UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012

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

Commission File #333-74638

ADINO ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

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

2500 CITY WEST BOULEVARD, SUITE 300 HOUSTON, TEXAS		77042
(Address of principal executive offices)		(Zip Code)

(281) 209-9800

(Registrant's telephone number, including area code)

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

Common stock, $0.001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes x No

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ Yes x No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨ Yes x No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer,” accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if smaller reporting company)

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

Yes x No ¨

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently competed second fiscal quarter: At June 30, 2012, the market price of all voting and non-voting common equity held by non-affiliates by reference to the closing price of the Company’s stock on such date was $297,776.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: At April 16, 2013, there were 156,249,331 shares of common stock outstanding.

TABLE OF CONTENTS

		Page No.
PART I
Item 1.	Business	3
Item 2.	Properties	7
Item 3.	Legal Proceedings	7

PART II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	8
Item 6	Selected Financial Data	9
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	14
Item 8	Financial Statements and Supplementary Data	15
	Report of Independent Registered Public Accounting Firm	15
	Consolidated Balance Sheets - December 31, 2012 and December 31, 2011	16
	Consolidated Statements of Operations- Years Ended December 31, 2012 and 2011 and the period from November 1, 2012 (re-entry to development stage) to December 31, 2012	17
	Consolidated Statement of Changes in Stockholders’ Deficit - Years Ended December 31, 2012 and 2011	18
	Consolidated Statements of Cash Flows- Years Ended December 31, 2012 and 2011 and the period from November 1, 2012 (re-entry to development stage) to December 31, 2012	19
	Notes to Consolidated Financial Statements	20

Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	44
Item 9A	Controls and Procedures	44
Item 9B	Other Information	45

PART III

Item 10	Directors, Executive Officers and Corporate Governance	45
Item 11	Executive Compensation	46
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	47
Item 13	Certain Relationships and Related Transactions, and Director Independence	48
Item 14	Principal Accounting Fees and Services	48

PART IV

Item 15	Exhibits, Financial Statement Schedules	48

Signatures		50

PART I

ITEM 1. DESCRIPTION OF BUSINESS

ORGANIZATION AND GENERAL INFORMATION ABOUT THE COMPANY

Adino Energy Corporation ("Adino", we” or the "Company"), is an emerging oil and gas exploration and production company focused on mature oilfield assets with significant redevelopment, workover and enhanced oil recovery (“EOR”) potential.

Adino was incorporated under the laws of the State of Montana on August 13, 1981, under the name Golden Maple Mining and Leaching Company, Inc. In 1985, the Company ceased its mining operations and discontinued all business operations in 1990. The Company then acquired Consolidated Medical Management, Inc. (“CMMI”) and kept the CMMI name. The Company initially focused its efforts on the continuation of the business services offered by CMMI. These services focused on the delivery of turn-key management services for the home health industry, predominately in south Louisiana. The Company exited the medical business in December 2000. In August 2001, the Company decided to refocus on the oil and gas industry. In 2003, we decided to cease our oil and gas activities and focus on becoming a fuel company. In 2010, the Company began focusing on oil and gas exploration and production.

The Company’s former subsidiary, Intercontinental Fuels, LLC (“IFL”), a Texas limited liability company, was founded in 2003. Adino first acquired 75% of IFL’s membership interests in 2003. The Company acquired 100% ownership of IFL shortly thereafter.

In January 2008, the Company changed its name to Adino Energy Corporation. We believe that this name better reflects our current and future business activities, as we plan to continue focusing on the energy industry.

As of July 1, 2010, the Company acquired PetroGreen Energy LLC, a Nevada limited liability company, and AACM3, LLC, a Texas limited liability company d/b/a Petro 2000 Exploration Co. (together "Petro Energy"). Petro Energy was a licensed Texas oilfield operator operating 11 wells on two leases covering approximately 300 acres in Coleman County, Texas. Petro Energy also owned a drilling rig, two service rigs and associated tools and equipment. The Company also acquired the operator license held by the principal of Petro Energy.

After the acquisition of Petro Energy, the Company created two wholly owned subsidiaries: Adino Exploration, LLC (“Adino Exploration”) and Adino Drilling, LLC (“Adino Drilling”). All oil and gas leases were transferred from the Petro Energy companies to Adino Exploration and future oil and gas exploration acquisitions and activity are to be operated through this company. The large drilling rig acquired in the Petro Energy transaction and other associated drilling machinery and equipment were transferred to Adino Drilling.

In October 2011, Adino signed a letter of intent to purchase all of the assets of Ashton, AOS 1A, and AOS 1-B (collectively, “AOS”). The proposed purchase price for the assets was $6,000,000 in face value of convertible preferred stock of the Company, with the preferred stock converting to common stock at the rate of $0.15 per share. The parties agreed that partial closing of the purchase would occur once the sellers received clear title to the assets subject to the agreement. The first partial closing of purchase occurred on November 3, 2011, and the Company issued 100,000 shares of Adino's Class "B" Preferred Stock Series 1 (the "Preferred Stock"), as follows: 95,534 shares to AOS 1A, and 4,466 shares to AOS 1-B. The Preferred Stock shall be convertible into common shares at AOS 1A or AOS 1-B's option at any time after six months, provided that (a) immediately after the first six months, only 25% of the Preferred Stock may be converted to common stock, and (b) each month thereafter, only up to 12.5% of the Preferred Stock may be converted to common stock. The number of shares of Preferred Stock was chosen to conform to the agreed upon value of $1,500,000 for the assets. The Company later decided not to acquire the remaining AOS assets. On February 7, 2012, the Company sold all oilfield machinery and equipment it had purchased from AOS in its November 2011 acquisition for $500,000.

With the Company’s focus on oil and gas exploration and production, the Company decided to sell its interest in IFL. To that end, on February 7, 2012, Adino sold all of its membership interest in IFL to Pomisu XXI S.L. (“Buyer”). The purchase price to be paid by the Buyer was $900,000, paid in two installments with the first installment of $244,825 paid on February 7, 2012, and the balance due not later than May 7, 2012. The balance of the purchase price shall be computed as follows: $900,000 minus $244,825 (initial installment) minus $655,175 of IFL liabilities assumed and settled by the Buyer. The liabilities included $106,520 in accounts payable, $1,500 to a related party, $110,000 in retained customer deposit and $437,155 for the G J Capital lawsuit judgment (see Note 26 of the Company’s financial statements for a more thorough discussion). The balance due had not been paid as of December 31, 2012 and the full receivable balance has been reserved.

On June 29, 2012, the Company executed a multi-party agreement with the Sellers of the Petro Energy assets and Gator-Dawg Drilling, LLC (“Gator-Dawg”). In the agreement, the Company released the restriction on the 10 million shares of common stock held in escrow on behalf of the Sellers in the Petro Energy purchase in July 2010. In exchange, the Sellers released all claims to the contract clawback agreement, which stated that the Sellers could repurchase the assets sold to the Company for $1.00 if the price of the Company’s stock did not reach $0.25 per share by the specified date. The Company also transferred the membership shares of AACM3, LLC to its former owner, Alex Perales. AACM3, LLC did not hold any assets at the time of transfer. Gator-Dawg agreed to transfer the drilling rig and associated assets purchased from the Company in March 2011 to AACM3, LLC. In exchange for the drilling rig transfer, the Company cancelled the $500,000 note due from Gator-Dawg for purchase of those assets (disallowed for consolidation), executed a $100,000 note payable to Gator-Dawg for rig improvements paid for by Gator-Dawg during its ownership of the rig, and transferred a truck and trailer purchased in early 2012 to Gator-Dawg. The completion of this multi-party agreement extinguished the contract clawback provision at June 29, 2012.

The Company’s Chairman and former Chief Financial Officer have an ownership interest in the Buyer. Exploration’s members approved the sale of assets and the terms of the Agreement as being fair and reasonable. In evaluating the sale of Exploration’s assets, including the determination of an appropriate purchase price paid, the Company considered a variety of factors, including the estimated future net oil reserves of the oil and gas leases, comparable sales of other oil and gas leases in the area, and the value of the equipment sold.

On October 31, 2012, Shannon McAdams, the Company’s chief financial officer, resigned his employment with the Company and with Adino Exploration, LLC.

DESCRIPTION OF BUSINESS

Oil and Gas Exploration and Production

The Company is an emerging oil and gas exploration and production (“E&P”) company publicly traded under the symbol ADNY on the OTCQB quotation service operated by OTC Markets Group, Inc. The Company is focused on mature oilfield assets with significant redevelopment, work-over and EOR potential.

The Company’s subsidiary, Adino Exploration, LLC, is a bonded Texas oil and gas operator that owned and operated leases in Coleman and Runnels counties. The Company owned and operated 776 mineral acres with producing leases representing 64,300 barrels of proven, developed, and producing (“PDP”) reserves. With both a service rig and a drilling rig, Adino Exploration was a fully equipped independent E&P company with substantial growth prospects. Adino focuses on small producing assets with low risk development opportunities. We assemble strong acreage positions by aggregating small leaseholds that are typically overlooked by larger companies. In order to maximize operational efficiency, we look for leases that are geographically concentrated and geologically similar. The Company grew through the drill bit, augmented by opportunistic acquisitions of good quality development acreage. Our success rate for development drilling in this area was 100% through eight wells, growing reserves from 4,600 bbls to 64,300 bbls of oil. The Company’s acreage position grew from 119 acres to 776 acres through acquisition. Consistent with our strategy, we paid very low bonuses for leases in proven areas with good well control. All operations were within 20 miles of Coleman, Texas and had similar geology. Leases were either held by production or had generous primary terms.

Adino Exploration’s management team included managers and technical experts with decades of oil & gas industry experience. They cover all primary disciplines critical to the success of an E&P company, from operations and deal origination through geology and reservoir engineering. Working together since July 2010, Adino Exploration’s management team has produced impressive results. Starting with 4 bopd of production on 119 acres and a hodgepodge of well-used equipment, Adino Exploration had grown into a complete oilfield operator with a rapidly expanding reserve base and prospect inventory. Further, the team’s focus on tight operations and capital efficiency has resulted in a high drilling success rate, high margins per produced barrel, low finding & development (F&D) costs and low average acreage costs for new leases.

When the Company was approached to sell Adino Exploration’s assets in Coleman and Runnels counties, management believed that the price offered afforded the Company a very high rate of return on investment (over 300%) and a chance to move the Company’s business plan forward quickly compared to growing the Company with limited funding due to the constraints of its balance sheet. With little debt, the Company now believes that it can secure debt and equity funding at competitive rates.

The Company is now executing the same successful plan in Texas but has determined that it is ready to expand its footprint to Oklahoma and Kansas as well. The Company is currently assessing several potential target leases in these areas due to lower drilling and production cost and expects to aggressively acquire leases and production in Texas, Oklahoma and Kansas. The Company’s business will stay the same with the exception of much greater acreage accumulation, which we believe will increase the Company’s cash flow and reserve base.

Fuel Storage Operations

With the Company’s focus on oil and gas exploration and production, the Company decided to sell its interest in IFL. To that end, on February 7, 2012, Adino sold all of its membership interest in IFL to Pomisu XXI S.L. (“Buyer”). The purchase price agreed to with the Buyer was $900,000, paid in two installments with the first installment of $244,824.97 paid on February 7, 2012, and the balance due not later than May 7, 2012. The balance of the purchase price was computed as follows: $900,000 minus $244,842.97 (initial installment) minus $655,175 of IFL liabilities assumed and settled by the Buyer. The liabilities included $106,520 in accounts payable, $1,500 to a related party, $110,000 in retained customer deposit and $437,155 for the G J Capital lawsuit judgment (see Item 3 for a more thorough discussion). The balance due had not been paid as of December 31, 2012 and the full receivable balance has been reserved. The Company is considering its legal options to obtain payment of the unpaid amount of the purchase price.

GOVERNMENTAL REGULATIONS / ENVIRONMENTAL MATTERS

Proposals and proceedings that might affect the oil and gas industry are periodically presented to Congress and state legislatures and commissions. We cannot predict when or whether any such proposals may become effective. The petroleum industry is heavily regulated. There is no assurance that the regulatory approach currently pursued by various agencies will continue indefinitely. Notwithstanding the foregoing, we currently do not anticipate that compliance with existing federal, state and local laws, rules and regulations, will have a material or significantly adverse effect upon our capital expenditures, earnings or competitive position.

We are subject to various types of regulation at the federal, state and local levels. This regulation includes requiring permits for drilling wells, maintaining bonding requirements in order to drill or operate wells and regulating the location of wells, the method of drilling and casing of wells, the surface use and restoration of properties upon which wells are drilled, the plugging and abandoning of wells and the disposal of fluids used or generated in connection with operations. Our operations are also subject to various conservation laws and regulations. These include the regulation of the size of drilling and spacing units or proration units and the density of wells which may be drilled and the unitization or pooling of oil and natural gas properties. In addition, state conservation laws sometimes establish maximum rates of production from oil and natural gas wells, generally prohibit the venting or flaring of natural gas and impose certain requirements regarding the ratability of production. The effect of these regulations may limit the amount of oil and natural gas we can produce from our wells in a given state and may limit the number of wells or the locations at which we can drill.

Currently, there are no federal, state or local laws that regulate the price for our sales of crude oil, natural gas, natural gas liquids or condensate. However, the rates charged and terms and conditions for the movement of gas in interstate commerce through certain intrastate pipelines and production area hubs are subject to regulation under the Natural Gas Policy Act of 1978, as amended. Pipeline and hub construction activities are, to a limited extent, also subject to regulations under the Natural Gas Act of 1938, as amended. While these controls do not apply directly to us, their effect on natural gas markets can be significant in terms of competition and cost of transportation services, which in turn can have a substantial impact on our profitability and costs of doing business. Additional proposals and proceedings that might affect the natural gas and crude oil extraction industry are considered from time to time by Congress, and state regulatory bodies. We cannot predict when or if any such proposals might become effective and their effect, if any, on our operations. We do not believe that we will be affected by any action taken in any materially different respect from other crude oil and natural gas producers, gatherers and marketers with whom we compete.

State regulation of gathering facilities generally includes various safety, environmental and in some circumstances, nondiscriminatory take requirements. This regulation has not generally been applied against producers and gatherers of natural gas and crude oil to the same extent as processors, although natural gas and crude oil gathering may receive greater regulatory scrutiny in the future.

Our oil and natural gas production and saltwater disposal operations and our processing, handling and disposal of hazardous materials, such as hydrocarbons and naturally occurring radioactive materials are subject to stringent environmental regulation. Compliance with environmental regulations is generally required as a condition to obtaining drilling permits. State inspectors frequently inspect regulated facilities and review records required to be maintained for document compliance. We could incur significant costs, including cleanup costs resulting from a release of hazardous material, third-party claims for property damage and personal injuries, fines and sanctions, as a result of any violations or liabilities under environmental or other laws. Changes in or more stringent enforcement of environmental laws could also result in additional operating costs and capital expenditures.

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

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

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

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

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

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

EMPLOYEES

As of December 31, 2012, Adino and its subsidiaries have no employees. We have consulting and management arrangements with our officers and have outsourced our other activities. We have contracts with 4 persons, including executive officers and administrative personnel.

COMPETITION

The Company faces competition from other oil and natural gas companies in all aspects of our business, including acquisition of producing properties and oil and natural gas leases, marketing of oil and natural gas, and obtaining goods, services and labor. Most of our competitors have substantially larger financial and other resources than the Company. Factors that affect our ability to acquire producing properties include available funds, available information about prospective properties and our limited number of employees. Competition is also presented by alternative fuel sources including heating oil and other fossil fuels. Renewable energy sources may become more competitive in the future.

The availability of a ready market for and the price of any hydrocarbons produced will depend on many factors beyond our control including, but not limited to, the amount of domestic production and imports of foreign oil and liquefied natural gas, the marketing of competitive fuels, the proximity and capacity of natural gas pipelines, the availability of transportation and other market facilities, the demand for hydrocarbons, the effect of federal and state regulation of allowable rates of production, taxation, the conduct of drilling operations and federal regulation of crude oil and natural gas. In addition, the restructuring of the natural gas pipeline industry virtually eliminated the gas purchasing activity of traditional interstate gas transmission pipeline buyers. Producers of natural gas have therefore been required to develop new markets among gas marketing companies, end users of natural gas and local distribution companies. All of these factors, together with economic factors in the marketing arena, generally affect the supply of and/or demand for oil and natural gas and thus the prices available for sales of oil and natural gas.

FUTURE BUSINESS

Oil and Gas Exploration and Production

To attain its vision, the Company will pursue the following primary strategic goals:

£	To become a leading player in the shallow oil and gas exploration market in Texas, Oklahoma and Kansas;
£	To build Adino Energy Corporation into an industry-recognized brand that is synonymous with efficient and environmentally friendly operations;
£	To build an organization that can fully exploit the industry to achieve market dominance;
£	To build a state-of-the-art publicly traded E&P company that is scalable to other areas of the U.S. oil and gas production markets;
£	To solidify the Company’s lead in oil and gas production markets by locating its subsidiaries in other similar locations in the top onshore oil and gas producing states;
£	To build oil and gas support services in keeping with the demands of acquiring other operators;
£	Increase revenue for Adino and its subsidiaries.

ITEM 2. DESCRIPTION OF PROPERTY

Adino Corporate Offices

Adino’s executive offices are located at 2500 Citywest Boulevard, Houston, Texas. These premises are leased on a month-to-month basis.

Oil and Gas Exploration and Production

The Company currently has no oil and gas properties.

ITEM 3. LEGAL PROCEEDINGS

G J Capital, Ltd. v. Adino Energy Corporation, et. al.

On March 15, 2010, G J Capital, Ltd. (“G J Capital”) filed suit against Adino Energy Corporation and IFL in the 129th Judicial District Court of Harris County, Texas. G J Capital’s claim related to a repurchase agreement whereby IFL sold to G J Capital certain assets for $250,000 and retained the ability to repurchase the assets in sixty days by paying to G J Capital the amount of $275,000. G J Capital’s petition alleged claims of breach of contract, money had and received, and fraudulent misrepresentation. G J Capital later amended its petition to allege that certain of Adino’s directors and officers (Mr. Timothy Byrd and Mr. Sonny Wooley) fraudulently transferred assets of Adino and/or IFL. G J Capital also alleged that Mr. Wooley and Mr. Byrd were the alter ego of Adino and IFL, and/or that Adino and/or IFL were alteregos of one another. G J Capital also alleged fraudulent conduct by one or more of the defendants.

Adino, IFL, Mr. Byrd and Mr. Wooley countersued G J Capital and filed third-party claims against CapNet Securities Corporation (“CapNet”), Daniel L. Ritz, Jr. (“Ritz”), Gulf Coast Fuels, Inc. (“Gulf Coast”) and Paul Groat (“Groat”), alleging that they conspired to damage IFL and Adino by involving it in the transaction described above. In this action, Adino, IFL, Mr. Byrd and Mr. Wooley contended that Ritz, CapNet, Gulf Coast, and Groat were involved together for the common, improper scheme to cause IFL immense financial hardship so that Gulf Coast could acquire the fuel terminal currently leased by IFL at an unfairly low price; that as part of this conspiracy they also effected a settlement of the Gulf Coast claim (which, if true, would mean that G J Capital acquired no claim at all against any of the defendants); and that in addition or in the alternative, even if G J Capital acquired some cognizable interest against IFL, Adino, IFL, Byrd and Wooley are entitled to indemnification by and contribution by Ritz, CapNet, Gulf Coast, and Groat. Adino nonsuited its claims against CapNet, Ritz, Gulf Coast, and Groat in February 2012.

In December 2011, G J Capital dismissed its claims against Mr. Byrd and Mr. Wooley. Also in December 2011, the court rendered judgment for G J Capital and against Adino and IFL in the amount of $250,000, plus $152,988 in attorneys’ fees, $9,300 in court costs, plus $24,867 in prejudgment interest. The Company did not appeal this judgment. In February 2012, the Company paid $200,321 in partial settlement of the amount due. On May 1, 2012, the Company paid the final balance due on the GJ Capital suit, receiving a full release on all liability.

PART II

As of December 31, 2012, Adino had 156,249,331 shares of common stock outstanding. There are approximately 944 holders of record of our common stock.

The Company’s common stock is quoted on the OTCQB operated by OTC Markets Group, Inc.

The following table sets forth certain information as to the high and low bid quotations quoted on the OTCBB and OTCQB for 2011 and 2012. Information with respect to over-the-counter bid quotations represents prices between dealers, does not include retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions.

Period	High		Low
Fourth Quarter 2012	$	0.003	$	0.001
Third Quarter 2012	$	0.002	$	0.001
Second Quarter 2012	$	0.008	$	0.002
First Quarter 2012	$	0.032	$	0.008

Fourth Quarter 2011	$	0.05	$	0.02
Third Quarter 2011	$	0.038	$	0.013
Second Quarter 2011	$	0.038	$	0.015
First Quarter 2011	$	0.05	$	0.02

The source of the above information is Yahoo Finance and OTCmarkets.com.

DIVIDENDS

Holders of the Company’s common stock are entitled to pro rata dividends as declared by the Company’s Board of Directors. We have not paid any dividends on our common stock in the past two fiscal years. We presently intend to retain future earnings to support our growth. Any payment of cash dividends in the future will be dependent upon the amount of funds legally available, our earnings, financial condition, capital requirements, and any other factors which our Board of Directors deems relevant. In the past three fiscal years, we have entered into a series of convertible promissory notes which prohibit us from paying or declaring a dividend on our common stock.

Holders of certain series of the Company’s preferred stock have preferential dividend rights as described below.

The Company has designated three series of its Class B Preferred Stock: Series 1, Series 2, and Series 3.

Dividends for Class B Preferred Stock Series 1 and Class B Preferred Stock Series 2 are payable quarterly on the last days of March, June, September, and December in each year with respect to the quarterly period ending on the day prior to each such respective dividend payment date. In no event shall the holders of Class A Preferred Stock receive dividends of more than percent (1%) in any fiscal year, and each share shall rank on parity with each other share of preferred stock, irrespective of class or series, with respect to dividends at the respective fixed or maximum rates for such series.

Dividends for Class B Preferred Stock Series 1 and Class B Preferred Stock Series 2 are non-cumulative, however, the holders of such series, in preference to the holders of any common stock, shall be entitled to receive, as and when declared payable by the Board of Directors from funds legally available for the payment thereof, dividends in lawful money of the United States of America at the rate per annum fixed and determined for the shares of such series, but no more.

Dividends for Class B Preferred Stock Series 3 are cumulative. The holders of Class B Preferred Stock Series 3 shall be entitled to receive a quarterly dividend equal to 2.5% of the issue price of each share. The dividends shall be paid quarterly, when as and if declared payable by the Company’s Board of Directors from funds legally available for the payment thereof. If in any quarter the Company does not pay any accrued dividends, such dividends shall cumulate. Interest shall not be paid on cumulated dividends. At December 31, 2012 and December 31, 2011, the Company paid or accrued dividends of $38,853 and $1,942 respectively on the Class B Preferred Stock Series 3.

RECENT SALES OF UNREGISTERED SECURITIES

During 2012, the Company issued several convertible promissory notes to Asher Enterprises, Inc. (“Asher”), as described below.

During the first quarter of 2012, the Company issued a nine-month convertible promissory note to Asher in the amount of $40,000. The note has a maturity date of October 23, 2012 and an annual interest rate of eight percent (8%) per annum. The holders have the right from and after the date of issuance, and until any time until the note is fully paid, to convert any outstanding and unpaid principal portion of the note, and accrued interest, into fully paid and non-assessable shares of common stock. The note has an initial conversion price of fifty eight percent (58%) of the three lowest closing bid prices for the ten days preceding the conversion date.

On January 11, 2012, Asher converted $5,000 of its note and $2,120 in accrued interest into 569,600 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $2,401 due to the reduction of the associated liability.

On January 24, 2012, Asher converted $12,000 of its note into 2,181,818 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $5,624 due to the reduction of the associated liability.

On February 21, 2012, Asher converted $15,000 of its note into 2,678,571 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $7,073 due to the reduction of the associated liability.

On March 12, 2012, Asher converted $13,000 of its note into 4,482,759 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $6,098 due to the reduction of the associated liability.

On April 16, 2012, Asher converted $12,000 of its note into 6,666,667 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $6,411 due to the reduction of the associated liability.

On May 23, 2012, Asher converted $10,000 of its note into 2,941,176 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $5,493 due to the reduction of the associated liability.

On May 23, 2012, Asher converted $1,000 of its note and $2,120 in accrued interest into 1,733,333 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $541 due to the reduction of the associated liability.

On October 5, 2012, Asher converted $5,300 of its note into 7,361,112 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $3,187 due to the reduction of the associated liability.

All of the above note conversions were within the terms of the agreement and did not result in a gain or loss to the Company.

On January 9, 2012, an investor converted his $22,500 note into 681 shares of the Company’s Class B Preferred Stock Series 3. Additionally, he invested an additional $30,000 in the Company through the purchase of 857 shares of Class B Preferred Stock Series 3 shares.

On April 4, 2012, the Company approved a stock conversion of $103,000 in accrued consulting expense into common stock, at a conversion rate of $0.05 per share, or 2,060,000 shares of the Company’s common stock.

The Company claims an exemption from registration for the above issuances pursuant to Section 4(2) of the Securities Act due to the small number of purchasers and their sophistication in financial and business matters. The Company claims an exemption under Section 3(a)(9) of the Securities Act for issuances of common stock pursuant to each note conversion described above.

PART II

ITEM 6. SELECTED FINANCIAL DATA

Item 6 is not required for a smaller reporting company.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

FORWARD-LOOKING INFORMATION

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

Consolidation

The accompanying financial statements include the accounts of Adino Energy Corporation and its wholly owned subsidiaries Intercontinental Fuels, LLC (sold 2/7/12), Adino Exploration, LLC (sold 10/31/12), Adino Drilling, LLC (sold 3/1/2011), PetroGreen Energy LLC (sold 6/29/12), and AACM3, LLC (sold 6/29/12). All intercompany accounts and transactions have been eliminated. References to Adino or the Company include the above subsidiaries.

Revenue Recognition

The Company recognizes revenue from throughput fees in the month that the services are provided based upon contractually determined rates. The Company recognizes storage fee revenue in the month that the service is provided in accordance with our customer contracts. Adino Exploration earns revenue from the sale of oil.

As described above, in accordance with the requirement of current guidance, the Company recognizes revenue when (1) persuasive evidence of an arrangement exists (contracts), (2) delivery has occurred (monthly), (3) the seller’s price is fixed or determinable (per the customer’s contract or current market price), and (4) collectability is reasonably assured (based upon our credit policy).

The Company has performed an analysis and determined that gross revenue reporting is appropriate, since (1) the Company is the primary obligor in the transaction (2) the Company has latitude in establishing price and (3) the Company changes the product and performs part of the service.

Investments

The Company from time to time maintains a portfolio of marketable investment securities for deposit requirements associated with our oil and gas operator licenses. The securities have an investment grade and a term to earliest maturity generally of ten months to over one year and include certificates of deposit. These securities are carried at cost, which approximates market. The Company’s securities are classified as held-to-maturity because the Company has the positive intent and ability to hold the securities to maturity.

Oil and Gas Producing Activities

The Company follows the full cost method of accounting for oil and gas operations whereby all costs associated with the exploration and development of oil and gas properties are initially capitalized into a single cost center (“full cost pool”). Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties and costs of drilling directly related to acquisition and exploration activities. Proceeds from property sales are generally credited to the full cost pool, with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. A significant alteration would typically involve a sale of 25% or more of the proved reserves related to a full cost pool.

Depletion of exploration and production costs and depreciation of production equipment is computed using the units of production method based upon estimated proved oil and gas reserves as determined by consulting engineers and prepared (annually) by independent petroleum engineers. Costs included in the depletion base to be amortized include (a) all proved capitalized costs including capitalized asset retirement costs, net of estimated salvage values, less accumulated depletion, (b) estimated future development cost to be incurred in developing proved reserves, and (c) estimated dismantlement and abandonment costs, net of estimated salvage values that have not been included as capitalized costs because they have not yet been capitalized in asset retirement costs. The costs of unproved properties are withheld from the depletion base until it is determined whether or not proved reserves can be assigned to the properties. The unproved properties are reviewed quarterly for impairment. When proved reserves are assigned or the unproved property is considered to be impaired, the cost of the property or the amount of the impairment is added to the costs subject to depletion calculations

Derivatives

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

Asset Retirement Obligation

The Company accounts for its asset retirement obligations by recording the fair value of a liability for an asset retirement obligation recognized for the period in which it was incurred if a reasonable estimate of fair value could be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The increase in carrying value of a property associated with the capitalization of an asset retirement cost is included in proved oil and gas properties in the consolidated balance sheets. The Company depletes the amount added to proved oil and gas property costs. The future cash outflows associated with settling the asset retirement obligation that have been accrued in the accompanying balance sheets are excluded from the ceiling test calculations. The Company also depletes the estimated dismantlement and abandonment costs, net of salvage values, associated with future development activities that have not yet been capitalized as asset retirement obligations. These costs are also included in the ceiling test calculations. The asset retirement liability is allocated to operating expense using a systematic and rational method.

Stock-based Compensation

We record stock-based compensation as a charge to earnings, net of the estimated impact of forfeited awards. As such, we recognize stock-based compensation cost only for those stock-based awards that are estimated to ultimately vest over their requisite service period, based on the vesting provisions of the individual grants. The process of estimating the fair value of stock-based compensation awards and recognizing stock-based compensation cost over their requisite service periods involves significant assumptions and judgments.

We estimate the fair value of stock option awards on the date of grant using a Black-Scholes valuation model which requires management to make certain assumptions regarding: (i) the expected volatility in the market price of the Company’s common stock; (ii) dividend yield; (iii) risk-free interest rates; and (iv) the period of time employees are expected to hold the award prior to exercise (referred to as the expected holding period). The expected volatility under this valuation model is based on the current and historical implied volatilities from traded options of our common stock. The dividend yield is based on the approved annual dividend rate in effect and current market price of the underlying common stock at the time of grant. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for bonds with maturities ranging from one month to ten years. The expected holding period of the awards granted is estimated using the historical exercise behavior of employees. In addition, we estimate the expected impact of forfeited awards and recognize stock-based compensation cost only for those awards expected to vest. We use historical experience to estimate projected forfeitures. If actual forfeiture rates are materially different from our estimates, stock-based compensation expense could be significantly different from what we have recorded in the current period. We periodically review actual forfeiture experience and revise our estimates, as considered necessary. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the revision.

Goodwill and Intangible Assets

We evaluate the recoverability and measure the potential impairment of our goodwill annually. The annual impairment test is a two-step process that begins with the estimation of the fair value of the reporting unit. The first step screens for potential impairment and the second step measures the amount of the impairment, if any. Our estimate of fair value considers the financial projections and future prospects of our business, including its growth opportunities and likely operational improvements. As part of the first step to assess potential impairment, we compare our estimate of fair value for the reporting unit to the book value of the reporting unit. We determine the fair value of the reporting units based on the income approach. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. If the book value is greater than our estimate of fair value, we would then proceed to the second step to measure the impairment, if any. The second step compares the implied fair value of goodwill with its carrying value. The implied fair value is determined by allocating the fair value of the reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. If the carrying amount of the reporting unit’s goodwill is greater than its implied fair value, an impairment loss will be recognized in the amount of the excess. We believe our estimation methods are reasonable and reflect common valuation practices.

On a quarterly basis, we perform a review of our business to determine if events or changes in circumstances have occurred which could have a material adverse effect on the fair value of the Company and its goodwill. If such events or changes in circumstances were deemed to have occurred, we would perform an impairment test of goodwill as of the end of the quarter, consistent with the annual impairment test performed at the end of our fiscal year on December 31, and record any noted impairment loss.

The Company sold its interest in Intercontinental Fuels, LLC on February 7, 2012. We recorded goodwill impairment to the extent of the loss to be recognized on the transaction, or $4,827 as of December 31, 2011.

Income Taxes

The Company uses the asset and liability approach to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted.

On January 1, 2007, the Company adopted an accounting standard which clarifies the accounting for uncertainty in income taxes recognized in financial statements. This standard provides guidance on recognizing, measuring, presenting and disclosing in the financial statements uncertain tax positions that a company has taken or expects to take on a tax return. See Note 21 for further information related to the Company’s accounting for uncertainty in income taxes.

Discontinued Operations

The results of operations of a component of an entity that either has been disposed of or is classified as held for sale is reported in discontinued operations if both of the following conditions are met:

a. The operations and cash flows of the component have been (or will be) eliminated from the ongoing operations of the entity as a result of the disposal transaction.

b. The entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.

In a period in which a component of an entity either has been disposed of or is classified as held for sale, the income statement of the Company for current and prior periods will report the results of operations of the component, including any gain or loss recognized, in discontinued operations. The results of operations of a component classified as held for sale shall be reported in discontinued operations in the period(s) in which they occur.

Note References

All references to “Notes” are to the notes of our financial statements set forth in Item 8.

RESULTS OF OPERATIONS

The Company sold its wholly-owned subsidiary, IFL, as of February 7, 2012 and the oil and gas assets of its wholly owned subsidiary, Adino Exploration, at October 31, 2012. The revenues and expenses from these subsidiaries have been shown as net income or loss from discontinued operations. The Company’s net income or loss in 2011 has also been separated from the consolidated entity and presented in discontinued operations for comparison purposes.

Revenue: As the Company sold its revenue producing segments, described above, all revenue is reported in the discontinued operations from IFL (see Note 23) and Adino Exploration (see Note 24).

Payroll and Related Expenses: The Company had several employees on payroll in 2011, but resorted to hiring contract workers during the year and into 2012, resulting in a reduction in expense between the periods. Payroll and related expenses in 2011 were $154,312, compared to $5,089 in 2012.

General and Administrative: The Company’s expense for the year ended December 31, 2012 was $605,212 compared to $69,199 for the year ended December 31, 2011. The increase is primarily due to bad debt expense of $437,155 to reserve for potentially uncollectible receivables.

Legal and Professional: Legal and professional expense was $338,877 and $301,929 for the years ended December 31, 2012 and 2011, respectively. During 2011, the Company experienced significant legal expense associated with the G J Capital lawsuit. Expenses incurred in 2012 relate primarily to the oil and gas sale to Broadway. Legal fees were negotiated and the Company received a credit on legal billings of $52,785 during the first quarter of 2012. See Note 24 for discussion of the oil and gas interest sale and Note 26 for discussion on the G J Capital lawsuit.

Consulting Expense: The Company’s consulting expenses were $160,574 and $757,555 for the years ended December 31, 2012 and 2011, respectively, a significant decrease. During 2011, the Company accrued officer and accountant compensation. These accruals were discontinued in 2012. The Company also retained a marketing consultant in 2011, resulting in non-cash expense of $225,750 for services rendered.

Depreciation Expense: Depreciation expense was $5,083 and $15,333 for the years ended December 31, 2012 and 2011, respectively. The decrease is due to the repossession of the Company vehicle and other assets becoming fully depreciated during 2012.

Interest Income: Interest income was $0 and $46,570 for the years ended December 31, 2012 and 2011, respectively.

Interest Expense: Interest expense was $258,381 and $294,770 for the years ended December 31, 2012 and 2011. The decrease is largely due to interest on the Sundlun note payable being frozen in July, 2012, as the Broadway asset sale was being structured. The note to Mr. Sundlun was fully settled in the asset sale to Broadway. See Note 24 for a complete discussion.

Gain on Debt Conversion: On April 18, 2012, The Board of Directors approved a stock conversion of $103,000 in accrued consulting expense into Rule 144 common stock, at a conversion rate of $0.05 per share. The conversion resulted in issuance of 2,060,000 shares of stock and a gain to the Company of $88,156.

Gain on Sale/Relinquishment: On June 29, 2012, the Company executed a multi-party agreement with the Sellers of the PetroGreen assets and Gator-Dawg Drilling, LLC (“Gator-Dawg”). In the agreement, the Company released the restriction on the 10 million shares of common stock held in escrow on behalf of the Sellers in the PetroGreen asset purchase in July 2010. In exchange, the Sellers released all claims to the contract clawback agreement. The Company also transferred the membership shares of AACM3, LLC to its former owner, Alex Perales. AACM3, LLC did not hold any assets at the time of transfer. Gator-Dawg (formerly Adino Drilling, LLC) agreed to transfer the drilling rig and associated assets purchased from the Company in March 2011 to AACM3, LLC. In exchange for the drilling rig transfer, the Company transferred a truck and trailer purchased in early 2012 and executed a $100,000 note payable to Gator-Dawg. The completion of this multi-party agreement extinguished the contract clawback provision at June 29, 2012. The net effect of the multi-party agreement resulted in a gain on sale/relinquishment to the Company of $473,232 at September 30, 2012.

Gain (Loss) on Derivative: The Company entered into a series of promissory notes that permitted conversion of the notes into shares of the Company’s common stock at a discount to the market price. This discount to market conversion feature is treated as a derivative for accounting purposes. This note also caused two other financial instruments held by the Company to be considered derivatives. The Company has calculated the change in value of those instruments for the year ended December 31, 2012 for a gain of $15,282, compared with a gain of $10,850 for the year ended December 31, 2011. See Note 15 of the Company’s financial statements for a more thorough discussion of this item.

Gain on Change in Fair Value of Clawback: A component of the Petro Energy acquisition agreement gave the former owners of these companies the option to repurchase for $1.00 the assets held by the companies as of July 1, 2010 if the Company’s common stock price fails to reach $0.25 per share within three years of the original acquisition date. The contract was valued at each balance sheet date and resulted in a loss on clawback of $198,643 and $49,385 for the years ended December 31, 2012 and 2011, respectively. The contract clawback provision was valued at $386,739 at December 31, 2011. The clawback was settled in June, 2012. See Note 16 for more discussion.

Gain on Sale of Assets: The Company sold the assets acquired from Ashton for $500,000 on February 7, 2012, resulting in a gain on sale of $161,905. See Note 8 for a thorough discussion of the asset purchase and sale transaction.

Net Income/Loss: The Company had a net loss of $977,253 and $1,308,673 for the years ended December 31, 2012 and 2011, respectively. The Company’s contract clawback relinquishment contributed a gain of $473,232 to the 2012 second quarter income, contributing to the income from 2011 to 2012. Of the totals, net income contributed by IFL, reflected in discontinued operations, was $61,511 and $820,083, for the years ended December 31, 2012 and 2011, respectively. Of the totals, net loss contributed by Adino Exploration reflected in discontinued operations, was $247,920 and $242,209 for the years ended December 31, 2012 and 2011, respectively. Although the Company realized a gain on the oil and gas asset sale of $2,474,522, it was accounted for as a related party gain and was recorded to additional paid in capital at October 31, 2012. See Note 23 and 24 for detailed information on the sale transactions.

Cash: The Company’s available cash decreased at December 31, 2012 to $16,887 from $102,540 at December 31, 2011. In December 2011, the Company received additional investment from members of the Schwartz group of $150,000. The Company also had deposits from the BlueRock financing for well completion. Of the cash on hand, $70,800 was reserved for tax payments by IFL and $50,000 was on deposit for a Texas oil and gas operator license held by Adino Exploration.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s access to financing improved somewhat during 2012 and 2011, due to several convertible notes that were issued to two groups of private investors. As a result of these private note issuances, the Company raised $1,212,380. At December 31, 2012, all notes were converted to equity, paid or settled in the asset sale to Broadway, except for the existing note balance of $62,500 with the Schwartz Group.

The Company’s liquidity and capital resources also improved as a result of its sale of Adino Exploration. This sale resulted in Adino receiving $2,921,616, which included a cash payment of $811,825 and the elimination of the Company and Exploration debts in the amount of $2,109,791. With little debt, the Company now believes that it can secure debt and equity funding at competitive rates.

The Company’s available cash decreased from $52,540 at December 31, 2011 to $16,887 at December 31, 2012. In 2011, the Company received additional investment from members of the Schwartz Group of $150,000 and had deposits from the BlueRock financing for well completion. At December 31, 2012, the Company is dependent on additional investment and new business to obtain continued cash flow.

As of December 31, 2012, the Company has a working capital and total stockholders’ deficit of $970,120. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern depends upon its ability to obtain funding for its working capital deficit. Of the outstanding current liabilities at December 31, 2012, there are two significant non-cash items: $50,000 of the outstanding liability is from deferred revenue and $522,959 is due to certain officers and directors for prior years’ accrued compensation. They have agreed in writing to postpone payment if necessary, should the Company need capital it would otherwise pay these individuals. The Company plans to satisfy current year and future cash flow requirements through growing business operations. The Company also hopes to pursue merger and acquisition opportunities including the expansion of existing business opportunities, primarily in the oil and gas exploration and production sector.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Item 7A is not required for a smaller reporting company.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Adino Energy Corporation

(A Development Stage Company)

Houston, Texas

We have audited the accompanying consolidated balance sheets of Adino Energy Corporation (A Development Stage Company) (the Company”) as of December 31, 2012 and 2011 and the related consolidated statements of operations, shareholders' deficit and cash flows for the years then ended and for the period from November 1, 2012 (re-entry to development stage) to December 31, 2012. These consolidated 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit 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 Adino Energy Corporation (A Development Stage Company) as of December 31, 2012 and 2011 and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations and maintains a working capital deficit. These matters raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern. See note 2 to the consolidated financial statements for further information regarding this uncertainty.

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

April 17, 2013

Adino Energy Corporation

(A Development Stage Company)

Consolidated Balance Sheets

As of December 31, 2012 and December 31, 2011

	December 31, 2012			December 31, 2011

ASSETS
Cash in bank	$	16,887		$	102,540
Certificate of deposit - restricted		50,075			50,000
Accounts receivable, net of allowances		-			10,394
Deposits and prepaid assets		2,801			56,530
Assets held for sale		-			4,151,882
Total current assets		69,763			4,371,346

Fixed assets, net of accumulated depreciation of $0 and $43,469, respectively		-			3,957
Total non-current assets		-			3,957

TOTAL ASSETS	$	69,763		$	4,375,303

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	365,511		$	428,493
Accounts payable - related party		21,737			61,387
Accrued liabilities		9,777			129,387
Accrued liabilities - related party		522,959			568,689
Contract clawback provision		-			386,739
Notes payable - current portion		-			445,995
Convertible notes payable - current portion		62,500			119,514
Interest payable		7,399			10,156
Derivative liability		-			136,894
Deferred revenue		50,000			50,000
Liabilities associated with assets held for sale - current		-			4,264,093
Total current liabilities		1,039,883			6,601,347

Notes payable, net of current portion		-			5,007
Convertible notes payable, net of current portion		-			85,000
Liabilities associated with assets held for sale, net of current portion		-			400,000
TOTAL LIABILITIES	$	1,039,883		$	7,091,354

SHAREHOLDERS’ DEFICIT
Capital stock, $0.001 par value, 500 million shares authorized, 156,249,331 and 122,910,232 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively		156,249			125,573
Preferred stock, $0.001 par value, 20,685,250 shares authorized, 111,180 and 109,642 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively		699,205			685,558
Additional paid in capital		16,856,424			14,177,563
Deficit accumulated before re-entry to the development stage		(18,601,930	)		(17,704,745	)
Accumulated deficit after re-entry to the development stage		(80,068	)		-
Total shareholders’ deficit		(970,120	)		(2,716,051	)

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	69,763		$	4,375,303

See accompanying notes to the consolidated financial statements

Adino Energy Corporation

(A Development Stage Company)

Consolidated Statements of Operations

For the years ended December 31, 2012 and 2011

And the period from November 1, 2012 (re-entry to development stage) to December 31, 2012

	For the year ended Dec 31, 2012			For the year ended Dec 31, 2011			From re-entry to the development stage to (November 1, 2012) to December 31, 2012

REVENUES AND GROSS MARGINS
Oil and gas operations	$	-		$	-		$	-
Total revenues		-			-			-

OPERATING EXPENSES
Payroll and related expenses		5,089			154,312			-
General and administrative		168,057			69,199			15,427
Bad debt expense		437,155			-			-
Legal and professional		338,877			301,929			28,880
Consulting fees		160,574			757,555			35,020
Repairs		-			2,052			-
Depreciation expense		5,083			15,333			-
Operating supplies		4,788			-			-
Total operating expenses		1,119,623			1,300,380			79,327

OPERATING INCOME (LOSS)		(1,119,623	)		(1,300,380	)		(79,327	)

OTHER INCOME AND EXPENSES
Interest income		-			46,570			-
Interest expense		(258,381	)		(294,770	)		(741	)
Gain (loss) on debt conversion		88,156			-			-
Gain from lawsuit/sale leaseback		32,606			17,086			-
Gain (loss) on acquisition / sale		176,527			-			-
Gain (loss) on derivative		15,282			10,850			-
Gain or loss on change in fair value of clawback		(198,643	)		(49,385	)		-
Gain (loss) on sale/relinquishment		473,232			-			-
Other income (expense)		-			(44,476	)		-
Total other income and expense		328,779			(314,125	)		(741	)

Income (loss) from continuing operations	$	(790,844	)	$	(1,614,505	)	$	(80,068	)

Discontinued Operations
Loss from operations of discontinued Adino Exploration, LLC		(247,920	)		(242,209	)		-
Gain from operations of discontinued Intercontinental Fuels, LLC		61,511			820,083			-
Loss from operations of discontinued Adino Drilling, LLC		-			(272,042	)		-
Net income (loss)	$	(977,253	)	$	(1,308,673	)	$	(80,068	)


Net income (loss) per share continuing operations	$	0.00		$	(0.02	)
Net income (loss) per share discontinued operations	$	(0.00	)	$	0.01

Net income (loss) per share, basic and fully diluted	$	(0.00	)	$	(0.02	)

Weighted average shares outstanding, basic and fully diluted		145,134,397			114,945,584

See accompanying notes to the consolidated financial statements

ADINO ENERGY CORPORATION

(A Development Stage Company)

Consolidated Statement of Changes in Shareholders’ Deficit

For the years ended December 31, 2012 and 2011

	Common Stock Shares		Common Stock Amount		Preferred Shares		Preferred Stock Amount			APIC		Accum Deficit after re-entry to the Development Stage			Accum Deficit before re-entry to the Development Stage			Total

Balance December 30, 2010		107,260,579	$	107,260		-	$	-		$	13,785,442	$	-		$	(16,396,072	)	$	(2,503,370	)

Shares issued in debt conversion - common		6,563,716		6,563		-		-			98,936					-			105,499
Derivative settlement		-		-		-		-			62,826		-			-			62,826
Shares issued for services		11,750,000		11,750		-		-			230,359		-			-			242,109
Shares issued in debt conversion - preferred		-		-		5,358		187,500			-					-			187,500
Shares issued for cash		-		-		4,284		150,000			-		-			-			150,000
Shares issued in asset purchase		-		-		100,000		350,000					-						350,000
Dividend on preferred stock		-		-		-		(1,942	)		-		-			-			(1,942	)
Net loss		-		-		-		-			-		-			(1,308,673	)		(1,308,673	)
Balance December 31, 2011		125,574,295	$	125,573		109,642	$	685,558		$	14,177,563	$	-		$	(17,704,745	)	$	(2,716,051	)

Shares issued in debt conversion – common		30,675,036		30,676		-		-			61,708					-			92,384
Derivative settlement		-		-		-		-			142,631					-			142,631
Shares issued in debt conversion - preferred		-		-		681		22,500			-					-			22,500
Shares issued for cash		-		-		857		30,000			-					-			30,000
Dividend on preferred stock		-		-		-		(38,853	)							-			(38,853	)
Oil and gas asset sale – related party gain		-		-		-		-			2,474,522		-			-			2,474,522
Net loss		-		-		-		-			-		(80,068	)		(897,185	)		(977,253	)
Balance December 31, 2012		156,249,331	$	156,249		111,180	$	699,205		$	16,856,424	$	(80,068	)	$	(18,601,930	)	$	(970,120	)

See accompanying notes to the consolidated financial statements

ADINO ENERGY CORPORATION

(A Development Stage Company)

Consolidated Statements of Cash Flows

For the years ended December 31, 2012 and 2011

And the period from November 1, 2012 (re-entry to development stage) to December 31, 2012

							November 1, 2012
							(re-entry to
							development stage)
	December 31, 2012			December 31, 2011			December 31, 2012

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(977,253	)	$	(1,308,673	)	$	(80,068	)

Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Depreciation and depletion		123,402			128,037			-
Accretion		3,198			3,704			-
Loss on sale of subsidiary		8,414			252,524			-
Shares issued for services		-			242,109			-
Gain on foreclosure		(14,622	)		-			-
Gain on conversion of debt		(88,156	)		-			-
Gain on clawback relinquishment		(473,232	)		-			-
Goodwill impairment - IFL		-			4,827			-
Gain from lawsuit / sale amortization		(32,606	)		(391,279	)		-
Amortization of discount on note receivable		-			(46,570	)		-
Bad debt expense		437,155			-			-
(Gain) / loss on change in fair value of derivative		(15,282	)		(10,847			-
Loss on change in fair value of clawback provision		198,643			49,385			-
Gain on sale – Ashton assets		(161,905	)		-			-
Amortization of debt discount		70,990			82,878			-
Changes in operating assets and liabilities:
Accounts receivable		14,859			4,756			-
Inventory		-			(25,001	)		-
Other assets		69,325			(62,346	)		7,020
Accounts payable and accrued liabilities		(256,138	)		539,572			(116,643	)
Deferred revenue		-			50,000			-
Net cash (used in) operating activities		(1,093,208	)		(486,924	)		(189,691	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of IFL		244,825			-			-
Proceeds from sale of Adino Exploration assets		811,825			-			-
Proceeds from sale of assets		500,000			-			-
Purchase of equipment		(100,351	)		(590,755	)		-
Net cash provided by (used in) investing activities		1,456,299			(590,755	)		-
								-
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from preferred stock investment		30,000			150,000			-
Borrowings on note payable		40,000			1,062,380			-
Dividends paid		(38,853	)		-			(9,750	)
Principal payments on note payable		(709,296	)		(87,928			-
Net cash provided by (used in) financing activities		(678,149	)		1,124,452			(9,750	)

Net change in cash and cash equivalents		(315,058	)		46,773			(199,441	)
Cash and cash equivalents, beginning of period		331,945			285,172			216,328
Cash and cash equivalents, end of period	$	16,887		$	331,945		$	16,887

Cash paid for:
Interest	$	42,719		$	12,582		$	-
Income taxes	$	-		$	-		$	-

Gain on sale of Adino Exploration	$	2,474,522		$	-		$	-
Acquisition purchased with preferred stock	$	-		$	350,000		$	-
Asset retirement obligation	$	-		$	10,551		$	-
Reduction in derivative due to debt conversion/settlement	$	142,631		$	62,826		$	-
Conversion of note - preferred stock	$	22,500		$	293,000		$	-
Conversion of note – common stock	$	92,384						-
Derivative liability new debt	$	21,119		$	107,059		$	-

See accompanying notes to the consolidated financial statements

ADINO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Background

The Company’s wholly-owned subsidiary, Intercontinental Fuels, LLC (“IFL”), a Texas limited liability company, was founded in 2003. Adino first acquired 75% of IFL’s membership interests in 2003. The Company acquired 100% ownership of IFL shortly thereafter.

As of July 1, 2010, the Company acquired PetroGreen Energy LLC, a Nevada limited liability company, and AACM3, LLC, a Texas limited liability company d/b/a Petro 2000 Exploration Co. (together "Petro Energy"). Petro Energy is a licensed Texas oilfield operator currently operating 11 wells on two leases covering approximately 300 acres in Coleman County, Texas. Petro Energy also owns a drilling rig, two service rigs and associated tools and equipment. The Company also acquired the operator license held by the principal of Petro Energy.

With the Company’s focus on oil and gas exploration and production, the Company decided to sell its interest in IFL. To that end, on February 7, 2012, Adino sold all of its membership interest in IFL to Pomisu XXI S.L. (“Buyer”). The purchase price to be paid by the Buyer was $900,000, paid in two installments with the first installment of $244,825 paid on February 7, 2012, and the balance due not later than May 7, 2012. The balance of the purchase price shall be computed as follows: $900,000 minus $244,825 (initial installment) minus $655,175 of IFL liabilities assumed and settled by the Buyer. The liabilities included $106,520 in accounts payable, $1,500 to a related party, $110,000 in retained customer deposit and $437,155 for the G J Capital lawsuit judgment (see Note 26 for a more thorough discussion). The balance due had not been paid as of December 31, 2012 and the full receivable balance has been reserved.

On June 29, 2012, the Company executed a multi-party agreement with the Sellers of the Petro Energy assets and Gator-Dawg Drilling, LLC (“Gator-Dawg”). In the agreement, the Company released the restriction on the 10 million shares of common stock held in escrow on behalf of the Sellers in the Petro Energy asset purchase in July 2010. In exchange, the Sellers released all claims to the contract clawback agreement, which stated that the Sellers could repurchase the assets sold to the Company for $1.00 if the price of the Company’s stock did not reach $0.25 per share by the specified date. The Company also transferred the membership shares of AACM3, LLC to its former owner, Alex Perales. AACM3, LLC did not hold any assets at the time of transfer. Gator-Dawg agreed to transfer the drilling rig and associated assets purchased from the Company in March, 2011 to AACM3, LLC. In exchange for the drilling rig transfer, the Company cancelled the $500,000 note due from Gator-Dawg for purchase of those assets (disallowed for consolidation), executed a $100,000 note payable to Gator-Dawg for rig improvements paid for by Gator-Dawg during its ownership of the rig, and transferred a truck and trailer purchased in early 2012 to Gator-Dawg. The completion of this multi-party agreement extinguished the contract clawback provision at June 29, 2012.

On October 31, 2012, the Company and Adino Exploration, LLC (“Exploration”), a wholly owned subsidiary of the Company, entered into an Asset Purchase and Sales Agreement (“Agreement”) with Broadway Resources, LLC (“Broadway”). Pursuant to the Agreement Exploration sold its oil and gas leases located in Coleman and Runnels Counties, Texas. The purchase price paid by Broadway was $2,921,616, which includes a cash payment of $811,825 and the elimination of the Company and Exploration debts in the amount of $2,109,791.

Use of Estimates

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

Principles of Consolidation

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

Concentrations of Credit Risk

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

The Company maintains its cash in well-known banks selected based upon management’s assessment of the banks’ financial stability. Balances rarely exceed the $250,000 federal depository insurance limit. The Company has not experienced any losses on deposits and believes the risk of loss is minimal.

Management assesses the need for an allowance for doubtful accounts based upon the financial strength of our customers, historical experience with our customers and the aging of the amounts due.

Cash Equivalents

For purposes of reporting cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. We had no cash equivalents at either December 31, 2012 or December 31, 2011.

Investments

Other Assets

Supplies consisting of equipment and parts to be used for future drilling projects and repair to existing wells are stated at cost. As the supplies are assigned to a particular project, they are then capitalized or expensed, accordingly. Supplies are evaluated at each balance sheet date for obsolescence and impairment.

Property and Equipment

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

Oil and Gas Producing Activities

Depletion of exploration and production costs and depreciation of production equipment is computed using the units of production method based upon estimated proved oil and gas reserves as determined by consulting engineers and prepared (annually) by independent petroleum engineers. Costs included in the depletion base to be amortized include (a) all proved capitalized costs including capitalized asset retirement costs, net of estimated salvage values, less accumulated depletion, (b) estimated future development cost to be incurred in developing proved reserves; and (c) estimated dismantlement and abandonment costs, net of estimated salvage values that have not been included as capitalized costs because they have not yet been capitalized in asset retirement costs. The costs of unproved properties are withheld from the depletion base until it is determined whether or not proved reserves can be assigned to the properties. The unproved properties are reviewed quarterly for impairment. When proved reserves are assigned or the unproved property is considered to be impaired, the cost of the property or the amount of the impairment is added to the costs subject to depletion calculations.

Current guidance requires that unamortized capitalized costs (less certain adjustments) for each cost center not exceed the cost ceiling, which is defined as the present value of future net revenues from estimated production of proved oil and gas reserves (plus certain adjustments). If adjusted unamortized costs capitalized within a cost center exceed the cost center ceiling, the excess is charged to expenses and separately disclosed during the period it occurs. The Company evaluates the carrying cost of the applicable oil producing properties for any impairment as required.

Derivatives

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

Asset Retirement Obligation

The Company accounts for its asset retirement obligations by recording the fair value of a liability for an asset retirement obligation recognized for the period in which it was incurred if a reasonable estimate of fair value could be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The increase in carrying value of a property associated with the capitalization of an asset retirement cost is included in proved oil and gas properties in the consolidated balance sheets. The Company depletes the amount added to proved oil and gas property costs. The future cash outflows associated with settling the asset retirement obligation that have been accrued in the accompanying balance sheets are excluded from the ceiling test calculations. The Company also depletes the estimated dismantlement and abandonment costs, net of salvage values, associated with future development activities that have not yet been capitalized as asset retirement obligations. These costs are also included in the ceiling test calculations. Accretion of the asset retirement liability is allocated to operating expense using the discount method.

Revenue Recognition

IFL earns revenue from throughput and storage fees on a monthly basis. The Company recognizes revenue from throughput fees in the month that the services are provided based upon contractually determined rates. The Company recognizes storage fee revenue in the month that the service is provided in accordance with our customer contracts.

The Company has performed an analysis and determined that gross revenue reporting is appropriate, since (1) the Company is the primary obligor in the transaction (2) the Company has latitude in establishing price and (3) the Company provides the product and performs part of the service.

Adino Exploration earns revenue from the sale of oil. The Company recognizes oil, gas and natural gas condensate revenue in the period of delivery. Settlement for oil sales occurs 30 days after the oil has been sold; and settlement for gas sales would occur 60 days after the gas had been sold. The Company recognizes revenue when an arrangement exists, the product or service has been provided, the sales price is fixed or determinable, and collectability is reasonably assured.

Income Taxes

Income (Loss) Per Share

Current guidance requires earnings per share (“EPS”) to be computed and reported as both basic EPS and diluted EPS. Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income by the weighted average number of common shares and dilutive common stock equivalents (convertible notes and interest on the notes, stock awards and stock options) outstanding during the period. Dilutive EPS reflects the potential dilution that could occur if options to purchase common stock were exercised for shares of common stock. The dilutive effect of convertible instruments on earnings per share is not presented in the consolidated statements of operations for periods with a net loss.

Stock-Based Compensation

We estimate the fair value of stock option awards on the date of grant using a Black-Scholes valuation model which requires management to make certain assumptions regarding: (i) the expected volatility in the market price of the Company’s common stock; (ii) dividend yield; (iii) risk-free interest rates; and (iv) the period of time employees are expected to hold the award prior to exercise (referred to as the expected holding period). The dividend yield is based on the approved annual dividend rate in effect and current market price of the underlying common stock at the time of grant. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for bonds with maturities ranging from one month to ten years. The expected holding period of the awards granted is estimated using the historical exercise behavior of employees. In addition, we estimate the expected impact of forfeited awards and recognize stock-based compensation cost only for those awards expected to vest. We use historical experience to estimate projected forfeitures. If actual forfeiture rates are materially different from our estimates, stock-based compensation expense could be significantly different from what we have recorded in the current period. We periodically review actual forfeiture experience and revise our estimates, as considered necessary. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the revision.

The Company has granted options and warrants to purchase Adino’s common stock. These instruments have been valued using the Black-Scholes model.

Impairment of Long-Lived Assets

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

At December 31, 2011, Adino evaluated and determined that no impairment was warranted on the fixed assets of the Company. Additionally, no impairment was required on the oil and gas assets of the Company. There was no change to the impairment analysis performed at the December 31, 2011 audit and no indicators of impairment at the audit. As there were no fixed assets at December 31, 2012, no impairment testing was required. See Notes 6 and 11 for a more thorough discussion of the Company’s fixed assets and oil and gas assets as of December 31, 2011.

Goodwill

For the year ended December 31, 2011, goodwill was our single largest asset. We evaluate the recoverability and measure the potential impairment of our goodwill annually. The annual impairment test is a two-step process that begins with the estimation of the fair value of the reporting unit. The first step screens for potential impairment and the second step measures the amount of the impairment, if any. Our estimate of fair value considers the financial projections and future prospects of our business, including its growth opportunities and likely operational improvements. As part of the first step to assess potential impairment, we compare our estimate of fair value for the reporting unit to the book value of the reporting unit. We determine the fair value of the reporting units based on the income approach. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. If the book value is greater than our estimate of fair value, we would then proceed to the second step to measure the impairment, if any. The second step compares the implied fair value of goodwill with its carrying value. The implied fair value is determined by allocating the fair value of the reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. If the carrying amount of the reporting unit’s goodwill is greater than its implied fair value, an impairment loss will be recognized in the amount of the excess. We believe our estimation methods are reasonable and reflect common valuation practices.

In December 2010, the FASB issued FASB ASU No. 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts,” which is now codified under FASB ASC Topic 350, “Intangibles - Goodwill and Other.” This ASU provides amendments to Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not goodwill impairment exists. When determining whether it is more likely than not impairment exists, an entity should consider whether there are any adverse qualitative factors, such as a significant deterioration in market conditions, indicating impairment may exist. FASB ASU No. 2010-28 is effective for fiscal years (and interim periods within those years) beginning after December 15, 2010. Upon adoption of the amendments, an entity with reporting units having carrying amounts which are zero or negative is required to assess whether it is more likely than not the reporting units’ goodwill is impaired. If the entity determines impairment exists, the entity must perform Step 2 of the goodwill impairment test for that reporting unit or units. Step 2 involves allocating the fair value of the reporting unit to each asset and liability, with the excess being implied goodwill. An impairment loss results if the amount of recorded goodwill exceeds the implied goodwill. Any resulting goodwill impairment should be recorded as a cumulative-effect adjustment to beginning retained earnings in the period of adoption.

The Company recorded an impairment of $4,827 at December 31, 2011, the amount of the loss recognized on the IFL transaction.

Fair Value of Financial Instruments

On January 1, 2008, the Company adopted a new standard related to the accounting for financial assets and financial liabilities and items that are recognized or disclosed at fair value in the financial statements on a recurring basis, at least annually. This standard provides a single definition of fair value and a common framework for measuring fair value as well as new disclosure requirements for fair value measurements used in financial statements. Fair value measurements are based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs, and are determined by either the principal market or the most advantageous market. The principal market is the market with the greatest level of activity and volume for the asset or liability. Absent a principal market to measure fair value, the Company would use the most advantageous market, which is the market that the Company would receive the highest selling price for the asset or pay the lowest price to settle the liability, after considering transaction costs. However, when using the most advantageous market, transaction costs are only considered to determine which market is the most advantageous and these costs are then excluded when applying a fair value measurement. The adoption of this standard did not have a material effect on the Company’s financial position, results of operations or cash flows.

On January 1, 2009, the Company adopted an accounting standard for applying fair value measurements to certain assets, liabilities and transactions that are periodically measured at fair value. The adoption did not have a material effect on the Company’s financial position, results of operations or cash flows.

In August 2009, the FASB issued an amendment to the accounting standards related to the measurement of liabilities that are routinely recognized or disclosed at fair value. This standard clarifies how a company should measure the fair value of liabilities, and that restrictions preventing the transfer of a liability should not be considered as a factor in the measurement of liabilities within the scope of this standard. This standard became effective for the Company on October 1, 2009. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

The fair value accounting standard creates a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest.

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable.

Discontinued Operations

a. The operations and cash flows of the component have been (or will be) eliminated from the ongoing operations of the entity as a result of the disposal transaction.

b. The entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.

Reclassification

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

Recently Issued Accounting Pronouncements

In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.

In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.

In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.

In December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income” in Accounting Standards Update No. 2011-05. This update defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income in both the statement of income where net income is presented and the statement where other comprehensive income is presented. The adoption of ASU 2011-12 is not expected to have a material impact on our financial position or results of operations.

In December 2011, the FASB issued ASU No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this pronouncement may have on its results of operations or financial position.

NOTE 2 - GOING CONCERN

NOTE 3 - LEASE COMMITMENTS

On April 1, 2007, IFL agreed to lease a fuel storage terminal from 17617 Aldine Westfield Road, LLC for 18 months at $15,000 per month. The lease contained an option to purchase the terminal for $3.55 million by September 30, 2008. The Company evaluated this lease and determined that it qualified as a capital lease for accounting purposes. The terminal was capitalized at $3,179,572, calculated using the present value of monthly rent at $15,000 for the months April 2007 - September 2008 and the final purchase price of $3.55 million discounted at IFL’s incremental borrowing rate of 12.75%. The terminal was depreciated over its useful life of 15 years resulting in monthly depreciation expense of $17,664. As of December 31, 2007, the carrying value of the capital lease liability was $3,355,984.

Due to the difficult credit markets, the Company was unable to secure financing for the Houston terminal facility and assigned its rights under the terminal purchase option to Lone Star Fuel Storage and Transfer, LLC (“Lone Star”). Lone Star purchased the terminal from 17617 Aldine Westfield Road, LLC on September 30, 2008. Lone Star then entered into a five year operating lease with option to purchase with IFL. The five year lease has monthly rental payments of $30,000, escalating 3% per year. IFL’s purchase option allows for the terminal to be purchased at any time prior to October 1, 2009 for $7,775,552. The sale price escalated $1,000,000 per year after this date, through the lease expiration date of September 30, 2013. The Company recognized the escalating lease payments on a straight line basis.

The Lone Star lease was evaluated and was deemed to be an operating lease.

The transactions that led to the above two leases both resulted in gains to the Company. The lawsuit settlement just prior to the lease with 17617 Aldine Westfield Road, LLC resulted in a gain to the Company of $1,480,383. The Company amortized this amount over the life of the capital asset, or 15 years (See Part I, Item 3 for a more thorough discussion).

At the expiration of the capital lease, September 30, 2008, the above remaining gain of $1,332,345 was rolled into the gain on the sale assignment transaction with Lone Star of $624,047. The total remaining gain to be amortized as of September 30, 2008 was $1,956,392. This amount is being amortized over the life of the Lone Star operating lease, or 60 months. The operating lease expires on September 30, 2013. This treatment is consistent with sale leaseback gain recognition rules.

With the Company’s focus on oil and gas exploration and production, the Company decided to sell its interest in IFL. To that end, on February 7, 2012, Adino sold all of its membership interest in IFL to Pomisu XXI S.L. (“Buyer”). The purchase price to be paid by the Buyer was $900,000, paid in two installments with the first installment of $244,825 paid on February 7, 2012, and the balance due not later than May 7, 2012. The balance of the purchase price shall be computed as follows: $900,000 minus $244,825 (initial installment) minus $655,175 of IFL liabilities assumed and settled by the Buyer. The liabilities included $106,520 in accounts payable, $1,500 to a related party, $110,000 in retained customer deposit and $437,155 for the G J Capital lawsuit judgment (see Part I, Item 3 for a more thorough discussion). At December 31, 2012, the balance due from Buyer had not been paid. The Company has reserved the full receivable amount.

NOTE 4 - CERTIFICATE OF DEPOSIT

At December 31, 2012 and December 31, 2011, the Company has $50,075 and $50,000, respectively, of restricted certificates of deposit (“CDs”). These investments are classified as either a current or long-term asset based on their maturity date. The securities generally have maturity dates of ten months to over one year. The restricted investments serve as collateral for an oil and gas operator license held by the Company’s wholly-owned subsidiary, Adino Exploration, LLC. The cash is held in custody by the issuing bank, is restricted as to withdrawal or use, and is currently invested in certificates of deposit. Income from these investments is paid to the Company at maturity of the certificates of deposit. These investments are classified as held-to-maturity and are recorded as either short-term or long-term on the balance sheet based on contractual maturity date and are recorded at amortized cost. The Company’s securities are classified as held-to-maturity because the Company has the positive intent and ability to hold the securities to maturity.

NOTE 5 - ACCOUNTS RECEIVABLE

The Company advanced $10,000 to a business associate in December 2011. As the amount is not collected at December 31, 2012, the Company has recorded an allowance for the full balance.

	December 31, 2012			December 31, 2011

Advances	$	10,000		$	10,000
Less: Allowance for uncollectible accounts		(10,000	)		-
Total	$	-		$	10,000

NOTE 6 - FIXED ASSETS

The following is a summary of this category:

	December 31, 2012		December 31, 2011

Vehicles	$	-	$	7,426
Less: Accumulated depreciation		-		(3,469	)
Total	$	-	$	3,957

The Company owned a vehicle that was no longer needed. The Company chose to allow the vehicle to be repossessed, in settlement of the auto note outstanding. The repossession resulted in a gain to the Company of $14,622.

Vehicles have a useful life of five years. Depreciation expense for the years ended December 31, 2012 and 2011 was $5,083 and $15,333, respectively.

NOTE 7 - SALE OF ADINO DRILLING, LLC

On March 31, 2011, the Company sold the membership shares of Adino Drilling, LLC to a related party. Under the terms of the agreement, the Company realized a reduction in accrued liability of $100,000 and acquired a $500,000 six year, 5.24% interest note receivable, for a total sale price of $600,000. The sale resulted in a gain to the Company of $247,376; however the transaction’s related party note of $500,000 is not allowed for reporting purposes, therefore the Company realized a reportable loss of $252,624. Adino’s management believes that the sale of the drilling rig and associated equipment was in the best interest of the Company and the shareholders. The rig held by the Company was primarily suited for drilling up to 3,500 feet. However, the Company is currently drilling shallower wells. This large rig would be uneconomical for drilling smaller wells. The Company has decided to contract with service companies that specialize in shallower wells, thus reducing drilling expense.

With the sale of Adino Drilling, LLC, the $7,139 of goodwill resulting from the original Petro Energy acquisition was written off. The transaction has been accounted for as a discontinued operation.

Below are the asset and liability values for Adino Drilling, LLC at March 31, 2011:

	Assets disposed at March 31, 2011

Cash	$	100
Fixed assets, net of depreciation of $34,837 and $21,186 at March 31, 2011		350,702
Total assets		350,802

Accounts payable		5,317
Accounts payable - related party		-
Total liabilities		5,317

Net assets - discontinued operations	$	345,485

NOTE 8 - RECEIVABLE - ASSET SALES

With the Company’s focus on oil and gas exploration and production, the Company decided to sell its interest in IFL. To that end, on February 7, 2012, Adino sold all of its membership interest in IFL to Pomisu XXI S.L. (“Buyer”). The purchase price to be paid by the Buyer was $900,000, paid in two installments with the first installment of $244,825 paid on February 7, 2012, and the balance due not later than May 7, 2012. The balance of the purchase price shall be computed as follows: $900,000 minus $244,825 (initial installment) minus $655,175 of IFL liabilities assumed and settled by the Buyer. The agreement also called for any cash payments made by the Company, on behalf of the Buyer, to be repaid to the Company at the settlement. As of March 31, 2012, the Company had paid $200,321 in partial settlement of the G J Capital lawsuit judgment. The full receivable balance due from Buyer of $437,155 has been reserved, as the balance had not been collected by the May 7, 2012 settlement date.

A schedule of the balances at December 31, 2012 and December 31, 2011 is as follows:

	December 31, 2012			December 31, 2011

IFL membership sale	$	437,155		$	-
Less: allowance for uncollectible accounts		(437,155	)		-
Total receivable - asset sales	$	-		$	-

NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS

December 31, 2012
Description	Level 1		Level 2		Level 3		Total Realized Gain (Loss) due to Valuation		Total Unrealized Gain (Loss) due to Valuation

Marketable security - CD	$	50,075	$	-	$	-	$	75	$	-

Notes payable - derivative		-		-		-		15,282		-

Contract clawback provision		-		-		-		198,643		-
Total	$	50,075	$	-	$	-	$	86,826	$	-

December 31, 2011
Description	Level 1		Level 2		Level 3		Total Realized Gain (Loss) due to Valuation			Total Unrealized Gain (Loss) due to Valuation

Marketable security - CD	$	50,000	$	-	$	-	$	-		$	-

Goodwill		-		-		1,554,413		(4,827	)		-

Notes payable - derivative		-		-		136,894		10,850			-

Contract clawback provision		-		-		386,739		49,385			-
Total	$	50,000	$	-	$	2,078,046	$	53,859		$	-

The Company’s $50,000 CD is carried at cost, which approximates market. During the year ended December 31, 2012, the Company realized $75 in interest income on the CD. The Company valued the convertible note and warrant derivatives using Level 3 criterion, shown above. Those notes gave rise to the derivative and caused the Haag warrants to be tainted, requiring derivative treatment. With the sale of the oil and gas assets to Broadway Resources, LLC on October 31, 2012, the Company settled all notes payable with Asher. Thus, at December 31, 2012, the Company had no derivatives requiring valuation.

With the sale of IFL, the Company removed all associated goodwill at the sale date, February 7, 2012. At December 31, 2011, the Company recognized a loss on goodwill of $4,827 for an ending balance of $1,554,413.

On June 29, 2012, the Company executed a multi-party agreement with the Sellers of the Petro Energy assets and Gator-Dawg Drilling, LLC (“Gator-Dawg”). In the agreement, the Company released the restriction on the 10 million shares of common stock held in escrow on behalf of the Sellers in the PetroGreen asset purchase in July of 2010. In exchange, the Sellers released all claims to the contract clawback agreement, which stated that the Sellers could repurchase the assets sold to the Company for $1.00 if the price of the Company’s stock did not reach $0.25 per share by the specified date. The Company also transferred the membership shares of AACM3, LLC to its former owner, Alex Perales. AACM3, LLC did not hold any assets at the time of transfer. Gator-Dawg agreed to transfer the drilling rig and associated assets purchased from the Company in March, 2011 to AACM3, LLC. In exchange for the drilling rig transfer, the Company cancelled the $500,000 note due from Gator-Dawg for purchase of those assets (disallowed for consolidation), executed a $100,000 note payable to Gator-Dawg for rig improvements and transferred a truck and trailer purchased in early 2012 to Gator-Dawg. The completion of this multi-party agreement extinguished the contract clawback provision at June 29, 2012.

The clawback was valued at the agreement date, June 29, 2012, resulting in a total change in clawback value of $198,643 for the year ended December 31, 2012.

NOTE 10 - NOTES RECEIVABLE / INTEREST RECEIVABLE

On November 6, 2003, Mr. Stuart Sundlun purchased 1,200 units of IFL from Adino. Part of the purchase price was a note from Mr. Sundlun dated November 6, 2003, bearing interest of 10% per annum in the amount of $750,000. This note was secured by 600 units of IFL being held in attorney escrow and released pursuant to the sales agreement. The sales agreement provided that the unreleased units would revert to Adino if Mr. Sundlun did not acquire the remaining 600 units.

On August 7, 2006, IFL repurchased the units sold to Mr. Sundlun. The entire amount due from Mr. Sundlun and payable to Mr. Sundlun is reported at gross in the Company's financial statements. The right of offset does not officially exist even though it has been discussed. In accordance with current guidance, the Company did not net the note receivable against the note payable. Current guidance states “It is a general principal of accounting that the offsetting of assets and liabilities in the balance sheet is improper except where a right of setoff exists.” Although both parties agreed verbally that a net payment would be acceptable, no formal documentation exists of this verbal agreement.

The Company's position to not offset the amounts is further substantiated by current guidance as follows, due to lacking two of the four general criteria: (1) The Company does not have a contractual right to offset even though that is the Company's intention and (2) Neither of the notes contains a specific right of offset.

In addition to the above facts, the note holder provided a separate written confirmation to the Company's auditors at December 31, 2011 of both the note payable and note receivable balances, respectively.

The Company's net notes receivable and payable to and from Mr. Sundlun are a net payable of $750,000.

The 600 units of IFL are no longer held in escrow as the Company purchased all 1,200 units of IFL including the escrow units for $1,500,000 which is the value of the note payable.

The note receivable from Mr. Sundlun matured on November 6, 2008. The Company extended the note’s maturity date to August 8, 2011 with no additional interest accrual to occur past November 6, 2008. Due to the fact that there will be no interest accrued on the note going forward, the Company recorded a discount on the note principal of $179,671. This amount will amortize until the note’s maturity in August 2011.

Interest accrued on the Sundlun note receivable was $375,208 at December 31, 2011.

A schedule of the balances at December 31, 2012 and 2011 is as follows:

	December 31, 2012		December 31, 2011

Sundlun, net of unamortized discount	$	-	$	750,0000

Total notes receivable	$	-	$	750,000
Less: current portion		-		(750,000	)
Total long-term notes receivable	$	-	$	-

With the oil and gas assets sale on October 31, 2012, the full amount of the note and interest receivable to Mr. Sundlun was satisfied. Therefore, balances at December 31, 2012 were $0. See note 24 for discussion on the oil and gas asset sale.

NOTE 11 - OIL AND GAS PROPERTIES

Tangible drilling costs: The Company acquired tangible drilling equipment and proved oil and gas properties with the Petro Energy acquisition in July 2010. The tangible assets were valued based on the appropriate application of the market or cost approaches as of the date of acquisition. The fair value was estimated at the depreciable value of the current replacement costs based on the age and condition of the assets.

Since the Petro Energy acquisition, the Company completed an extensive work over program on the original wells acquired. The Company also drilled and completed 3 wells on the James Leonard lease during 2011. In late 2011, the Company drilled 5 new wells - 4 on the James Leonard lease and 1 on the Felix Brandt lease, financed by BlueRock Energy Capital II, LLC (“BlueRock”).

Proved oil and gas properties: As of December 31, 2011, the Company’s Felix Brandt leases include thirteen proved developed producing (PDP) wells and three saltwater disposal wells. As a result of the Company’s work over and drilling programs during 2011, the estimated discounted net cash flow on the combined Felix Brandt and James Leonard leases was $951,247 as of December 31, 2011. Due to our significant net loss carryforward, we do not expect to pay any federal income taxes on future net revenues provided from the Felix Brandt lease production. Therefore, the pre-tax and after-tax estimate of discounted future net cash flows at December 31, 2011 are both $951,247. As the properties were no longer owned due to the asset sale to Broadway (see Note 24), the Company has no income tax effect from future proved oil and gas revenues.

Asset retirement obligation: The Company accounts for its asset retirement obligations by recording the fair value of a liability for an asset retirement obligation recognized in the period in which it was incurred if a reasonable estimate of fair value could be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and allocated to operating expense using a systematic and rational method. As of December 31, 2011, the Company has recorded a net asset of $46,372 and related liability of $50,944. Accretion for the year ended December 31, 2012 was $3,198. Due to the oil and gas asset sale on October 31, 2012 (see Note 24), the Company has no asset retirement obligation at December 31, 2012.

Impairment: Current guidance requires that unamortized capitalized costs (less certain adjustments) for each cost center not exceed the cost ceiling, which is defined as the present value of future net revenues from estimated production of proved oil and gas reserves (plus certain adjustments). If adjusted unamortized costs capitalized within a cost center exceed the cost center ceiling, the excess is charged to expenses and separately disclosed during the period it occurs. For the year ended December 31, 2011, the Company evaluated the carrying cost of the applicable oil producing properties and determined that the carrying value did not exceed the cost ceiling; therefore no adjustment was necessary for 2011. Due to the oil and gas asset sale on October 31, 2012 (see Note 24), the Company has no need for an impairment analysis at December 31, 2012.

The oil and gas related asset values at December 31, 2012 and December 31, 2011 were as follows:

	December 31, 2012		December 31, 2011

Tangible drilling costs	$	-	$	409,334
Proved oil and gas properties		-		71,060
Unproved oil and gas properties		-		280,602
Asset retirement cost		-		46,372
Impairment		-		(47,481	)
Accumulated depletion		-		(73,260	)
Total	$	-	$	686,627

On October 31, 2012, the Company and Adino Exploration, LLC (“Exploration”), a wholly owned subsidiary of the Company, entered into an Asset Purchase and Sales Agreement (“Agreement”) with Broadway Resources, LLC (“Buyer”), The Agreement provided that Exploration agreed to sell all of its rights, title and interest to its oil and gas leases located in Coleman and Runnels Counties, Texas. The purchase price paid by the Buyer was $2,921,616, which includes a cash payment of $811,825 and the elimination of the Company and Exploration debts in the amount of $2,109,791. With the sale, the Company had no oil and gas assets to report on at December 31, 2012.

NOTE 12 - OTHER ASSETS

As the Company’s wells and lease holdings have increased, it has need for supplies on hand for lease and well repair and maintenance. At December 31, 2011, the Company had $25,001 in supplies and replacement parts available for use. Due to the sale of the oil and gas assets on October 31, 2012 the Company did not have supplies at December 31, 2012.

NOTE 13 - CONSOLIDATION OF IFL AND GOODWILL

From the period of IFL’s inception to 2005, our ownership percentage in IFL was 60%. Our ownership increased to 80% during 2005 when our 20% partner withdrew from IFL and rescinded its investment. On August 7, 2006, we obtained the remaining 20% interest in IFL from Stuart Sundlun in consideration for a note payable. This transaction was accounted for as a step acquisition. This step acquisition resulted in an additional $1,500,000 of goodwill as the fair value of the net assets acquired was determined by management to be zero and the consideration given as discussed above was the $1,500,000 note.

Adino evaluated the aggregate goodwill for impairment at December 31, 2011 and determined that the fair value of the reporting unit exceeds its carrying amount and was therefore, not impaired. At December 31, 2011, the Company had $1,559,240 of goodwill on the balance sheet. Due to the sale of the Company’s interest in IFL in February 2012, the Company has recorded impairment of the goodwill to the extent of the loss on the transaction of $4,827 as of December 31, 2011.

NOTE 14 - ACCRUED LIABILITIES / ACCRUED LIABILITIES - RELATED PARTY

Other liabilities and accrued expenses consisted of the following as of December 31, 2012 and December 31, 2011:

	December 31, 2012		December 31, 2011

Accrued accounting and legal fees	$	-	$	125,000
Customer deposits		-		110,000
Property and payroll tax accrual		27		2,444
Deferred lease liability		-		31,268
Dividend payable		-		1,942
Total accrued liabilities	$	27	$	270,654

Accrued salaries-related party	$	522,959	$	1,013,034

Asset retirement obligation	$	-	$	50,944

Accrued accounting and legal fees: On April 4, 2012, the Company converted the accrued consultant debt of $103,000 into 2,060,000 shares of Rule 144 common stock. See Note 18 for further discussion.

Deferred lease liability: The Lone Star lease is being expensed by the straight line method as required by current guidance, resulting in a deferred lease liability that would have been extinguished by the lease termination date of September 30, 2013. The Company sold all of its membership interest in IFL to a third party on February 7, 2012.

Accrued salaries - related party: This liability is due to certain officers and directors for prior years’ accrued compensation. With the sale of the oil and gas assets, all liabilities to Mr. Wooley have been settled. The remaining officer has agreed to postpone payment if necessary, should the Company need capital it would otherwise pay him.

Asset retirement obligation: With the oil and gas assets sale on October 31, 2012, the asset retirement obligation was fully satisfied.

NOTE 15 - NOTES PAYABLE / CONVERTIBLE NOTES PAYABLE

	December 31, 2012			December 31, 2011

NOTES PAYABLE
Note payable - Gulf Coast Fuels/GJ Capital	$	-		$	436,380
Note payable - GMAC, bearing interest of 11.7% per annum with 60 monthly payments of $895, due May 13, 2013		-			14,622
Total notes payable		-			451,002
Less: current portion		-			(445,995	)
Long term notes payable	$	-		$	5,007

CONVERTIBLE NOTES PAYABLE
Note payable - Asher notes, net of discount of $0 and $50,986 at December 31, 2012 and December 31, 2011, respectively	$	-		$	119,514
bearing interest of 8% per annum, due February 16, 2012 (balance $0 at 12/31/12; $5,000 at 12/31/11)
bearing interest of 8% per annum, due March 23,2012 (balance $0 at 12/31/12; $53,000 at 12/31/11)
bearing interest of 8% per annum, due April 7, 2012 (balance $0 at 12/31/2012 and $37,500 at 12/31/11)
bearing interest of 8% per annum, due June 12, 2012 (balance $0 at 12/31/2012 and $37,500 at 12/31/11)
bearing interest of 8% per annum, due August 28, 2012 (balance $0 at 12/31/2012 and $37,500 at 12/31/11)
Notes payable - Schwartz group, bearing interest at 6%, due January 9, 2013		62,500			85,000
Total convertible notes payable		62,500			204,514
Less: current portion		(62,500	)		(119,514	)
Long term convertible notes payable	$	-		$	85,000

Gulf Coast Fuels / GJ Capital: In December 2011, the court rendered judgment for G J Capital and against Adino and IFL in the amount of $250,000, plus $152,988 in attorneys’ fees, $9,300 in court costs, plus $24,867 in prejudgment interest. The Company did not appeal this judgment. In February 2012, the Company paid $200,321 in partial settlement of the amount due. On May 1, 2012, the Company paid the final balance due on the GJ Capital suit, receiving a full release on all liability.

Asher Notes: On August 11, 2010, the Company issued a convertible promissory note to Asher Enterprises, Inc. (Asher”), in the amount of $57,500. The note had a maturity date of May 13, 2011 and an annual interest rate of eight percent (8%) per annum. The holders have the right from and after the date of issuance, and until any time until the note is fully paid, to convert any outstanding and unpaid principal portion of the note, and accrued interest, into fully paid and non-assessable shares of common stock. The note has an initial conversion price of fifty eight percent (58%) of the 3 lowest closing bid prices for the 10 days preceding the conversion date and full reset provision. The note’s convertible feature was valued and resulted in a debt discount of $35,838, which is being amortized over the nine month note life, using the straight line method. In this case, using the straight line method approximates the effective interest method, given the short time to maturity.

With the Asher notes, the Company has the right to redeem the notes within 90 days from the date of issuance for 135% of the redemption amount and accrued interest, from days 91-120, the Company has the right to redeem the notes for 145% of the redemption amount and accrued interest, and from days 121-180, the Company has the right to redeem the notes for 150% of the redemption amount and accrued interest.

During the first quarter of 2011, Asher converted $34,000 of the notes into the Company’s common stock, resulting in an issuance of 1,862,833 shares to Asher. During the second quarter of 2011, Asher converted the remaining balance of $23,500 into the Company’s common stock, resulting in an issuance of 2,036,820 shares to Asher. No amounts were converted during the third quarter, 2011. During the fourth quarter of 2011, Asher converted $48,000 into the Company’s common stock, resulting in an issuance of 2,664,063 shares to Asher. See Note 18 for a detailed description of each conversion.

During the second quarter of 2011, the Company issued two nine-month convertible promissory notes to Asher in the amount of $53,000 each. The notes have maturity dates of February 16, 2012 and March 23, 2012 and an annual interest rate of eight percent (8%) per annum. The holders have the right from and after the date of issuance, and until any time until the note is fully paid, to convert any outstanding and unpaid principal portion of the note, and accrued interest, into fully paid and non-assessable shares of common stock. The note has an initial conversion price of sixty five percent (65%) of the three lowest closing bid prices for the ten days preceding the conversion date. The notes’ convertible features were valued and resulted in debt discounts of $23,918 and $23,998 respectively, which is being amortized over the nine month note life, using the straight line method. In this case, using the straight line method approximates the effective interest method, given the short time to maturity.

During the third quarter of 2011, the Company issued two nine-month convertible promissory notes to Asher in the amount of $37,500 each. The notes have maturity dates of April 17, 2012 and June 12, 2012 and an annual interest rate of eight percent (8%) per annum. The holders have the right from and after the date of issuance, and until any time until the note is fully paid, to convert any outstanding and unpaid principal portion of the note, and accrued interest, into fully paid and non-assessable shares of common stock. The note due April 17, 2012 has an initial conversion price of sixty five percent (65%) of the three lowest closing bid prices for the ten days preceding the conversion date. The note due June 12, 2012 has an initial conversion price of fifty six percent (56%) of the three lowest closing bid prices for the ten days preceding the conversion date. The notes’ convertible features were valued and resulted in debt discounts of $15,943 and $21,720 respectively, which is being amortized over the nine month note life, using the straight line method. In this case, using the straight line method approximates the effective interest method, given the short time to maturity.

On November 22, 2011, the Company issued a nine-month convertible promissory note to Asher in the amount of $37,500. The note has a maturity date of August 28, 2012 and an annual interest rate of eight percent (8%) per annum. The holders have the right from and after the date of issuance, and until any time until the note is fully paid, to convert any outstanding and unpaid principal portion of the note, and accrued interest, into fully paid and non-assessable shares of common stock. The note has an initial conversion price of fifty eight percent (58%) of the three lowest closing bid prices for the ten days preceding the conversion date. The note’s convertible feature was valued and resulted in a debt discount of $21,477, which is being amortized over the nine month note life, using the straight line method. In this case, using the straight line method approximates the effective interest method, given the short time to maturity.

On January 19, 2012, the Company issued a nine-month convertible promissory note to Asher in the amount of $40,000. The note has a maturity date of October 23, 2012 and an annual interest rate of eight percent (8%) per annum. The holders have the right from and after the date of issuance, and until any time until the note is fully paid, to convert any outstanding and unpaid principal portion of the note, and accrued interest, into fully paid and non-assessable shares of common stock. The note has an initial conversion price of fifty eight percent (58%) of the three lowest closing bid prices for the ten days preceding the conversion date. The note’s convertible feature was valued and resulted in a debt discount of $21,119, which is being amortized over the nine month note life, using the effective interest method.

During the first quarter of 2012, Asher converted $45,000 of the notes and $2,120 in interest into the Company’s common stock, resulting in an issuance of 9,912,748 shares to Asher. There was no gain or loss on the transaction as the conversions were within the terms of the agreement.

During the second quarter of 2012, Asher converted $23,000 of the notes and $2,120 in interest into the Company’s common stock, resulting in an issuance of 11,341,176 shares to Asher. There was no gain or loss on the transaction as the conversions were within the terms of the agreement.

On October 5, 2012, Asher converted $5,300 of the notes into the Company’s common stock, resulting in an issuance of 7,361,112 shares to Asher. There was no gain or loss on the transaction as the conversions were within the terms of the agreement.

The Company fully settled all notes due to Asher on November 1, 2012, receiving full release on the notes and reserved common shares.

Schwartz Notes: On January 10, 2011, the Company issued convertible promissory notes to investors in the amount of $272,500, to fund drilling activities associated with the recent Petro Energy acquisition. The notes have a maturity date of January 9, 2013, with interest accrued and paid at the option of the holder at an annual interest rate of six percent (6%) per annum. The holders have the right from and after the date of issuance, and until any time until the note is fully paid, to convert any outstanding and unpaid principal portion of the note, and accrued interest, into fully paid and non-assessable shares of common stock. The note has a fixed conversion price of $0.35. During December 2011, the Company offered to convert the notes into shares of the Company’s Class B Preferred Stock Series 3. Three of the investors then chose to convert their notes, totaling $187,500 into shares of the preferred stock. In January 2012, a fourth investor chose to convert his note balance of $22,500 into shares of the Company’s Class B Preferred Stock Series 3. The final note of $62,500 remains outstanding at December 31, 2012.

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

	Principal

2013	$	62,500
2014		-
2015		-
2016		-
2017		-
Total	$	62,500

NOTE 16 - CONTRACT CLAWBACK PROVISION

A component of the acquisition agreement with Petro Energy and AACM3, LLC gave the former owners of these companies the option to repurchase for $1.00 the assets held by the companies as of July 1, 2010 if the Company’s common stock price fails to reach $0.25 per share within three years of the original acquisition date. The contract clawback provision was valued at December 31, 2011 at $386,739.

The contract clawback was valued at June 29, 2012 and the increase in provision was recorded as a loss on contract clawback in the statement of operations.

On June 29, 2012, the Company executed a multi-party agreement with the Sellers of the Petro Energy assets and Gator-Dawg Drilling, LLC (“Gator-Dawg”). In the agreement, the Company released the restriction on the 10 million shares of common stock held in escrow on behalf of the Sellers in the Petro Energy asset purchase in July of 2010. In exchange, the Sellers released all claims to the contract clawback agreement, which stated that the Sellers could repurchase the assets sold to the Company for $1.00 if the price of the Company’s stock did not reach $0.25 per share by the specified date. The Company also transferred the membership shares of AACM3, LLC to its former owner, Alex Perales. AACM3, LLC did not hold any assets at the time of transfer. Gator-Dawg agreed to transfer the drilling rig and associated assets purchased from the Company in March 2011 to AACM3, LLC. In exchange for the drilling rig transfer, the Company cancelled the $500,000 note due from Gator-Dawg for purchase of those assets (disallowed for consolidation), executed a $100,000 note payable to Gator-Dawg for rig improvements and transferred a truck and trailer purchased in early 2012 to Gator-Dawg. The completion of this multi-party agreement extinguished the contract clawback provision at June 29, 2012.

NOTE 17 - DERIVATIVE LIABILITY

Based on current guidance, the Company concluded that the convertible notes payable to Asher referred to in Note 15 were required to be accounted for as a derivative. This guidance requires the Company to bifurcate and separately account for the conversion features of the convertible notes issued as embedded derivatives.

With convertible notes in general, there are three primary events that can occur: the holder can convert the note into stock; the Company can force conversion of the convertible note; or the Company can default on the note or liquidate. The model analyzed the underlying economic factors that influenced which of these events would occur, when they were likely to occur, and the specific terms that would be in effect at the time (i.e. interest rates, stock price, conversion price etc.). Projections were then made on these underlying factors which led to a set of potential scenarios. Probabilities were assigned to each of these scenarios based on management projections. This led to a cash flow projection and a probability associated with that cash flow. A discounted weighted average cash flow over the various scenarios was completed, and it was compared to the discounted cash flow of a hypothetical one year 0% debt instrument without the embedded derivatives, thus determining a value for the compound embedded derivatives at the date of issue.

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

The Company used a lattice model that values the compound embedded derivatives based on a probability weighted discounted cash flow model. This model is based on future projections of the various potential outcomes. The Asher notes contained embedded derivatives that were analyzed. Certain features of the Asher notes were incorporated into the derivative valuation model, including the conversion feature with a reduction of the conversion rate based upon future below-market issuances and the redemption options.

The structure of the Asher notes caused two other financial instruments held by the Company to be deemed derivatives: The BWME notes and the Haag warrants. Both were valued as derivatives as of the date of the Asher note issuance (Haag warrants) or date of issuance (BWME notes) and are revalued at each balance sheet reporting date.

Below is detail of the derivative liability balances as of December 31, 2012 and December 31, 2011.

2012

Derivative Liability	December 31, 2011		Additions		Increase (Decrease) from valuation			(Decrease) from settlement			December 31, 2012

Asher note / BWME notes	$	133,234	$	21,119	$	(46,114	)	$	(108,239	)	$	-

Haag warrants		3,660		-		(3,660	)					-
Total	$	136,894	$	21,119	$	(49,774	)	$	(108,239	)	$	-

2011

Derivative Liability	December 31, 2010		Additions		Increase (Decrease) from valuation			December 31, 2011

Asher note / BWME notes	$	96,161	$	107,059	$	(69,986	)	$	133,234

Haag warrants		7,350		-		(3,690	)		3,660
Total	$	103,511	$	107,059	$	(73,676	)	$	136,894

2012: The net decrease of $136,894 is split between changes to derivative liability due to new note addition of $21,119, a reduction of $142,631 to additional paid-in-capital for the derivative reduction attributable to the Asher note conversions and payments discussed in Notes 16 and 19. The remaining $15,282 is reflected as gain on derivatives in the statement of operations as the derivatives were valued each period end and marked to market.

2011: The net increase of $33,383 is split between changes to derivative liability due to new note addition and conversion of $107,059, a reduction of $62,826 to additional paid-in-capital for the derivative reduction attributable to the Asher note conversions discussed in Notes 16 and 19. The remaining $10,850 is reflected as gain on derivatives in the statement of operations as the derivatives were valued each period end and marked to market.

On November 1, 2012, all notes to Asher were settled, eliminating the derivative and tainted warrants caused by the Asher note terms.

NOTE 18 - STOCK

The Company's common stock has a par value of $0.001. There were 50,000,000 shares authorized as of December 31, 2007. At the Company’s January 2008 shareholder meeting, the shareholders voted to increase the authorized common stock to 500,000,000 shares. As of September 30, 2012 and December 31, 2011, the Company had 135,487,043 and 125,574,295 shares issued and outstanding, respectively.

On January 11, 2012, Asher converted $5,000 of its note and $2,120 in accrued interest into 569,600 shares of the Company’s common stock.

On January 24, 2012, Asher converted $12,000 of its note into 2,181,818 shares of the Company’s common stock.

On February 21, 2012, Asher converted $15,000 of its note into 2,678,571 shares of the Company’s common stock.

On March 12, 2012, Asher converted $13,000 of its note into 4,482,759 shares of the Company’s common stock.

On April 16, 2012, Asher converted $12,000 of its note into 6,666,667 shares of the Company’s common stock.

On May 23, 2012, Asher converted $10,000 of its note into 2,941,176 shares of the Company’s common stock.

On May 23, 2012, Asher converted $1,000 of its note and $2,120 in accrued interest into 1,733,333 shares of the Company’s common stock.

On October 5, 2012, Asher converted $5,300 of its note into 7,361,112 shares of the Company’s common stock..

All note conversions were within the terms of the agreement and did not result in a gain or loss.

On April 18, 2012, the Board of Directors approved a stock conversion of $103,000 in accrued consulting expense into Rule 144 common stock, at a conversion rate of $0.05 per share. The conversion resulted in issuance of 2,060,000 shares of stock and a gain to the Company of $87,962, based on the difference between the conversion rate and the market price on the date of conversion.

As a result of the above common stock issuances, there were 156,249,331 shares issued and outstanding as of December 31, 2012.

PREFERRED STOCK

In 1998, the Company amended its articles to authorize Preferred Stock. There are 20,000,000 shares authorized with a par value of $0.001. The shares are non-voting and non-redeemable by the Company. The Company further designated two series of its Preferred Stock: "Series 'A' $12.50 Preferred Stock" with 2,159,193 shares of the total shares authorized and "Series "A" $8.00 Preferred Stock," with the number of authorized shares set at 1,079,957 shares.

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

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

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

As of December 31, 2012, the Company has also designated three series of Class B Preferred Stock.

The number of authorized shares of Class B Preferred Stock Series 1 is 666,680 shares. At any time after six months from the date of issuance of Class B Preferred Stock Series 1, any holder may convert up to 25% of such holder’s initial holdings (i.e. before taking into account any prior conversions, but taking into account any sales or transfers) of Class B Preferred Stock Series 1 into fully paid and nonassessable shares of common stock of the Company at the rate of one hundred (100) shares of common stock per share of Class B Preferred Stock Series 1. Every month thereafter, any holder of Class B Preferred Stock Series 1 may convert up to 12.5% of such stockholder’s initial holdings of Class B Preferred Stock Series 1 (i.e. before taking into account any prior conversions, but taking into account any sales or transfers) into fully paid and nonassessable shares of common stock of the Company at the rate of one hundred (100) shares of common stock per share of Class B Preferred Stock Series 1. Any such conversion may be effected by giving to the Secretary of the Company written notice of conversion, accompanied by the surrender of the certificate(s) of the stock to be converted, duly endorsed, along with any other information or documents reasonably requested by the Secretary to effect the conversion. The shares of Class B Preferred Stock Series 1 shall not have any voting rights. Any outstanding shares of Class B Preferred Stock Series 1 may be redeemed by the Company, at the Company’s option, at any time for $15.00 per share.

On November 3, 2011, The Company acquired all unencumbered assets owned by two limited partnerships managed by Ashton Oilfield Services, LLC (“Ashton”). The assets were purchased for one million five hundred thousand dollars ($1,500,000) and the Company issued 100,000 shares of Class B Preferred Stock Series 1 to Ashton. The assets were valued based on fair market value for similar assets in good, working condition.

At December 31, 2012 and December 31, 2011, there were 100,000 shares of Class B Preferred Stock Series 1 issued and outstanding.

The number of authorized shares of Class B Preferred Stock Series 2 is 666,660 shares. At December 31, 2012 and December 31, 2011, there were no shares of Class B Preferred Stock Series 2 issued and outstanding.

The number of authorized shares of Class B Preferred Stock Series 3 is 18,570 shares. The issue price for Class B Preferred Stock Series 3 is $35.00. The holders of Class B Preferred Stock Series 3 shall be entitled to receive a quarterly dividend equal to 2.5% of the issue price of each share. The dividends shall be paid quarterly, when as and if declared payable by the Company’s Board of Directors from funds legally available for the payment thereof. If in any quarter the Company does not pay any accrued dividends, such dividends shall cumulate. Interest shall not be paid on cumulated dividends. Each share of Class B Preferred Stock Series 3 shall rank on the same parity with each other share of preferred stock, irrespective of series, with respect to dividends at the respective fixed or maximum rate for such series. Any holder of Class B Preferred Stock Series 3 may convert, at any time, any or all shares held into common stock of the Company. Each Class B Preferred Stock Series 3 share held may be converted into one hundred (100) fully paid and nonassessable shares of common stock of the Company at the conversion rate of $0.35 per common stock .

On December 10, 2011, three of the Schwartz investors, each holding a note for $62,500, converted their notes into 1,786 shares of the Company’s Class B Preferred Stock Series 3, for a total issuance of 5,358 shares. Additionally, each investor invested an additional $50,000 in the Company through the purchase of 1,428 shares of Class B Preferred Stock Series 3 shares, for a total issuance of 4,284 shares. The conversion was within the terms of the agreement and there was no gain or loss on the transaction.

On January 9, 2012, one of the Schwartz investors converted his $22,500 note into 681 shares of the Company’s Class B Preferred Stock Series 3. Additionally, he invested an additional $30,000 in the Company through the purchase of 857 shares of Class B Preferred Stock Series 3 shares. The conversion was within the terms of the agreement and there was no gain or loss on the transaction.

At December 31, 2012 and December 31, 2011, there were 11,180 and 9,642 shares of Class B Preferred Stock Series 3 issued and outstanding, respectively.

DIVIDENDS

Dividends for Class A Preferred Stock and Class B Preferred Stock Series 1 are non-cumulative, however, the holders of such series, in preference to the holders of any common stock, shall be entitled to receive, as and when declared payable by the Board of Directors from funds legally available for the payment thereof, dividends in lawful money of the United States of America at the rate per annum fixed and determined as herein authorized for the shares of such series, but no more.

Dividends for Class A Preferred Stock are payable quarterly on the last days of March, June, September, and December in each year with respect to the quarterly period ending on the day prior to each such respective dividend payment date. In no event shall the holders of Class A Preferred Stock receive dividends of more than percent (1%) in any fiscal year, and each share shall rank on parity with each other share of preferred stock, irrespective of class or series, with respect to dividends at the respective fixed or maximum rates for such series.

At December 31, 2012 and December 31, 2011, the Company recorded dividends paid or accrued for the Class B Preferred Stock Series 3 shares of $38,853 and $1,942 respectively, for those shares issued in the Schwartz debt conversions, discussed above.

NOTE 19 - STOCK OPTIONS / STOCK WARRANTS

In September 2007, the Company entered into a consulting agreement with Small Cap Support Services, Inc. (“Small Cap”) to provide investor relations services. In addition to monthly compensation, Small Cap was entitled to 500,000 options, vesting ratably over 8 quarters through August 30, 2009, priced at 166,667 shares at $0.15, $0.25, and $0.35 each. Using the Black-Scholes valuation model and an expected life of 3.5 years, volatility of 271.33%, and a discount rate of 4.53%, the Company determined the aggregate value of the 500,000 seven year options to be $59,126. The options became fully expensed and vested as of June 30, 2009. All options are outstanding at December 31, 2012 and December 31, 2011.

NOTE 20 - EARNINGS PER SHARE

As both 2012 and 2011 resulted in a net loss, the Company does not calculate fully diluted earnings per share, separately.

As of December 31, 2012, Adino had 156,249,331 shares outstanding, with no shares payable outstanding. The Company uses the treasury stock method to determine whether any outstanding options or warrants are to be included in the diluted earnings per share calculation.

The dilutive effect of convertible instruments on earnings per share is not presented in the consolidated statements of operations for periods with a net loss.

NOTE 21 - DEFERRED INCOME TAX

On January 1, 2007, the Company adopted an accounting standard which clarifies the accounting for uncertainty in income taxes recognized in financial statements. This standard provides guidance on recognizing, measuring, presenting and disclosing in the financial statements uncertain tax positions that a company has taken or expects to take on a tax return. See Note 1 for further information related to the Company’s accounting for uncertainty in income taxes.

During both 2012 and 2011, the Company incurred a net loss and therefore had no tax liability. The Company does not have any material uncertain income tax positions. As a result, the net deferred tax asset generated by the loss carry forward has been fully reserved. The cumulative net operating loss carry forward is approximately $13,824,160 and $12,459,913 at December 31, 2012 and 2011, respectively, and will expire in the years 2021 through 2031.

At December 31, 2012 and 2011, the deferred tax assets consisted of the following:

	December 31, 2012			December 31, 2011

Net operating loss	$	4,700,214		$	4,236,370
Less: Valuation allowance	$	(4,700,214	)	$	(4,236,370	)
Net deferred tax asset	$	-		$	-

NOTE 22 - SALE OF ADINO DRILLING, LLC

With the sale of Adino Drilling, LLC, the $7,139 of goodwill resulting from the original Petro Energy acquisition was written off. The transaction has been accounted for as a discontinued operation.

Below are the asset and liability values for Adino Drilling, LLC at March 31, 2011:

	Assets disposed at March 31, 2011

Cash	$	100
Fixed assets, net of depreciation of $34,837 at March 31, 2011		350,702
Total assets		350,802

Accounts payable		5,317
Accounts payable - related party		-
Total liabilities		5,317

Net assets - discontinued operations	$	345,485

NOTE 23 - SALE OF INTERCONTINENTAL FUELS, LLC

On February 7, 2012, Adino sold all of its membership interest in IFL to Pomisu XXI S.L. (“Buyer”). The purchase price paid by the Buyer was $900,000, paid in two installments with the first installment of $244,825 paid on February 7, 2012, and the balance due not later than May 7, 2012. The balance of the purchase price shall be computed as follows: $900,000 minus $244,825 (initial installment) minus any IFL liabilities plus any cash on deposit with Regions Bank for the benefit of IFL or cash on deposit with J.P. Morgan Bank for the benefit of the Company.

The Buyer agreed to assume the following liabilities in the transaction:

Description	Amount

Accounts payable	$	106,520
G J Capital judgment		437,155
Due to related party		1,500
Prepaid rent deposit		110,000
Total	$	655,175

The February 7, 2012 IFL balance sheet (unconsolidated) is presented below:

	February 7, 2012
Assets
Cash	$	82,409
Fixed Assets net of depreciation		6,131
Total assets	$	88,540

Liabilities
Accounts payable	$	148,258
Accrued liabilities		76,215
Due to related party		1,500
Deferred gain on sale/leaseback		171,293
Due to G J Capital		437,155
Total liabilities		834,421

Equity
Additional paid-in-capital		1,870,100
Distributions		(663,476	)
Retained earnings		(2,069,189	)
Net income		116,684
Total equity		(745,881	)
Total liabilities and equity	$	88,540

IFL net income for the three months ended March 31, 2012 and year ended 2011, reflected as discontinued operations on the Statement of Operations is as follows:

	IFL			IFL
	Three months ended			Year ended
	3/31/12			12/31/11
Revenues:
Terminal operations revenue	$	152,000		$	1,824,000

Operating expenses:
Terminal management		33,430			402,270
General and administrative		43,949			504,159
Legal and professional		8,762			127,207
Consulting fees		28,000			180,024
Repairs		-			100
Depreciation expense		150			22,237
Total operating expenses		114,291			1,235,997

Operating income (expense)		37,709			588,003

Other income (expense)
Interest income		351			276
Interest expense		(741	)		(7,809	)
Other expense		-			(151,665	)
Gain from lawsuit/sale leaseback		32,606			391,278
Total other income and expense		32,216			232,080
					-
Net income	$	69,925		$	820,083

Net loss on sale		8,414			-

Total net income from discontinued operations	$	61,511		$	820,083

NOTE 24 - SALE OF OIL AND GAS ASSETS

On October 31, 2012, the Company and Adino Exploration, LLC (“Exploration”), a wholly owned subsidiary of the Company, entered into an Asset Purchase and Sales Agreement (“Agreement”) with Broadway Resources, LLC (“Buyer”). The Agreement provided that Exploration agreed to sell all of its rights, title and interest to its oil and gas leases located in Coleman and Runnels Counties, Texas. The purchase price paid by the Buyer was $2,921,616, which includes a cash payment of $811,825 and the elimination of the Company and Exploration debts in the amount of $2,109,791.

The Company’s Chairman and Chief Financial Officer have an ownership interest in the Buyer. Exploration’s members approved the sale of assets and the terms of the Agreement as being fair and reasonable. In evaluating the sale of Exploration’s assets, including the determination of an appropriate purchase price paid, the Company considered a variety of factors, including the estimated future net oil reserves of the oil and gas leases, comparable sales of other oil and gas leases in the area, and the value of the equipment sold.

On October 31, 2012, Shannon McAdams, the Company’s chief financial officer, resigned his employment with the Company and with Adino Exploration, LLC.

The cash payment at closing was comprised of a payment to the Company of $300,000 and payment of liabilities, shown below.

Description	Amount

Accounts payable	$	220,190
Note payable - BlueRock Energy Capital II, LLC		291,635

Total	$	511,825

In the sale, Broadway acquired the following assets and liabilities:

	10/31/2012

Inventory	$	19,708
Note receivable - current portion		750,000
Interest receivable		375,208

Total current assets		1,144,916

Fixed assets, net of depreciation		148,575
Oil and gas properties		680,075

Total non-current assets		828,650

TOTAL ASSETS	$	1,973,566

Accounts payable	$	30,140
Accrued liabilities - related party		322,122
Asset retirement obligation		54,142
Notes payable - current portion		1,741,023
Convertible notes payable - current portion		100,000
Interest payable		988,836
Total current liabilities		3,236,263

Convertible notes payable		400,000
TOTAL LIABILITIES	$	3,636,263

The Company classified all similar assets and liabilities at December 31, 2011 as assets held for sale, for comparative purposes.

Net loss for Adino Exploration for the year ended December 31, 2012 and 2011 is reflected as Loss from Discontinued Operations. The Statement of Operations information for those periods is detailed as follows:

	For the years ended
	12/31/2012			12/31/2011
REVENUES AND GROSS MARGINS
Oil and gas operations	$	322,523		$	277,917
Total revenues		322,523			277,917

OPERATING EXPENSES
Payroll and related expenses		73,034			64,406
General and administrative		178,931			156,012
Legal and professional		3,707			18,999
Consulting fees		159,949			142,260
Repairs		3,743			20,755
Depreciation expense		121,517			80,659
Operating supplies		30,912			40,381
Total operating expenses		571,793			523,472

OPERATING (LOSS)		(249,270	)		(245,555	)

OTHER INCOME AND EXPENSES
Interest income		704			42
Interest expense		(35	)		(9,544	)
Gain from lawsuit/sale leaseback		-			(17,086	)
Other income (expense)		681			29,934
Total other income and (expense)		1,350			3,346

(Loss) from continuing operations	$	(247,920	)	$	(242,209	)

Although the Company realized a gain on the oil and gas asset sale of $2,474,522, it was accounted for as a related party gain and was recorded to additional paid in capital at October 31, 2012

NOTE 25 - LAWSUIT SETTLEMENT - IFL TERMINAL

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

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

As a result of these transactions, all claims by and against all parties except Mr. Peoples were released. In addition, all liens pending on IFL’s property were released. The complete lawsuit settlement resulted in a net gain to Adino and IFL of $1,480,383. Due to the terminal sale / leaseback transaction, the gain is being recognized over the life of the capitalized asset or 15 years. Gain recognized for 2011 was $391,278 and $32,606 through the sale date, February 7, 2012.

NOTE 26 - LAWSUIT SETTLEMENT - G J CAPITAL

On March 15, 2010, G J Capital, Ltd. (“G J Capital”) filed suit against Adino Energy Corporation and IFL in the 129th Judicial District Court of Harris County, Texas. G J Capital’s claim relates to a repurchase agreement whereby IFL sold to G J Capital certain assets for $250,000 and retained the ability to repurchase the assets in sixty days by paying to G J Capital the amount of $275,000. G J Capital’s petition alleged claims of breach of contract, money had and received, and fraudulent misrepresentation. G J Capital later amended its petition to allege that certain of Adino’s directors and officers (Mr. Timothy Byrd and Mr. Sonny Wooley) fraudulently transferred assets of Adino and/or IFL. G J Capital has also alleged that Mr. Wooley and Mr. Byrd are the alter ego of Adino and IFL, and/or that Adino and/or IFL are alter egos of one another. G J Capital also alleged fraudulent conduct by one or more of the defendants.

NOTE 27 - CONCENTRATIONS

The Company had two customers during the reporting periods presented. Customer A was associated with revenues at IFL, thus no revenue since February 7, 2012, the IFL sale date. The Company’s oil and gas revenues were gathered by one party, Customer B.

	Year Ended December 31, 2012		%			Year Ended December 31, 2011		%

Customer A	$	152,000		28	%	$	1,824,000		84	%
Customer B	$	386,903		72	%	$	347,037		16	%
Total	$	538,903		100	%	$	2,171,037		100	%

Customer B represented 100% of outstanding receivables for the year ended December 31, 2011. There was no outstanding receivable balance at December 31, 2012.

NOTE 28 - SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (Unaudited)

In January 2010, the FASB issued an ASU to amend existing oil and gas reserve accounting and disclosure guidance to align its requirements with the SEC’s revised rules discussed in Note 1. The significant revisions involve revised definitions of oil and gas producing activities, changing the pricing used to estimate reserves at period end to a twelve month arithmetic average of the first day of the month prices and additional disclosure requirements. In contrast to the SEC rule, the FASB does not permit the disclosure of probable and possible reserves in the supplemental oil and gas information in the notes to the financial statements. The amendments are effective for annual reporting periods ending on or after December 31, 2009. Application of the revised rules is prospective and companies are not required to change prior period presentation to conform to the amendments. Application of the amended guidance has only resulted in changes to the prices used to determine proved reserves at December 31, 2009. The new guidelines have expanded the definition of proved undeveloped reserves that can be recorded from an economic producer. The opportunity to prove reasonable certainty for spacing areas located more than one direct development spacing area from economic producer did not impact or prove undeveloped reserves.

The Company follows the guidelines prescribed in ASC Topic 932 for computing a standardized measure of future net cash flows and changes therein relating to estimated proved reserves. Future cash inflows and future production and development costs are determined by applying prices and costs, including transportation, quality, and basis differentials, to the year-end estimated quantities of oil and gas to be produced in the future. The resulting future net cash flows are reduced to present value amounts by applying a ten percent annual discount factor. Future operating costs are determined based on estimates of expenditures to be incurred in producing the proved oil and as reserves in place at the end of the period using year-end costs and assuming continuation of existing conditions, plus Company overhead incurred. Future development costs are determined based on estimates of capital expenditures to be incurred in developing proved oil and gas reserves.

The assumptions used to compute the standardized measure are those prescribed by the FASB and the SEC. The assumptions do not necessarily reflect the Company’s expectations of actual revenues to be derived from those reserves, nor their present value. The limitations inherent in the reserve quantity estimation process, as discussed previously, are equally applicable to the standardized measure computations since these reserve quantity estimates are the basis for the valuation process. The Company emphasizes that reserve estimates are inherently imprecise and that estimates of new discoveries and undeveloped locations are more imprecise than estimates of established proved producing oil and gas properties. Accordingly, these estimates are expected to change as future information becomes available. All of the Company’s proved reserves are located in the State of Texas.

Proved oil and natural gas reserve quantities at December 31, 2012 and December 31, 2011, and the related discounted future net cash flows are based on estimates prepared by Corridor Resources, LLC, independent petroleum engineers.

Oil reserves

	2011 (bbls.)

Beginning balance		6,210
Revisions of previous estimates		-
Purchase of reserves		-
Extensions, discoveries and other additions		24,458
Sale of reserves
Production		(3,548	)
End of year balance		27,120

During 2011, the Company’s primary focus was continuing the enhancement of the acquired wells and drilling new wells. The Company focused development of the James Leonard lease, drilling and completing 3 wells during the spring and summer. With the success of those shallow, low cost projects, the Company focused on acquiring funding for additional wells. On October 14, 2011, the Company entered into a production agreement with BlueRock Energy Capital II, LLC (“BlueRock”). Under the production agreement, BlueRock funded Adino with $410,000 for the drilling of five oil wells on the Company’s Leonard and Felix Brandt leases and for working capital. Under the terms of the production agreement, BlueRock was entitled to 65% of the net revenue interest of the wells until BlueRock received $410,000 plus an 18% return on investment. These monies were paid as the Company received production payments on the new wells. After payment of this amount, BlueRock received a 3% overriding royalty interest on the wells. As of December 31, 2011, the wells were drilled and completion was underway. The BlueRock production agreement was assumed and settled as part of the sale of the Company’s oil and gas assets on October 31, 2012.

Costs Incurred

Capitalized Costs Relating to Oil and Gas Producing Activities

	2011

Unproved oil and gas properties	$	280,602
Proved oil and gas properties		526,766
Total		807,368
Accumulated depreciation, depletion, amortization and valuation allowances		(120,741	)
End of year balance	$	686,627

Costs Incurred in Oil and Gas Property Acquisition, Exploration, and Development:

Costs incurred in oil and natural gas property acquisition, exploration and development activities are summarized below for the year ended December 31, 2011:

	2011
Property acquisition costs:
Unproved	$	-
Proved		-
Exploration costs		-
Development costs		485,506
Asset retirement cost		3,704
Total costs incurred	$	489,210

Standardized Measure

The standardized measure of discounted future net cash flows relating to the Company’s ownership interests in proved oil reserves for the year ended December 31, 2011 is shown below:

	2011

Future cash inflows	$	2,384,380
Future oil and natural gas operation expenses		(1,157,350	)
Future development costs
Future income tax expenses
Future net cash flows		1,227,030
10% annual discount for estimating timing of cash flow		(275,760	)
Standardized measure of discounted future net cash flow	$	951,270

No data is presented for the year ended December 31, 2012, as all oil and gas interests were sold at October 31, 2012. See Note 24 for a thorough discussion of the sale.

NOTE 29 - SUBSEQUENT EVENTS

There were no significant subsequent events through April 16, 2013, the date the financial statements were issued.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

ITEM 9A. CONTROL AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

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

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. We have identified the following material weaknesses:

As of December 31, 2012, we did not maintain effective controls over the control environment. Specifically, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

As of December 31, 2012, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2012, based on the criteria established in "Internal Control-Integrated Framework" issued by the COSO.

Corrective Action

Management plans to address the structure of the Board of Directors and discuss adding an audit committee during 2012.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting through the date of this report or during the quarter ended December 31, 2012, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Independent Registered Accountant’s Internal Control Attestation

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permanently exempts smaller reporting companies from providing attestation of their internal controls pursuant to Section 404 of the Sarbanes-Oxley Act. As a result, this report does not provide such an attestation, and the Company will be exempt from providing such an attestation until the Company’s market capitalization reaches $75 million.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The directors and officers of the Company as of December 31, 2012, are set forth below. The directors hold office for their respective term and until their successors are duly elected and qualified. The officers serve at the discretion of the Board of Directors.

DIRECTORS, EXECUTIVE OFFICERS, AND SIGNIFICANT EMPLOYEES

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

Name	Age	Office

Sonny Wooley	73	Chairman of the Board of Directors
Timothy G. Byrd, Sr.	51	Chief Executive Officer, Chief Financial Officer and Director

SONNY WOOLEY, CHAIRMAN OF THE BOARD OF DIRECTORS

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

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

Mr. Byrd became the Company’s Chief Executive Officer (“CEO”) and director in December 2001. Prior to that time, Mr. Byrd was President of Innovative Capital Markets, an advisory firm that developed growth strategies for corporations through strategic alliances and mergers and acquisitions. Mr. Byrd was appointed Chief Financial Officer in November 2012.

We do not have any standing committees.

None of our officers or directors have filed any bankruptcy petition, been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities law within the past ten (10) years.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

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

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

CODE OF ETHICS

The Company has adopted a code of ethics applicable to our CEO, controller, our other employees, and our suppliers. This code is intended to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to the SEC and in other public communications that we make; compliance with applicable governmental laws, rules and regulations; the prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and accountability for adherence to the code. A copy of our code of ethics was filed as an exhibit to our 2008 annual report filed with the SEC. The Company will provide a copy of our code of ethics, without charge, to any person who requests it. In order to request a copy of our code of ethics, please contact our headquarters and speak with our investor relations department. Additionally, the complete code of ethics is available on our website at www.adinoenergycorp.com.

AUDIT COMMITTEE

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

ITEM 11. EXECUTIVE COMPENSATION

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

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary ($)	Bonus	Stock Awards	Option Awards ($)	All Other Compensation ($)	Total ($)

Timothy G. Byrd, Sr., CEO	2012	15,000	-0-	-0-	-0-	-0-	15,000
Timothy G. Byrd, Sr., CEO	2011	180,000	-0-	5,500	-0-	-0-	185,500

Sonny Wooley, Chairman	2012	15,000	-0-	-0-	-0-	-0-	15,000
Sonny Wooley, Chairman	2011	180,000	-0-	5,500	-0-	-0-	185,500

Shannon W. McAdams, CFO	2012	3,500	-0-	-0-	-0-	-0-	3,500
Shannon W. McAdams, CFO	2011	146,000	-0-	-0-	-0-	-0-	146,000

Nancy Finney, Controller	2012	26,000	-0-	-0-	-0-	-0-	26,000
Nancy Finney, Controller	2011	90,000	-0-	5,357	-0-	-0-	95,357

Of the amounts reflected above, certain amounts were deferred and not paid as of 12/31/2012 and 12/31/2011:

Name	Amount deferred in 2012	Amount deferred in 2011

Timothy Byrd	$-	$77,573
Nancy Finney	$-	$19,000

Mr. Byrd’s and Mr. Wooley’s salaries are paid in the form of consulting agreements. The Company did not have an employment agreement with Mr. McAdams.

DIRECTOR COMPENSATION

Name					Year			Fees Earned or Paid in Cash ($)			Stock Awards ($)			Total ($)
	None				2012			-0-			-0-			-0-

No director compensation was paid in 2012.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

There are no outstanding equity awards to management at December 31, 2012.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

EQUITY COMPENSATION PLAN INFORMATION

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders	-0-	N/A	-0-
Equity compensation plans not approved by security holders	500,000	$0.25	-0-

The 500,000 options are issued to our former investor relations firm, SmallCap Support Services, Inc. (“SmallCap”).

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

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

Sonny Wooley		18,857,514(3)		13.92%

Timothy G. Byrd, Sr.		18,852,041		13.91%

Alejandro Perales		8,011,628		5.91%

Executive officers and directors as a group (2 persons)		37,709,555		24.1%

The above numbers and percentages are as of April 16, 2013.

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

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

(3) Includes 256 shares held indirectly.

The Company does not have any independent directors. For purposes of determining director independence, we used the standards applicable to companies listed on the NASDAQ Stock Exchange, which are not applicable to us. The Company is considering adding an additional director, who may be independent, in 2013.

On March 31, 2011, the Company sold the membership interest of Adino Drilling, LLC to Adino Drilling, Corp. for $600,000. Adino Drilling, Corp. is an entity affiliated with our Chairman, Sonny Wooley. Under the sale agreement, the Company reduced its accrued compensation due to Mr. Wooley by $100,000 and accepted a $500,000 promissory note, bearing interest at 5.24% annually and due in six years. This note was cancelled in the sale of Adino Exploration, LLC, further described below.

On October 31, 2012, the Company and Adino Exploration, LLC (“Exploration”), a wholly owned subsidiary of the Company, entered into an Asset Purchase and Sale Agreement (“Agreement”) with Broadway Resources, LLC (“Broadway”). Pursuant to the Agreement, Exploration sold its oil and gas leases located in Coleman and Runnels Counties, Texas. The purchase price paid by Broadway was $2,921,616, which includes a cash payment of $811,825 and the elimination of the Company and Exploration debts in the amount of $2,109,791. The Company’s Chairman and former Chief Financial Officer have an ownership interest in Broadway. As part of the Agreement, on October 31, 2012, the Company’s Chairman entered into a Debt Release Agreement with the Company releasing the Company of all obligations owed to him relating to any accrued and unpaid compensation in the amount of $315,575.25.

Exploration’s sole member, Adino, approved the sale of assets and the terms of the Agreement as being fair and reasonable. In evaluating the sale of Exploration’s assets, including the determination of an appropriate purchase price paid, the Company considered a variety of factors, including the estimated future net oil reserves of the oil and gas leases, comparable sales of other oil and gas leases in the area, and the value of the equipment sold.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

We paid $45,300 and $41,600 for the audit of our financial statements and review of our quarterly reports for fiscal year 2011 and 2012, respectively.

AUDIT-RELATED FEES

We paid aggregate fees of $-0- for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements this fiscal year. In 2011, these fees were $-0-.

TAX FEES

We paid aggregate fees of $2,600 and $-0- for tax compliance, tax advice, and tax planning by our principal accountant for the years ended December 31, 2011and 2012, respectively. These services consisted of preparing and filing our federal income tax and federal excise tax returns.

ALL OTHER FEES

We paid aggregate fees of $-0- for products and services provided by our principal accountant not otherwise disclosed above. In 2010, we were billed $-0- for these products and services.

PRINCIPAL ACCOUNTANT ENGAGEMENT POLICIES

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

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this report:

Exhibit
Number		Exhibit

3.1		Articles of Incorporation (as amended January 30, 2008) (incorporated by reference to our Form 10-K filed on March 18, 2009)

3.2		Amendment to Articles of Incorporation (amendment for Class B Preferred Stock Series 1) (incorporated by reference to our Form 8-K filed November 14, 2011)

3.3		Amendment to Articles of Incorporation (amendment for Class B Preferred Stock Series 3)

3.4		By-laws of Golden Maple Mining and Leaching Company, Inc. (now Adino Energy Corporation) (incorporated by reference to our Form 10-K filed on March 18, 2009)

10.1		Membership Interest Purchase Agreement (incorporated by reference to our Form 10-Q filed on November 22, 2010)

10.2		Post-Closing Agreement (incorporated by reference to our Form 10-Q filed on November 22, 2010)

10.3		Resolution of the Board of Directors of February 1, 2010 (incorporated by reference to our Form 10-K filed on April 1, 2011)

10.4		Resolution of the Board of Directors of November 24, 2010 (incorporated by reference to our Form 10-K filed on April 1, 2011)

10.5		BlueRock Energy Capital II Production Agreement

10.6		Asset Purchase Agreement (incorporated by reference to our Form 8-K filed November 14, 2011 )

10.7		Lease with Lone Star Fuel Storage and Transfer, LLC (incorporated by reference to our Form 10-K filed on March 18, 2009)

10.8		Employment Agreement with Sonny Wooley (incorporated by reference to our Form 10-Q filed on August 15, 2011)

10.9		Employment Agreement with Timothy G. Byrd (incorporated by reference to our Form 10-Q filed on August 15, 2011)

10.10		Terminaling Services Agreement for Commingled Products (incorporated by reference to our Form 10-Q filed on November 14, 2011)

10.11		Amendment to Terminaling Agreement (incorporated by reference to our Form 10-Q filed on November 14, 2011)

10.12		Asset Purchase and Sale Agreement with Broadway Resources, LLC (incorporated by reference to our Form 8-K filed on November 5, 2012)

10.13		Termination and Release of BlueRock Production Payment

14		Code of Business Conduct and Ethics (incorporated by reference to our Form 10-K filed on March 18, 2009)

21		Subsidiaries of the Registrant

31.1		Certification of Chief Executive Officer pursuant to Rule 15d-14(a) of the Exchange Act

31.2		Certification of Chief Financial Officer pursuant to Rule 15d-14(a) of the Exchange Act

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101	Interactive Data File

SIGNATURES

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the undersigned has duly caused this Form 10-K to be signed on its behalf by the undersigned, there unto duly authorized, in the City of Houston, Texas on April 18, 2013.

ADINO ENERGY CORPORATION

By: /s/ Timothy G. Byrd, Sr.
Timothy G. Byrd, Sr.
Chief Executive Officer, Chief Financial Officer and Director

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

Signature	Name and Title	Date

/s/ Sonny Wooley	Chairman of the Board	April 18, 2013
Sonny Wooley	of Directors

/s/ Timothy G. Byrd, Sr.	Chief Executive Officer,	April 18, 2013
Timothy G. Byrd, Sr.	Chief Financial Officer
	and Director

ADINO ENERGY CORP 10-K