrowing base dependant on cash, eligible accounts receivable and inventory. Changes in the borrowing base may result in the need to reduce outstanding borrowing under the revolving line by the Company.		943,991		-

Both the long term promissory note and the revolving promissory note are jointly secured under a security agreement that provides for the pledge of all of Company’s assets. In addition these obligations are jointly secured by a cross-corporate guaranty furnished by UPDA (the Company’s parent entity).

Loan Compliances
The revolving promissory note imposes certain negative covenants on the Company related to repurchase, redemption and dividends on common stock or other equity securities of the Company and its wholly owned subsidiaries; limitations on the fair value of Company’s securities issuances to individuals and requires lender approval on Company merger or acquisition activities or management changes. Other covenants to be met by the Company include minimum net worth and earnings before interest, taxes and depreciation (“EBITDA”).

The long term promissory note contains provisions relating to change in Company control and negative covenant provisions similar to those contained in the revolving promissory note described in the preceding paragraph, as well as minimum net worth and EBITDA requirements.

At December 31, 2007 and subsequent to the date of issuance of these consolidated financial statements, the Company remains in compliance with the negative and other covenants described in preceding paragraphs.

Net notes payable to Sheridan Asset Management	$	4,127,994	$	-
Current portion	$	728,001	$	-
Long-term portion		3,399,993		-
	$	4,127,994	$	-

F-27

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. NOTES AND LOANS PAYABLE (continued)

The maturities of the Sheridan debt at December 31, 2007 are as follows:
Years Ending
December 31,		Total Amount		Term Loan		Revolving Loan
2008	$	728,001	$	728,001	$	-
2009		1,028,001		1,028,001		-
2010		2,371,992		1,428,001		943,991
	$	4,127,994	$	3,184,003	$	943,991

Others		December 31,		December 31,
		2007		2006
As of December 31, 2007 and December 31, 2006, notes payable consist of the following:
10% per annum advances received from Brainard Management Associates, principal and interest payable on demand as bridge financing in pending change of control of Company (B)	$	550,000	$	-
15% per annum note formerly payable to Robert Suliot and now payable to Dion Lorenzo, principal and interest payable on demand, through December 31, 2006, convertible into 700,000 shares of common stock (B)		25,000		25,000
15% per annum note formerly payable to Robert Suliot and now payable to Dion Lorenzo, principal and interest payable on demand, through December 31, 2006, convertible into 700,000 shares of common stock (B)		25,000		25,000
15% per annum note formerly payable to Robert Suliot and now payable to Dion Lorenzo, principal and interest payable on demand, through December 31, 2006, convertible into 2,000,000 shares of common stock (B)		50,000		50,000
10% per annum note payable to Clinreg Consulting Services, principal and interest due on February 15, 2007 guaranteed by an officer		-		32,349
8% per annum note payable to CAA Premium Finance, LLC, principal and interest due on first day of each succeeding month until paid in full.		94,197		-
Total	$	744,197	$	132,349

Related parties:
Companies’ Parent Entity and Certain of Its Wholly-Owned Subsidiaries
Terms and to Whom Payable		December 31,		December 31,
		2007		2006
5% per annum note payable to Companies’ Parent Entity, Universal Property Development and Acquisition, Inc. ("UPDA"), principal and interest payable on demand	$	2,350,000	$	-
Intercompany account non-interest bearing balance payable to UPDA		1,022,560		-
Intercompany account non-interest bearing balance payable to UPDA-Operators, a wholly-owned subsidiary of UPDA		656,276		-
		4,028,836		-
Less:
Company repayments to UPDA since the extension of the now past due date		(550,000)		-
Unilateral reduction in the original purchase price to the Company for the UPDA subsidiaries, principally storage facility, assets originally transferred to the Company by UPDA (See Note 14)		(740,000)
		2,738,836		-
Less: Loss on recapitalization of Continental’s Stockholders’ Equity section - reserve for liabilities to UPDA with payment contingent on future profitability of Continental (See Note 14)		(2,736,541)
Total	$	2,295	$	-

F-28

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. NOTES AND LOANS PAYABLE (continued)

Other Relationships
As of December 31, 2007 and December 31, 2006, notes payable to related parties consist of the following:
Terms and to Whom Payable		December 31,		December 31,
		2007		2006
5% per annum note payable to Kamal Abdallah, Chairman, principal and interest due on demand after February 1, 2008		100,000		-
16% per annum note payable to G. Richard Smith, former Chairman and stockholder in its predecessor entity, principal and interest due March, 2007 (A)		-		300,000
18% per annum note payable to a stockholder, principal and interest due on demand; unsecured		-		2,000
15% per annum notes payable to stockholders, principal and interest due at various times		-		31,375
Total	$	100,000	$	333,375

(A)	- Notes payable to related parties for $300,000 was sold by G. Richard Smith, former Chairman, on January 26, 2007 to an outside party, Mathews Investments LLC. Therefore the note is no longer owed to a related party, but still remained a liability of the Company.
	As discussed in Notes 8 and 15, below is a summary of Common Stock issued in conversion for $300,000 of notes payable to Mathews Investments, LLC:
	On April 25, 2007, the Board of Directors approved the conversion of $100,000 of the $300,000 outstanding notes owed to Mathew Investments LLC into shares of the Company’s common stock. Based upon the assets and capitalization of the Company, the conversion price of the shares of common stock to be issued upon this conversion of the Notes was valued at $0.012 per share by the Company’s Board of Directors. This conversion of Notes to common stock will result in the issuance by the Company of an aggregate of 8,326,115 restricted shares of its common stock.
	On June 14, 2007, the Board of Directors approved the conversion of an additional $100,000 of the $300,000 outstanding notes owed to Mathew Investments LLC into shares of the Company’s common stock. Based upon the assets and capitalization of the Company, the conversion price of the shares of common stock to be issued upon this conversion of the Notes was valued at $0.009 per share by the Company’s Board of Directors. This conversion of Notes to common stock will result in the issuance by the Company of an aggregate of 11,101,487 restricted shares of its common stock.
	On August 17, 2007, the Board of Directors approved the conversion of the final $100,000 of the $300,000 outstanding notes owed to Mathew Investments LLC into shares of the Company’s common stock. Based upon the assets and capitalization of the Company, the conversion price of the shares of common stock to be issued upon this conversion of the Notes was valued at $0.008 per share by the Company’s Board of Directors. This conversion of Notes to common stock will result in the issuance by the Company of an aggregate of 12,615,326 restricted shares of its common stock.
(B)	- Per the Sale of Assets agreement, between a former officer/director in the predecessor entity, Coronado Industries, Inc., interest is to be accrued on these notes from the date that they are transferred to the Continental Fuels. As of December 31, 2007, $55,219 of interest has been accrued.

NOTE 13- CHANGE IN DIRECTORS & OFFICERS

On January 26, 2007, Mr. G. Richard Smith, Mr. Gary R. Smith and Mr. Mark R. Smith resigned from the Board of Directors of the
Registrant and from all executive officer positions held by them with the Registrant.

On January 26, 2007, the Board of Directors of the Registrant appointed Mr. Peter Gelb to serve as a director of the Registrant to fill a
vacancy on the Board of Directors that was created by the prior resignation of Dr. John T. LiVecchi.

On January 26, 2007, Mr. Peter Gelb was appointed to serve as the Chief Executive Officer, President, Chief Accounting Officer and
Treasurer of the Registrant.

On January 26, 2007, the Board of Directors of the Registrant appointed Mr. Marco Gutierrez to serve as a director of t he Registrant to fill a
vacancy on the Board of Directors.

F-29

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13- CHANGE IN DIRECTORS & OFFICERS (continued)

On January 26, 2007, Mr. Marco Gutierrez was appointed to serve as the Secretary of the Registrant.

On February 26, 2007, Mr. Peter Gelb submitted to the Registrant his resignation from all his executive officer positions with the Registrant,
including his position as Chief Executive Officer of the Registrant. Mr. Gelb’s resignation as Chief Executive Officer became effective on
March 1, 2007. Mr. Gelb continued as a director of the Registrant and remains the Chairman of the Registrant’s Board of Directors.

On February 26, 2007, the board of directors of the Registrant approved the appointment of Mr. Timothy Brink as Chief Executive Officer,
President and Chief Financial Officer of the Registrant, which appointment became effective on March 1, 2007.

On March 14, 2007 Company announced the appointment of Ernesto Haberer as Vice President of Business Development.

On April 23, 2007, Kamal Abdallah, the CEO, President and board member of UPDA, and Christopher McCauley, the Vice-President,
Secretary and board member of UPDA, were appointed as members of the Board of Directors of the Company to fill vacancies thereon.

On November 21, 2007, Mr. Marco Gutierrez and Mr. Peter Gelb both resigned from the Board of Directors of the Registrant. On the same
date, Mr. Timothy Brink, the Company’s current President and Chief Executive Officer, was appointed to serve as director to fill the
vacancy. The Board of Directors also appointed Mr. Kamal Abdallah to serve as Chairman of the board, while Mr. Christopher McCauley
was appointed Secretary.

The Board of Directors of the Registrant currently consists of three members, Mr. Kamal Abdallah, Mr. Timothy Brink, and Mr. Christopher
McCauley. The full Board of Directors of the Registrant consists of five seats. Currently, two seats of the Registrant’s Board of Directors are
vacant.

NOTE 14 - RECAPITALIZATION TRANSACTION

Since UPDA had a post-SPA transaction 77% voting interest, applicable GAAP and related-party transaction theory dictates that the
substance of the transaction from UPDA’s perspective and in consolidation is a recapitalization. EITF 88-16 states that absent a 50% change
in voting control there is no step-up or goodwill to be recognized. Pre-transaction, UPDA owned 100% of UPDA Texas Trading, Inc., nka
Continental Trading Enterprizes, Inc. and US Petroleum Depot and pos t-transaction UPDA obtained 77% of the voting rights of Continental,
hence the requisite 50% change of control occurred. Therefore, there is no immediate step-up or goodwill recognition.

The Codification of SEC Staff Accounting Bulletins Topic 5U specifies that no gain be recognized on the sale of assets to a thinly capitalized
entity, particularly when the purchasing entity’s assets consist principally of assets acquired from the seller. Gain is to be deferred until it is
reasonably assured. The SAB states that the deferred gain should be noted parenthetically as a deduction from the related asset. Accordingly,
UPDA has deferred recognition of any gain on the sale of assets in its financial statements filed on its Form 10QSB for the twelve months
ended December 31, 2007. Since the principal asset acquired in this transaction by the Company wa s an oil storage facility with a historical
cost basis of approximately $1,125,000 paid for in cash by UPDA prior to the acquisition, the Company has reflected a deferred loss of
$2,736,541, resulting from the fact that the convertible preferred shares issued to UPDA by the Company exceeded the book value of net
assets acquired by the Company, as a reduction in notes and loans payable by the Company to UPDA, as parent entity, and certain of its
wholly-owned subsidiaries. Essentially, the deferred loss has been offset against the debt because payment of the debt by the Company to
UPDA and its wholly-owned subsidiaries is dependent upon the future profitability of the Company. Therefore, the Company’s recording of
the Recapitalization Transaction is consistent with the handling of the transaction by UPDA.

F-30

CONTINENTAL FUELS, INC.

(FORMERLY CORONADO INDUSTRIES, INC.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 - DEBT CONVERSION COSTS

As discussed in Notes 8 and 12, the Company is in the process of issuing an aggregate of 32,042,928 of its $.001 Par Value Common Stock
to Mathews Investment, LLC from the conversion of notes payable with a face value of $300,000. The conversion of the aforementioned
notes payable into Common Stock has resulted in “Debt Conversion Costs” of $91,056,436 being charged to Operations during the year
ended December 31, 2007. Through December 31, 2007, the Company issued 23,251,440 out of the aggregate of 32,042,928 of its $.001
Par Value Common Stock that the Company is committed to issuing to Mathews Investments LLC.

NOTE 16 - SECURED LINE OF CREDIT PAYABLE

On March 6, 2007, Continental Trading Enterprizes, Inc. entered into a Line of Credit agreement with Inter National Bank under which a line
totaling $1,000,000 was established for financing relating to petroleum products sales made to third party customers. On April 10, 2007, an
additional $350,000 was added to the existing Line of Credit. On July 6, 2007, Continental Trading Enterprizes, Inc. received an additional
$450,000 towards the existing Line of Credit. On October 19, 2007, an additional $400,000 was added to the existing Line of Credit. The
Line of Credit expired in March 2008 and was subject to a 5% late fee. Amounts due under the line were secured by a pledge of collateral on
behalf of Continental Trading Enterprizes, Inc. in the form of a certificate of deposit by Benka Partners and Joan Partners (the "Pledgors").
Effective, September, 2007 the Pledgors shall each receive $.50 per barrel upon payment to the Compan y from sales to third parties but only
when the transaction shows positive gross margins on the sale.

On December 12, 2007, Continental Trading Enterprizes, Inc. was liable for a series of disbursements under the line aggregating $2,200,000,
which bears interest ranging from 7.13% to 7.25% per annum. The amounts disbursed were used by Continental Fuels and Continental
Trading Enterprizes, Inc. to make the payments needed for a contracted purchase of certain petroleum products by Continental Trading
Enterprizes, Inc. for resale to third parties. As consideration for the pledge, the Company agreed that the Pledgors shall each receive $.25 per
barrel upon payment to the Company from sale to third parties but only when the transaction shows positive gross margins on the sales.

Concurrent with the Term Loan received from Sheri dan on December 12, 2007 to finance the acquisition of Geer, the Company also entered
into a Revolving Line of Credit with Sheridan in the amount of $3,000,000 at an interest rate of 20% per annum on the amount used and 10%
per annum on the unused portion commencing on January 1, 2008. On December 13, 2007, the Company used $2,207,261 of the $3,000,000
available to fully repay the balance owed to Inter National Bank for the Line of Credit used by Continental Trading Enterprizes, Inc. As of
December 31, 2007, $792,739 of the Sheridan Revolving Line remains unused.

NOTE 17 - SUBSEQUENT EVENTS

Through March 31, 2008, the Company issued an additional 4,775,000 out of the aggregate of 32,042,928 of its $.001 Par Value Common
Stock that the Company was committed to issuing to Mathews Investments LLC in the fourth quarter of 2007.

As of March 31, 2008, Karen Sandhu has disposed of 10,000,000 Common Stock shares and now holds 31,000,000 of the Company’s
Common Stock.

As of March 31, 2008, Karen Sandhu converted 3,000 out of the 10,000 UPDA Class B Convertible Preferred Shares into 60,000,000 of its
Common Stock shares.

F-31

Continental Fuels Inactive 10-12BRegistration of securities