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, ~~2011~~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~~ 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 ~~¨ No~~ 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, ~~2011~~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 $3297,~~962,083~~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, ~~2012~~2013, there were ~~135~~156,~~487~~249,~~043~~331 shares of common stock outstanding.

TABLE OF CONTENTS

		Page No.
PART I
Item 1.	Business	43
Item 2.	Properties	87
Item 3.	Legal Proceedings	87
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	98
Item 6	Selected Financial Data	119
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1110
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	1514
Item 8	Financial Statements and Supplementary Data	1615
	Report of Independent Registered Public Accounting Firm	1615
	Consolidated Balance Sheets – December 31, 2011 and December 31, 2010	17
	Consolidated Balance Sheets - December 31, 2012 and December 31, 2011	16
	Consolidated Statements of Operations- Years Ended December 31, 2011 and 2010	18
	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, 2011 and 2010	19
	Consolidated Statement of Changes in Stockholders’ Deficit - Years Ended December 31, 2012 and 2011	18
	Consolidated Statements of Cash Flows- Years Ended December 31, 2011 and 2010	20
	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	2120
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	4344
Item 9A	Controls and Procedures	4344
Item 9B	Other Information	4445
PART III
Item 10	Directors, Executive Officers and Corporate Governance	4445
Item 11	Executive Compensation	4546
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	4647
Item 13	Certain Relationships and Related Transactions, and Director Independence	4748
Item 14	Principal Accounting Fees and Services	4748
PART IV
Item 15	Exhibits, Financial Statement Schedules	48
Signatures		4850

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. ~~The Company also leases and operates a fuel terminal in Houston, Texas.~~

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 ~~wholly-owned~~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 iswas a licensed Texas oilfield operator ~~currently~~ operating 11 wells on two leases covering approximately 300 acres in Coleman County, Texas. Petro Energy also ~~owns~~owned a drilling rig, two service rigs and associated ~~tools~~ 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.

~~With~~In October 2011, Adino signed a letter of intent to purchase all of the ~~Company’s~~assets ~~focus~~of onAshton, ~~oil~~AOS 1A, and ~~gas~~AOS ~~exploration~~1-B ~~and~~(collectively, “AOS”). The proposed purchase ~~production~~price for the assets was $6,000,000 in face value of convertible preferred stock of the Company, ~~decided~~with the preferred stock converting to ~~sell~~common ~~its~~stock ~~interest~~at inthe ~~IFL~~rate of $0.15 Toper share. The parties agreed that ~~end,~~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 ~~February~~November 73, ~~2012~~2011, and the Company issued 100,000 shares of Adino's Class "B" Preferred Stock Series 1 (~~subsequent~~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 ~~period~~first ~~covered~~six months, only 25% of bythe ~~this~~Preferred ~~report~~Stock may be converted to common stock, and (b) each month thereafter, ~~Adino~~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 ofoilfield machinery ~~its~~and ~~membership~~equipment ~~interest~~it had purchased from AOS in ~~IFL~~its toNovember a2011 ~~third~~acquisition ~~party~~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

OnThe ~~July~~Company 1,is ~~2010,~~an ~~the~~emerging ~~Company~~oil ~~acquired~~and ~~100%~~gas ofexploration ~~the~~and ~~membership~~production ~~interests~~(“E&P”) ofcompany ~~Petro~~publicly ~~Energy~~traded ~~for~~under ~~10,000,000~~the ~~shares~~symbol ofADNY ~~Adino~~on ~~common stock; however,~~ the ~~newly~~OTCQB ~~issued~~quotation ~~shares will~~service ~~remain~~operated inby ~~escrow~~OTC ~~until~~Markets ~~Adino’s~~Group, ~~stock price reaches $0~~Inc.25 ~~per~~The ~~share.~~Company Ifis ~~Adino's~~focused ~~stock~~on ~~price~~mature ~~fails~~oilfield toassets ~~reach~~with ~~$0.25~~significant ~~within~~redevelopment, ~~three~~work-over ~~years,~~and ~~the~~EOR ~~sellers may repurchase for $1~~potential.~~00 the assets originally held by Petro Energy on July 1, 2010.~~

~~Petro~~The ~~Energy~~Company’s ~~was~~subsidiary, Adino Exploration, LLC, is a ~~licensed~~bonded Texas ~~oilfield operator~~oil ~~operating~~and 11gas ~~wells~~operator onthat ~~two~~owned and operated leases ~~covering~~in ~~approximately~~Coleman ~~300~~and Runnels counties. The Company owned and operated 776 mineral acres inwith ~~Coleman~~producing ~~County~~leases representing 64,300 ~~Texas~~barrels of proven, developed, and producing (“PDP”) reserves. ~~Petro~~With ~~also~~both ~~owned~~a service rig and a drilling rig, ~~two~~Adino ~~service~~Exploration ~~rigs~~was ~~and~~a ~~associated~~fully ~~tools~~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 ~~equipment~~geologically similar. The Company ~~also~~grew ~~acquired~~through the ~~operator~~drill ~~license~~bit, ~~held~~ augmented by ~~the~~opportunistic ~~principal~~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 ~~PetroGreen~~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 ~~Petro~~had ~~2000~~similar ~~Exploration~~geology. CoLeases were either held by production or had generous primary terms.

~~The~~Adino ~~newly~~Exploration’s ~~acquired~~management ~~leases~~team included ~~have~~managers ~~mature~~and ~~production~~technical experts with decades of oil & gas industry experience. They cover all primary disciplines critical ~~from~~to ~~eight~~the ~~proved~~success ~~developed~~of ~~producing~~an ~~(PDP)~~E&P ~~wells~~company, from operations and ~~three~~deal ~~saltwater~~origination ~~disposal~~through ~~wells~~geology and reservoir engineering. ~~The~~Working ~~area~~together since July 2010, Adino Exploration’s management team has ~~seen~~produced ~~active~~impressive ~~oil~~results. ~~production~~Starting ~~from multiple~~with ~~pay~~4 ~~zones~~bopd ~~since~~of ~~the~~production on ~~1950s.~~119 ~~Reservoir~~acres ~~pressure~~and ~~has~~a ~~dropped~~hodgepodge ~~over~~of ~~time;~~well-used ~~however~~equipment, ~~the~~Adino ~~Company~~Exploration ~~believes~~had ~~that~~grown ~~significant~~into ~~oil~~a complete oilfield operator with a rapidly ~~remains~~expanding inreserve ~~place~~base and prospect inventory. ~~Adino~~Further, ~~started~~the team’s focus on tight operations and capital efficiency has resulted in a ~~waterflood~~high ~~project~~drilling success rate, ~~which~~high ~~management~~margins ~~believes~~per ~~will~~produced ~~substantially~~barrel, ~~increase~~low ~~both~~finding ~~daily~~& ~~production~~ development (F&D) costs and ~~economically~~low ~~recoverable~~average acreage ~~reserves~~costs for new leases.

~~Since~~When the ~~acquisition, the~~ Company ~~has completed~~was ~~Phase~~approached Ito ofsell Adino ~~its~~Exploration’s ~~workover~~assets ~~program~~in onColeman ~~its~~and ~~Felix~~Runnels ~~Brandt~~counties, ~~and~~management ~~Felix~~believed ~~Brandt~~that ~~"A"~~the ~~leases~~price ~~(collectively,~~offered afforded the ~~“Felix~~Company ~~Brandt~~a ~~leases”)~~very ~~located~~high inrate ~~southeast~~of ~~Coleman~~return ~~County,~~on ~~Texas.~~investment ~~With~~(over ~~the~~300%) ~~completion~~and ofa ~~Phase~~chance Ito ofmove the ~~workover~~Company’s ~~program,~~business ~~Adino has~~plan ~~eight~~forward ~~wells~~quickly oncompared to ~~production.~~growing ~~Two~~the ~~more~~Company ~~wells~~with ~~are~~limited ~~designated~~funding asdue ~~injection~~to ~~wells for~~ the ~~previously~~constraints ~~announced~~of ~~waterflood~~its ~~project (one~~balance issheet. anWith ~~active~~little ~~injection~~debt, ~~well and~~ the ~~other is in the permitting process). The~~ Company ~~also~~now ~~recompleted~~believes that anit ~~existing~~can ~~well~~secure ~~as a~~debt ~~water~~and ~~source~~equity ~~for~~funding ~~the~~at ~~waterflood~~competitive rates.

~~During~~The ~~Phase~~Company I,is ~~Adino~~now ~~perforated~~executing ~~into~~the ~~new~~same successful ~~zones~~plan onin ~~two~~Texas ofbut ~~the~~has ~~existing~~determined ~~wells~~that ~~and~~it ~~applied~~is ~~acid~~ready ~~fracture~~to ~~jobs~~expand onits ~~both~~footprint to Oklahoma and Kansas as well. ~~Acid~~The ~~fracture~~Company ~~involves~~is ~~pumping~~currently assessing aseveral ~~diluted~~potential ~~acid~~target ~~solution,~~leases in these areas due to lower drilling and production cost and expects to aggressively ~~under~~acquire ~~high~~leases ~~pressure,~~and ~~into~~production ~~underground~~in ~~formations~~Texas, ~~containing~~Oklahoma ~~hydrocarbons~~and Kansas. The ~~technique~~Company’s isbusiness ~~used~~will tostay ~~improve~~ the ~~permeability~~same of with the ~~formations,~~exception of ~~allowing~~much ~~hydrocarbons~~greater toacreage ~~flow~~accumulation, ~~more~~which ~~easily~~we ~~into~~believe will increase the ~~wellbore~~Company’s cash flow and reserve base.

In addition, significant parts of the production equipment have been replaced and water storage tanks have been installed. The Company continues to improve basic infrastructure on the Felix Brandt Leases, including retention berms around the tank batteries, trenching flow-lines and removal of debris from the area.

With the initial Petro Energy purchase, the Company acquired 100% of the working interest (87.5% net revenue interest) in the James Leonard lease (the “Leonard lease”) in southeast Coleman County, Texas. The primary target pay zone of the Leonard lease is the Fry Sand at approximately 1,200 feet.

In December 2010, we began Phase II of the Petro Energy development plan for the Leonard lease. The Company cleared the needed land and drilled 3 successful wells on the Leonard lease, completing those wells in early summer 2011. We have also moved in the required tank battery with retention berms, put in flow lines and have added a shop for localized equipment repairs and disbursement.

With the success of the drilling program, the Company had the reserve analysis recalculated to include both the Felix Brandt and Leonard leases. An independent engineering firm estimated the discounted net cash flow increased from $118,590 as of December 31, 2010 to $951,270 at December 31, 2011.

On October 12, 2011, the Company signed a letter of intent with Ashton Oilfield Services, LLC (“Ashton”) for purchase of oilfield equipment, including a drilling rig, associated equipment and several vehicles. 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. In November 2011, the Company closed on $1,500,000 of the total proposed sale price, issuing 100,000 shares of preferred stock to a limited partnership managed by Ashton. The agreement was finalized in November and the Company began consolidating the equipment from its various locations in Texas, New Mexico and Oklahoma. The Company later decided not to acquire the remaining Ashton assets. On February 7, 2012 (subsequent to the period covered by this report), the Company sold all oilfield machinery and equipment it had purchased from Ashton Oilfield Services in its November 2011 acquisition for $500,000 cash.

On October 14, 2011, the Company entered into a production agreement with BlueRock Energy Capital II, LLC (“BlueRock”). Under the production agreement, BlueRock has agreed to fund Adino with $410,000 for the drilling of five oil wells on the Leonard and Felix Brandt leases and for working capital. Under the terms of the production agreement, BlueRock will be entitled to 65% of the net revenue interest of the wells until BlueRock receives $410,000 plus an 18% return on investment. These monies are to be paid as the Company receives production payments on the new wells. After payment of this amount, BlueRock will receive a 3% overriding royalty interest on the wells.

Drilling began on the BlueRock five well program (one well on the Felix Brandt lease and four wells on the Leonard lease) in November 2011. Drilling was completed by December 31, 2011 with well completion expected in 2012.

The Company believes that its focused efforts in exploration and production during 2011 were very successful. We plan to continue the path of lease acquisition and development resulting in increased production and reserve interests in 2012 and beyond.

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 ~~(subsequent to the period covered by this report)~~, Adino sold all of its membership interest in IFL to Pomisu XXI S.L. (“Buyer”). The purchase price agreed to bewith ~~paid by~~ the Buyer iswas $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 ~~shall~~was be computed as follows: $900,000 minus $244,842.97 (initial installment) minus $655,~~157~~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, ~~2011~~2012, Adino and its subsidiaries have ~~one~~no ~~employee~~employees. We have consulting and management arrangements with our officers and have outsourced our ~~fuel terminaling~~other ~~operations to minimize payroll expense~~activities. We have contracts with 94 persons, including executive officers, ~~non-executive officers, secretarial~~ and ~~field~~administrative personnel.

COMPETITION

WeThe ~~face~~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~~ 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

~~The~~To ~~Company~~attain ~~believes that~~ its ~~focused~~vision, ~~efforts~~the inCompany ~~exploration~~will ~~and~~pursue ~~production during 2011 were very successful. We plan to continue~~ the ~~path~~following ofprimary ~~lease~~strategic ~~acquisition and development resulting in increased production and reserve interests in 2012 and beyond.~~goals:

~~Fuel~~£ ~~Storage~~To ~~Operations~~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.

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 (subsequent to the period covered by this report), Adino sold all of its membership interest in IFL to Pomisu XXI S.L. (“Buyer”). The purchase price to be paid by the Buyer is $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 shall be computed as follows: $900,000 minus $244,842.97 (initial installment) minus $655,157 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).

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

~~Adino Exploration, LLC has regional headquarters in Coleman, Texas.~~ The Company currently has ~~leased~~no aoil ~~dual bay warehouse facility with secure yard storage from the Coleman County Economic Development Council. The warehouse includes a reception area, an office~~ and agas ~~conference room~~properties.

Fuel Storage Operations

IFL’s headquarters are located at its fuel distribution terminal at 17617 Aldine Westfield Road, Houston, Texas. This terminal is leased from Lone Star Fuel Storage and Transfer LLC for $31,855 per month. The terminal is situated on 10 ½ acres adjacent to, and to the west of the George Bush International Airport (IAH). The terminal has 7 fuel storage tanks with a collective capacity of 163,349 barrels of product (6,860,658 gallons). Auxiliary buildings containing 5,800 square feet are present. There are three loading bays for tanker trucks. The terminal is configured to handle 20,000,000 gallons of motor fuel per month through the truck loading racks. Although not currently connected, a six inch dedicated pipeline connects the terminal to IAH, capable of moving 22,000,000 gallons of jet fuel per month through the pipeline to the airport.

Originally built between 1981 and 1988, substantial renovation and improvement was done by two customers in 2000-2001. Adino’s management team acquired the non-operational terminal in 2003. Adino’s management then brought the terminal up to code, passed all inspections and acquired all licenses necessary for operations. In March 2006, the terminal opened with its first storage customer, the Metropolitan Transportation Authority of Harris County (Houston’s mass transit authority). From 2006 to 2008, additional customers were added and substantial improvements were made to the property and facilities. Security was enhanced and office buildings and grounds were improved. The loading rack had a third lane added to accommodate additional customer load. Larger, more efficient pumps were installed and the rack was configured to handle the newly mandated ultra low sulfur diesel.

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

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

As stated earlier, IFL was sold after the period covered by this report, and as a result, as of February 7, 2012, the Company no longer leases the IFL fuel terminal. The purchase price to be paid by the Buyer is $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 shall be computed as follows: $900,000 minus $244,842.97 (initial installment) minus $655,157 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).

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 ~~relates~~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 ~~has~~ also alleged that Mr. Wooley and Mr. Byrd ~~are~~were the alter ego of Adino ~~and~~ and IFL, and/or that Adino and/or IFL ~~are~~were ~~alter~~alteregos ~~egos~~ of one another. G J Capital also alleged fraudulent conduct by one or more of the defendants.

8Adino, 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.

~~Adino,~~In ~~IFL~~December 2011, ~~Mr. Byrd and Mr. Wooley countersued~~ G J Capital ~~and~~dismissed its ~~filed third-party~~ claims against ~~CapNet~~Mr. ~~Securities~~Byrd ~~Corporation~~and ~~(“CapNet”), Daniel L~~Mr. ~~Ritz, Jr~~Wooley. ~~(“Ritz”), Gulf~~Also ~~Coast~~in ~~Fuels~~December 2011, ~~Inc.~~the ~~(“Gulf~~court ~~Coast”)~~rendered ~~and~~judgment ~~Paul~~for ~~Groat~~G ~~(“Groat”),~~J ~~alleging~~Capital ~~that~~and ~~they~~against ~~conspired to damage~~Adino ~~IFL~~ and ~~Adino~~IFL ~~by involving it~~ in the ~~transaction~~amount ~~described~~of ~~above. In this action~~$250, ~~Adino~~000, ~~IFL~~plus $152,988 ~~Mr.~~in ~~Byrd~~attorneys’ ~~and Mr. Wooley contended that Ritz~~fees, ~~CapNet~~$9,300 ~~Gulf~~in ~~Coast~~court costs, ~~and~~plus ~~Groat were involved together for the common~~$24,867 ~~improper~~in ~~scheme~~prejudgment tointerest. The ~~cause~~Company ~~IFL~~did ~~immense~~not ~~financial hardship~~appeal sothis ~~that~~judgment. ~~Gulf~~In ~~Coast~~February ~~could~~2012, ~~acquire~~ the ~~fuel~~Company ~~terminal~~paid ~~currently~~$200,321 ~~leased~~in bypartial ~~IFL at an unfairly low price; that as part of this conspiracy they also effected a~~ settlement of the ~~Gulf~~amount ~~Coast~~due. On ~~claim~~May ~~(which~~1, ~~if true~~2012, ~~would~~the ~~mean~~Company ~~that~~paid ~~G J Capital acquired no claim at all against any of~~ the ~~defendants);~~final ~~and~~balance ~~that~~due inon ~~addition or in~~ the ~~alternative,~~GJ ~~even if G J~~ Capital ~~acquired some cognizable interest against IFL~~suit, ~~Adino,~~receiving ~~IFL,~~a ~~Byrd~~full ~~and~~release ~~Wooley~~on ~~are~~all ~~entitled to indemnification by and contribution by Ritz, CapNet, Gulf Coast, and Groat~~liability.

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 $152,987.50 in attorneys’ fees, $9,300.00 in court costs, plus $20,616.44 in prejudgment interest. Interest will continue to accrue on the judgment at the rate of $34.25 until satisfied. The Company did not appeal this judgment. The Company accrued all fees and interest related to the judgment as of December 31, 2011. The total accrual expensed to IFL was $437,155. This amount was assumed by the buyer of IFL in the February 2012 sale. (See Item 2 and Note 22 for a thorough discussion of the IFL sale and terms).7

PART II

As of December 31, ~~2011~~2012, Adino had ~~125~~156,~~574~~249,~~295~~331 shares of common stock outstanding. There are approximately ~~891~~944 holders of record of our common stock.

The Company’s common stock is quoted on the ~~Over-the-Counter Bulletin Board (“OTCBB”) operated by the Financial Industry Regulatory Authority, Inc. and 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 ~~2010~~2011 and ~~2011~~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
Fourth Quarter 2010	$	0.055	$	0.02
Third Quarter 2010	$	0.07	$	0.01
Second Quarter 2010	$	0.02	$	0.01
First Quarter 2010	$	0.03	$	0.01

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

DIVIDENDS

WeHolders 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 or ~~preferred~~ 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.

InHolders ~~August~~of ~~2010,~~certain weseries ~~entered~~of ~~into~~the ~~a convertible~~Company’s ~~promissory~~preferred ~~note~~stock ~~which~~have ~~limits~~preferential ~~us from paying or declaring a~~ dividend onrights ~~our~~as ~~common~~described ~~stock~~below.

~~During~~The ~~2011, the~~ Company has ~~authorized~~designated ~~two~~three ~~new~~ series of its Class B Preferred Stock,: Series 1, ~~and~~ Series ~~3. The Class B Series 1 shares are not entitled to dividend payment. 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 ($35.00). The dividends shall be paid quarterly~~, ~~when~~ 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~~.

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

OnDuring ~~February 2~~2012, ~~2010,~~ the ~~Board~~Company ~~approved~~issued several aconvertible ~~stock~~promissory ~~issuance~~notes ~~of 250,000 shares of restricted common stock each~~ to ~~Michael~~Asher ~~Turchi and Mountaintop Development~~Enterprises, Inc. ~~for services rendered to the Company. The issuance resulted in an expense to the Company of $5~~(“Asher”),~~700,~~ ~~based~~as ondescribed ~~the stock’s market price at the date of issuance~~below.

9During 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.

~~The~~On ~~Company~~January ~~issued~~11, 102012,~~000,000~~ ~~shares~~Asher ofconverted $5,000 ~~stock~~of toits ~~the~~note ~~sellers~~and $2,120 in ~~the~~accrued ~~Petro~~interest ~~Energy~~into ~~acquisition.~~569,600 ~~The~~shares ~~Company acquired 100%~~ of the ~~membership~~Company’s ~~interests~~common ~~of both companies as of July 1, 2010~~stock. The ~~transaction~~conversion resulted in an ~~stock~~increase ~~expense~~of toadditional ~~the~~paid-in-capital ~~Company~~ of $~~150~~2,~~000,~~401 ~~based~~due onto the ~~stock’s~~reduction ~~market price at the date~~ of ~~issuance. See Notes 1, 6, 9, 13, and Item 1 for a thorough discussion of~~ the ~~acquisition~~associated ~~transaction~~liability.

On ~~September~~January 724, ~~2010~~2012, ~~the~~Asher ~~Board~~converted ~~approved~~$12,000 aof ~~stock~~its ~~issuance~~note ofinto 2,~~000~~181,~~000~~818 shares of ~~restricted~~the Company’s common stock ~~to Vulcan Advisors, LLC for consulting services performed for the Company~~. The ~~issuance~~conversion resulted in an ~~expense~~increase toof ~~the~~additional ~~Company~~ paid-in-capital of $705,~~000,~~624 ~~based~~due onto the ~~stock’s~~reduction ~~market~~of ~~price at~~ the ~~date~~associated ~~of issuance~~liability.

~~During~~On ~~November~~February ~~2010~~21, ~~the~~2012, ~~Board~~Asher ~~approved~~converted $15,000 aof ~~stock~~its ~~issuance~~note ofinto ~~500~~2,~~000~~678,571 shares ~~each~~of tothe ~~its~~Company’s ~~three~~common ~~members for services rendered~~stock. The ~~total~~conversion ~~issuance of 1,500,000 shares~~ resulted in ~~expense~~an toincrease ~~the~~of ~~Company~~additional paid-in-capital of $467,~~500,~~073 ~~based~~due onto the ~~stock’s~~reduction ~~market~~of ~~price at~~ the ~~date~~associated ~~of issuance~~liability.

On ~~February~~March 2212, ~~2011~~2012, Asher converted $1013,000 of its note into ~~465~~4,~~116~~482,759 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $96,~~535~~098 due to the reduction of the associated liability.

On ~~March~~April 816, ~~2011~~2012, Asher converted $12,000 of its note into ~~603~~6,~~015~~666,667 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $116,~~397~~411 due to the reduction of the associated liability.

On ~~March~~May 2223, ~~2011~~2012, Asher converted $1210,000 of its note into ~~794~~2,~~702~~941,176 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $115,~~205~~493 due to the reduction of the associated liability.

On ~~April~~May 423, ~~2011~~2012, Asher converted $151,000 of its note and $2,120 in accrued interest into 1,~~219~~733,~~512~~333 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $~~13,780~~541 due to the reduction of the associated liability.

On ~~April~~October 125, ~~2011~~2012, Asher converted $85,~~500~~300 of its note into ~~817~~7,~~308~~361,112 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $73,~~683~~187 due to the reduction of the associated liability.

~~During~~All of the ~~fourth~~above ~~quarter~~note ~~2011,~~conversions ~~Asher converted~~were ~~$48,000~~within ofthe ~~its~~terms ~~notes into 2,664,063 shares~~ of the ~~Company’s~~agreement ~~common~~and ~~stock.~~did ~~The~~not ~~conversions~~result ~~resulted~~ in ana ~~increase~~gain ofor ~~additional paid-in-capital~~loss ~~of $45,336 due~~ to the ~~reduction of the associated liability~~Company.

~~All~~On ofJanuary ~~the~~9, ~~above~~2012, ~~note~~an ~~conversions~~investor ~~were within the terms of the~~converted ~~agreement.~~his ~~The~~$22,500 ~~Company~~note ~~claims~~into an681 ~~exemption~~shares ~~under Section 4(2)~~ of the ~~Securities~~Company’s ~~Act~~Class ~~for~~B ~~the~~Preferred ~~issuance~~Stock ofSeries ~~each promissory note~~3. ~~The Company~~Additionally, ~~claims~~he invested an ~~exemption~~additional $30,000 ~~under~~in ~~Section~~the ~~3(a)(9)~~Company ofthrough the ~~Securities~~purchase ~~Act~~of ~~for~~857 ~~the~~shares ~~issuances~~ of ~~common~~Class ~~stock~~B ~~pursuant~~Preferred toStock ~~each~~Series ~~note conversion~~3 shares.

On ~~August~~April 94, ~~2011~~2012, the Company ~~entered~~approved ~~into~~ a ~~consulting~~stock ~~agreement~~conversion ~~with~~of ~~RKM Capital for consulting and investor relations services. The Company paid~~ $2103,~~500 and~~000 ~~issued~~in ~~ten~~accrued ~~million,~~consulting ~~seven~~expense ~~hundred~~into ~~fifty thousand (10,750,000) shares of restricted~~ common stock, ~~with~~at a ~~market~~conversion ~~price~~rate of $0.02 05 per share, ~~resulting~~or ~~in expense to the Company of $225~~2,~~750.~~060,000 shares ~~The Company claims an exemption under Section 4(2)~~ of the ~~Securities Act~~Company’s ~~for~~common ~~this issuance~~stock.

OnThe ~~September~~Company ~~16,~~claims ~~2011,~~an ~~the~~exemption ~~Board~~from ~~of Directors issued 250,000~~registration ~~shares~~for ofthe ~~restricted~~above ~~common~~issuances ~~stock~~pursuant to ~~each~~Section 4(2) of ~~its~~the ~~directors~~Securities asAct ~~compensation~~due ~~for~~to ~~2011~~the ~~director’s~~small ~~fees. The~~number ~~market price on date~~ of ~~the~~purchasers ~~grant~~and ~~was~~their ~~$0.022, resulting~~ sophistication in ~~expense~~financial toand ~~the~~business ~~Company of $11,000~~matters. The Company claims an exemption under Section 4 3(2a)(9) of the Securities Act for ~~this~~issuances ~~issuance~~of common stock pursuant to each note conversion described above.

On September 16, 2011, the Company granted 500,000 shares of restricted common stock to the Company’s controller, Nancy Finney, for services rendered. Ms. Finney relinquished the 500,000 fully vested options granted to her in 2007 with this transaction. The Company claims an exemption for the above issuance pursuant to Section 3(a)(9) of the Securities Act due to the fact that Ms. Finney was an existing security holder of the Company at the time of the exchange.

In November 2011, the Company agreed to issue 95,534 shares of Class “B” Preferred Stock Series 1 ( “Preferred Stock”) to AOS 1A, LP (“Shareholder”) pursuant to an Asset Purchase Agreement entered into by the Company whereby the Company purchased all the unencumbered assets of AOS 1A, LP. The Preferred Stock is convertible into common stock at the Shareholder’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. These shares were issued on January 7, 2012, subsequent to the period covered by this report. The Company claims an exemption under Section 4(2) of the Securities Act for this issuance.

In November 2011, the Company agreed to issue 4,466 shares of Class “B” Preferred Stock Series 1 (“Preferred Stock”) to AOS 1-B, LP pursuant to an Asset Purchase Agreement entered into by the Company whereby the Company purchased all the unencumbered assets of AOS 1-B, LP. The Preferred Stock shall be convertible into common shares at Shareholder’s option at any time after six months, provided that (a) (b) 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. These shares were issued on January 7, 2012, subsequent to the period covered by this report. The Company claims an exemption under Section 4(2) of the Securities Act for this issuance.

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

~~IFL earns revenue from both throughput and storage fees on a monthly basis.~~ The Company recognizes revenue from throughput fees in the month that the services are provided based upon contractually determined rates. The Company recognizes storage fee revenue in the month that the service is provided in accordance with our customer contracts. 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.10

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.

1211

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. AsWe ~~the Company knew of this transaction as of the date of issuance of the Company’s financial statements, 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 2021 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. ~~With~~and ~~knowledge~~the oil and gas assets of ~~sale~~its ~~prior~~wholly toowned ~~the~~subsidiary, ~~filing~~Adino ~~date~~Exploration, ofat ~~this~~October ~~report~~31, ~~the~~2012. The revenues and expenses from ~~that~~these ~~subsidiary~~subsidiaries have been shown as net income or loss from discontinued operations. The Company’s net income or loss in ~~2010~~ 2011 has also been separated from the consolidated entity and presented in discontinued operations for comparison purposes.

Revenue: ~~The~~As the Company’s ~~revenues~~sold ~~were~~its ~~$277,917~~revenue ~~and~~producing ~~$58~~segments,~~107~~ ~~for~~described ~~the years ended December 31~~above, ~~2011~~all ~~and~~revenue ~~2010,~~is ~~respectively.~~reported ~~The~~in ~~Company’s acquisition of~~ the ~~oil~~discontinued ~~and gas leases during July 2010 (as a result of the Petro Energy acquisition) and the subsequent drilling~~ operations ~~contributed $58,107 in revenue during the last 6 months of 2010. In 2011, revenues~~ from ~~oil and gas operations~~IFL ~~increased~~(see ~~substantially~~Note to23) ~~$331,024 with additional drilling~~ and ~~workover~~Adino ~~projects.~~Exploration ~~Royalty~~(see ~~expense~~Note ~~of $53,107 has been netted from the total amount presented for 2011~~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.

~~Cost of Product Sales~~Cash: The Company’s ~~oil~~available ~~and~~cash ~~gas~~decreased ~~segment~~at ~~pays~~December ~~royalty expenses that are recorded as cost of product sales. In 2010~~31, ~~royalty~~2012 ~~expense~~to ~~was relatively low~~$16,887 atfrom $8102,~~902,~~540 ~~primarily~~at ~~due~~December ~~the~~31, ~~fact~~2011. ~~that~~In December 2011, the ~~company’s~~Company ~~oil~~received ~~and~~additional ~~gas~~investment ~~production only occurred~~ from ~~July~~members ~~through~~of ~~December,~~the ~~2010.~~Schwartz Ingroup ~~2011, cost~~ of ~~product sales totaled~~ $9150,~~407~~000. The Company ~~saw~~also ~~significant~~had ~~increases in~~deposits ~~its~~from ~~production on~~ the BlueRock ~~Felix~~financing ~~Brandt~~for ~~and~~well ~~James~~completion. ~~Leonard~~Of ~~leases,~~the ~~resulting~~cash inon ~~royalty~~hand, ~~expenses of~~ $4470,~~814,~~800 ~~which~~was ~~are~~reserved ~~netted~~for ~~with oil~~tax ~~and~~payments ~~gas~~by ~~revenues.~~IFL ~~The balance of the 2011 cost of product sales were attributed to amounts accrued~~ and ~~due~~$50,000 ~~BlueRock~~was ~~for~~on ~~their~~deposit ~~December production payments. See Note 14~~ for a ~~more~~Texas ~~detailed~~oil ~~discussion~~and ofgas ~~the~~operator ~~BlueRock~~license ~~financing~~held ~~arrangement~~by Adino Exploration.

Payroll and Related Expenses: With the addition of Adino Exploration on July 1, 2010, the Company hired several employees to operate its leases. Additionally, the Company has added payroll for one employee at its corporate office. These employee additions result in payroll expense of $218,718 and $90,213 for the years ended December 31, 2011 and 2010, respectively.

General and Administrative: The Company’s expenses for the year ended December 31, 2011 and 2010 were $221,803 and $111,350, respectively, an increase of $110,453 or 99%. In July 2010, the Company set up an office in Coleman, Texas to facilitate the development of its oil and gas leases, resulting in additional office expense of $42,845 and $17,193 in insurance expenses for the six months ended December 31, 2010. The same expenses for the full year, 2011 were $44,510 in office expense and $29,996 in insurance expense.

With increased production, the Company experienced an increase in severance tax from $3,979 in 2010 to $13,352 in 2011. As production and drilling activity increased, the Company’s travel expenses were escalated from $52,026 in 2010 to $90,678 in 2011. The Company incurred $30,000 in bad debt expense in September 2010 but had no corresponding expense in 2011.

Legal and Professional: Legal and professional expense was $320,928 and $209,251 for the year ended December 31, 2011 and 2010, respectively. Legal fees increased primarily due to increased expense related to the G J Capital lawsuit. See Item 3 of the Company’s financial statements for additional information regarding the Company’s legal and professional fees.

Consulting Expense: The Company’s consulting expenses were $899,815 and $66,046 for the years ended December 31, 2011 and 2010, respectively, a significant increase. The Company retained the services of a consultant, geologist and petroleum engineer during 2011 to assist in property development, resulting in an increase in 2011 expense over 2010 of $131,350. 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 $95,992 and $51,732 for the years ended December 31, 2011 and 2010, respectively. The increase is due to the addition of machinery and equipment through the Petro Energy acquisition and $3,407 in asset retirement accretion. The Company has also seen a significant increase in its depletion expense, as production increases. Depletion expense for the years ended December 31, 2011 and 2010 was $52,536 and $20,724, respectively. See Notes 5 and 9 of the Company’s financial statements for additional information regarding these assets and the corresponding depreciation and depletion.

Impairment Expense: 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 evaluated the carrying cost of the applicable oil producing properties and determined that the asset should be reduced by $47,481 for the year ended December 31, 2010. There was no such impairment required for the year ended December 31, 2011.

Operating Supplies: Supplies expense was $34,382 and $24,949 for the years ended December 31, 2011 and 2010, respectively. The increase is due to a full year of exploration and production operations in 2011 versus only six months in 2010.

Interest Income: Interest income was $46,612 and $67,568 for the years ended December 31, 2011 and 2010, respectively. The Company has agreed to an amendment on the $750,000 note receivable with Mr. Sundlun. This amendment extended the maturity date of the note to August 2011 at no additional interest past the original maturity date of November 6, 2008. Due to the lack of interest expense, the Company recognized a discount on the note and amortizes that discount through the note’s maturity date. The decrease in income from 2010 to 2011 is a result of the discount being fully amortized at July 31, 2011.

Interest Expense: Interest expense was $304,314 and $170,802 for the years ended December 31, 2011 and 2010, respectively, an increase of $133,512 or 78%. Interest expense increased for 2011 due to the Company entering into several convertible promissory notes payable to Asher, resulting in 8% annual interest to the Company. The Company also entered into a promissory note payable to BlueRock, resulting in 18% annual interest to the Company, and a promissory note payable to the Schwartz Group, resulting in 6% annual interest to the Company. Interest expense consistent between 2010 and 2011 are for the notes to Mr. Sundlun and vehicle financing. See Note 14 of the Company’s financial statements for additional information regarding interest expense.

Gain (Loss) on Derivative: The Company entered into a promissory note that permits conversion of the note 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, 2011 for a gain of $10,850, compared with a loss of $67,673 for the year ended December 31, 2010. See Note 16 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. This contract clawback provision was valued at $386,739 and $337,354 for the years ended December 31, 2011 and 2010, respectively.

Other Expense: In 2011, the Company had Other Expense of $14,542. Of this total, $4,827 was for goodwill impairment associated with the IFL Sale. The Company also had with no corresponding expense in 2010.

Net Income/Loss: The Company had net losses of $1,308,673 and $277,802 for the years ended December 31, 2011 and 2010, respectively. The increased loss was primarily due to increased legal expense and the judgment associated with the GJ Capital lawsuit and increased office, travel, payroll and depreciation expenses for the Company’s oil and gas subsidiary. Of the totals, net income contributed by IFL was $531,580 and $108,583, for the years ended December 31, 2011 and 2010, respectively. See Note 22 for a detailed statement of operations. The Company also sold its wholly owned subsidiary, Adino Drilling, LLC, to a related party on March 31, 2011, resulting in a loss from discontinued operations of $252,524, as the note receivable of $500,000 was disallowed for reporting purposes. See Note 21 for a more thorough discussion of the sale.

Cash: The Company’s available cash increased at December 31, 2011 to $381,945 up from $285,172 at December 31, 2010. 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 ~~2010~~2012 and 2011, due to several convertible notes that wewere issued to two groups of private investors. As a result of these private note issuances, the Company raised $1,212,380. ~~The~~At ~~Company~~December is31, ~~not~~2012, ~~required~~all tonotes ~~repay~~were ~~most~~converted ofto ~~this financing~~equity, ~~until~~paid ~~the~~or ~~third~~settled ~~quarter~~in ~~of 2013, thereby providing~~ the ~~Company~~asset asale ~~longer~~to ~~period~~Broadway, toexcept ~~earn~~for the ~~money~~existing ~~necessary~~note tobalance ~~pay~~of ~~off~~$62,500 with the ~~notes~~Schwartz Group.

The Company’s ~~available~~liquidity ~~cash~~and ~~increased~~capital atresources ~~December~~also ~~31,~~improved ~~2011~~as toa ~~$381,945~~result upof ~~from~~its ~~$282,272~~sale atof ~~December~~Adino ~~31, 2010~~Exploration. InThis ~~December~~sale ~~2011,~~resulted ~~the~~in ~~Company~~Adino ~~received~~receiving ~~additional~~$2,921,616, ~~investment~~which included ~~from~~a ~~members~~cash ofpayment ~~the Schwartz group~~ of $~~150~~811,~~000.~~825 ~~The~~and ~~Company~~the ~~also~~elimination ~~had~~of ~~deposits from~~ the ~~BlueRock~~Company ~~financing~~and ~~for~~Exploration ~~well~~debts ~~completion. Of~~in the ~~cash~~amount onof ~~hand,~~ $702,~~800~~109,791. ~~was~~With ~~reserved~~little ~~for tax payments by IFL and $50~~debt,~~000~~ the ~~was~~Company onnow ~~deposit~~believes ~~for~~that ait ~~Texas~~can ~~oil~~secure debt and ~~gas~~equity ~~operator~~funding ~~license held~~at bycompetitive ~~Adino Exploration~~rates.

AsThe ofCompany’s ~~December~~available ~~31,~~cash ~~2011, the Company has~~decreased afrom ~~working capital deficit of~~ $452,~~693,961~~540 ~~and~~at ~~total~~December ~~stockholders’~~31, ~~deficit~~2011 ofto $216,~~716,051. These~~887 ~~factors~~at ~~raise~~December ~~substantial doubt~~31, ~~regarding the Company’s ability to continue as a going concern~~2012. ~~The~~In ~~ability~~2011, of the Company toreceived ~~continue~~additional asinvestment afrom ~~going concern~~members ~~depends~~of ~~upon its ability to obtain funding for its working capital deficit. Of~~ the ~~outstanding~~Schwartz ~~current~~Group ~~liabilities~~of ~~at December 31, 2011, there are several non-cash items: ,~~ $~~386~~150,~~739~~000 ~~is due to a non-cash clawback provision~~ and ~~$136,894~~had isdeposits ~~attributed to~~from ~~a derivative liability. Additionally, $1,013,034 of~~ the ~~outstanding~~BlueRock ~~current~~financing ~~liability is due to certain officers and directors~~ for ~~prior~~well ~~years’ accrued compensation~~completion. ~~They~~ ~~have~~At ~~agreed~~December in31, ~~writing to postpone payment if necessary~~2012, ~~should~~ the Company is ~~need~~dependent ~~capital~~on itadditional ~~would~~investment ~~otherwise~~and ~~pay~~new ~~these~~business ~~individuals. The Company plans~~ to ~~satisfy~~obtain ~~current~~continued ~~year and future~~ cash flow ~~requirements through its existing, 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.~~

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.

1514

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, ~~2011~~2012 and ~~2010~~ 2011 and the related consolidated statements of operations, ~~stockholders~~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 ~~audit~~audits.

We conducted our ~~audit~~audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the ~~audit~~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 ~~audit~~ included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over ~~financial~~ 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~~ estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our ~~audit~~audits ~~provides~~ 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, ~~2011~~2012 and ~~2010~~2011 and the results of its operations and cash flows for the ~~period~~periods described above in conformity with accounting principles generally accepted in the United States of America.

The accompanying ~~financial~~consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring ~~losses~~ losses from operations and maintains a working capital deficit. These matters raise substantial doubt about the Company’s ~~ability~~ 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 1617, ~~2012~~2013

1615

~~ADINO~~Adino ~~ENERGY~~Energy ~~CORPORATION~~Corporation

(A Development Stage Company)

Consolidated Balance Sheets

ASAs OFof ~~DECEMBER~~December 31, ~~2011~~2012 ~~AND~~and ~~2010~~December 31, 2011

	December 31, 2011			December 31, 2010
	December 31, 2012			December 31, 2011
ASSETS
Cash in bank	$	~~331~~16,~~945~~887		$	~~282~~102,~~272~~540
Certificate of deposit - restricted		50,~~000~~075			-50,000
Accounts receivable		14,859			9,615
Accounts receivable, net of allowances		-			10,394
Deposits and prepaid assets		662,~~908~~801			6456,~~562~~530
Notes receivable, net of unamortized discount of $0 and $46,570 at December 31, 2011 and 2010, respectively		750,000			703,430
Assets held for sale		-			4,151,882
Interest receivable		375,208			375,208
Total current assets		69,763			4,371,346
Other assets		25,001			-
Fixed assets, net of accumulated depreciation of $0 and $43,469, respectively		-			3,957
Total current assets		1,613,921			1,435,087
Total non-current assets		-			3,957
Fixed assets, net of accumulated depreciation of $109,715 and $69,052, respectively		520,342			165,648
TOTAL ASSETS	$	69,763		$	4,375,303
Oil and gas properties (full cost method), net of accumulated amortization, depreciation, depletion, and asset impairment
Proved properties		406,025			155,279
Unproved properties		280,602			59,060
Goodwill		1,554,413			1,566,379
Discontinued operations - net assets held for sale		-			357,314
Total non-current assets		2,761,382			2,303,680
TOTAL ASSETS	$	4,375,303		$	3,738,767
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	~~650~~365,~~235~~511		$	~~413~~428,~~515~~493
Accounts payable - related party		8221,~~387~~737			4761,~~200~~387
Accrued liabilities		~~270~~9,~~654~~777			~~334~~129,~~912~~387
Accrued liabilities - related party		1522,~~013,034~~959			~~909~~568,~~960~~689
Asset retirement obligation		50,944			36,689
Contract clawback provision		-			386,739
Contract clawback provision		386,739			337,354
Notes payable - current portion		-			445,995
Notes payable - current portion		2,445,363			1,864,251
Convertible notes payable - current portion		62,500			119,514
Interest payable		~~830~~7,~~360~~399			~~660~~10,~~000~~156
Derivative liability		~~136,894~~-			~~103~~136,~~511~~894
Deferred revenue		50,000			-50,000
Deferred gain - current portion		391,272			391,272
Liabilities associated with assets held for sale - current		-			4,264,093
Discontinued operations – liabilities held for sale		-			44,884
Total current liabilities		1,039,883			6,601,347
Total current liabilities		6,307,882			5,143,548
Notes payable, net of current portion		-			5,007
Deferred gain, net of current portion		293,465			684,744
Convertible notes payable, net of current portion		-			85,000
Notes payable, net of current portion		490,007			413,845
Liabilities associated with assets held for sale, net of current portion		-			400,000
TOTAL LIABILITIES	$	71,~~091~~039,~~354~~883		$	67,~~242~~091,~~137~~354
SHAREHOLDERS’ DEFICIT
Preferred stock, $0.001 par value, 20,685,250 shares authorized, 109,642 shares outstanding		685,558			-
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
Capital stock, $0.001 par value, 500 million shares authorized, 125,574,295 and 107,260,579 shares issued and outstanding at December 31, 2011 and December 31, 2010, respectively		125,573			107,260
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		1416,~~177~~856,~~563~~424			1314,~~785~~177,~~442~~563
Retained deficit		(17,704,745	)		(16,396,072	)
Deficit accumulated before re-entry to the development stage		(18,601,930	)		(17,704,745	)
Total shareholders’ deficit		(2,716,051	)		(2,503,370	)
Accumulated deficit after re-entry to the development stage		(80,068	)		-
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	4,375,303		$	3,738,767
Total shareholders’ deficit		(970,120	)		(2,716,051	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	69,763		$	4,375,303

~~The~~See accompanying notes ~~are~~to anthe ~~integral part~~consolidated ~~of these~~ 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

~~Consolidated~~(A ~~Statements~~Development ofStage ~~Operations~~Company)

~~FOR~~Consolidated ~~THE~~Statement ~~YEARS~~of ~~ENDED~~Changes ~~DECEMBER 31, 2011~~in ~~AND~~Shareholders’ ~~2010~~Deficit

	December 31,			December 31,
	2011			2010
REVENUES
Oil and gas operations		277,917			58,107
Total revenues		277,917			58,107
OPERATING EXPENSES
Cost of product sales		9,407			12,214
Payroll and related expenses		218,718			90,213
General and administrative		221,803			111,350
Legal and professional		320,928			209,251
Consulting fees		899,815			66,046
Repairs		22,807			20,258
Depreciation, depletion and accretion		95,992			51,732
Impairment expense		-			47,481
Operating supplies		34,382			24,949
Total operating expenses		1,823,852			633,494
OPERATING LOSS		(1,545,935	)		(575,387	)
OTHER INCOME AND EXPENSES
Interest income		46,612			67,568
Interest expense		(304,314	)		(170,802	)
Gain (loss) on derivative		10,850			(67,673	)
Gain (loss) on change in fair value of clawback provision		(49,385	)		71,406
Other expense		(14,542	)		-
Total other income and expense		(310,779	)		(99,501	)
LOSS FROM CONTINUING OPERATIONS	$	(1,856,714	)	$	(674,888	)
DISCONTINUED OPERATIONS
Income from operations of discontinued Intercontinental Fuels, LLC		820,083			397,086
Loss from operations of discontinued Adino Drilling, LLC		(272,042	)		-
NET LOSS	$	(1,308,673	)	$	(277,802	)
Net income (loss) per share, basic and fully diluted – continuing operations	$	(0.02	)	$	(0.01	)
Net income (loss) per share, basic and fully diluted – discontinued operations	$	0.00		$	0.00
Total net income (loss) per share, basic and fully diluted	$	(0.01	)	$	(0.00	)
Weighted average shares outstanding, basic and fully diluted		114,945,584			99,512,634

For the years ended December 31, 2012 and 2011

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

	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

~~Consolidated~~(A ~~Statement~~Development ofStage ~~Changes in Shareholders’ Deficit~~Company)

~~FOR~~Consolidated ~~THE~~Statements ~~YEARS~~of ~~ENDED~~Cash ~~DECEMBER 31, 2010 and 2011~~Flows

	Common Stock Shares		Common Stock Amount		Preferred Shares		Preferred Stock Amount			APIC		Retained Earnings (Deficit)			Total
Balance December 31, 2009		93,260,579	$	93,260		-	$	-		$	13,527,242	$	(16,118,270	)	$	(2,497,768	)
Shares issued for services - officers		1,500,000		1,500		-		-			50,200		-			51,700
Shares issued for acquisition		2,500,000		2,500		-		-			68,000		-			70,500
Shares issued for services		10,000,000		10,000		-		-			140,000		-			150,000
Net loss		-		-		-		-			-		(277,802	)		(277,802	)
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	)

For the years ended December 31, 2012 and 2011

~~The~~And ~~accompanying~~the ~~notes~~period ~~are~~from anNovember ~~integral~~1, ~~part~~2012 of(re-entry ~~these~~to ~~financial~~development ~~statements.~~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

Consolidated Statements of Cash Flows

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	December 31,			December 31,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,308,673	)	$	(277,802	)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Depreciation and depletion		128,037			61,410
Accretion		3,704			868
Amortization of discount on note receivable		(46,570	)		(67,568	)
Loss on sale of subsidiary		252,524			-
Shares issued for services		242,109			122,200
Bad debt expense		-			30,000
Goodwill impairment – IFL		4,827			-
Gain from lawsuit / sale amortization		(391,279	)		(391,278	)
Gain on debt forgiveness		-			(65,000	)
(Gain) / loss on change in fair value of derivative		(10,847	)		67,673
Gain on change in fair value of clawback provision		49,385			(71,406	)
Oil and gas impairment		-			47,481
Amortization of debt discount		82,878			9,031
Changes in operating assets and liabilities:
Accounts receivable		4,756			57,116
Inventory		(25,001	)		-
Other assets		(12,346	)		(14,306	)
Accounts payable and accrued liabilities		539,572			56,599
Deferred revenue		50,000			-
Net cash (used in) operating activities		(436,924	)		(434,982	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		(590,755	)		(223,190	)
Net cash (used in) investing activities		(590,755	)		(223,190	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from preferred stock investment		150,000			-
Borrowings on note payable		1,062,380			457,500
Principal payments on note payable		(87,928	)		(16,698	)
Net cash provided by financing activities		1,124,452			440,802
Net change in cash and cash equivalents		96,773			(217,370	)
Cash and cash equivalents, beginning of period		285,172			502,542
Cash and cash equivalents, end of period	$	381,945		$	285,172
Cash paid for:
Interest	$	12,582		$	12,285
Income taxes	$	-		$	-
Supplemental disclosures of non-cash information:
Contract clawback provision	$	-		$	408,760
Acquisition purchased with preferred stock	$	350,000		$	150,000
Asset retirement obligation	$	10,551		$	36,255
Note discount	$	-		$	35,838
Operating license deposit	$	-		$	50,000
Reduction in derivative due to debt conversion	$	62,826		$	-
Conversion of note – preferred stock	$	293,000		$	-
Derivative liability new debt	$	107,059		$	-
Accrual of dividend payable	$	1,942		$	-

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

ADINO ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Background

Adino ~~was~~Energy ~~incorporated~~Corporation ~~under the laws of~~("Adino", ~~the~~we” ~~State~~or ~~of Montana on August 13, 1981, under~~ the ~~name Golden Maple Mining and Leaching~~ "Company"), ~~Inc.~~is Inan ~~1985,~~emerging ~~the~~oil ~~Company ceased its mining operations~~ and ~~discontinued~~gas ~~all~~exploration ~~business operations in 1990. The Company then acquired Consolidated Medical Management, Inc. (“CMMI”)~~ and ~~kept~~production ~~the~~company ~~CMMI name. The Company initially~~ focused ~~its efforts~~ on ~~the~~mature ~~continuation of the business~~oilfield ~~services~~assets ~~offered~~with bysignificant ~~CMMI. These services focused on the delivery of turn-key management services for the home health industry~~redevelopment, ~~predominately~~ inworkover ~~south Louisiana. The Company exited the medical business in December 2000. In August 2001, the Company decided to refocus on the oil~~ and ~~gas~~enhanced ~~industry. In 2006, we decided to cease our~~ oil ~~and~~recovery ~~gas~~(“EOR”) ~~activities and focus on becoming a fuel company~~potential.

~~The~~Adino was incorporated under the laws of the State of Montana on August 13, 1981, under the name Golden Maple Mining and Leaching Company’s, ~~wholly~~Inc. ~~owned~~In ~~subsidiary~~1985, the Company ceased ~~Intercontinental~~its ~~Fuels,~~mining ~~LLC~~operations and discontinued all business operations in 1990. The Company then acquired Consolidated Medical Management, Inc. (“~~IFL~~CMMI”), aand ~~Texas~~kept ~~limited~~the ~~liability~~CMMI ~~company,~~name. ~~was~~The ~~founded~~Company ininitially ~~2003.~~focused ~~Adino~~its ~~first~~efforts ~~acquired~~on ~~75%~~the continuation of the business services offered by CMMI. These services focused on the delivery of ~~IFL’s~~turn-key ~~membership~~management ~~interests~~services for the home health industry, predominately in ~~2003~~south Louisiana. The Company ~~acquired~~exited ~~100%~~the ~~ownership~~medical ofbusiness ~~IFL~~in ~~shortly~~December ~~thereafter~~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.

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.

On March 31, 2011, the Company sold the membership ~~interest~~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 has a reportable loss of $252,624.

OnIn ~~or about~~ October 122011, ~~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 ~~Preferred Stock shall have other terms as determined by Adino's Board of Directors. 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 ~~Ashton~~AOS assets. On February 7, 2012 ~~(subsequent to the period covered by this report)~~, the Company sold all oilfield ~~machinery~~ machinery and equipment it had purchased from ~~Ashton~~AOS ~~Oilfield Services~~ in its November 2011 acquisition for $500,000 ~~cash~~.

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 ~~(subsequent to the period covered by this report)~~, 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 ~~for~~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.

~~For the years ended December 31, 2011 and 2010, we had no reserve for doubtful accounts as all of our receivables were collected early in the subsequent period and had no expectation of loss.~~ 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, ~~2011~~2012 or December 31, ~~2010~~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

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.

~~For~~At ~~the years ended~~ December 31, 2011 ~~and 2010~~, 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, ~~2010~~ 2011 audit and no indicators of impairment at the ~~review~~audit. As there were no fixed assets at December 31, 2012, no impairment testing was required. See Notes 56 and 911 for a more thorough discussion of the Company’s fixed assets and oil and gas assets as of December 31, 2011.

Goodwill

~~Goodwill~~For isthe 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~~ provides amendments to Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those ~~reporting~~ reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not goodwill ~~impairment~~ 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.

~~With~~The ~~our knowledge of the loss realized on the IFL sale in February 2012, the~~ Company ~~has~~ recorded an impairment of $4,827 at December 31, 2011, the amount of the loss recognized on the IFL transaction. ~~No such knowledge or expectation of loss was present at December 31, 2010 or the quarters ended March 31, June 30 and September 30, 2011.~~

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 ~~January~~October ~~2010~~2012, the ~~FASB~~Financial ~~issued~~Accounting anStandards ~~amendment to~~Board ~~the~~(FASB) ~~accounting~~issued ~~standards~~Accounting ~~related~~Standards toUpdate ~~the~~(ASU) ~~disclosures~~2012-04, ~~about~~“Technical anCorrections and ~~entity’s~~Improvements” ~~use~~in ofAccounting ~~fair~~Standards ~~value~~Update ~~measurements~~No. ~~Among~~2012-04. ~~these~~The amendments~~, entities~~ ~~will~~in bethis ~~required~~update tocover ~~provide~~a ~~enhanced~~wide ~~disclosures~~range ~~about transfers into and out~~ of ~~the Level 1 (fair value determined~~Topics ~~based on quoted prices~~ in ~~active~~the ~~markets~~Accounting ~~for~~Standards ~~identical~~Codification. ~~assets~~These ~~and~~amendments ~~liabilities)~~include ~~and~~technical ~~Level~~corrections ~~2 (fair value determined based on significant other observable inputs) classifications, provide separate disclosures about purchases, sales, issuances~~ and ~~settlements~~improvements ~~relating~~ to the ~~tabular~~Accounting ~~reconciliation of beginning and ending balances of the Level 3 (fair value determined based on significant unobservable~~Standards ~~inputs)~~Codification ~~classification~~ and ~~provide~~conforming ~~greater~~amendments ~~disaggregation~~related ~~for~~to ~~each class of assets and liabilities that use~~ fair value measurements. ~~Except~~ ~~for~~The ~~the~~amendments ~~detailed~~in ~~Level~~this 3update ~~roll-forward~~will ~~disclosures,~~be ~~the new standard is~~ effective for ~~the Company for interim and annual~~ ~~reporting~~fiscal periods beginning after December 3115, ~~2009~~2012. The ~~requirement~~adoption toof ~~provide~~ASU ~~detailed disclosures about the purchases, sales, issuances and settlements in the roll~~2012-~~forward~~04 ~~activity for Level 3 fair value measurements~~ is ~~effective for the Company for interim and annual reporting periods beginning after December 31, 2011. The Company does~~ not ~~expect~~expected ~~that~~to ~~the adoption of this new standard will~~ have a material impact toon ~~its~~our financial ~~consolidated~~position ~~financial~~or ~~statements~~results of operations.

In ~~January~~August ~~2010~~2012, the FASB issued an ASU 2012-03, to“Technical ~~amend~~Amendments ~~existing oil~~ and ~~gas~~Corrections ~~reserve~~to ~~accounting~~SEC ~~and~~Sections: ~~disclosure~~Amendments ~~guidance~~ to ~~align~~SEC ~~its~~Paragraphs ~~requirements~~Pursuant ~~with~~to ~~the~~SEC ~~SECs~~Staff ~~revised~~Accounting ~~rules. The~~Bulletin ~~significant~~(SAB) ~~revisions~~No. ~~involve revised definitions of oil and gas producing activities~~114, ~~changing~~Technical ~~the~~Amendments ~~pricing~~Pursuant ~~used~~ to ~~estimate~~SEC ~~reserves at~~Release ~~period~~No. ~~end~~33-9250, ~~to a twelve month arithmetic average of the first day of the month prices~~ and ~~additional~~Corrections ~~disclosure~~Related ~~requirements. In contrast~~ to ~~the SEC rule, the~~ FASB ~~does~~Accounting ~~not~~Standards ~~permit the disclosure of probable and possible reserves in the supplemental oil~~Update ~~and~~2010-22 ~~gas~~(SEC ~~information~~Update)” in ~~the~~Accounting ~~notes~~Standards toUpdate ~~the~~No. ~~financial statements~~2012-03. ~~The~~This ~~amendments~~update ~~are~~amends ~~effective~~various ~~for~~SEC ~~annual~~paragraphs ~~reporting~~pursuant ~~periods~~to ~~ending~~the onissuance orof ~~after~~SAB ~~December~~No. ~~31, 2009~~114. ~~Application~~ ofThe ~~the~~adoption ~~revised~~of ~~rules~~ASU 2012-03 is ~~prospective~~not ~~and~~expected ~~companies~~to ~~are~~have ~~not~~a ~~required~~material toimpact ~~change prior~~on ~~period~~our ~~presentation~~financial toposition ~~conform~~or toresults of ~~the amendments~~operations.

In ~~September~~July ~~2011~~2012, the FASB ~~has~~ issued ASU ~~No. 2011~~2012-0802, “Intangibles— – Goodwill and Other (Topic 350): Testing ~~Goodwill~~Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, isIntangibles ~~intended~~– ~~to simplify~~Goodwill ~~how~~and ~~entities,~~Other ~~both~~(Topic ~~public~~350): ~~and~~Testing Indefinite-Lived ~~nonpublic,~~Intangible ~~test~~Assets ~~goodwill~~ for ~~impairment.~~Impairment ~~ASU~~and ~~2011-08~~ permits an entity to first to assess qualitative factors to determine whether it is “more likely than not” that ~~the~~an ~~fair~~indefinite-lived ~~value~~intangible ofasset ~~a reporting unit~~ is ~~less~~impaired ~~than its carrying amount~~ as a basis for determining whether it is necessary to perform the ~~two-step~~quantitative ~~goodwill~~ impairment test ~~described~~ in ~~Topic~~ accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The ~~more-likely-than-not~~amendments ~~threshold~~are iseffective ~~defined~~for asannual ~~having~~and ainterim ~~likelihood~~impairment oftests ~~more~~performed ~~than~~for ~~50%.~~fiscal years beginning ~~ASU~~after ~~2011-08~~September 15, 2012. Early adoption is ~~effective~~permitted, including for annual and interim ~~goodwill~~ impairment tests performed ~~for~~as ~~fiscal~~of ~~years~~a ~~beginning~~date before ~~after~~July ~~December~~27, 152012, if a public entity’s financial statements for the most recent annual or interim period have not yet ~~2011.~~been ~~The~~issued ~~Company~~or, ~~does~~for nonpublic entities, have not ~~expect~~yet ~~the~~been made available for issuance. The adoption of ASU ~~2011~~2012-0802 is not expected to have ~~any~~a material impact on ~~its~~our ~~consolidated~~ financial ~~statements~~position or results of operations.

In December 2011, the FASB issued ~~Accounting Standards~~ASU ~~Update No.~~ 2011-1112, “~~Balance~~Deferral ~~Sheet~~of ~~(Topic~~the ~~210):~~Effective ~~Disclosures~~Date ~~about~~for ~~Offsetting~~Amendments ~~Assets~~to ~~and~~the ~~Liabilities,”~~Presentation ~~(“ASU 2011-11”).~~of ~~ASU~~Reclassifications ~~2011-11~~of ~~enhances~~Items ~~disclosures~~out ~~regarding~~of ~~financial~~Accumulated ~~instruments and derivative instruments. Entities are required~~Other toComprehensive ~~provide~~Income” ~~both~~in ~~net~~Accounting ~~information~~Standards ~~and~~Update ~~gross~~No. ~~information~~2011-05. ~~for~~This ~~these~~update ~~assets~~defers ~~and~~the ~~liabilities~~requirement ~~in order~~ to ~~enhance~~present ~~comparability~~items ~~between~~that ~~those~~are ~~entities~~reclassified ~~that~~from ~~prepare~~accumulated ~~their~~other ~~financial~~comprehensive ~~statements~~income onto ~~the~~net ~~basis~~income ofin ~~U.S.~~both ~~GAAP~~the ~~and~~statement ~~those~~of ~~entities~~income ~~that~~where ~~prepare~~net ~~their~~income ~~financial~~is ~~statements~~presented onand the ~~basis~~statement ofwhere ~~IFRS.~~other ~~This~~comprehensive ~~new~~income ~~guidance~~ is ~~to be applied retrospectively~~presented. The adoption of ~~these~~ASU ~~provisions~~2011-12 ~~does~~is not ~~have~~ expected to have a material impact on ~~the~~our ~~Company’s~~financial ~~consolidated~~position ~~financial~~or ~~statements~~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

As of December 31, ~~2011~~2012, the Company has a working capital ~~deficit of $4,693,961~~ and total stockholders’ deficit of $2970,~~716,051~~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, ~~2011~~2012, there are ~~several~~two significant non-cash items: $~~386~~50,~~739~~000 isof ~~due~~the tooutstanding aliability ~~non-cash clawback provision and $136,894~~ is ~~attributed~~from ~~to a~~deferred ~~derivative~~revenue ~~liability. Additionally,~~and $1522,~~013,034~~959 ~~of the outstanding current liability~~ 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 ~~its existing,~~ growing business operations. The Company also hopes to pursue merger ~~and~~ and acquisition opportunities including the expansion of existing business opportunities, primarily in the oil and gas exploration and production sector.

NOTE 3 - LEASE COMMITMENTS

On April 1, 2007, IFL agreed to lease ~~the~~ ~~IFL~~ a fuel storage terminal from 17617 Aldine Westfield Road, LLC for 18 months at $15,000 per month. The lease ~~included~~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.

26Due 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.

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 escalates $1,000,000 per year after this date, through the lease expiration date of September 30, 2013. The Company recognizes the escalating lease payments on a straight line basis. As of December 31, 2011, the Company has not exercised its option to purchase the Houston terminal facility.

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 ~~initially~~ amortized this ~~gain~~amount over the life of ~~the~~ ~~capital lease (18 months), but later recognized that this time frame was in error. The appropriate amortization period for~~ the ~~gain is the life of the~~ capital asset, or 15 years~~. The~~ ~~Company~~(See ~~has~~Part ~~restated~~I, ~~all~~Item ~~appropriate~~3 ~~periods to reflect this change and reported those changes in its annual report~~ for ~~the~~a ~~year~~more ~~ended~~thorough ~~December 31, 2008~~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~~ Star of $624,047. The total remaining gain to be amortized as of September 30, 2008 ofwas $1,956,392. ~~will~~This beamount ~~amortized~~is ~~over~~being amortized over the life of the Lone Star operating lease, or 60 months. The operating lease expires ason of September 30, 2013. This ~~treatment~~ treatment is consistent with sale leaseback gain recognition rules. ~~For the years ended December 31, 2011 and 2010, the Company realized a gain on sale/leaseback of $391,278 for each year.~~

~~NOTE~~With 4the –Company’s ~~CERTIFICATE~~focus OFon ~~DEPOSIT~~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.

At December 31, 2011, the Company has $50,000 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.26

NOTE 54 –- ~~ACCOUNTS~~CERTIFICATE ~~RECEIVABLE~~OF DEPOSIT

~~The~~At December 31, 2012 and December 31, 2011, the Company ~~uses~~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 ~~gathering~~operator license held by the ~~company~~Company’s ~~for~~wholly-owned ~~its~~subsidiary, ~~oil~~Adino ~~sales~~Exploration, LLC. ~~Each~~The ~~month,~~cash ~~sales~~is ~~are~~held ~~recorded~~in ascustody by the ~~product~~issuing bank, is ~~picked~~restricted as upto bywithdrawal ~~the~~or ~~gatherer~~use, and ~~payments~~is ~~are~~currently ~~made~~invested in certificates of deposit. Income from these investments is paid to the Company, at maturity of the ~~following~~certificates ~~month~~of deposit. ~~The~~These ~~amounts~~investments ~~accrued~~are atclassified ~~December~~as ~~31,~~held-to-maturity ~~2011~~ and ~~2010~~are recorded as either short-term or long-term on the balance sheet based on contractual maturity date and are ~~for~~recorded ~~December~~at ~~production,~~amortized tocost. beThe ~~paid~~Company’s insecurities ~~January~~are ~~2012.~~classified ~~Additionally,~~as held-to-maturity because the Company ~~advanced~~has ~~$10,000~~the topositive aintent ~~business~~and ~~associate~~ability into ~~December,~~hold ~~2011~~the ~~for~~securities ~~repayment~~to ~~in 2012~~maturity.

	December 31, 2011		December 31, 2010
Oil and gas gatherer receivable	$	4,859	$	9,615
Advances		10,000		-
Total	$	14,859	$	9,615

NOTE 5 - ACCOUNTS RECEIVABLE

~~NOTE~~The 6Company –advanced ~~EQUIPMENT~~$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, 2011			December 31, 2010
	December 31, 2012			December 31, 2011
Machinery and equipment	$	528,720		$	160,150
Vehicles	$	-		$	7,426
Vehicles		60,927			47,427
Less: Accumulated depreciation		-			(3,469	)
Leasehold improvements		37,076			23,789
Total	$	-		$	3,957
Office equipment		3,334			3,334
Subtotal		630,057			234,700
Less: Accumulated depreciation		(109,715	)		(69,052	)
Total	$	520,342		$	165,648

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.

~~The~~Below ~~useful~~are ~~life for leasehold improvements is~~ the ~~duration~~asset ~~of the lease on the IFL fuel terminal, through September 30, 2013. Machinery~~ and ~~equipment,~~liability ~~consisting primarily~~values offor ~~oil~~Adino ~~field assets (see Note 10)~~Drilling, ~~has~~LLC aat ~~useful~~March ~~life of seven years~~31, ~~vehicles’ useful life is five years and office equipment is being depreciated over three years.~~2011:

NOTE 7 – PETRO ENERGY ACQUISITION PURCHASE PRICE ALLOCATION

	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

~~The~~NOTE ~~Company’s~~8 ~~acquisition~~- ofRECEIVABLE ~~the Petro~~- ~~Energy~~ASSET companies (see Note 1) included operating wells and fixed assets. The transaction, treated as a business combination, was valued under current guidance using fair value methods. To arrive at the acquired asset’s fair value, the valuation considered the value to be the price, in cash or equivalent, that a buyer could reasonably be expected to pay, and a seller could reasonably be expected to accept, if the business were exposed for sale on the open market for a reasonable period of time, with both buyer and seller being in possession of the pertinent facts and neither being under any compulsion to act.SALES

~~The~~In ~~Company~~October ~~issued~~2011, ~~ten~~Adino ~~million~~signed a letter of intent to purchase all of the assets of Ashton, AOS 1A, and AOS 1-B (10collectively, “AOS”). The proposed purchase price for the assets was $6,000,000~~) shares~~ 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 asof ~~consideration~~the ~~for~~purchase would occur once the ~~companies~~sellers received clear title to the assets subject to the agreement. The ~~stock~~first ~~price~~partial asclosing of ~~July~~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 ~~2010~~follows: ~~was~~95,534 $0shares to AOS 1A, and 4,466 shares to AOS 1-B.~~015~~ ~~per~~The Preferred Stock shall be convertible into common shares at ~~share~~AOS 1A or AOS 1-B's option at any time after six months, ~~representing~~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 $~~150~~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. At December 31, 2012, the outstanding balance on the purchase was fully collected.

~~The~~With ~~tangible~~the ~~assets~~Company’s ~~acquired~~focus ~~were~~on ~~valued~~oil and ~~based~~gas onexploration and production, the ~~appropriate~~Company ~~application~~decided to sell its interest in IFL. To that end, on February 7, 2012, Adino sold all of ~~the~~its ~~market~~membership orinterest ~~cost~~in ~~approaches~~IFL to Pomisu XXI S.L. (“Buyer”). The ~~fair~~purchase ~~value~~price ~~was~~to ~~estimated~~be atpaid by the ~~depreciable~~Buyer ~~value~~was of$900,000, paid in two installments with the ~~current~~first ~~replacement~~installment ~~costs~~of ~~based~~$244,825 paid on February 7, 2012, and the ~~age~~balance due not later than May 7, 2012. The balance of the ~~assets~~purchase price shall be computed as follows: $900,000 ~~assuming~~minus ~~they~~$244,825 ~~are~~(initial ininstallment) ~~good~~minus $655,175 of ~~working~~IFL ~~order~~liabilities assumed and settled by the Buyer. ~~Additionally,~~The agreement also called for any cash payments made by the Company, on behalf ~~had~~of anthe ~~independent~~Buyer, ~~third~~to ~~party~~be ~~value~~repaid to the ~~oil~~Company ~~reserves~~at ~~for~~the settlement. As of March 31, 2012, the ~~Felix~~Company ~~Brandt~~had ~~wells~~paid $200,321 in ~~Coleman~~partial settlement of the G J Capital lawsuit judgment. The full receivable balance due from Buyer of $437,155 ~~Texas~~has been reserved, as the balance had not been collected by the May 7, 2012 settlement date.

A ~~component~~schedule of the ~~acquisition~~balances ~~agreement with~~at ~~PetroGreen Energy and AACM3, LLC gave the former owners of these companies the option to repurchase for $1.00 the assets held~~December ~~by the companies as of July 1~~31, ~~2010~~2012 ifand ~~the~~December ~~Company’s common stock price fails to reach $0.25 per share within three years of the original acquisition date. This contract clawback provision was valued at July 1~~31, ~~2010~~2011 atis ~~$408,760.~~as follows:

The above valuations resulted in a goodwill calculation on acquisition of $7,139 at July 1, 2010.

	December 31, 2012			December 31, 2011

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

~~Below~~NOTE is9 ~~the~~- ~~acquisition~~FAIR ~~summary~~VALUE ~~including fair~~OF ~~value~~FINANCIAL ~~of assets acquired, liabilities assumed and consideration given as of July 1, 2010:~~INSTRUMENTS

	Fair Value at July 1, 2010
December 31, 2012
Assets acquired:
Description	Level 1			Level 2		Level 3		Total Realized Gain (Loss) due to Valuation		Total Unrealized Gain (Loss) due to Valuation
Tangible drilling costs	$	155,700
Marketable security - CD	$	50,075		$	-	$	-	$	75	$	-
Proved oil and gas properties		71,060
Notes payable - derivative		-			-		-		15,282		-
Machinery and equipment		324,861
Contract clawback provision		-			-		-		198,643		-
Total acquired asset fair value		551,621
Total	$	50,075		$	-	$	-	$	86,826	$	-
Less liability assumed:
Contract clawback provision		(408,760	)
Consideration - Common stock		(150,000	)
Goodwill from acquisition	$	7,139

NOTE 8 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s $50,000 CD is carried at cost, which approximates market. No gain or loss was realized on the security at December 31, 2011. The Company valued the Petro Energy acquisition, the current convertible note and warrant derivatives and the Company’s largest asset, goodwill, using Level 3 criterion, shown below. As of December 31, 2011, the valuations resulted in a gain on derivatives of $10,850, loss on contract clawback provision of $49,385 and goodwill impairment of $4,827 for a net loss of $53,859.

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		-		-		133,235		14,541			-
Haag warrants - derivative		-		-		3,659		(3,691	)		-
Contract clawback provision		-		-		386,739		49,385			-
Total	$	50,000	$	-	$	2,078,046	$	53,859		$	-

December 31, 2010
December 31, 2011
Description	Level 1		Level 2		Level 3		Total Realized Gain (Loss) due to Valuation			Total Unrealized Gain (Loss) due to Valuation
Goodwill	$	-	$	-	$	1,566,379	$	-		$	-
Marketable security - CD	$	50,000	$	-	$	-	$	-		$	-
Asher /BWME notes - derivative		-		-		96,161		(60,323	)		-
Goodwill		-		-		1,554,413		(4,827	)		-
Haag warrants - derivative		-		-		7,350		(7,350	)		-
Notes payable - derivative		-		-		136,894		10,850			-
Contract clawback provision		-		-		~~337~~386,~~354~~739		7149,~~406~~385			-
Total	$	-50,000	$	-	$	2,~~007~~078,~~244~~046	$	353,~~733~~859		$	-

AtThe Company’s $50,000 CD is carried at cost, which approximates market. During the year ended December 31, ~~2010~~2012, the Company ~~had~~realized $~~1,559,240 of~~75 ~~goodwill~~in interest income on the CD. ~~balance~~The ~~sheet~~Company valued the convertible note and warrant derivatives using Level 3 criterion, shown above. ~~Due~~Those notes gave rise to the ~~sale~~derivative ofand caused the ~~Company’s~~Haag ~~interest~~warrants into ~~IFL~~be intainted, ~~February~~requiring ~~2012~~derivative ~~(subsequent~~treatment. toWith the ~~period~~sale of the oil and gas ~~covered~~assets byto ~~this~~Broadway ~~report)~~Resources, LLC on October 31, 2012, the Company ~~has~~settled ~~recorded~~all ~~impairment~~notes ofpayable ~~the~~with ~~goodwill~~Asher. toThus, ~~the~~at ~~extent~~December of31, 2012, the ~~loss~~Company onhad ~~the~~no ~~transaction~~derivatives ofrequiring ~~$4,827~~valuation.

~~NOTE~~With 9the -sale ~~NOTES~~of ~~RECEIVABLE /~~IFL, ~~INTEREST~~the Company removed ~~RECEIVABLE~~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 ~~and 2010~~ 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 ~~and 2010~~.

29A schedule of the balances at December 31, 2012 and 2011 is as follows:

A schedule of the balances at December 31, 2011 and 2010 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	$	-	$	-

	December 31, 2011			December 31, 2010
Sundlun, net of unamortized discount	$	750,000		$	703,430
Total notes receivable	$	750,000		$	703,430
Less: current portion		(750,000	)		(703,430	)
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 1011 - 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 ~~has~~ completed an extensive ~~workover~~work over program on the original wells acquired. The Company ~~has~~ 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”). ~~(See Note 14 for additional discussion).~~

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. ~~According to the reserve analysis conducted by an independent engineering firm, the estimated discounted net cash flow on the Felix Brandt lease was $118,590 as of December 31, 2010.~~ As a result of the Company’s ~~workover~~work over and drilling programs during 2011, the estimated discounted net cash flow on the combined Felix Brandt and James Leonard leases ~~are~~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, ~~2011~~2012 was $3,~~704~~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. ~~The~~For ~~Company~~the year ended December 31, 2011, the Company evaluated the carrying cost of the applicable oil producing properties and determined that the carrying value ~~should~~did benot ~~reduced~~exceed ~~by $47,481 for~~ the ~~year ended~~ ~~December~~cost ~~31,~~ceiling; ~~2010.~~therefore ~~For~~no ~~the~~adjustment ~~year~~was ~~ended~~necessary ~~December~~for ~~31,~~ 2011,. Due to the ~~Company~~oil ~~evaluated~~and ~~the~~gas ~~carrying~~asset ~~cost~~sale ofon ~~the~~October ~~applicable~~31, ~~oil~~2012 ~~producing~~(see ~~properties~~Note ~~and~~24), ~~determined that~~ the ~~carrying~~Company ~~value~~has ~~did~~no ~~not~~need ~~exceed~~for ~~the~~an ~~cost~~impairment ~~ceiling,~~analysis ~~therefore~~at noDecember ~~adjustment~~31, ~~was necessary for 2011~~2012.

The oil and gas related asset values at December 31, 2011 and December 31, 2010 were as follows:

	December 31, 2011			December 31, 2010
Tangible drilling costs	$	409,334		$	116,603
Proved oil and gas properties		71,060			71,060
Unproved oil and gas properties		280,602			59,060
Asset retirement cost		46,372			35,821
Impairment		(47,481	)		(47,481	)
Accumulated depletion		(73,260	)		(20,724	)
Total	$	686,627		$	214,339

NOTE 11 – 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. The Company did not have need for supplies in 2010.

~~NOTE~~The 12oil –and ~~CONSOLIDATION~~gas OFrelated ~~IFL~~asset values at December 31, 2012 and ~~AND~~December ~~GOODWILL~~31, 2011 were as follows:

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 as described in Note 9. 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.

	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

~~Adino~~On ~~evaluated~~October ~~the~~31, ~~aggregate~~2012, ~~goodwill for~~the ~~impairment~~Company atand ~~December 31~~Adino Exploration, ~~2010~~LLC ~~and~~(“Exploration”), ~~determined~~a ~~that~~wholly ~~the~~owned ~~fair~~subsidiary ~~value~~ of the ~~reporting~~Company, ~~unit~~entered ~~exceeds~~into ~~its~~an ~~carrying~~Asset ~~amount~~Purchase and ~~was~~Sales ~~therefore,~~Agreement ~~not~~(“Agreement”) ~~impaired.~~with AtBroadway ~~December 31~~Resources, ~~2011~~LLC (“Buyer”), ~~the~~The ~~Company~~Agreement ~~had~~provided ~~$1,559,240~~that ofExploration agreed ~~goodwill~~to onsell ~~the~~all ~~balance~~of ~~sheet.~~its ~~Due~~rights, totitle ~~the~~and ~~sale~~interest ~~of the~~to ~~Company’s~~its ~~interest~~oil inand ~~IFL~~gas leases located in ~~February~~Coleman ~~2012~~and ~~(subsequent~~Runnels toCounties, ~~the~~Texas. The ~~period~~purchase ~~covered~~price paid by ~~this~~the ~~report)~~Buyer was $2,921,616, ~~the~~which ~~Company~~includes ~~has~~a ~~recorded impairment~~cash payment of ~~the~~$811,825 ~~goodwill~~and to the ~~extent~~elimination of the ~~loss~~Company and onExploration debts in the ~~transaction~~amount of $42,~~827~~109,791. With the sale, the Company had no oil and gas assets to report on at December 31, 2012.

NOTE 1312 –- ~~ACCRUED~~OTHER ~~LIABILITIES / ACCRUED LIABILITIES – RELATED PARTY~~ASSETS

~~Other~~As ~~liabilities~~the ~~and~~Company’s ~~accrued~~wells ~~expenses~~and lease ~~consisted~~holdings ofhave ~~the~~increased, ~~following~~it ashas ofneed for supplies on hand for lease and well repair and maintenance. At December 31, 2011, the Company had $25,001 in supplies and ~~2010:~~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.

	December 31, 2011		December 31, 2010
Accrued accounting and legal fees	$	125,000	$	115,000
Customer deposits		110,000		110,000
Property and payroll tax accrual		2,444		76,113
Deferred lease liability		31,268		33,799
Dividend payable		1,942		-
Total accrued liabilities	$	270,654	$	334,912
Accrued salaries-related party	$	1,013,034	$	909,960
Asset retirement obligation	$	50,944	$	36,689

NOTE 13 - CONSOLIDATION OF IFL AND GOODWILL

~~Deferred~~From ~~lease~~the ~~liability: The~~period of IFL’s inception ~~Lone~~to ~~Star~~2005, ~~lease~~our isownership ~~being~~percentage ~~expensed~~in byIFL ~~the~~was ~~straight~~60%. Our ~~line~~ownership ~~method~~increased asto ~~required~~80% byduring ~~current~~2005 ~~guidance~~when our 20% partner withdrew from IFL and rescinded its investment. On August 7, ~~resulting~~2006, we obtained the remaining 20% interest in ~~a deferred~~IFL ~~lease~~from Stuart Sundlun in ~~liability~~consideration ~~that~~for ~~will~~a benote ~~extinguished~~payable. byThis ~~the~~transaction ~~lease~~was ~~termination~~accounted ~~date~~for ofas ~~September~~a ~~30,~~step ~~2013~~acquisition. ~~The~~This ~~Company~~step ~~sold~~acquisition ~~all~~resulted in an additional $1,500,000 of ~~its~~goodwill ~~membership interest~~as inthe ~~IFL~~fair tovalue aof ~~third~~the ~~party~~net onassets ~~February~~acquired 7,was ~~2012~~determined ~~(subsequent~~by management to be zero and the consideration ~~period~~given ~~covered~~as bydiscussed ~~this~~above ~~report)~~was the $1,500,000 note.

~~Accrued~~Adino ~~salaries~~evaluated –the ~~related~~aggregate ~~party: This~~goodwill ~~liability~~for isimpairment ~~due~~at toDecember ~~certain~~31, ~~officers~~2011 and ~~directors~~determined ~~for~~that ~~prior~~the ~~years’~~fair ~~accrued~~value ~~compensation~~of the reporting unit exceeds its carrying amount and was therefore, not impaired. ~~They~~ ~~have~~At ~~agreed~~December 31, 2011, the Company had $1,559,240 of goodwill on the balance sheet. Due to the sale of ~~postpone~~the ~~payment~~Company’s ifinterest ~~necessary,~~in ~~should~~IFL in February 2012, the Company ~~need~~has ~~capital~~recorded itimpairment ~~would~~of ~~otherwise~~the ~~pay~~goodwill ~~these~~to ~~individuals~~the extent of the loss on the transaction of $4,827 as of December 31, 2011.

NOTE 14 - ~~NOTES~~ACCRUED ~~PAYABLE~~LIABILITIES / ACCRUED LIABILITIES - RELATED PARTY

	December 31, 2011			December 31, 2010
Note payable - Stuart Sundlun, bearing interest of 10% per annum, due August 7, 2011	$	1,500,000		$	1,500,000
Note payable - Gulf Coast Fuels, bearing interest of $25,000		436,380			275,000
Demand note - Perales, non interest bearing, due May 31, 2011		-			50,000
Note payable – Asher notes, net of discount of $50,986 and $26,807 at December 31, 2011 and December 31, 2010, respectively		119,514			30,693
bearing interest of 8% per annum, due May 13, 2011 (balance $0.00 at 12/31/11; $57,500 at 12/31/10)
bearing interest of 8% per annum, due February 16, 2012 (balance $5,000 at 12/31/11; $0.00 at 12/31/10)
bearing interest of 8% per annum, due March 23,2012 (balance $53,000 at 12/31/11; $0.00 at 12/31/10)
bearing interest of 8% per annum, due April 7, 2012 (balance $37,500 at 12/31/11; $0.00 at 12/31/10)
bearing interest of 8% per annum, due June 12, 2012 (balance $37,500 at 12/31/11; $0.00 at 12/31/10)
bearing interest of 8% per annum, due August 28, 2012 (balance $37,500 at 12/31/11; $0.00 at 12/31/10)
Notes payable - BWME, bearing interest at 8% per annum, due September 2, 2013		400,000			400,000
Notes payable - Schwartz group, bearing interest at 6%, due January 9, 2013		85,000			-
Notes payable – BlueRock Energy Group, bearing interest at 18%, payable via production; $0.00 at 12/31/10)		379,854			-
Note payable - GMAC, bearing interest of 11.7% per annum with 60 monthly payments of $895, due May 13, 2013		14,622			22,403
Total notes payable	$	2,935,370		$	2,278,096
Less: current portion		(2,445,363	)		(1,864,251	)
Long term note payable	$	490,007		$	413,845

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.

OnAccrued ~~August~~salaries ~~11, 2010,~~- ~~the~~related ~~Company~~party: This liability ~~issued~~is adue ~~convertible promissory note~~ to ~~Asher~~certain ~~Enterprises,~~officers ~~Inc. (“Asher”), in the amount of $57,500. The note had a maturity date of May 13, 2011~~ and andirectors ~~annual~~for ~~interest~~prior ~~rate~~years’ ofaccrued ~~eight percent (8%) per annum~~compensation. With ~~The holders have~~ the ~~right~~ ~~from~~sale ~~and after the date~~ of ~~issuance, and until any time until~~ the ~~note is fully paid, to convert any outstanding and unpaid~~ ~~principal~~oil ~~portion of the note,~~ and ~~accrued~~gas ~~interest~~assets, ~~into~~all ~~fully~~liabilities ~~paid~~to ~~and non-assessable shares of common stock~~Mr. ~~The~~Wooley ~~note~~have ~~has~~been ~~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~~settled. The ~~note’s~~remaining ~~convertible~~officer ~~feature was~~has ~~valued~~agreed ~~and~~to ~~resulted~~postpone inpayment aif ~~debt discount of $35~~necessary,~~838, which is being amortized over the nine month note life, using the straight~~ ~~line~~should ~~method. In this case, using~~ the ~~straight~~Company ~~line~~need ~~method~~capital ~~approximates~~it ~~the~~would ~~effective~~otherwise ~~interest~~pay ~~method, given the short time to maturity~~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.

On September 2, 2010, the Company issued convertible promissory notes to investors in the amount of $400,000, to fund financing and start-up costs of the recent Petro Energy acquisition. The notes have a maturity date of September 2, 2013, with accrued interest paid quarterly 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 a fixed conversion price of $0.10. In December 2010, the former owner of AACM3, LLC transferred the certificate of deposit securing the P5 bond financial assurance for the Company’s oil and gas operator’s license to the Company. The agreement calls for the Company to pay a total of $60,000 for the transfer, which was completed in the second quarter of 2012.

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 chose to convert their notes, totaling $187,500 into shares of the preferred stock. The remaining notes of $62,500 and $22,500 remain outstanding at December 31, 2011.

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 17 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.

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 will be entitled to 65% of the net revenue interest of the wells until BlueRock receives $410,000 plus an 18% return on investment. These monies are to be paid as the Company receives production payments on the new wells. After payment of this amount, BlueRock will receive a 3% overriding royalty interest on the wells. At December 31, 2011, the balance on the BlueRock agreement was $379,854.

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		~~Principal~~
2012			$	2,445,363
2013	$	62,500
2013				490,007
2014		-
2014				-
2015		-
2015				-
2016		-
2016				-
2017		-
Total	$	62,500	$	~~2,935,370~~

NOTE 1516 - CONTRACT CLAWBACK PROVISION

A component of the acquisition agreement with ~~PetroGreen~~Petro Energy and AACM3, LLC gave the former owners of these companies the option to repurchase for $1.00 the assets held by 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 of the original acquisition date. ~~This~~The contract clawback provision was valued at ~~July 1, 2010 at $408,760 and was revalued at~~ December ~~31,~~ ~~2010 at $337,354 resulting in a gain on change in clawback valuation of $71,406 at December~~ 31, ~~2010.~~2011 ~~The clawback valuation~~ at ~~December 31, 2011 was~~ $386,739~~, resulting in a loss on change in clawback valuation of $49,385 at December 31, 2011~~.

~~NOTE~~The 16contract –clawback ~~DERIVATIVE~~was ~~LIABILITY~~valued at June 29, 2012 and the increase in provision was recorded as a loss on contract clawback in the statement of operations.

~~Based~~On onJune ~~current~~29, ~~guidance~~2012, the Company executed ~~concluded~~a ~~that~~multi-party agreement with the ~~convertible~~Sellers ~~notes~~of ~~payable~~the toPetro ~~Asher~~Energy ~~referred~~assets toand Gator-Dawg Drilling, LLC (“Gator-Dawg”). In the agreement, the Company released the restriction on the 10 million shares of common stock held in ~~Note~~escrow 14on ~~were~~behalf ~~required~~of the Sellers in the Petro Energy asset purchase in July of 2010. In exchange, the Sellers released all claims to bethe ~~accounted~~contract ~~for~~clawback asagreement, which astated ~~derivative~~that the Sellers could repurchase the assets sold to the Company for $1.00 if the price of the Company’s stock ~~This~~did ~~guidance~~not ~~requires~~reach $0.25 per share by the specified date. The Company also transferred the membership shares of AACM3, LLC to ~~bifurcate~~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 ~~separately~~associated ~~account~~assets purchased from the Company in March 2011 to AACM3, LLC. In exchange for the ~~conversion~~drilling ~~features~~rig oftransfer, the ~~convertible~~Company cancelled ~~notes~~the ~~issued~~$500,000 note due from Gator-Dawg for purchase of those assets (disallowed for consolidation), executed a $100,000 asnote ~~embedded~~payable ~~derivatives~~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 revalued as of December 31, 2011.

Below is detail of the derivative liability balances as of December 31, 2011 and December 31, 2010.

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

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 12 and 15. The remaining $10,850 is reflected as gain on derivatives in the statement of operations.

NOTE 17 – STOCK

COMMON 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 December 31, 2011 and December 31, 2010, the Company had 125,574,295 and 107,260,579 shares issued and outstanding, respectively.

On February 2, 2010, the Board approved a stock issuance of 250,000 shares of restricted common stock each to Michael Turchi and Mountaintop Development, Inc. for services rendered to the Company. The issuance resulted in an expense to the Company of $5,700, based on the stock’s market price at the date of issuance.

The Company issued 10,000,000 shares of stock to the sellers in the Petro Energy acquisition. The Company acquired 100% of the membership interests of both companies as of July 1, 2010. The transaction resulted in stock expense to the Company of $150,000, based on the stock’s market price at the date of issuance. See Notes 1, 6, 9, 13, and Item 1 for a thorough discussion of the acquisition transaction.

On September 7, 2010, the Board approved a stock issuance of 2,000,000 shares of restricted common stock to Vulcan Advisors, LLC for consulting services performed for the Company. The issuance resulted in an expense to the Company of $70,000, based on the stock’s market price at the date of issuance.

During November 2010, the Board approved a stock issuance of 500,000 shares each to its three members for services rendered. The total issuance of 1,500,000 shares resulted in expense to the Company of $46,500, based on the stock’s market price at the date of issuance.

On February 22, 2011, Asher converted $10,000 of its note into 465,116 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $9,535 due to the reduction of the associated liability.

On March 8, 2011, Asher converted $12,000 of its note into 603,015 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $11,397 due to the reduction of the associated liability.

On March 22, 2011, Asher converted $12,000 of its note into 794,702 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $11,205 due to the reduction of the associated liability.

On April 4, 2011, Asher converted $15,000 of its note into 1,219,512 shares of the Company’s common stock. The conversion resulted in an increase of additional paid-in-capital of $13,780 due to the reduction of the associated liability.

OnThe ~~April~~structure ~~12,~~of ~~2011,~~the Asher ~~converted~~notes ~~$8,500~~caused oftwo ~~its~~other ~~note~~financial ~~into~~instruments ~~817,308~~held ~~shares~~by of the Company’s ~~common~~to ~~stock.~~be deemed derivatives: The ~~conversion~~BWME ~~resulted~~notes inand anthe ~~increase~~Haag ofwarrants. ~~additional~~Both ~~paid-in-capital~~were valued ofas ~~$7,683~~derivatives ~~due~~as toof the ~~reduction~~date of the ~~associated~~Asher ~~liability~~note issuance (Haag warrants) or date of issuance (BWME notes) and are revalued at each balance sheet reporting date.

~~During~~Below ~~the~~is ~~fourth~~detail ~~quarter 2011, Asher converted $48,000~~ of ~~its notes into 2,664,063 shares of~~ the ~~Company’s~~derivative ~~common~~liability balances ~~stock.~~as ~~The conversions resulted in an increase~~ of ~~additional paid-in-capital~~December ~~of $45~~31,~~336~~ ~~due~~2012 toand ~~the~~December ~~reduction~~31, ~~of the associated liability~~2011.

~~All note conversions were within the terms of the agreement.~~ 2012

On August 9, 2011, the Company entered into a consulting agreement with RKM Capital for consulting and investor relations services. The Company paid $2,500 and issued ten million, seven hundred fifty thousand (10,750,000) shares of restricted common stock, with a market price of $0.02 per share, resulting in expense to the Company of $225,750.

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	)	$	-

~~On September 16,~~ 2011, the Board of Directors issued 250,000 shares of restricted common stock to each of its directors as compensation for 2011 director’s fees. The market price on the date of grant was $0.022, resulting in expense to the Company of $11,000.

On September 16, 2011, the Board of Directors granted 500,000 shares of restricted common stock to the Company’s controller, Nancy Finney, for services rendered. Ms. Finney relinquished the 500,000 fully vested options granted to her in 2007 in this transaction. Current guidance required the options to be revalued as of the day prior to the share grant. Using the Black-Scholes valuation model and an expected life of 1 year (remaining option life), volatility of 226%, and a discount rate of .09%, the Company has determined the aggregate value of the 500,000 options to be $5,643. The market price of the issued stock on date of grant was $0.022, resulting in stock expense to the Company of $11,000. The Company recorded an expense of $5,357 (market value – option value) on the transaction.

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

As2012: aThe ~~result~~net decrease of ~~the~~$136,894 is ~~above~~split ~~common~~between ~~stock~~changes ~~issuances, there~~to ~~were~~derivative ~~125~~liability due to new note addition of $21,~~574~~119,~~295~~ ~~shares~~a ~~issued~~reduction of $142,631 to additional paid-in-capital for the derivative reduction attributable to the Asher note conversions and ~~outstanding~~payments discussed in Notes 16 and 19. The remaining $15,282 is reflected as gain on derivatives in the statement of ~~December~~operations ~~31,~~as ~~2011~~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, ~~2011~~2012, the Company has also designated ~~two~~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, ~~2011~~2012 and December 31, 2011, there were 100,000 shares of Class B Preferred Stock Series 1 issued and outstanding. ~~No shares were issued or outstanding at December 31, 2010.~~

The number of authorized shares of Class B Preferred Stock Series 32 is 18666,~~570~~660 shares. ~~The~~At ~~issue~~December 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 quarterly31, ~~when~~2012 as and ifDecember ~~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~~31, ~~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~~2011, ~~irrespective~~there ofwere ~~series,~~no ~~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 32 ~~share~~issued ~~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~~outstanding.~~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. 36

AtThe ~~December~~number 31of authorized shares of Class B Preferred Stock Series 3 is 18,570 ~~2011~~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, ~~there~~when ~~were~~as 9and 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,~~642~~ such dividends shall cumulate. ~~shares~~Interest shall not be paid on cumulated dividends. Each share of Class B Preferred Stock Series 3 ~~issued~~shall ~~and~~rank ~~outstanding.~~on Nothe ~~shares~~same ~~were~~parity with ~~issued~~each other share of preferred stock, irrespective of series, with respect to dividends at the respective fixed or ~~outstanding~~maximum rate for such series. Any holder of Class B Preferred Stock Series 3 may convert, at ~~December~~any 31time, ~~2010~~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 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 ~~Series 1~~ 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, ~~2011~~2012 and December 31, 2011, the Company recorded a ~~dividend~~dividends ~~payable~~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 ~~conversion~~conversions, discussed above.

NOTE 1819 - 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.

InNOTE ~~November~~20 2007, the Company entered into an agreement with Nancy Finney, the Company’s Controller. In addition to monthly contract payments, Ms. Finney was entitled to 500,000 options, vesting over 24 months as certain milestones were met. In accordance with current guidance, these options were expensed at their fair value over the requisite service period. Using the Black-~~Scholes~~ ~~valuation~~EARNINGS ~~model~~PER and an expected life of 2.5 years, volatility of 276.75%, and a discount rate of 4.16%, the Company determined the aggregate value of the 500,000 options to be $23,949. The options became fully expensed and vested as of September 30, 2009.SHARE

36As both 2012 and 2011 resulted in a net loss, the Company does not calculate fully diluted earnings per share, separately.

OnAs ~~September~~of 16December 31, ~~2011~~2012, ~~the~~Adino ~~Board of Directors granted 500~~had 156,~~000~~ 249,331 shares ~~of restricted common stock to Ms. Finney for services rendered. Ms. Finney relinquished the 500~~outstanding,~~000 fully~~ ~~vested~~with ~~options~~no ~~granted~~shares topayable ~~her in 2007 within this transaction~~outstanding. ~~Current~~ The ~~guidance~~Company ~~required~~uses the ~~options~~treasury tostock bemethod ~~revalued as of the day prior~~ to ~~the~~determine ~~share~~whether ~~grant. Using the Black-Scholes valuation model and an expected life of 1 year (remaining~~any ~~option~~outstanding ~~life),~~options ~~volatility~~or ofwarrants ~~226%,~~are ~~and a discount rate of .09%, the Company has determined the aggregate value of the 500,000 options~~ to be ~~$5,643. The~~included ~~market price of the issued stock on date of the grant was $0.022, resulting~~ in ~~stock expense to~~ the ~~Company~~ ofdiluted ~~$11,000. The~~earnings ~~Company~~per ~~recorded~~share ~~an expense of $5,357 (market value – option value) on the transaction~~calculation.

NOTE 19 – EARNINGS PER SHARE

The table below sets forth the computation of basic and diluted net income (loss) per share for the years ended December 31, 2011 and 2010.

	For the years ended December 31,
	2011			2010
Numerator:
(Loss) from continuing operations	$	(1,856,714	)	$	(674,888	)
Income from discontinued operations	$	548,041		$	397,086
Basic net income (loss)	$	(1,308,673	)	$	(277,802	)
Diluted net income (loss)	$	(1,308,673	)	$	(277,802	)
Denominator:
Basic weighted average common shares outstanding		114,945,684			99,512,634
Effect of dilutive securities
Convertible note - Asher		5,089,194			1,280,990
Dilutive weighted average common shares outstanding		120,034,878			100,793,624
Net (loss) per share, basic and fully diluted – continuing operations	$	(0.02	)	$	(0.01	)
Net income per share, basic and fully diluted – continuing operations	$	0.00		$	0.00
Basic net income (loss) per share	$	(0.01	)	$	(0.00	)
Diluted net income (loss) per share	$	(0.01	)	$	(0.00	)

As of December 31, 2011, Adino had 125,574,295 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.

As of December 31, 2011, Adino had 500,000 earned options outstanding to a former consultant, exercisable between $0.15 to $0.35 each. Using an average share price for the year ended December 31, 2011 of $0.029, the options result in no additional dilution to the Company.

The Company calculated the dilutive effect of the convertibility of the outstanding notes, resulting in additional weighted average share additions of 5,089,194 for the year ended December 31, 2011. The effect on earnings per share from the Company’s BWME and Schwartz convertible notes was excluded from the diluted weighted average shares outstanding because the conversion of these instruments would have been non-dilutive since the strike price is above the market price for our 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.

~~NOTE~~The 20dilutive –effect ~~DEFERRED~~of ~~INCOME~~convertible ~~TAX~~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 201 for further information related to the Company’s accounting for uncertainty in income taxes.

During both ~~2011~~2012 and ~~2010~~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 $1213,~~459~~824,~~913~~160 and $1112,~~245~~459,~~582~~913 at December 31, ~~2011~~2012 and ~~2010~~2011, respectively, and will expire in the years ~~2020~~2021 through ~~2030~~2031.

At December 31, ~~2011~~2012 and ~~2010~~2011, the deferred tax assets consisted of the following:

	December 31, 2011			December 31, 2010
	December 31, 2012			December 31, 2011
Net operating loss	$	4,~~236~~700,~~370~~214		$	34,~~823~~236,~~498~~370
Less: Valuation allowance	$	(4,~~236~~700,~~370~~214	)	$	(34,~~823~~236,~~498~~370	)
Net deferred tax asset	$	-		$	-

NOTE 2122 –- SALE OF ADINO DRILLING, LLC

With the sale of Adino Drilling, LLC, the $7,139 of goodwill resulting from the original ~~PetroGreen~~Petro Energy acquisition, ~~discussed in Note 7~~ 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 ~~and December 31, 2010~~:

	Assets disposed at March 31, 2011		~~December 31, 2010~~
Cash	$	100	$	~~2,899~~
Fixed assets, net of depreciation of $34,837 and $21,186 at March 31, 2011 and December 31, 2010, respectively		350,702		354,415
Fixed assets, net of depreciation of $34,837 at March 31, 2011		350,702
Total assets		350,802		~~357,314~~
Accounts payable		5,317		~~44,472~~
Accounts payable - related party		-		~~412~~
Total liabilities		5,317		~~44,884~~
Net assets - discontinued operations	$	345,485	$	~~312,430~~

NOTE 2223 –- SALE OF INTERCONTINENTAL FUELS, LLC

On February 7, 2012 ~~(subsequent to the period covered by this report)~~, 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,~~824.97~~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,~~842.97~~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.

Within the purchase, the buyer acquired no assets, besides the membership interest in IFL.

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

Description	Amount
Accounts payable	$	106,520
G J Capital judgment		437,~~154~~155
Due to related party		1,500
Prepaid rent deposit		110,000
Total	$	655,175

The ~~December~~February 317, ~~2011~~2012 IFL balance sheet (unconsolidated) is presented below:

	December 31, 2011
	February 7, 2012
Assets
Cash	$	~~107~~82,~~544~~409
Fixed Assets net of depreciation		6,~~281~~131
Total assets	$	~~113~~88,~~825~~540
Liabilities
Accounts payable	$	~~183~~148,~~634~~258
Accrued liabilities		~~141~~76,~~267~~215
Deferred gain on sale/leaseback		179,858
Due to related party		1,500
Due to G J Capital		436,380
Deferred gain on sale/leaseback		171,293
Total liabilities		941,139
Due to G J Capital		437,155
Total liabilities		834,421
Equity
Additional paid-in-capital		1,870,100
Distributions		(~~628~~663,~~226~~476	)
Retained earnings		(2,~~600~~069,~~768~~189	)
Net income		~~531~~116,~~580~~684
Total equity		(~~827~~745,~~314~~881	)
Total liabilities and equity	$	~~113~~88,~~825~~540

~~With~~IFL ~~knowledge~~net ofincome for the ~~sale~~three atmonths ~~the filing~~ended ~~date~~March 31, ~~the~~2012 ~~operating~~and ~~income~~year ofended ~~IFL~~2011, ~~must~~reflected ~~be presented~~ as discontinued operations. ~~For~~on ~~comparison purposes, 2010 operations are presented consistently. The net income detail for~~ the ~~years~~Statement ~~ended~~of ~~December~~Operations ~~31, 2011 and 2010 for IFL (unconsolidated)~~ is ~~presented~~as ~~below~~follows:

	IFL			IFL
	for the year ended			for the year ended
	Three months ended			Year ended
	12/31/2011			12/31/2010
	3/31/12			12/31/11
Revenues:
Terminal operations revenue	$	1152,~~824,~~000		$	1,~~944~~824,~~666~~000
Operating expenses:
Cost of product sales		-			236,503
Terminal management		33,430			402,270
Terminal management		402,270			400,360
General and administrative		43,949			504,159
General and administrative		504,159			573,984
Legal and professional		8,762			127,207
Legal and professional		127,207			72,372
Consulting fees		28,000			180,024
Consulting fees		180,024			719,387
Repairs		-			100
Repairs		100			5,929
Depreciation expense		150			22,237
Depreciation expense		22,237			10,545
Total operating expenses		114,291			1,235,997
Total operating expenses		1,235,997			2,019,080
Operating income (expense)		37,709			588,003
Operating income (expense)		588,003			(74,414	)
Other income (expense)
Interest income		~~276~~351			99276
Interest expense		(~~7,809~~741	)		(107,~~295~~809	)
Gain on debt conversion		-			65,000
Other expense		-			(151,665	)
Gain from lawsuit/sale leaseback		~~391~~32,~~278~~606			391,278
Other income		(151,665	)		25,418
Total other income and expense		32,216			232,080
Total other income and expense		232,080			471,500
					-
Net income	$	~~820~~69,~~083~~925		$	~~397~~820,~~086~~083
Net loss on sale		8,414			-
Total net income from discontinued operations	$	61,511		$	820,083

NOTE 2324 ~~– NON~~-~~CASH~~ ~~INVESTING~~SALE OF OIL AND ~~FINANCING~~GAS ~~ACTIVITIES~~ASSETS

~~The~~On ~~note~~October ~~receivable~~31, ~~from~~2012, ~~Mr.~~the ~~Sundlun~~Company ~~matured~~and Adino onExploration, ~~November~~LLC 6(“Exploration”), ~~2008. The~~a ~~Company~~wholly ~~extended~~owned subsidiary of the ~~note’s~~Company, ~~maturity~~entered ~~date~~into toan ~~August~~Asset 8,Purchase ~~2011~~and Sales Agreement (“Agreement”) with noBroadway ~~additional~~Resources, ~~interest accrual~~LLC to(“Buyer”). ~~occur~~The ~~past~~Agreement ~~November~~provided 6,that ~~2008. Due~~Exploration agreed to ~~the~~sell ~~fact~~all ~~that~~of ~~there~~its ~~will~~rights, betitle noand interest ~~accrued~~to onits ~~the~~oil ~~note~~and ~~going~~gas ~~forward, the~~leases ~~Company~~located ~~recorded~~in aColeman ~~discount~~and onRunnels ~~the~~Counties, ~~note~~Texas. The ~~principal~~purchase ofprice ~~$179,671~~paid inby ~~2010. This~~the ~~amount~~Buyer was ~~fully~~$2,921,616, ~~amortized~~which asincludes ofa ~~August 2011.~~cash ~~The~~payment ~~Company~~of is$811,825 ~~currently~~and ~~re-negotiating~~ the ~~notes~~elimination ~~receivable~~of the Company and ~~payable~~Exploration ~~with~~debts ~~Mr.~~in ~~Sundlun~~the amount of $2,109,791.

~~NOTE~~The 24Company’s –Chairman ~~LAWSUIT~~and ~~SETTLEMENT~~Chief Financial –Officer have an ownership interest in the Buyer. Exploration’s members approved the sale of assets and the terms ~~IFL~~of ~~TERMINAL~~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 ~~2010 and~~ 2011 was $391,278 ~~for~~and ~~each~~$32,606 ~~year~~through the sale date, February 7, 2012.

NOTE 2526 –- 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.

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.

40In 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.

InNOTE ~~December~~27 ~~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 $152,987.50 in attorneys’ fees, $9,300.00 in court costs, plus $20,616.44 in prejudgment interest. Interest will continue to accrue on the judgment at the rate of $34.25 until satisfied. The Company did not appeal this judgment. The Company accrued all fees and interest related to the judgment as of December 31, 2011. The total accrual expensed to IFL was $437,155. This amount was assumed by the buyer of IFL in the February 2012 sale.CONCENTRATIONS

~~NOTE~~The 26Company –had ~~CONCENTRATIONS~~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.

The Company has one customer for its oil and gas revenues.

	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	%

		Year Ended December 31, 2011				%				Year Ended December 31, 2010				%
Customer A		$	277,917				100	%		$	58,107				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.

~~The~~NOTE ~~same~~28 ~~customer~~- ~~discussed~~SUPPLEMENTAL ~~above~~OIL ~~represented 100%~~AND ofGAS ~~outstanding~~RESERVE INFORMATION ~~receivables for both years ended December 31, 2011 and 2010.~~(Unaudited)

NOTE 27 – 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, ~~2011~~2012 and December 31, ~~2010~~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.)			~~2010 (bbls.)~~
Beginning balance		6,210			-
Revisions of previous estimates		-			-
Purchase of reserves		-			~~3,490~~
Extensions, discoveries and other additions		24,458			~~3,720~~
Sale of reserves					-
Production		(3,548	)		~~(1,000~~	)
End of year balance		27,120			~~6,210~~

41During 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.

The Company performed a series of workover procedures to the wells on the Felix Brandt lease, resulting in an increase in the production capacity of 3,720 bbls over the initial purchase as of December 31, 2010.

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 will be entitled to 65% of the net revenue interest of the wells until BlueRock receives $410,000 plus an 18% return on investment. These monies are to be paid as the Company receives production payments on the new wells. After payment of this amount, BlueRock will receive a 3% overriding royalty interest on the wells. As of December 31, 2011, the wells were drilled and completion was underway.

Costs Incurred

Capitalized Costs Relating to Oil and Gas Producing Activities

	2011			~~2010~~
Unproved oil and gas properties	$	280,602		$	~~59,060~~
Proved oil and gas properties		526,766			~~223,484~~
Total		807,368			~~282,544~~
Accumulated depreciation, depletion, amortization and valuation allowances		(120,741	)		~~(68,205~~	)
End of year balance	$	686,627		$	~~214,339~~

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 ~~years~~year ended December 31, ~~2010 and~~ 2011:

	2011		~~2010~~
Property acquisition costs:
Unproved	$	-	$	~~59,060~~
Proved		-		~~71,060~~
Exploration costs		-		-
Development costs		485,506		~~116,603~~
Asset retirement cost		3,704		~~35,821~~
Total costs incurred	$	489,210	$	~~282,544~~

Standardized Measure

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

	2011			~~2010~~
Future cash inflows	$	2,384,380		$	~~451,160~~
Future oil and natural gas operation expenses		(1,157,350	)		~~(327,680~~	)
Future development costs					-
Future income tax expenses					-
Future net cash flows		1,227,030			~~123,480~~
10% annual discount for estimating timing of cash flow		(275,760	)		~~(4,890~~	)
Standardized measure of discounted future net cash flow	$	951,270		$	~~118,590~~

42No 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 2829 – - SUBSEQUENT EVENTS

~~During~~There ~~the~~were ~~first~~no ~~quarter~~significant ofsubsequent ~~2012, Asher~~events ~~Enterprises,~~through ~~Inc.~~April ~~elected~~16, to2013, ~~convert a portion of its outstanding notes receivable with~~ the ~~Company~~date ~~on four separate occasions. The conversions were made in accordance with~~ the ~~note~~financial ~~agreement~~statements ~~and resulted in a reduction of the note payable balance of $45,000 and accrued interest of $2,120. Common shares issued in settlement~~ were ~~9,912,748~~issued.

On January 6, 2012, one of the Schwartz investors holding a note for $22,500, converted his note into 681 shares of the Company’s Class B Preferred Stock Series 3 shares. 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 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 $244,824.97 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 $244,842.97 (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 liabilities assumed 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.

On February 7, 2012, the Company sold, for $500,000 cash, all oilfield machinery and equipment it had purchased from Ashton Oilfield Services in its November 3, 2011 acquisition. The Company purchased the assets for 100,000 shares of Class B Preferred Stock Series 1, valued at $350,000

There were no additional subsequent events through April 16, 2012, 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, ~~2011~~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:

1. As of December 31, ~~2011~~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.

2. As of December 31, ~~2011~~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, ~~2011~~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, ~~2011~~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, ~~2011~~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 ~~will~~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	7273	Chairman of the Board of Directors
Timothy Byrd	50	Chief Executive Officer and Director
Timothy G. Byrd, Sr.	51	Chief Executive Officer, Chief Financial Officer and Director
Shannon McAdams, CFA	41	Chief Financial Officer

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.

SHANNON McADAMS, CHIEF FINANCIAL OFFICER

Effective January 1, 2011, Adino appointed Shannon W. McAdams, CFA, to serve as its Chief Financial Officer (“CFO”). From April through December 2010, Mr. McAdams was retained by Adino as a consultant to assist the Company in developing its exploration and production business, arrange debt financing, and negotiate with vendors. From April 2007 through February 2010, Mr. McAdams was Director at Galway Group, LP, an energy advisory firm specializing in natural gas and renewables. While there, his work focused on financial advisory services and commodity research. From 2005 through 2006, Mr. McAdams was the Director of Origination at Technology Tree Group, Inc., where he was involved in all stages of commercialization of emerging technology companies.

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.

From our review of the Section 16(a) filings made in connection with the Company’s stock, we determined that a filing was not made with respect to the following transactions:

· Our CEO, Timothy G. Byrd, Sr., did not file a Form 4 regarding a grant of 500,000 shares to him on November 24, 2010. The failure to file this form was due to an administrative oversight.

· Our CFO, Shannon McAdams, did not file a Form 3 after his appointment as CFO. Mr. McAdams was unaware of this requirement and will file all applicable Section 16(a) forms promptly.

CODE OF ETHICS

The Company has adopted a code of ethics applicable to our CEO, ~~CFO,~~ controller, our other employees, and our suppliers. This code is intended to promote honest and ~~ethical~~ 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. ~~However, the Board is considering an audit committee financial expert in 2012.~~

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~~	Year	~~Salary ($)~~	Salary ($)	~~Bonus~~	Bonus	~~Stock Awards~~	Stock Awards	~~Option Awards ($)~~	Option Awards ($)	~~All Other Compensation ($)~~	All Other Compensation ($)	~~Total ($)~~	Total ($)
Timothy G. Byrd, Sr., CEO	~~2010~~	2012		~~180~~15,000		-0-		~~15,500~~-0-		-0-		-0-		~~195~~15,~~500~~000
Timothy G. Byrd, Sr., CEO	~~2011~~	2011		180,000		-0-		5,500		-0-		-0-		185,500
Sonny Wooley, Chairman	~~2010~~	2012		~~180~~15,000		-0-		~~15,500~~-0-		-0-		-0-		~~195~~15,~~500~~000
Sonny Wooley, Chairman	~~2011~~	2011		180,000		-0-		5,500		-0-		-0-		185,500
Shannon W. McAdams, CFO	~~2010~~	2012		643,500		-0-		-0-		-0-		-0-		643,500
Shannon W. McAdams, CFO	~~2011~~	2011		146,000		-0-		-0-		-0-		-0-		146,000
Nancy Finney, Controller	~~2010~~	2012		9026,000		-0-		-0-		-0-		-0-		9026,000
Nancy Finney, Controller	~~2011~~	2011		90,000		-0-		5,357		-0-		-0-		95,357

4546

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 2011~~	Amount deferred in 2012	~~Amount deferred in 2010~~	Amount deferred in 2011
Sonny Wooley	$	83,500	$	76,000
Timothy Byrd		$-		$77,573
Timothy Byrd	$	77,573	$	69,773
Nancy Finney		$-		$19,000
Shannon McAdams	$	42,000	$	10,500
Nancy Finney	$	19,000	$	18,325

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

DIRECTOR COMPENSATION

Name		~~Year~~	Year	~~Fees Earned or Paid in Cash ($)~~	~~Stock~~Fees ~~Awards~~Earned or Paid in Cash ($)			Stock Awards ($)	~~Total ($)~~	Total ($)
Peggy Behrens		2010		-0-		15,500	(1)		15,500
	None		2012		-0-			-0-		-0-

~~During~~No ~~November~~director ~~2010,~~compensation the Board approved a stock issuance of 500,000 shares each to its three members for services rendered. The total issuance of 1,500,000 shares resulted in expense to the Company of $46,500, based on the stock’s market price at the date of issuance. $15,500 of this expense was ~~attributed~~paid ~~to Ms. Behrens’ stock issuance. Ms. Behrens resigned as a director~~ in ~~December 2010~~2012.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

There are no outstanding equity awards to management at December 31, ~~2011~~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~~

Number of securities to be issued upon exercise of outstanding options, warrants and rights

~~Weighted-average exercise price 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))~~

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”).

46The 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

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%

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	%
Shannon McAdams, CFA		2,000,000	(4)		1.48	%
Alejandro Perales		8,011,628			5.91	%
Executive officers and directors as a group (3 persons)		39,709,555			29.3	%

The above numbers and percentages are as of April 16, ~~2012~~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.

(4) Mr. McAdams’ shares are held by Vulcan Advisors, LLC, of which Mr. McAdams is the sole equity owner.

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 ~~2012~~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 $4241,~~500~~600 for the audit of our financial statements and review of our quarterly reports for fiscal year 2011 and ~~2010~~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 ~~2010~~2011, these fees were $-0-.

TAX FEES

We paid aggregate fees of $2,600 and $~~1,750~~-0- for tax compliance, tax advice, and tax planning by our principal accountant for the years ended December 31, ~~2011~~2011and ~~and 2010~~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 )
		Lease with Lone Star Fuel Storage and Transfer, LLC (incorporated by reference to our Form 10-K filed on March 18, 2009)
10.7		Employment Agreement with Sonny Wooley (incorporated by reference to our Form 10-Q filed on August 15, 2011)
10.8		Employment Agreement with Timothy G. Byrd (incorporated by reference to our Form 10-Q filed on August 15, 2011)
10.9		Terminaling Services Agreement for Commingled Products (incorporated by reference to our Form 10-Q filed on November 14, 2011)
10.10		Amendment to Terminaling Agreement (incorporated by reference to our Form 10-Q filed on November 14, 2011)
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

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 1618, ~~2012~~2013.

ADINO ENERGY CORPORATION By: /s/ Timothy G. Byrd, Sr. Timothy G. Byrd, Sr. ~~CEO~~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 1618, ~~2012~~2013
Sonny Wooley	of Directors
/s/ Timothy G. Byrd, Sr.	Chief Executive Officer,	April 1618, ~~2012~~2013
Timothy G. Byrd, Sr.	~~and~~Chief ~~Director~~Financial Officer
/s/ Shannon W. McAdams, CFA	Chief Financial Officer	April 16, 2012
	and Director
Shannon W. McAdams, CFA

4850

SUBSIDIARIES OF ADINO ENERGY CORPORATION
Name of subsidiary	State of incorporation or organization	Assumed names
Intercontinental Fuels, LLC	Texas	N/A
AACM3, LLC	Texas	Petro 2000
		Exploration
PetroGreen Energy, LLC	Nevada	N/A
Adino Exploration, LLC	Texas	Adino Exploration
		Petro 2000 Exploration Co
Adino Oilfield Services, LLC	Texas

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