SECURITIESTable EXCHANGEof COMMISSION Contents

~~Washington~~SECURITIES ~~D.C.~~EXCHANGE ~~20549~~ COMMISSION

~~FORM~~Washington ~~10-Q~~ D.C. 20549

~~(Mark~~FORM ~~One)~~ 10-Q

~~x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15~~(dMark One) ~~OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~January~~x ~~31,~~QUARTERLY ~~2012 For~~REPORT ~~the~~PURSUANT ~~Quarterly~~TO ~~Period~~SECTION ~~Ended~~13 ~~January 31,~~OR ~~2012~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨For ~~TRANSITION~~the ~~REPORT~~Quarterly ~~PURSUANT~~Period TOEnded ~~SECTION~~April 30, 132012 ~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~¨ ~~the~~TRANSITION ~~transition~~REPORT ~~period~~PURSUANT ~~from to~~ TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~Commission~~For ~~file~~the ~~number~~transition ~~000-09923~~period from to

~~IMPERIAL~~Commission ~~PETROLEUM,~~file ~~INC.~~number 000-09923

~~(Exact~~IMPERIAL PETROLEUM, ~~name~~INC. ~~of registrant as specified in its charter)~~

Nevada		95-3386019
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
710 Norfleet Drive West		47356
Middletown, Indiana		(Zip Code)

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (765) 354-9832


Nevada		95-3386019
(State or other jurisdiction of incorporation or organization)		(IRS Employer identification No.)

101 NW 1^st Street, Suite 213 Evansville, Indiana		47708
		(Zip Code)

~~Indicate by check mark whether the~~ Registrant’s ~~(1) has~~telephone ~~filed~~number, ~~all~~including ~~reports~~area ~~required~~code ~~to be filed by Section 13 or 15~~(d812) ~~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~~867-1433 ~~been subject to such filing requirements for the past 90 days. Yes x No ¨~~

Indicate by check mark whether the ~~registrant~~Registrant (1) has ~~submitted~~filed ~~electronically~~all ~~and~~reports ~~posted on its corporate website, if any, every interactive data file~~ required to be ~~submitted~~filed ~~and~~by ~~posted~~Section 13 ~~pursuant~~or to15(d) ~~Rule 405~~ of ~~Regulation~~the ~~S-T~~Securities ~~(section~~Exchange ~~232.405~~Act of ~~this~~1934 ~~chapter)~~ during the preceding 12 months (or for such shorter period that the ~~registrant~~Registrant was required to ~~submit~~file such reports), and ~~post~~(2) has been subject to such ~~files)~~ filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant ishas asubmitted ~~large~~electronically ~~accelerated~~and ~~filer,~~posted anon ~~accelerated~~its ~~filer~~corporate website, orif aany, ~~non-accelerated~~every ~~filer.~~interactive ~~See definition~~data offile ~~“accelerated~~required ~~filer~~to ~~and~~be ~~large~~submitted ~~accelerated~~and ~~filer”~~posted inpursuant to Rule ~~12b~~405 of Regulation S-2T (section 232.405 of this chapter) during the ~~Exchange~~preceding ~~Act~~12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

~~Large~~Indicate by check mark whether the registrant is a large accelerated filer, ¨an accelerated ~~Accelerated~~ filer, ¨or ~~Non~~a non-~~Accelerated~~accelerated filer. xSee ~~Smaller~~definition ~~reporting~~of ~~company~~“accelerated ¨filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark~~¨ ~~whether~~Accelerated ~~the~~filer ~~registrant~~¨ isNon-Accelerated afiler ~~shell~~x ~~company~~Smaller ~~(as~~reporting ~~defined~~company ~~in Rule 12b-2 of the Exchange Act.): Yes~~ ¨ ~~No x~~

OnIndicate ~~January 31,~~by ~~2012,~~check ~~there~~mark ~~were~~whether ~~40,763,569~~the ~~shares~~registrant ofis ~~the~~a ~~Registrant’s~~shell ~~common~~company ~~stock~~(as ~~issued~~defined ~~and~~in ~~outstanding~~Rule 12b-2 of the Exchange Act.): Yes ¨ No x

~~Cautionary~~On ~~Note~~June 11, ~~Regarding~~2012, ~~Forward-Looking~~there ~~Statements~~were 61,338,501 shares of the Registrant’s common stock issued and outstanding.

AsTable usedof herein, unless we otherwise specify, the terms the “Company,” “we,” “us” and “our” means Imperial Petroleum, Inc. Contents

~~This~~Cautionary ~~Report~~Note ~~contains~~Regarding ~~forward~~Forward-~~looking~~Looking ~~statements~~Statements ~~concerning our financial condition, results of operations and business, including, without limitation, statements pertaining to:~~

•As ~~The~~used ~~development~~herein, ofunless ~~our~~we ~~existing~~otherwise ~~oil~~specify, ~~and~~the ~~gas~~terms ~~properties~~the “Company,” “we,” “us” and ~~leases;~~“our” means Imperial Petroleum, Inc.

•This ~~Implementing~~Report ~~aspects~~contains offorward-looking statements concerning our financial condition, results of operations and business, ~~plans;~~including, without limitation, statements pertaining to:

• ~~Financing~~The ~~goals~~development of our existing oil and ~~plans~~gas properties and leases;

• ~~Our~~Implementing ~~existing~~aspects ~~cash~~of ~~and whether and how long these funds will be sufficient to fund~~ our ~~operations;~~business ~~and~~plans;

• ~~Our~~Financing ~~raising~~goals ofand ~~additional capital through future equity financings.~~plans;

~~These~~• ~~and~~Our ~~other~~existing ~~forward-looking~~cash ~~statements are primarily in the section entitled “Management’s Discussion~~ and ~~Analysis~~whether ~~of Financial Conditions~~ and ~~Results~~how oflong ~~Operations.” Generally, you can identify~~ these ~~statements~~funds ~~because~~will ~~they~~be ~~include~~sufficient phrases such as “anticipates,” “believes,” “expects,” “future,” “intends,” “plans,” and similar terms. These statements are only predictions. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy, and actual results may differ materially from those we anticipated due to afund ~~number~~our ofoperations; uncertainties, many of which are unforeseen. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Report on Form 10-Q. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including those stated in this Report. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. and

We• ~~believe~~Our itraising isof ~~important~~additional tocapital ~~communicate~~through ~~our expectations to our investors. There may be events in the~~ future, ~~however,~~equity ~~that we are unable to predict accurately or over which we have no control~~financings. Cautionary language in this Report provides examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements.

2These and other forward-looking statements are primarily in the section entitled “Management’s Discussion and Analysis of Financial Conditions and Results of Operations.” Generally, you can identify these statements because they include phrases such as “anticipates,” “believes,” “expects,” “future,” “intends,” “plans,” and similar terms. These statements are only predictions. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy, and actual results may differ materially from those we anticipated due to a number of uncertainties, many of which are unforeseen. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Report on Form 10-Q. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including those stated in this Report. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

~~IMPERIAL~~We ~~PETROLEUM~~believe it is important to communicate our expectations to our investors. There may be events in the future, ~~INC~~however, that we are unable to predict accurately or over which we have no control. Cautionary language in this Report provides examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements.

IndexTable toof Form 10-Q for the Quarterly Period Contents

~~Ended~~Explanatory ~~January 31,~~Note ~~2012~~(1.):

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.		4
Condensed Consolidated Balance Sheets as of July 31, 2011 and January 31, 2012			5
Condensed Consolidated Statements of Operations for the three month and six months ended January 31, 2012 and 2011			7
Condensed Consolidated Statements of Cash Flows for the six months ended January 31, 2012 and 2011			8
Notes to Condensed Consolidated Financial Statements			9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		25
Item 4.	Controls and Procedures		25
PART II – OTHER INFORMATION
The information called for by Item 1. Legal Proceedings, Item 1A. Risk Factors, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, Item 3. Defaults Upon Senior Securities, Item 4. Submission of Matters to a Vote of Security Holders and Item 5. Other Information are not applicable			27-31
Item 6.	Exhibits		31
SIGNATURES			32

On April 4, 2012, the Company’s wholly-owned subsidiary, e-Biofuels, LLC filed a voluntary petition for protection from creditors under Chapter 7 of Title 11 of the Bankruptcy Code with the United States Bankruptcy Court for the Southern District of Indiana under Case Number 12-03816-FJO-7A. The Court appointed Richard E. Boston, 27 North 5th St., Richmond, IN 47374 as U.S Trustee on that date. The e-Biofuels subsidiary represented approximately 99.6% of the Company’s revenues. In the filing, e-Biofuels listed total assets of $11,354,800.51 and total liabilities of $17,321,036.88. (See Form 8-K dated April 4, 2012 incorporated herein by reference). The operations of e-Biofuels are presented as Discontinued Operations in the Company’s financials.

3Explanatory Note (2.):

~~PART~~On IMay 25, 2012, the Company received a subpoena for the period of January 1, 2010 to the present, as part of a fact-finding inquiry from the Division of Enforcement of the Securities and Exchange Commission (“SEC”). ~~FINANCIAL~~The ~~INFORMATION~~subpoena requires us to produce numerous documents related to the Company and our wholly-owned subsidiary, E-Biofuels, LLC. The subpoena demands the production of documents related to the operations, accounting, business practices, purchase and sales of biodiesel, tax credits and incentives from any state, federal or agency, the production process of the biodiesel, including, the purchase of any products related to the manufacturing of biodiesel, financing, stock issuances, executives and employees. The purpose of the subpoena is to determine whether any federal laws have been violated.

~~Item~~In addition, on May 24, 2012, the Company and E-Biofuels, LLC, received subpoenas in connection with a Grand Jury investigation into the activities of the Company and E-Biofuels, LLC, for the period of January 1, 2006 to the present. ~~Financial~~In ~~Statements~~conjunction with the Grand Jury investigation, on May 24, 2012, the United States District Court of the Southern District of Indiana authorized search warrants to obtain records, documents and evidence related to the ongoing investigation. The search warrants were executed on May 24, 2012.

~~We have~~The ~~prepared~~Company ~~the~~intends ~~condensed~~to ~~consolidated~~fully ~~financial~~cooperate ~~statements~~with ~~included~~the ~~herein~~investigations. ~~without audit~~Currently, ~~pursuant to~~ the ~~rules~~Company ~~and~~cannot ~~regulations~~estimate of the ~~Securities~~ultimate ~~and~~financial ~~Exchange~~impact, ~~Commission (the “SEC”). Certain information and footnote disclosures normally~~if ~~included~~any, inresulting ~~financial~~from ~~statements~~the ~~prepared in accordance with generally accepted accounting principles have been omitted pursuant to such SEC rules and regulations~~investigations. In ~~our opinion,~~ the ~~accompanying~~event ~~statements~~that ~~contain~~violations ~~all adjustments (consisting~~ of ~~normal~~ ~~recurring~~state ~~adjustments)~~or ~~necessary~~federal toare ~~present~~determined, ~~fairly~~such ~~the~~determination ~~financial~~could ~~position~~have ofa ~~our~~material ~~company~~negative asimpact ofon ~~January 31,~~the ~~2012,~~operations ~~and its results~~ of ~~operations for~~ the ~~three~~Company. ~~months~~In ~~and six month periods ended January 31~~addition, ~~2012~~if ~~and~~it ~~2011~~is ~~and~~determined ~~its~~that ~~cash~~the ~~flows~~Company’s ~~for~~subsidiary, ~~the~~E-biofuels, ~~six month period ended January 31~~LLC, ~~2012~~received ~~and~~improper ~~2011.~~tax ~~The~~credits ~~results~~ for ~~these~~the ~~interim~~sale ~~periods~~of ~~are~~biodiesel, ~~not~~then ~~necessarily indicative of~~ the results ~~for~~could ~~the~~have ~~entire~~a ~~year.~~material ~~The~~impact ~~accompanying~~on ~~financial statements should be read in conjunction with~~ the ~~financial~~Company. ~~statements~~(See ~~and~~Form ~~the~~8-K ~~notes~~dated ~~thereto~~May 25, ~~filed~~2012 asincorporated aherein ~~part~~by ~~of our annual report on Form 10-K~~reference).

4Investors are cautioned that the events described above are material to the operations of the Company and that the Company cannot, with any degree of certainty, estimate or predict the impact that these events may have on the future of the Company, its operations or its share price.

IMPERIALTable PETROLEUM,of INC. Contents

~~CONDENSED~~IMPERIAL ~~CONSOLIDATED~~PETROLEUM, ~~BALANCE~~INC. ~~SHEET~~

	January 31,2012			July 31,2011
ASSETS
Current Assets:
Cash	$	139,147		$	900,883
Accounts Receivable		109,385			1,549,154
Accounts Receivable (Government Incentives)		821,677			3,344,919
Inventory		40,086			1,293,171
Non-compete Agreement, net of accumulated amortization of $235,750		1,178,750			—
Prepaid expenses (current portion)		504,328			910,407
Loan Receivable (related party)		—			6,440
Other Current Assets		10,200			157,166
Total current assets		2,803,573			8,162,140
Property, plant and equipment:
Mining claims, options, and development costs		74,500			74,500
Fixed Assets		12,124,299			11,969,451
Land		515,900			515,900
Oil and gas properties (full cost method)		—			4,690,765
		12,714,699			17,250,616
Less: accumulated depreciation, depletion and amortization		(2,874,399	)		(3,092,503	)
Net property, plant and equipment		9,840,300			14,158,113
Other assets:
License agreements, net of accumulated amortization.		442,756			442,756
Loan Receivable (related party)		—			332,989
Deposits		10,850			—
Prepaid expenses		269,717			1,438,722
Total Other Assets		723,323			2,214,467
Total assets	$	13,367,196		$	24,534,720

Index to Form 10-Q for the Quarterly Period

5Ended April 30, 2012

	January 31,2012				July 31,2011
			Page
LIABILITIES AND SHAREHOLDERS’ EQUITY
PART I – FINANCIAL INFORMATION
Current liabilities:
Item 1.	Financial Statements.			5
Accounts payable	$	2,667,812			$	1,307,654
Condensed Consolidated Balance Sheets as of July 31, 2011 and April 30, 2012				6
Accrued expenses		4,864,960				5,183,849
Condensed Consolidated Statements of Operations for the three months and nine months ended April 30, 2012 and 2011				8
Derivative liability		281,184				—
Condensed Consolidated Statements of Cash Flows for the nine months ended April 30, 2012 and 2011				9
Customer Deposit Liability		120,820				2,901,054
Notes to Condensed Consolidated Financial Statements				10
Notes payable – current portion		9,201,912				11,162,479
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.			26
Notes payable – related parties		538,786				540,286
Item 3.	Quantitative and Qualitative Disclosures about Market Risk			28
Total current liabilities		17,675,474				21,095,322
Item 4.	Controls and Procedures			28
Long-term liabilities:
PART II – OTHER INFORMATION
Mortgage Note		1,498,141				1,525,641
The information called for by Item 1. Legal Proceedings, Item 1A. Risk Factors, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, Item 3. Defaults Upon Senior Securities, Item 4. Submission of Matters to a Vote of Security Holders and Item 5. Other Information are not applicable				29-32
Notes Payable, Other		463,791				1,009,602
Item 6.	Exhibits			32
Asset retirement obligation		—				472,855
SIGNATURES				33
Total long-term liabilities		1,961,932				3,008,098
STOCKHOLDERS’ EQUITY:
Common stock of $.006 par value; authorized 150,000,000 shares; 40,763,569 and 34,905,136 issued and outstanding at January 31, 2012 and July 31,2011, respectively		244,582				209,431
Common stock, owed but not issued - 0 and 100,000 shares at January 31, 2012 and July 31, 2011, respectively		—				600
Paid-in capital		25,404,412				21,977,786
Retained deficit		(29,919,204	)			(21,756,517	)
Treasury Stock, 2,000,000 shares at January 31, 2012		(2,000,000	)			—
Total stockholders’ equity		(6,270,210	)			431,300
Total liabilities and stockholders’ equity		13,367,196				24,534,720

SeeTable Notesof to Condensed Consolidated Financial Statements Contents

6PART I. FINANCIAL INFORMATION

~~IMPERIAL~~Item 1. ~~PETROLEUM,~~Financial ~~INC.~~Statements

~~CONDENSED~~We ~~CONSOLIDATED~~have ~~STATEMENT~~prepared OFthe ~~OPERATIONS~~condensed consolidated financial statements included herein without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such SEC rules and regulations. In our opinion, the accompanying statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position of our company as of April 30, 2012, and its results of operations for the three and nine month periods ended April 30, 2012 and 2011 and its cash flows for the nine month period ended April 30, 2012 and 2011. The results for these interim periods are not necessarily indicative of the results for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and the notes thereto filed as a part of our annual report on Form 10-K.

Explanatory Note (~~UNAUDITED~~1.):

	Three Months Ended						Six Months Ended
	1/31/2012			1/31/2011			1/31/2012			1/31/2011
Revenues and other income:
Biodiesel	$	13,227,815		$	13,090,859		$	49,253,214		$	28,921,186
Biodiesel Government Incentives		24,573			0			416,073			0
Oil and gas		58,618			75,228			133,775			104,179
Other revenue		25,710			29,200			25,710			92,027
Total operating income	$	13,336,716		$	13,195,287		$	49,828,772		$	29,117,392
Costs and expenses:
Biofuels Direct Costs		12,640,083		$	12,275,542			46,144,258		$	25,853,710
Oil and Gas expenses		75,359			240,078			395,981			354,043
General and administrative		2,887,867			731,839			5,795,966			2,037,685
Depreciation, depletion and amortization		200,914			214,070			419,679			427,243
Total costs and expenses		15,804,223			13,461,529			52,755,884			28,672,681
Net Income (Loss) from operations		(2,467,507	)		(266,242	)		(2,927,112	)		444,711
Other income and (expense):
Interest expense		(888,275	)		(471,483	)		(1,644,961	)		(803,063	)
Interest income		0			0			2,826			0
Other income (expense)		(49,311	)		481,904			(23,449	)		791,904
Gain (loss) on sale of assets		(3,876,922	)		0			(3,876,922	)		0
Gain (loss) on valuation of derivative liability		217,360			0			306,932			0
Total other income and (expense)		(4,597,148	)		10,421			(5,235,574	)		(11,159	)
Net income (loss) before income tax		(7,064,655	)		(255,821	)		(8,162,686	)		433,552
Provision for income taxes		0			0			0			0
Net Income (Loss)	$	(7,064,655	)	$	(255,821	)	$	(8,162,686	)	$	433,552
NET INCOME/(LOSS) PER SHARE (basic)	$	(0.175	)	$	(0.011	)	$	(0.211	)	$	0.019
WEIGHTED AVERAGE SHARES OUTSTANDING (basic)		40,432,800			23,825,127			38,743,028			23,162,748
NET INCOME/(LOSS) PER SHARE (diluted)		N/A			N/A			N/A		$	0.018
WEIGHTED AVERAGE SHARES OUTSTANDING (diluted)		N/A			N/A			N/A			24,215,020

~~See~~Explanatory ~~Notes~~Note to(2.): ~~Condensed Consolidated Financial Statements~~

7On May 25, 2012, the Company received a subpoena for the period of January 1, 2010 to the present, as part of a fact-finding inquiry from the Division of Enforcement of the Securities and Exchange Commission (“SEC”). The subpoena requires us to produce numerous documents related to the Company and our wholly-owned subsidiary, E-Biofuels, LLC. The subpoena demands the production of documents related to the operations, accounting, business practices, purchase and sales of biodiesel, tax credits and incentives from any state, federal or agency, the production process of the biodiesel, including, the purchase of any products related to the manufacturing of biodiesel, financing, stock issuances, executives and employees. The purpose of the subpoena is to determine whether any federal laws have been violated.

~~IMPERIAL~~In ~~PETROLEUM~~addition, ~~INC~~on May 24, 2012, the Company and E-Biofuels, LLC, received subpoenas in connection with a Grand Jury investigation into the activities of the Company and E-Biofuels, LLC, for the period of January 1, 2006 to the present. In conjunction with the Grand Jury investigation, on May 24, 2012, the United States District Court of the Southern District of Indiana authorized search warrants to obtain records, documents and evidence related to the ongoing investigation. The search warrants were executed on May 24, 2012.

~~CONDENSED~~The ~~CONSOLIDATED~~Company ~~STATEMENT~~intends OFto ~~CASH~~fully cooperate ~~FLOWS~~with the investigations. Currently, the Company cannot estimate the ultimate financial impact, if any, resulting from the investigations. In the event that violations of state or federal are determined, such determination could have a material negative impact on the operations of the Company. In addition, if it is determined that the Company’s subsidiary, E-biofuels, LLC, received improper tax credits for the sale of biodiesel, then the results could have a material impact on the Company. (See Form 8-K dated May 25, 2012 incorporated herein by reference).

~~(UNAUDITED)~~5

	For the SixMonths Ended1/31/2012			For the SixMonths Ended1/31/2011
Operating activities:
Net income (loss)	$	(8,162,686	)	$	433,552
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization		419,679			427,243
Loss on sale of fixed asset		3,876,922			—
Gain on sale of licensing rights		—			(500,000	)
(Gain) Loss on valuation of derivative liability		(306,932	)		—
Stock and warrants issued for services		60,900			160,572
Amortization of stock and options issued for services		2,102,055			76,875
Change in accounts receivable		1,439,770			(2,310,978	)
Change in Accts. Rec – government incentives		2,766,123			—
Change in inventory		861,239			(299,388	)
Change in prepaid expenses		952,941			—
Change in accounts payable		1,279,418			(139,097	)
Change in other assets		(106,767	)		(11,962	)
Change in customer deposits		(2,773,484	)		—
Change in other liabilities		—			2,048,200
Change in accrued expenses		(241,697	)		806,458
Net cash provided by (used in) operating activities		2,167,481			691,475
Investing activities:
Purchase of fixed assets		(680,101	)		(355,474	)
Loans made (payments received) to related parties, net		339,429			—
Proceeds of sale of assets		100			275,000
Net cash provided by (used in) investing activities		(340,572	)		(80,474	)
Financing activities:
Purchase of treasury stock		(2,000,000	)		—
Payments on notes payable		(3,510,221	)		(592,383	)-
Proceeds from notes payable-related party		—			9,712
Sale of common stock, net of expenses		2,921,576			—
Net cash provided by (used in) financing activities		(2,588,645	)		(582,671	)
Net change in cash and cash equivalents		(761,736	)		28,330
Cash and cash equivalents, beginning of year		900,883			28,525
Cash and cash equivalents, end of year		139,147			56,855
Supplemental disclosures for cash flow information:
Cash paid during the period for:
Interest		1,446,640			357,405
Income taxes		—			—
Supplemental schedule of non-cash investing and financing:
Stock and warrants issued for prepaid expenses		1,066,817			—
Stock and warrants issued for services		60,900			160,572
Note payable issued for fixed assets		—			479,424
Options exercised for notes and accounts payable		—			60,000
Note payable issued for pre-paid non-compete agreement		1,200,000			0

~~See~~IMPERIAL ~~Notes~~PETROLEUM, toINC. ~~Condensed Consolidated Financial Statements~~

8CONDENSED CONSOLIDATED BALANCE SHEET

IMPERIAL PETROLEUM, INC.


	April 30, 2012			July 31, 2011
ASSETS
Current Assets:
Cash	$	20,190		$	900,883
Accounts Receivable		4,157			1,549,154
Accounts Receivable (Government Incentives)		0			3,344,919
Inventory		0			1,293,171
Non-compete Agreement, net of accumulated amortization of $235,750		825,125			—
Prepaid expenses (current portion)		28,106			910,407
Loan Receivable (related party)		0			6,440
Other Current Assets		10,316			157,166

Total current assets		887,894			8,162,140
Property, plant and equipment:
Mining claims, options, and development costs		0			74,500
Fixed Assets		700,990			11,969,451
Land		242,000			515,900
Oil and gas properties (full cost method)		0			4,690,765

		942,990			17,250,616
Less: accumulated depreciation, depletion and amortization		(0	)		(3,092,503	)

Net property, plant and equipment		942,990			14,158,113
Other assets:
License agreements, net of accumulated amortization.		246,876			442,756
Loan Receivable (related party)		0			332,989
Deposits		10,850			—
Prepaid expenses		0			1,438,722

Total Other Assets		257,726			2,214,467

Total assets	$	2,088,610		$	24,534,720

~~Notes~~6 ~~to Condensed Consolidated Financial Statements~~

(Unaudited)Table of Contents

1. GENERAL


	April 30, 2012			July 31, 2011
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	981,225		$	1,307,654
Accrued expenses		1,913,181			5,183,849
Customer Deposit Liability		120,820			2,901,054
Notes payable – current portion		8,318,334			11,162,479
Notes payable – related parties		587,061			540,286

Total current liabilities		11,920,621			21,095,322
Long-term liabilities:
Mortgage Note		0			1,525,641
Notes Payable, Other		0			1,009,602
Asset retirement obligation		0			472,855

Total long-term liabilities		0			3,008,098
STOCKHOLDERS’ EQUITY:
Common stock of $.006 par value; authorized 150,000,000 shares; 42,068,923 and 34,905,136 issued and outstanding at April 30, 2012 and July 31,2011, respectively		252,415			209,431
Common stock, owed but not issued – 19,217,340 and 100,000 shares at April 30, 2012 and July 31, 2011, respectively		115,304			600
Paid-in capital		20,638,860			21,977,786
Retained deficit		(28,838,590	)		(21,756,517	)
Treasury Stock, 2,000,000 shares at April 30, 2012		(2,000,000	)		—

Total stockholders’ equity		(9,832,011	)		431,300

Total liabilities and stockholders’ equity		2,088,610			24,534,720

~~The~~See ~~accompanying~~Notes ~~unaudited~~to ~~interim~~Condensed ~~condensed~~Consolidated ~~consolidated~~Financial ~~financial~~Statements statements have been prepared in accordance with the instructions for Form 10-Q. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for the interim periods presented have been included. Operating results for the periods presented are not necessarily indicative of the results, which may be expected for the year ending July 31, 2012. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended July 31, 2011.

~~Organization~~ 7

ImperialTable Petroleum, Inc. (the “Company”), a publicly held corporation, was organized under the laws of the state of Nevada. Contents

~~The~~IMPERIAL ~~Company’s principal business consists of biodiesel production and oil and gas exploration and production in the United States. The Company~~PETROLEUM, ~~through its wholly-owned subsidiary, Arrakis Oil Recovery, LLC is developing and implementing a process for the recovery of heavy oil from mineable oil sands in the U~~INC.S. ~~and internationally. At January 31, 2012, the Company has not fully implemented the oil recovery process.~~

~~Basis~~CONDENSED ofCONSOLIDATED ~~Presentation~~ STATEMENT OF OPERATIONS

~~The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Ridgepointe Mining Company, Imperial Chemical Company~~ (~~formerly The Rig Company~~UNAUDITED), Hoosier Biodiesel Company (formerly Global-Imperial Joint Venture, Inc.), Arrakis Oil Recovery, LLC, and e-biofuels, LLC. All significant inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates


	Three Months Ending						Nine Months Ending
	04/30/12			04/30/11			04/30/12			04/30/11
Revenue
Oil and gas revenue	$	1,515			64,684			135,290			168,863
Other revenue		500			0			14,250			0

Total operating income	$	2,015			64,684			149,540			168,863

Costs and Expenses:
Oil and Gas expenses	$	0			310,191			424,314			664,234
General and administrative		609,313			567,194			4,102,162			989,718
Impairment		267,255			0			267,255			0
Depreciation, depletion and amort.		3,124			7,622			8,720			28,027

Total costs and expenses	$	879,692			885,007			4,802,451			1,681,979

Net (loss) from continuing operations	$	(877,677	)		(820,323	)		(4,652,911	)		(1,513,116	)

Other income and (expense)
Interest expense		(2,268,300	)		(119,068	)		(2,470,641	)		(356,320	)
Gain on sale of assets		0			0			(3,767,827	)		0
Gain on Bankruptcy		5,369,281			0			5,369,281			0
Other Income/expense		0			0			306,837			500,000

Other
Total other income/(expense)		3,100,981			(119,068	)		(562,350	)		143,680

Net gain/ loss before income taxes	$	2,223,304			(939,391	)		(5,215,261	)		(1,369,436	)
Provision for income taxes

Current		0			0			0			0
Deferred		0			0			0			0

Total benefit from income taxes		0			0			0			0

Net income/loss from continuing operations	$	2,223,304			(939,391	)		(5,215,261	)		(1,369,436	)

Net income/loss from discontinued operations	$	(1,142,692	)		3,307,559			(1,866,812	)		4,171,156

Net Income (loss)		1,080,612			2,368,168			(7,082,073	)		2,801,720

Net Income(loss) per share from continuing operations	$	0.054			(0.035	)		(0.132	)		(0.056	)

Net Income(loss) per share from discontinued operations	$	(0.028	)		0.125			(0.047	)		0.172

Weighted Average Shares – basic and diluted		40,937,616			26,365,777			39,466,518			24,222,486

~~The~~See ~~presentation~~Notes ~~of financial statements in conformity with generally accepted U.S. accounting principles requires management~~ to ~~make estimates~~Condensed ~~and~~Consolidated ~~assumptions~~Financial ~~that~~Statements affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~Cash~~8 ~~and Cash Equivalents~~

ForTable purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Contents

~~Accounts~~IMPERIAL ~~Receivable~~PETROLEUM, INC.

~~Accounts~~CONDENSED ~~receivable~~CONSOLIDATED ~~are~~STATEMENT ~~carried~~OF onCASH aFLOWS gross basis, with no discounting, less the allowance for doubtful accounts. We estimate the allowance for doubtful accounts based on existing economic conditions, the financial conditions of the customers, and the amount and the age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for doubtful accounts only after all collection attempts have been exhausted. There is no collateral held for accounts receivable. The allowance for doubtful accounts was $44,430 and $44,430 as of January 31, 2012 and July 31, 2011, respectively. Bad debt expense for the six months ended January 31, 2012 was $0. Bad debt expense for the year ended July 31, 2011, 2010, and 2009 was $44,430, $25,001 and $0, respectively.

~~Fair~~(UNAUDITED) ~~Value of Financial Instruments~~

Fair values of cash and cash equivalents, investments and short-term debt approximate their carrying values due to the short period of time to maturity. Fair values of long-term debt are based on quoted market prices or pricing models using current market rates, which approximate carrying values. See Note 12 for further details.


	Nine Months Ending
	4/30/12			4/30/11
Operating activities:
Net income/(loss)	$	(7,082,073	)		2,801,720
Net income/(loss) discontinued operations		1,866,812			(4,171,156	)
Adjustments to reconcile net income (loss) to net cash (used) in operating activities
Depreciation, depletion and amortization		8,720			28,027
Loss on sale of fixed assets		3,767,827			0
Gain on bankruptcy of subsidiary		(5,369,281	)		0
Gain on valuation of derivative liability		(306,932	)		0
Gain on sale of licensing rights		0			(500,000	)
Stock and options issued for compensation		0			363,328
Stock and warrants issued for services		60,900			196,572
Stock and warrants issued for finance changes		2,722,753			0
Amortization of stock and options issued for services		2,470,035			131,980
Impairment expense		267,255			0
Changes in operating assets and liabilities:
Change in accounts receivable		451,115			(33,520	)
Change in prepaid expenses		1,097,432			0
Change in other assets		(10,666	)		30,287
Change in accounts payable		(111,258	)		494,768
Change in accrued expense		(28,381	)		748,488
Changes in customer deposits		0			(162,031	)

Net cash provided by (used in) operating activities-continued		(195,741	)		(71,537	)
Net cash provided by (used in) operating activities-discontinued		2,210,112			2,069,767

Cash provided (used by) operating activities		2,014,371			1,998,230

Cash flow from Investing activities:
Purchases and improvements to fixed assets		(352,752	)		0
Proceeds from sale of fixed assets		100			275,000

Net cash provided by (used in) investing activities-continuing		(352,652	)		275,000
Net cash provided by (used in) investing activities-discontinued		240,438			(413,027	)

Cash provided by (used in) investing activities		(112,214	)		(138,027	)

Financing activities:
Purchase of treasury stock		(2,000,000	)		0
Sale of common stock, net of expenses		2,921,576			0
Proceeds (payments) on notes payable-net		(274,881	)		(161,204	)

Net cash provided by (used in) financing activities-continuing		646,695			(161,204	)
Net cash provided by (used in) financing activities-discontinued		(3,429,545	)		(660,240	)

Net cash provided by (used in) financing activities		(2,782,850	)		(821,444	)

Net (decrease) increase in cash		(880,693	)		1,038,759
Cash and cash equivalents, beginning of period		900,883			28,525

Cash and cash equivalents, end of period	$	20,190			1,067,284

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	1,446,640			558,441

Income taxes	$	0			0

Non-cash financing activities:
Stock and warrants issued for prepaid expenses	$	1,066,817			0
Stock and options issued for compensation	$	0			363,328

Stock and warrants issued for services	$	60,900			196,572

Stock and warrants issued for financing charges	$	2,722,753			0

Options issued for notes and accounts payable	$	0			60,000

Equipment acquired with notes payable	$	0			479,424

Equipment acquired with stock	$	0			1,244,168

Note payable issued for pre-paid non-compete agreement	$	1,200,000			0

~~Concentrations~~See ofNotes ~~Credit~~to ~~Risk~~Condensed Consolidated Financial Statements

~~Financial~~9 ~~instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable.~~

TheTable Company’s cash is deposited in three financial institutions. Cash and certificates of deposit at banks are insured by the FDIC up to $250,000. At times, the balances in these accounts may be in excess of federally insured limits. As of January 31, 2012, the Company had no deposits in excess of federally insured limits. Contents

~~The~~IMPERIAL Company currently operates in the biodiesel production industry. The concentration of credit risk in a single industry affects the Company’s overall exposure to credit risk because customers may be similarly affected by changes in economic and other conditions. During the quarter ended January 31PETROLEUM, ~~2012, the Company’s major purchasers of its biodiesel were 39% to Element Renewable Energy; 33% to Fusion Renewable and 19% to Ultra Green Energy Services~~INC. As of January 31, 2012, these three customers made up 0%, 0%, and 50% of the Company’s accounts receivable, respectively. During the year ended July 31, 2011, the Company’s major purchasers of its biodiesel were 36.3% to Fusion, 24.5% to Element, and 17.1% to Pilot.

9Notes to Condensed Consolidated Financial Statements

~~Revenue~~(Unaudited) ~~Recognition~~

~~The~~(1) ~~Company~~GENERAL derives revenue from sales of oil, gas, and biodiesel products. The Company recognizes revenue when a formal arrangement exists, the price is fixed or determinable, all obligations have been performed pursuant to the terms of the formal arrangement, and collectability is reasonably assured. The Company also derives revenues from government incentive programs relating to biodiesel production. These revenues are recognized when the amount of the incentive is reasonably determinable and collection is reasonably assured.

~~Oil~~The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for the interim periods presented have been included. Operating results for the periods presented are not necessarily indicative of the results, which may be expected for the year ending July 31, 2012. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and ~~Gas~~notes ~~Properties~~thereto included in the Company’s Form 10-K for the year ended July 31, 2011.

~~The~~Explanatory ~~Company~~Note ~~follows the full cost method of accounting for oil and gas properties~~(1. Accordingly, all costs associated with acquisition, exploration, and development of oil and gas reserves, including directly related overhead costs, are capitalized. All capitalized costs of oil and gas): properties, including the estimated future costs to develop proved reserves, are amortized on the unit-of-production method using estimates of proved reserves. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized.

InOn ~~addition~~April 4, 2012, the ~~capitalized~~Company’s ~~costs~~wholly-owned ~~are~~subsidiary, ~~subject~~e-Biofuels, toLLC filed a ~~“ceiling~~voluntary ~~test,”~~petition ~~which~~for protection ~~basically~~from ~~limits~~creditors ~~such~~under ~~costs~~Chapter to7 ~~the aggregate~~of Title 11 of the ~~“estimated~~Bankruptcy ~~present~~Code ~~value~~with the United States Bankruptcy Court for the Southern District of Indiana under Case Number 12-03816-FJO-7A. The Court appointed Richard E. Boston,” ~~discounted~~27 atNorth a5th 10St., Richmond, IN 47374 as U.S Trustee on that date. The e-~~percent~~Biofuels ~~interest~~subsidiary ~~rate~~represented approximately 99.6% of ~~future~~the ~~net~~Company’s revenues. ~~from~~In ~~proved~~the ~~reserves~~filing, ~~based~~e-Biofuels onlisted ~~current~~total ~~economic~~assets of $11,354,800.51 and ~~operating~~total ~~conditions~~liabilities of $17,321,036.88. ~~plus~~(See Form ~~the~~8-K ~~lower~~dated ofApril 4, ~~cost~~2012 orincorporated ~~fair~~herein ~~market~~by ~~value~~reference). The operations of ~~unproved properties~~e-Biofuels are presented as Discontinued Operations in the Company’s financials.

~~Sales~~Explanatory ofNote proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in income(2.):

~~See~~On ~~Note~~May 25, 132012, the Company received a subpoena for ~~additional~~the ~~information~~period onof ~~Oil~~January 1, 2010 to the present, as part of a fact-finding inquiry from the Division of Enforcement of the Securities and ~~Gas~~Exchange ~~Properties~~Commission (“SEC”). The subpoena requires us to produce numerous documents related to the Company and our wholly-owned subsidiary, E-Biofuels, LLC. The subpoena demands the production of documents related to the operations, accounting, business practices, purchase and sales of biodiesel, tax credits and incentives from any state, federal or agency, the production process of the biodiesel, including, the purchase of any products related to the manufacturing of biodiesel, financing, stock issuances, executives and employees. The purpose of the subpoena is to determine whether any federal laws have been violated.

~~Other~~In ~~Property~~addition, on May 24, 2012, the Company and ~~Equipment~~E-Biofuels, LLC, received subpoenas in connection with a Grand Jury investigation into the activities of the Company and E-Biofuels, LLC, for the period of January 1, 2006 to the present. In conjunction with the Grand Jury investigation, on May 24, 2012, the United States District Court of the Southern District of Indiana authorized search warrants to obtain records, documents and evidence related to the ongoing investigation. The search warrants were executed on May 24, 2012.

~~Property~~The ~~and~~Company ~~equipment~~intends ~~are~~to ~~stated~~fully atcooperate ~~cost.~~with ~~Depreciation~~the isinvestigations. ~~computed~~Currently, by the ~~straight-line~~Company ~~method~~cannot ~~over~~estimate the ~~estimated~~ultimate ~~useful~~financial ~~lives~~impact, ofif any, ~~assets~~resulting from the investigations. ~~Expenditures~~In the event that ~~significantly~~violations ~~increase~~of ~~values~~state or ~~extend~~federal ~~useful lives~~ are ~~capitalized.~~determined, ~~Expenditures~~such ~~for~~determination ~~maintenance~~could ~~and~~have ~~repairs~~a ~~are~~material ~~charged~~negative toimpact ~~expenses~~on asthe ~~incurred~~operations of the Company. ~~Upon~~In ~~sale~~addition, orif ~~retirement~~it ofis ~~property~~determined ~~and~~that ~~equipment~~the Company’s subsidiary, ~~the~~E-biofuels, ~~cost~~LLC, ~~and~~received ~~related~~improper ~~accumulated~~tax ~~depreciation~~credits ~~and~~for ~~depletion~~the ~~are~~sale ~~eliminated~~of ~~from~~biodiesel, then the ~~respective accounts~~results ~~and~~could have a material impact on the ~~resulting~~Company. ~~gain~~(See orForm ~~loss~~8-K isdated ~~included~~May 25, in2012 ~~current~~incorporated ~~earnings~~herein by reference).

~~Mining~~Organization exploration costs are expensed as incurred. Development costs are capitalized. Depletion of capitalized mining costs will be calculated on the units of production method based upon current production and reserve estimates when placed in service.

~~Inventories~~Imperial Petroleum, Inc. (the “Company”), a publicly held corporation, was organized under the laws of the state of Nevada.

~~Inventories~~The ~~are~~Company’s ~~stated~~principal business atconsists ~~the~~of ~~lower~~oil ofand ~~cost~~gas orexploration ~~market~~and production in the United States. The ~~inventory~~Company asis ofdeveloping ~~January 31,~~a ~~2012~~newly ~~and~~formed ~~July 31~~wholly-owned subsidiary, ~~2011~~Arrakis ~~was~~Oil ~~$40~~Recovery,~~086~~ ~~and~~LLC ~~$1,293,171,~~for ~~respectively.~~the ~~All~~recovery ~~inventory~~of ~~pertains~~heavy tooil ~~our~~from ~~operations at~~mineable ~~e-biofuels.~~oil ~~The~~sands ~~balance~~in of the ~~inventory~~U.S. asand ofhas completed ~~January 31,~~a ~~2012~~Joint isVenture ~~made~~arrangement upwith ofPeak ~~$39~~Oil Sands,~~930~~ inLLC ~~raw~~to ~~materials~~begin ~~and~~a ~~$156~~project in ~~finished goods~~Kentucky. The ~~balance~~Company owns a royalty interest in the use of the ~~inventory~~oil assands oftechnology ~~July~~in Canada and certain other foreign countries. From May 3124, ~~2011~~2010 ~~was~~through April 4, ~~made~~2012, upthe ofCompany ~~$641,331~~operated a biodiesel facility located in ~~raw~~Middletown, ~~materials~~Indiana ~~and~~under ~~$651~~its wholly-owned subsidiary,~~840~~ ~~in finished~~e-Biofuels, ~~goods~~LLC. ~~There~~E-Biofuels isfiled nofor ~~allowance~~protection ~~for~~from ~~obsolete~~creditors ~~inventory~~under asChapter 7 of ~~January~~the U.S. Bankruptcy Code on April 314, 2012 orand ~~July 31,~~as ~~2011~~a result has discontinued its operations.

~~Long-Lived~~Basis ~~Assets~~of Presentation

~~Long-lived~~The ~~assets~~consolidated tofinancial bestatements ~~held~~include ~~and~~the ~~used~~accounts ~~or disposed~~ of ~~other~~the ~~than~~Company byand ~~sale~~its ~~are~~wholly ~~reviewed~~owned ~~for~~subsidiaries, ~~impairment~~Ridgepointe ~~whenever~~Mining ~~events~~Company, orPhoenix ~~changes~~Metals, Inc., indba ~~circumstances indicate that~~ the ~~carrying~~Imperial ~~amount~~Chemical ~~may not be recoverable. When required~~Company, ~~impairment~~Hoosier ~~losses~~Biodiesel onCompany ~~assets~~(formerly toGlobal-Imperial beJoint ~~held~~Venture, Inc.) and ~~used~~Arrakis orOil ~~disposed~~Recovery, ofLLC. ~~other~~All ~~than~~significant byinter-company ~~sale~~accounts ~~are~~and ~~recognized~~transactions ~~based~~have onbeen ~~the~~eliminated ~~fair~~in ~~value of the asset~~consolidation. ~~Long-lived~~The historical ~~assets~~operations ~~to be disposed~~ of bye-Biofuels, ~~sale~~LLC are ~~reported~~reflected atas ~~the~~discontinued ~~lower of its carrying amount of fair value less cost to sell~~operations.

~~Income~~10 ~~Taxes~~

DeferredTable tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of change in tax rates is recognized in income in the period that includes the enactment date. Contents

~~Earnings~~Use ~~and~~of ~~Loss~~Estimates ~~Per Common Share~~

~~Earnings~~The ~~(Loss)~~presentation ~~per~~of ~~common share-basic~~financial ~~are~~statements ~~computed~~in byconformity ~~dividing~~with ~~reported~~generally ~~net~~accepted ~~income~~U.S. ~~(loss)~~accounting byprinciples ~~the~~requires ~~weighted~~management ~~average~~to ~~common~~make ~~shares~~estimates ~~outstanding.~~and ~~Except~~assumptions ~~where~~that affect the ~~result~~reported ~~would~~amounts beof ~~anti-dilutive,~~assets and ~~net~~liabilities ~~income~~and ~~(loss)~~disclosure ~~per~~of ~~common~~contingent ~~share-diluted~~assets ~~has~~and ~~been~~liabilities ~~computed~~at ~~assuming~~ the ~~exercise~~date of ~~stock~~ ~~warrants~~the financial statements and ~~stock~~the ~~options~~reported ~~that~~amounts ~~are~~of ~~in-the-money~~revenues asand ofexpenses during the reporting period~~-end~~. Actual results could differ from those estimates.

~~Reclassification~~Cash and Cash Equivalents

~~Certain~~For purposes ~~reclassifications~~of ~~have~~the ~~been~~statement ~~made~~of tocash ~~prior~~flows, ~~periods~~the toCompany ~~conform~~considers all highly liquid debt instruments purchased with a maturity of three months or less to ~~the~~be ~~current~~cash ~~presentation~~equivalents.

10Accounts Receivable

~~Change~~Accounts receivable are carried on a gross basis, with no discounting, less the allowance for doubtful accounts. We estimate the allowance for doubtful accounts based on existing economic conditions, the financial conditions of ~~Control~~the customers, and the amount and the age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for doubtful accounts only after all collection attempts have been exhausted. There is no collateral held for accounts receivable. The allowance for doubtful accounts was $0 and $0 as of April 30, 2012 and July 31, 2011, respectively after elimination of e-Biofuels operations. Bad debt expense for the nine months ended April 30, 2012 was $0. Bad debt expense for the year ended July 31, 2012, 2011, and 2010 was $0, $0 and $0, respectively, after the elimination of e-Biofuels operations. (For the discontinued biofuels operations, the allowance for doubtful accounts was $44,430 as of July 31, 2011. Bad debt expense for the year ended July 31, 2011, 2010, and 2009 was $44,430, $25,001 and $0, respectively.)

InFair ~~November~~Value ~~2011, the Company accepted the resignation~~ of ~~Jeffrey~~Financial T.Instruments Wilson and Aaron M. Wilson from its Board of Directors. Mr. Jeffrey Wilson was the Chairman and President of the Company and resigned due to health issues. The original intent of the Company was to retain Mr. Wilson’s services as a technical consultant; however, the Company and Mr. Wilson were unable to reach a consulting agreement.

InFair ~~November,~~values ~~2011,~~of ~~Mr. Aaron~~cash ~~Wilson~~and ~~resigned~~cash ~~to allow for~~equivalents, ~~the~~investments ~~appointment~~and ofshort-term ~~Mr. Tim~~debt ~~Jones,~~approximate ~~who~~their ~~was~~carrying ~~also~~values ~~promoted~~due to ~~Chief~~the ~~Financial~~short ~~Officer~~period ~~and~~of ~~President~~time ofto ~~the~~maturity. ~~Company’s~~Fair evalues of long-~~biofuels,~~term ~~LLC~~debt ~~subsidiary,~~are tobased ~~the~~on ~~Board.~~quoted ~~Mr. Aaron~~market ~~Wilson~~prices ~~retained~~or ~~his~~pricing ~~title~~models asusing ~~President~~current ofmarket ~~the~~rates, ~~Company’s~~which ~~Arrakis~~approximate carrying ~~Oil~~values. ~~Recovery,~~See ~~LLC~~Note ~~subsidiary~~12 for further details.

InConcentrations ~~November, 2011, the Board appointed Mr. John Ryer, a director~~ of ~~the~~Credit ~~Company,~~Risk as its new Chief Executive Officer and President. In January 2011, Mr. Ryer resigned from the Board of Directors and as the Chief Executive Officer due to personal reasons. There were no disputes between Mr. Ryer and management of the Company or with its auditors. Mr. Robert Willmann was approved by the Board to replace Mr. Ryer as a Director until the next regular shareholders meeting.

InFinancial ~~December~~instruments ~~2011,~~that ~~Mr. Ben~~potentially ~~Campbell~~subject ~~resigned~~the asCompany ato ~~director~~significant concentrations of ~~the~~credit ~~Company~~risk consist principally of cash and accounts receivable.

InThe ~~December~~Company’s ~~2011,~~cash Mris deposited in one financial institution. ~~Greg~~ ~~Thagard~~Cash ~~was~~and ~~appointed~~certificates of deposit at banks are insured by the FDIC up to $250,000. At times, the ~~position~~balances in these accounts may be in excess of ~~Chairman~~federally insured limits. As of April 30, 2012, the ~~Board~~Company had no deposits in excess of federally insured limits.

InThe ~~January~~Company currently operates in the oil and natural gas industry. The concentration of credit risk in a single industry affects the Company’s overall exposure to credit risk because customers may be similarly affected by changes in economic and other conditions. During the quarter ended April 30, 2012, Mrthe Company had sales of oil and gas from non-operated properties only. ~~Tim~~ ~~Jones~~The ~~was~~Company’s ~~approved~~major aspurchasers ~~interim~~of ~~CEO~~its discontinued biodiesel operations were 39% to Element Renewable Energy; 33% to Fusion Renewable and ~~President~~19% to Ultra Green Energy Services. As of April 30, 2012, the Company’s accounts receivable for oil and gas operations were $4,157. During the year ended July 31, 2011, the Company’s major purchasers of its biodiesel from its discontinued biodiesel operations were 36.3% to Fusion, 24.5% to Element, and 17.1% to Pilot.

InRevenue ~~February~~Recognition 2012, the Company accepted the resignation of Mr. Robert Willmann from its Board of Directors. Mr. Willmann resigned due to time constraints and had no disagreements with the Management of the Company or with its independent accountants.

InThe ~~February~~Company ~~2012,~~derives ~~Mr. Aaron~~revenue ~~Wilson~~from ~~was~~sales ~~terminated~~of oil and natural gas and previously from ~~his~~biodiesel ~~position~~products. asThe ~~President~~Company recognizes revenue when a formal arrangement exists, the price is fixed or determinable, all obligations have been performed pursuant to the terms of ~~Arrakis~~the ~~Oil~~formal ~~Recovery~~arrangement, ~~LLC~~and ~~due~~collectability is reasonably assured. The Company also derives revenues from government incentive programs relating to ~~cash~~biodiesel ~~constraints~~production. These revenues are recognized when the amount of the incentive is reasonably determinable and collection is reasonably assured.

~~Recent~~11 ~~Accounting Pronouncements~~

TheTable FASBof issued ASC subtopic 855-10 (formerly SFAS 165 “Subsequent Events”), incorporating guidance on subsequent events into authoritative accounting literature and clarifying the time following the balance sheet date which management reviewed for events and transactions that may require disclosure in the financial statements. The Company has adopted this standard. The standard increased our disclosure by requiring disclosure reviewing subsequent events. ASC 855-10 is included in the “Subsequent Events” accounting guidance. Contents

InOil June 2011, the FASB issued ASU 2011-05 Comprehensive Income (Topic 220 - Presentation of Comprehensive Income). Under this amendment, an entity has the option to present the total of comprehensive income, the components of net income, and ~~the~~Gas ~~components~~Properties of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This Update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments in this Update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. For public entities, the amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. We are evaluating the provisions of ASU 2011-05 and do not believe it will have a material impact on the Company’s consolidated financial statements.

InThe ~~May~~Company ~~2011,~~follows the ~~FASB~~full ~~issued~~cost ~~ASU~~method ~~No. 2011-04,~~of ~~Fair~~accounting ~~Value~~for ~~Measurement~~oil ~~(Topic 820): Amendments to Achieve Common Fair Value Measurement~~ and ~~Disclosure~~gas ~~Requirements in U~~properties.S. ~~GAAP~~Accordingly, ~~and~~all ~~IFRSs.~~costs ~~This~~associated ~~ASU~~with ~~represents~~acquisition, ~~the~~exploration, ~~converged~~and ~~guidance~~development of ~~the~~oil ~~FASB~~ and ~~the~~gas ~~IASB~~reserves, ~~(the~~including directly ~~Boards)~~related onoverhead ~~fair~~costs, ~~value~~are ~~measurement~~capitalized. ~~The~~All ~~collective~~capitalized ~~efforts~~costs of ~~the~~oil ~~Boards~~ and ~~their staffs,~~gas ~~reflected in ASU 2011-04~~properties, ~~have~~including ~~resulted~~the inestimated ~~common~~future ~~requirements~~costs ~~for~~to ~~measuring~~develop ~~fair~~proved ~~value and for disclosing information about fair value measurements~~reserves, ~~including~~are aamortized ~~consistent~~on ~~meaning~~the unit-of-production ~~the~~method ~~term~~using ~~“fair~~estimates ~~value.”~~of ~~The~~proved ~~Boards have~~reserves. ~~concluded~~Investments ~~the common requirements will result~~ in ~~greater~~unproved ~~comparability~~properties ofand ~~fair~~major ~~value~~development ~~measurements~~projects ~~presented~~are ~~and~~not ~~disclosed~~amortized inuntil ~~financial~~proved ~~statements~~reserves ~~prepared~~associated ~~in accordance~~ with ~~U.S. GAAP and IFRSs. The amendments to~~ the ~~FASB~~projects ~~Accounting Standards~~can ~~Codification™~~be ~~(Codification)~~determined inor ~~this~~until ~~ASU~~impairment ~~are to be applied prospectively~~occurs. ~~For~~If ~~public entities,~~ the ~~amendments~~results ~~are~~of ~~effective~~an ~~during~~assessment ~~interim~~indicate ~~and~~that ~~annual~~the ~~periods~~properties ~~beginning after December 15~~are impaired, ~~2011. Early application is not permitted. We are evaluating~~ the ~~provisions~~amount of ~~ASU~~the ~~2011-04~~impairment ~~and~~is doadded ~~not~~to ~~believe it will have a material impact on~~ the ~~Company’s~~capitalized ~~consolidated~~costs ~~financial~~to ~~statements~~be amortized.

In ~~June 2011~~addition, the ~~FASB~~capitalized ~~issued~~costs ~~Presentation~~are ofsubject ~~Comprehensive~~to ~~Income under ASU 2011-05 or ASU 2011-05. ASU 2011-05 requires the presentation of comprehensive income in either (1)~~ a ~~continuous~~ ~~statement~~“ceiling oftest,” ~~comprehensive~~which ~~income~~basically orlimits ~~(2) two~~such ~~separate~~costs ~~but~~to ~~consecutive statements. ASU 2011-05 will be effective for~~ the ~~Company’s~~aggregate ~~first quarter~~ of ~~fiscal~~the ~~year~~“estimated ~~2013.~~present ~~The~~value,” ~~adoption~~discounted ofat ~~ASU~~a ~~2011~~10-05percent ~~may~~interest ~~require~~rate ~~a change in the presentation~~ of ~~the~~ ~~Company’s~~future ~~comprehensive~~net ~~income~~revenues from ~~the~~proved ~~statement~~reserves, ofbased ~~capital~~on ~~shares~~current economic and ~~equities~~operating conditions, toplus the ~~presentation~~lower of ~~comprehensive~~cost ~~income in either (1) a continuous statement of comprehensive income~~ or ~~(2) two~~fair ~~separate~~market ~~but~~value ~~consecutive statements. The amendments in ASU 2011-05 are to be applied retrospectively. The adoption~~ of ~~ASU~~unproved ~~2011-05 is not expected to have a material effect on the Company’s condensed financial statements~~properties.

11Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in income.

InSee ~~September~~Note ~~2011,~~13 ~~the FASB issued Testing Goodwill~~ for ~~Impairment~~additional ~~under~~information ~~ASU~~on ~~2011-08, which~~Oil ~~is intended to reduce the cost~~ and ~~complexity~~Gas ~~of the annual goodwill impairment test by providing entities with the option of performing a qualitative assessment to determine whether impairment testing is necessary~~Properties. The revised standard will be effective for annual and interim goodwill impairment tests performed beginning in the first quarter of fiscal year 2012, with early adoption permitted under certain circumstances. The Company is currently evaluating options related to early adoption.

Other ~~recent~~Property ~~accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA,~~ and ~~the~~Equipment ~~SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements~~

~~International~~Property ~~Financial~~and ~~Reporting~~equipment ~~Standards~~are stated at cost. Depreciation is computed by the straight-line method over the estimated useful lives of assets. Expenditures that significantly increase values or extend useful lives are capitalized. Expenditures for maintenance and repairs are charged to expenses as incurred. Upon sale or retirement of property and equipment, the cost and related accumulated depreciation and depletion are eliminated from the respective accounts and the resulting gain or loss is included in current earnings. The property and equipment owned by the Company as of April 30, 2012 has not been depreciated because it has not been placed in service yet.

InMining exploration ~~November~~costs ~~2008,~~are ~~the~~expensed ~~Securities~~as ~~and~~incurred. ~~Exchange~~Development ~~Commission~~costs ~~(“SEC”)~~are ~~issued~~capitalized. ~~for~~Depletion ~~comment~~of acapitalized ~~proposed~~mining ~~roadmap~~costs ~~regarding~~will ~~potential~~be ~~use~~calculated ofon ~~financial~~the ~~statements~~units ~~prepared~~of inproduction ~~accordance~~method ~~with~~based ~~International Financial~~upon ~~Reporting~~current ~~Standards~~production ~~(“IFRS”)~~and asreserve ~~issued~~estimates bywhen ~~the~~placed ~~International~~in ~~Accounting Standards Board~~service. During ~~Under~~ the ~~proposed~~nine ~~roadmap,~~months ~~the~~ended ~~Company~~April 30, ~~would~~2012, bemanagement ~~required~~determined tothat ~~prepare~~$74,500 ~~financial~~of ~~statements~~mining inclaims, ~~accordance with IFRS in fiscal year 2014~~options, ~~including~~ ~~comparative~~and ~~information~~development ~~also~~costs ~~prepared~~had ~~under~~experienced ~~IFRS~~a ~~for~~significant ~~fiscal~~decline ~~2013~~in ~~and 2012~~valuation. The ~~Company~~full isamount ~~currently assessing the potential impact~~ of ~~IFRS~~$74,500 onwas ~~its~~impaired ~~financial statements~~ and ~~will~~taken ~~continue~~as toimpairment expense ~~follow~~during the ~~proposed~~quarter ~~roadmap~~ended ~~for~~April 30, ~~future developments~~2012.

2.Inventories ~~GOING CONCERN~~

~~Financial~~Inventories ~~Condition~~are stated at the lower of cost or market. The inventory associated with the discontinued biodiesel business as of April 30, 2012 and July 31, 2011 was $0 and $1,293,171, respectively. All inventory pertains to our discontinued operations at e-biofuels. The balance of the inventory as of July 31, 2011 was made up of $641,331 in raw materials and $651,840 in finished goods. There is no allowance for obsolete inventory as of April 30, 2012 or July 31, 2011.

~~The~~Long-Lived ~~Company’s~~Assets financial statements for the three months and six months ended January 31, 2012 have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company had a net loss for the six months ended January 31, 2012 of $8,162,687 compared to net income for the six months ended January 31, 2011 of $433,552. As of January 31, 2012, the Company has $139,147 of cash on hand and a working capital deficit of $14,871,901. The Company had $7,365,167 of debt mature on January 31, 2012 as discussed in Note 5.The Company’s working capital deficiency in conjunction with the Company’s history of operating losses raises doubt regarding the Company’s ability to continue as a going concern.

~~Management~~Long-lived ~~Plans~~assets to ~~Continue~~be asheld aand ~~Going~~used ~~Concern~~or disposed of other than by sale are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. When required, impairment losses on assets to be held and used or disposed of other than by sale are recognized based on the fair value of the asset. Long-lived assets to be disposed of by sale are reported at the lower of its carrying amount of fair value less cost to sell.

~~The~~Income ~~Company’s ability~~Taxes to continue as a going concern is highly dependent upon (i) management’s ability to increase operating cash flows through existing biodiesel production (ii), management’s ability to work out an extension agreement with the current bank, or locate and obtain alternative financing, to fund the $7,365,167 in notes that matured on January 31, 2012 (iii) the ability to obtain the capital needed to initiate the tar sand operations.

3Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. ~~ACCOUNTING~~Deferred ~~POLICIES~~tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of change in tax rates is recognized in income in the period that includes the enactment date.

~~The~~Earnings ~~accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10Q~~ and doLoss ~~not~~Per ~~include all~~Common ofShare the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring items) considered necessary for a fair presentation have been included.

4Earnings (Loss) per common share-basic are computed by dividing reported net income (loss) by the weighted average common shares outstanding. ~~NON~~Except where the result would be anti-~~COMPETE~~dilutive, ~~AGREEMENT~~net income (loss) per common share-diluted has been computed assuming the exercise of stock warrants and stock options that are in-the-money as of period-end.

In12 June of 2011, the Company issued 300,000 shares and 500,000 warrants for consulting services. The shares were valued at market price of $1.49 for $447,000. The warrants had a term of five years and a strike price of $1.00 per share. The warrants were valued at $704,706 using the Black Scholes valuation method using the following factors; risk free interest rate of .85%, strike prices of $1.00, market price of $1.49, volatility of 163% , and no yield. The total value of the stock and warrants, $1,151,706, was capitalized as a prepaid expense and will be amortized over the five-year period of the consulting agreement. As of July 31, 2011, $28,793 has been expensed and $1,122,914 remained in prepaid expenses. During the quarter ended October 31, 2011, this consulting agreement was terminated and the remaining $1,122,914 was expensed. As of October 31, 2011, $0 remained in prepaid expenses related to this agreement.

SoonTable after termination of the consulting agreement, the consultant began to demand payment of promised salaries and unpaid commissions. As the consultant had significant relationships with multiple customers and vendors of the Company and as a major supplier of the Company on the biodiesel side began to demand that the consultant be paid what was owed, the Company agreed to a 1-year Severance, Confidentiality and Nondisclosure Agreement with the former consultant. In order to get the 1-year agreement in place, the major supplier agreed to loan the money required to finalize the Agreement to the Company (see next paragraph). On December 2, 2011, the Company finalized the Severance, Confidentiality and Nondisclosure agreement with the former consultant for $1,237,500 in cash and 300,000 shares of common stock. The shares of common stock were valued at $0.59, the market price on the day the agreement was made for total value of $177,000. The total amount associated with the agreement, $1,414,500, was set up as a Non-compete Agreement asset and is currently being amortized over the 12 month term of the agreement. As of January 31, 2012, $235,750 of the costs associated with the Agreement have been expensed and $1,178,750 remain as a current asset. Contents

12Reclassification

InCertain ~~December~~reclassifications ~~2011,~~have ~~the~~been ~~Company~~made ~~entered~~to ~~into~~prior aperiods ~~$1,200,000 unsecured promissory note with JAK Financial LLC~~ to ~~fund~~conform the payment of a Severance, Confidentiality and Nondisclosure Agreement with a former consultant. The original amount of the note was $1,200,000 and the effective interest rate on the note was 96.5%. The note was to ~~be paid with 60 daily payments of $23,000 beginning on December 20, 2011 and continuing for~~ the ~~next~~current ~~60 business days~~presentation. The Company made 16 such payments before it was no longer able to do so. The balance due as of January 31, 2012 was $933,167 with accrued interest of $85,202. The company is currently in default on this note.

5.Change ~~NOTES~~of ~~PAYABLE~~Control

~~The~~In November 2011, the Company inaccepted the ~~course~~resignation of ~~funding~~Jeffrey T. Wilson and Aaron M. Wilson from its ~~oil~~Board of Directors. Mr. Jeffrey Wilson was the Chairman and ~~gas~~President of the Company and ~~other~~resigned ~~activities,~~due ~~from~~to ~~time~~health issues. The original intent of the Company was to ~~time~~retain Mr. Wilson’s services as a technical consultant; however, ~~enters~~the ~~into~~Company ~~private~~and ~~notes~~Mr. Wilson ~~primarily~~were ~~from its~~unable ~~major~~to ~~shareholders~~reach a consulting agreement and Mr. Wilson was terminated as a consultant effective December 15, 2012.

	Jan 31, 2012		July 31, 2011
John Ryer, secured promissory note, dated December 8, 2010, due July 25, 2011, interest at 10%	$	—	$	20,000
William Stratton, secured by 10% of proceeds at Coquille Bay, dated June 6, 2011 due July 31, 2012, interest at 8%		—		50,000
Trinity Industries, secured promissory note, dated January 1, 2010, interest at 6%, collateralized by rail cars, currently in default.		500,139		597,484
Various unsecured promissory notes of e-biofuels, dated July 1, 2006 through September 11, 2009, interest varying from 5.5% to 14%		265,827		627,707
JAK Financial LLC, unsecured promissory note, dated December 7, 2011 due in 60 equal daily installments of$23,000		933,167		—
Mortgage note due a Bank, dated July 1, 2006, secured by facility and real estate of e-biofuels, variable interest rate at 5.125% as of July 31, 2011. Due in monthly payments through December of 2031.		1,540,026		1,560,589
Various equipment capital leases due to Stark Equipment, principal due from August 2011 to May 2014 plus interest at a variable rates range from 9.3% to 18.2% as of 7/31/11. Collateralized by the equipment.		61,537		384,662
Equipment note due a SBA, dated October 8, 2007, principal matures on November 2017 plus interest at a variable rate, 6.5% as of 7/31/11. Collateralized by certain equipment.		497,981		533,945
Term Note Payable to a Bank, debt due 1/31/12, monthly. Interest due monthly at 8%. Collateralized by the assets of e-biofuels.		1,535,283		2,079,944
Term Note Payable to a Bank, debt due 1/31/12, monthly. Interest due monthly at 9%. Collateralized by the assets of e-biofuels.		2,764,842		4,728,224
Term Note Payable to a Bank, debt due 1/31/12, monthly. Interest due monthly at 12%. Collateralized by the assets of e-biofuels.		3,065,042		3,115,167
Total		11,163,844		13,697,722
Less: current portion		9,201,912		11,162,479
Long-term notes payable		1,961,932		2,535,243

In November, 2011, Mr. Aaron Wilson resigned to allow for the appointment of Mr. Tim Jones, who was also promoted to Chief Financial Officer and President of the Company’s e-biofuels, LLC subsidiary, to the Board. Mr. Aaron Wilson retained his title as President of the Company’s Arrakis Oil Recovery, LLC subsidiary.

~~Current~~In ~~maturities~~November, 2011, the Board appointed Mr. John Ryer, a director of ~~notes~~the ~~payable~~Company, ~~are~~as its new Chief Executive Officer and President. In January 2011, Mr. Ryer resigned from the Board of Directors and as ~~follows:~~the Chief Executive Officer due to personal reasons. There were no disputes between Mr. Ryer and management of the Company or with its auditors. Mr. Robert Willmann was approved by the Board to replace Mr. Ryer as a Director until the next regular shareholders meeting.

7/31/12		9,201,912
7/31/13		143,770
7/31/14		148,871
7/31/15		136,206
7/31/16		140,320
Thereafter		1,392,765
Total	$	11,163,844

In December 2011, Mr. Ben Campbell resigned as a director of the Company.

13In December 2011, Mr. Greg Thagard was appointed to the position of Chairman of the Board.

~~Notes~~In ~~Payable~~January –2012, ~~Related~~Mr. Tim ~~Party~~Jones was approved as interim CEO and President of the Company.

	Jan 31, 2012		July 31, 2011
Officer—9.0% demand note		538,786		540,286
Employee—8% demand note		0		0
Total		538,786		540,286
Less Current		538,786		540,286
Long Term		0		0

In February 2012, the Company accepted the resignation of Mr. Robert Willmann from its Board of Directors. Mr. Willmann resigned due to time constraints and had no disagreements with the Management of the Company or with its independent accountants.

~~DEBT~~In February 2012, Mr. Aaron Wilson was terminated from his position as President of Arrakis Oil Recovery, LLC due to cash constraints.

AsOn ~~of January~~April 314, 2012, Mr. Tim ~~the~~Jones ~~Company~~resigned ~~currently~~as ~~has~~Managing noMember ~~debt~~of ~~facilities~~e-Biofuels inand ~~place~~as ~~other~~President ~~than~~and asa ~~noted~~member inof the ~~tables~~Board ~~above~~of Imperial and all of its subsidiaries.

InOn ~~connection with the acquisition of e-biofuels~~April 5, ~~LLC as a wholly-owned subsidiary~~2012, ~~the Company assumed senior debt under the following facilities: (1~~Mr.) ~~First Merchants Bank, N~~Jeffrey T.A. ~~Term~~Wilson ~~Loans; (2.) Cienna~~was ~~Capital/Small~~appointed ~~Business~~as ~~Administration~~President ~~(“SBA”)~~of ~~Mortgage~~Imperial ~~Note;~~and ~~(3.) SBA~~all ~~facilitated~~of ~~equipment~~its ~~loan~~subsidiaries and ~~(4.) certain~~as ~~Capital~~Chief ~~Leases~~Financial ~~for~~Officer ~~vehicles.~~of ~~The~~the ~~following~~Company isand as a ~~description~~member of the ~~terms~~Board ~~and conditions~~ of ~~each~~ ~~facility~~Directors. ~~as of January 31, 2012:~~

~~First~~On ~~Merchants Bank, N.A. Term Loans: The Company has three term loans with First Merchants Bank: Term Loan A has a balance due of $1,535,283 and an interest rate of~~ May 8~~%; Term Loan B has a balance due of $2~~,~~764,842~~ ~~with an interest rate of 9%; and Term Loan C has a balance due of $3~~2012,~~065,042~~ ~~with an interest rate of 12%~~Mr. ~~The Term loans expired on January~~ ~~31,~~Sam ~~2012,~~Wernli ~~are~~was ~~currently~~appointed into ~~default,~~the ~~and~~Board ~~are secured by all~~ of ~~the~~Directors ~~assets~~ of ~~e-biofuels;~~ the ~~personal~~Company ~~guarantees of Craig Ducey~~ and ~~Chad~~as ~~Ducey and by a corporate guarantee of~~ the ~~Company.~~Executive ~~The amended loan~~Vice ~~agreements~~President ~~call for a continuation fee~~ of ~~$50,000~~Imperial ~~per~~Chemical ~~month commencing as of October 31~~Company, ~~2011.~~a ~~The~~wholly-owned ~~Company~~subsidiary ~~must pay the fee for each month they have not paid the loan in full on or before the last day~~ of the ~~month~~Company.

~~Cienna~~Recent ~~Capital/~~Accounting ~~Small~~Pronouncements Business Administration Mortgage Note: The Company has a mortgage secured by the real estate and facility located in Middletown, Indiana. The balance due is $1,540,026 with an interest rate of 5.125%. The note is further secured by the personal guarantees of Mr. Craig Ducey and Mr. Chad Ducey. The term of the note is 25.5 years from December 2007.

~~SBA~~The ~~Equipment~~FASB ~~Loan:~~issued ~~The~~ASC ~~Company~~subtopic ~~obtained~~855-10 a(formerly ~~loan~~SFAS ~~for~~165 ~~the~~“ ~~purchase~~Subsequent ofEvents ~~equipment~~”), incorporating ~~through~~guidance ~~the issuance~~on ofsubsequent aevents ~~Debenture~~into authoritative inaccounting ~~December~~literature ~~2007~~and inclarifying the ~~original~~time ~~amount~~following ofthe ~~$772,000. The~~ balance ~~due~~sheet isdate ~~$497,982~~which ~~with~~management anreviewed ~~interest~~for ~~rate~~events ofand ~~6.5%.~~transactions ~~The~~that ~~note~~may isrequire ~~secured~~disclosure byin ~~certain~~the ~~equipment~~financial ~~located~~statements. The atCompany ~~the~~has ~~Middletown,~~adopted ~~Indiana~~this standard. The ~~plant~~standard ~~and~~increased ~~further~~our ~~secured~~disclosure by ~~the personal~~requiring ~~guarantees~~disclosure ofreviewing ~~Mr. Craig~~subsequent ~~Ducey and Mr~~events. ~~Chad~~ASC ~~Ducey.~~855-10 ~~The~~is ~~term~~included ofin the ~~note~~“Subsequent isEvents” ~~120~~accounting ~~months~~guidance.

~~Capital Leases:~~In ~~The~~June ~~Company~~2011, ~~has~~the ~~capital~~FASB ~~leases~~issued ~~related~~ASU 2011-05 Comprehensive Income (Topic 220 - Presentation of Comprehensive Income). Under this amendment, an entity has the option to ~~equipment~~present ~~used~~the intotal of comprehensive income, the ~~operation~~components of net income, and the ~~facility~~components atof ~~Middletown~~other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, ~~Indiana~~an ~~which~~entity is required to present each component of net income along with total ~~$61~~net income,~~537~~ ~~and~~each ~~have~~component ~~varying~~of ~~market~~other ~~based~~comprehensive ~~interest~~income ~~rates~~along with a total for other comprehensive income, and ~~varying~~a ~~maturity~~total ~~dates~~amount for comprehensive income. ~~See~~This Update eliminates the ~~table~~option ~~above~~to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments in this Update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. For public entities, the amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. We are evaluating the provisions of ASU 2011-05 and do not believe it will have a material impact on the Company’s consolidated financial statements.

~~During~~In May 2011, the ~~six~~FASB ~~months~~issued ~~ended~~ASU ~~January~~No. 312011-04, ~~2012,~~Fair ~~the~~Value ~~Company~~Measurement ~~entered~~(Topic ~~into~~820): anAmendments ~~agreement~~ to ~~assign~~Achieve ~~capital~~Common ~~leases~~Fair toValue ~~another party.~~Measurement ~~Fixed~~and ~~assets~~Disclosure ~~with~~Requirements ~~a net book value of $337,453 were assigned along with capital lease payable~~ in ~~the~~U.S. ~~amount~~GAAP ofand ~~$228,358~~IFRSs. ~~The~~This ~~Company~~ASU ~~recognized~~represents athe ~~net~~converged ~~loss~~guidance onof the ~~assignment~~FASB ~~transaction~~and the ofIASB ~~$109,095.~~

~~JAK~~13 Financial: In December 2011, the Company entered into an unsecured promissory note with JAK Financial LLC to fund the payment of a Severance, Confidentiality and Nondisclosure Agreement with a former consultant (See Note 4 for further details). The original amount of the note was $1,200,000 and the effective interest rate on the note was 96.5%. The note was to be paid with 60 daily payments of $23,000 beginning on December 20, 2011 and continuing for the next 60 business days. The Company made 16 such payments before it was no longer able to do so. The balance due as of January 31, 2012 was $933,167 with accrued interest of $85,202. The company is currently in default on this note.

OtherTable Debt: The Company has private notes and debt with various individuals, small companies and its former Chairman that totals $765,965 as of January 31, 2012. Generally this debt is unsecured and bear market interest rates and flexible terms. Contents

~~Interest~~ (the ~~expense~~Boards) ~~relating~~on tofair value measurement. The collective efforts of the ~~above~~Boards ~~notes~~and ~~was~~their $1staffs,~~644~~ reflected in ASU 2011-04,~~961~~ have resulted in common requirements for measuring fair value and ~~$803~~for disclosing information about fair value measurements,~~063~~ ~~for~~including a consistent meaning of the ~~six~~term ~~months~~“fair ~~ended~~value.” ~~January~~The Boards have concluded the common requirements will result in greater comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. 31The amendments to the FASB Accounting Standards Codification ™ (Codification) in this ASU are to be applied prospectively. For public entities, ~~2012~~the amendments are effective during interim and ~~2011~~annual periods beginning after December 15, 2011. Early application is not permitted. We are evaluating the provisions of ASU 2011-04 and do not believe it will have a material impact on the ~~respectively~~Company’s consolidated financial statements.

6In June 2011, the FASB issued Presentation of Comprehensive Income under ASU 2011-05 or ASU 2011-05. ~~RELATED~~ASU ~~PARTY~~2011-05 ~~TRANSACTIONS~~requires the presentation of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. ASU 2011-05 will be effective for the Company’s first quarter of fiscal year 2013. The adoption of ASU 2011-05 may require a change in the presentation of the Company’s comprehensive income from the statement of capital shares and equities to the presentation of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The amendments in ASU 2011-05 are to be applied retrospectively. The adoption of ASU 2011-05 is not expected to have a material effect on the Company’s condensed financial statements.

~~The~~In ~~Company~~September ~~has~~2011, ~~entered~~the ~~into~~FASB ~~transactions~~issued ~~with~~Testing ~~its~~Goodwill ~~former~~for ~~chief~~Impairment ~~executive~~under ASU ~~officer~~2011-08, ~~Jeffrey~~which T.is ~~Wilson~~intended ~~and~~to areduce ~~Company owned~~the cost and ~~controlled~~complexity byof ~~Mr. Wilson,~~the ~~H.N.~~annual ~~Corporation.~~goodwill ~~The~~impairment ~~amount~~test ~~outstanding~~by asproviding entities with the option of ~~January 31,~~performing ~~2012~~a ~~owed~~qualitative assessment to HNdetermine ~~Corporation~~whether ~~was~~impairment ~~$90,000~~testing ~~and~~is ~~such~~necessary. ~~amounts~~The ~~are~~revised standard ~~included~~will inbe ~~the~~effective ~~totals~~for ~~due~~annual ~~Mr. Wilson.~~and ~~There~~interim ~~were~~goodwill noimpairment ~~outstanding~~tests ~~amounts~~performed ~~due HN~~beginning ~~Corporation~~in asthe first quarter of ~~July 31,~~fiscal ~~2010.~~year ~~The~~2012, ~~Company~~with ~~had~~early ~~accrued~~adoption ~~salaries~~permitted ~~payable~~under tocertain Mrcircumstances. ~~Wilson~~ ofThe ~~$358,547~~Company asis ofcurrently ~~January 31,~~evaluating ~~2012~~options related to early adoption.

14Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements

~~The~~International ~~Company~~Financial ~~owes~~Reporting ~~its~~Standards former Chairman and Chief Executive Officer, Jeffrey T. Wilson, as a result of loans to the Company, a total of $538,786 in principal as of January 31, 2012 (including $90,000 owed to HN Corporation as discussed above). Interest rates on the loans are fixed at 9%. Accrued interest as of January 31, 2012 relating to these loans is $118,686.

~~Mr. Thagard,~~In aNovember ~~director~~2008, of the ~~Company~~Securities and ~~Chairman~~Exchange ofCommission ~~the~~(“SEC”) ~~Board,~~issued ~~has~~for ~~received compensation~~comment as a ~~consultant~~proposed toroadmap ~~the~~regarding ~~Company~~potential ~~and~~use ~~its~~of ~~subsidiaries~~financial statements prepared in ~~the~~accordance ~~fiscal~~with ~~year~~International Financial ~~ending~~Reporting ~~July 31,~~Standards ~~2011~~(“IFRS”) inas issued by the ~~amounts~~International ofAccounting ~~$84,000~~Standards Board. InUnder ~~November~~the ofproposed ~~2010~~roadmap, ~~Mr. Thagard~~the ~~used~~Company ~~$4,000~~would ofbe ~~notes~~required ~~payable~~to ~~and~~prepare ~~$56,000~~financial ofstatements ~~accounts~~in ~~payable~~accordance ~~due~~with ~~him~~IFRS ~~to exercise~~in ~~options~~fiscal ~~that~~year he2014, including ~~held.~~comparative ~~See~~information ~~note~~also 9prepared ~~for~~under ~~further~~IFRS ~~details.~~for ~~Mr. Thagard~~fiscal ~~settled~~2013 ~~his~~and ~~accounts~~2012. ~~payable~~The ~~due~~Company ~~him~~is incurrently assessing the ~~amount~~potential impact of ~~$154,500~~IFRS inon ~~exchange~~its ~~for~~financial ~~restricted~~statements ~~common~~and ~~stock~~will incontinue anto ~~amount~~follow ofthe ~~259,542~~proposed ~~shares~~roadmap ~~and~~for ~~$20,000 in cash on~~future ~~June 21, 2011~~developments.

Mr(2. ~~Craig~~) ~~Ducey,~~GOING ~~former~~CONCERN president of e-biofuels, is part owner along with Mr. Chad Ducey of Werks Management, a company that provided management services to e-biofuels. Prior to February 2012, Werks Management received a contracted amount per month in consulting fees for such services. The contracted amount was $70,000 per month through October of 2010, $60,000 per month from November of 2010 to April of 2011, and $62,833 per month from May of 2011 to January of 2012. Mr. Craig Ducey and Mr. Chad Ducey provided management services for e-biofuels through January 31, 2012. The Company recorded expenses to Werks Management in the total of $758,500 for the year ended July 31, 2011 and $377,000 for the six months ended January 31, 2012. The Company owed Werks Management $0 and $90,238 as of January 31, 2012 and July 31, 2011, respectively. In February 2012, the Company terminated the Werks Management Agreement.

~~During~~Financial ~~July~~Condition of 2011, the Company entered into a loan agreement loaning Mr. Chad Ducey $340,000 at an interest rate of 5%. The loan had a term of 25 years, was unsecured, and matured in July of 2036. The loan was paid off in October 2011. The balance of the note was $0 as of October 31, 2011.

InThe ~~September~~Company’s offinancial ~~2011, Mr. Brian~~statements ~~Carmichael,~~for athe ~~former~~three ~~owner~~months ~~of Werks Management~~ and ~~Sales~~nine months ~~Manager~~ended ~~for e-Biofuels~~April 30, ~~signed~~2012 ahave ~~new~~been ~~consulting~~prepared ~~agreement~~on ~~with~~a ~~e-biofuels~~going ~~and~~concern ~~will~~basis ~~receive~~which acontemplates ~~commission~~the realization of ~~$0.015~~assets ~~per~~and ~~gallon~~the settlement of ~~biodiesel~~liabilities ~~sold~~in ~~through~~ the ~~Middletown,~~normal ~~Indiana plant~~course of business. The ~~agreement~~Company ~~was~~had ~~subsequently~~a ~~modified~~net ~~and~~loss for the ~~amount~~nine ~~reduced~~months asended April 30, ~~the~~2012 ~~Company~~of ~~began~~$7,082,073 ~~selling~~compared ~~larger~~to ~~volumes~~net ofincome ~~biodiesel~~for tothe ~~Mr. Carmichael’s~~nine ~~company~~months ended April 30, ~~Element~~2011 ~~Renewable~~of ~~Energy~~$2,801,720. ~~The~~As ~~agreement~~of ~~has~~April 30, a2012, ~~term~~the Company has $20,190 of ~~one~~cash ~~year~~on hand and ~~automatically renews~~a inworking ~~one~~capital ~~year~~deficit ~~increments.~~of Mr$11,032,727. ~~Carmichael~~ noOn ~~longer~~April 4, 2012, ~~owns~~the anCompany’s ~~interest~~wholly-owned insubsidiary, ~~Werks~~e-Biofuels, ~~Management~~LLC asfiled a ~~result~~voluntary ofpetition ~~this~~for ~~agreement.~~protection ~~The~~from ~~Company~~creditors ~~instituted~~under ~~sales~~Chapter ~~controls~~7 ~~during~~of ~~fiscal~~Title ~~2011~~11 toof ~~provide~~the ~~additional~~Bankruptcy ~~management~~Code ~~oversight~~with ofthe ~~sales~~United ~~contracts to~~States ~~Element,~~Bankruptcy ~~wherein~~Court for the ~~CFO~~Southern isDistrict ~~required~~of Indiana toThe ~~approve~~Company’s ~~any~~e-Biofuels ~~sales~~subsidiary ~~contracts~~had by$7,365,167 ~~the~~of ~~Company~~debt tomature ~~Element~~on toJanuary 31, ~~insure~~2012 ~~the~~as ~~contracts~~discussed ~~are~~in ~~arms-length.~~Note ~~The~~5 ~~total~~for ~~paid~~which tothe ~~Mr. Carmichael~~Company ~~and~~is ~~his~~a ~~company~~guarantor. inThe ~~relation~~Company’s toworking ~~this~~capital ~~agreement~~deficiency ~~was~~in ~~$294,799~~conjunction ~~for~~with the ~~year~~Company’s ~~ended~~history ~~July 31,~~of ~~2011.~~operating ~~The~~losses ~~contract~~raises ~~with~~doubt ~~Mr. Carmichael~~regarding ~~was~~the ~~subsequently~~Company’s ~~terminated~~ability into ~~October~~continue ~~2011~~as bya ~~mutual~~going ~~consent of both parties~~concern.

InManagement ~~April~~Plans ~~2011 the company issued 975,000 warrants~~ to ~~purchase 975,000 shares of common stock to its directors and key employees for their services. The warrants had a term of two years and a strike price~~Continue of $0.50 per share. The warrants were valued at $363,328 using the Black Scholes valuation method using the following factors; risk free interest rate of .85%, strike prices of $0.50, market price of $0.495, volatility of 163% , and no yield. The value of the warrants was expensed as ~~compensation~~a ~~expense~~Going inConcern ~~the year ended July 31, 2011. See Note 8 for further information pertaining to the warrants.~~

InThe ~~June~~Company’s ~~2011~~ability ~~the~~to ~~company~~continue ~~issued~~as ~~100,000~~a ~~warrants~~going concern is highly dependent upon (i) management’s ability to ~~purchase~~establish ~~100,000~~operating ~~shares~~cash offlows ~~common~~through ~~stock~~its joint venture with Peak Oil Sands LLC (ii) the ability to aobtain ~~director~~the capital for ~~his~~working ~~services~~capital (iii.) ~~The~~the ~~warrants~~ability ~~had~~of the Company to settle litigation with the bank as a ~~term~~result of ~~two~~the ~~years~~bankruptcy filing of e-Biofuels and a(iv.) ~~strike~~the ~~price~~outcome of ~~$0.50~~certain ~~per~~investigations ~~share~~being conducted into the activities of e-Biofuels. ~~The warrants~~Management ~~were~~believes ~~valued~~that atits ~~$115,865~~oil ~~using~~sand ~~the~~joint ~~Black~~venture ~~Scholes~~will ~~valuation~~begin ~~method~~operations ~~using~~during the ~~following~~first ~~factors;~~quarter ~~risk~~of ~~free~~fiscal ~~interest~~2013 ~~rate~~and ofwill provide sufficient cash flow when operational to support the Company’s immediate needs.~~85%,~~ ~~strike~~Until ~~prices~~the sale of ~~$0.50~~the assets of e-Biofuels, ~~market~~LLC, ~~price~~it is impossible to know the extent of ~~$1.35,~~the ~~volatility~~possible liabilities associated with the claims of ~~163%~~First Merchants ,Bank against the Company and noto ~~yield~~ascertain the ability of the Company to defend such claims. The ~~value~~Company ofdoes not know the ~~warrants~~time-frame ~~was expensed~~for ascompletion ~~compensation~~of ~~expense~~the incurrent investigations into the ~~year~~activities ~~ended~~of ~~July 31,~~e-Biofuels ~~2011~~or any impacts those investigations may have upon the Company.

~~In October 2011, the Company agreed to purchase out of cash flow over~~ 3 ~~weeks, 2,000,000 shares of Imperial common stock from Craig and Chad Ducey for a total purchase price of $2,000,000~~. ~~The~~ACCOUNTING ~~stock~~POLICIES purchase was necessitated by tax liabilities incurred by the Ducey’s in the conversion of their notes receivable from the Company to restricted common stock in June 2011 and due to the fact that the Ducey’s personally guarantee the Company’s senior debt and were unable to obtain credit elsewhere to pay their tax liabilities. As part of the share purchase, the Company retired the note receivable from Mr. Chad Ducey in exchange for common stock. As of January 31, 2012, the 2,000,000 shares are being held as treasury stock.

7The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. ~~LITIGATION~~In the opinion of management, ~~COMMITMENTS~~all ~~AND~~adjustments ~~CONTINGENCIES~~(consisting of only normal recurring items) considered necessary for a fair presentation have been included.

~~The~~14 Company is a named defendant in lawsuits, is a party in governmental proceedings, and is subject to claims of third parties from time to time arising in the ordinary course of business. While the outcome of lawsuits or other proceedings and claims against the Company cannot be predicted with certainty, management does not expect these matters to have a material adverse effect on the financial position of the Company.

TheTable Company has accrued revenue payable, legal and petty suspense accounts in the amount of $173,907, $409,671 and $8,948, respectively, as of January 31, 2012. The Company has accrued revenue payable, legal and petty suspense accounts in the amount of $173,907, $409,671 and $8,948, respectively, as of July 31, 2011. The Company has continued to research owner account information in order to properly distribute legal suspense accounts in the normal course of business. Suspense accounts are cleared out annually and paid to the owners. Contents

~~The~~4. ~~Company~~NON-COMPETE ~~has~~AGREEMENT ~~no amounts reserved as a contingent liability as of January 31, 2012 against future losses associated with any such litigation.~~

WeIn ~~are~~June ~~subject~~of to2011, athe ~~variety~~Company ofissued ~~laws~~300,000 shares and ~~regulations~~500,000 inwarrants ~~all~~for ~~jurisdictions~~consulting inservices. ~~which~~The weshares ~~operate.~~were Wevalued ~~also~~at ~~are~~market ~~involved~~price inof ~~legal~~$1.49 ~~proceedings~~for $447,000. ~~claims~~The orwarrants ~~investigations~~had ~~that~~a ~~are~~term ~~incidental~~of tofive ~~the~~years ~~conduct~~and ofa ~~our~~strike ~~business~~price ~~and~~of ~~cannot~~$1.00 beper ~~avoided~~share. ~~Some~~The ofwarrants ~~these~~were ~~proceedings~~valued ~~allege~~at ~~damages~~$704,706 ~~against~~using usthe ~~relating~~Black toScholes ~~property~~valuation ~~damage~~method ~~claims~~using ~~(including~~the ~~injuries~~following ~~due~~factors; risk free interest rate of to.85%, ~~product~~strike ~~failure~~prices ~~and~~of ~~other~~$1.00, ~~product~~market ~~liability~~price ~~related~~of ~~matters)~~$1.49, ~~employment~~volatility ~~matters~~of 163% , and ~~commercial~~no oryield. ~~contractual~~The ~~disputes~~total value of the stock and warrants, $1,151,706, was capitalized as a prepaid expense and will be amortized over the five-year period of the consulting agreement. WeAs ~~vigorously~~of ~~defend~~July 31, ~~ourselves~~2011, ~~against~~$28,793 ~~all~~has ~~claims~~been ~~which~~expensed ~~require~~and ~~such~~$1,122,914 ~~action~~remained in prepaid expenses. InDuring ~~future~~the ~~periods~~quarter ended October 31, we2011, ~~could~~this beconsulting ~~subjected~~agreement ~~to cash~~was ~~costs~~terminated orand ~~non-cash~~the ~~charges~~remaining to$1,122,914 ~~earnings~~was ifexpensed. ~~any~~As of October 31, ~~these~~2011, ~~matters~~$0 isremained ~~resolved~~in onprepaid ~~unfavorable~~expenses ~~terms~~related to this agreement.

15Soon after termination of the consulting agreement, the consultant began to demand payment of promised salaries and unpaid commissions. As the consultant had significant relationships with multiple customers and vendors of the Company and as a major supplier of the Company on the biodiesel side began to demand that the consultant be paid what was owed, the Company agreed to a 1-year Severance, Confidentiality and Nondisclosure Agreement with the former consultant. In order to get the 1-year agreement in place, the major supplier agreed to loan the money required to finalize the Agreement to the Company (see next paragraph). On December 2, 2011, the Company finalized the Severance, Confidentiality and Nondisclosure agreement with the former consultant for $1,237,500 in cash and 300,000 shares of common stock. The shares of common stock were valued at $0.59, the market price on the day the agreement was made for total value of $177,000. The total amount associated with the agreement, $1,414,500, was set up as a Non-compete Agreement asset and is currently being amortized over the 12 month term of the agreement. As of April 30, 2012, $589,375of the costs associated with the Agreement have been expensed and $825,125 remain as a current asset.

In ~~February~~December ~~2012~~2011, ~~e-biofuels,~~the ~~LLC~~Company ~~terminated~~entered ~~the~~into ~~Management~~a ~~Agreement~~$1,200,000 ~~between~~unsecured ~~Werks Management,~~promissory ~~LLC~~note ~~and~~with ~~e-biofuels,~~JAK Financial LLC. ~~This~~to ~~agreement~~fund ~~was~~the ~~dated~~payment of ~~May 1~~a Severance, ~~2010~~Confidentiality and ~~had~~Nondisclosure anAgreement ~~original~~with 4a ~~year~~former ~~term~~consultant. The ~~agreement~~original ~~was~~amount ~~terminated due to cash constraints~~ of the ~~Company~~note was $1,200,000 and the ~~inability~~effective tointerest ~~work~~rate ~~out~~on athe ~~reduced~~note ~~management~~was ~~fee~~96.5%. ~~for~~The ~~the reduction~~note inwas ~~services~~to ~~provided~~be bypaid ~~Werks~~with ~~Management.~~60 Asdaily apayments ~~result~~ of ~~this termination~~$23,000 beginning ~~Werks~~on ~~Management~~December 20, ~~demanded~~2011 ~~the~~and ~~entire~~continuing ~~balance~~for of the ~~remaining~~next ~~contract~~60 ~~term~~business days. The ~~amount~~Company ~~demanded~~made by16 ~~Werks~~such ~~Management~~payments asbefore ait ~~result of this termination~~ was ~~$1,685,309. The~~no ~~Company~~longer ~~feels~~able ~~that~~to itdo ~~doesn’t~~so. ~~owe~~The ~~the~~ balance due as of ~~the~~April 30, ~~contract~~2012 ~~because~~was ~~the~~$933,167 ~~contracted~~with ~~services~~accrued ~~were~~interest ~~not~~of ~~being~~$94,534. ~~performed~~The Company atis ~~the~~currently ~~time~~in ofdefault ~~the~~on ~~termination~~this note.

85. ~~STOCK~~NOTES ~~WARRANTS~~PAYABLE ~~AND OPTIONS~~

InThe ~~April~~Company ~~2011~~in the ~~company~~course ~~issued 975,000 warrants to purchase 975,000 shares~~ of ~~common~~funding ~~stock to~~ its ~~directors~~oil and ~~key employees~~gas ~~for their services. The warrants had a term of two years~~ and aother ~~strike~~activities, ~~price~~from oftime ~~$0.50~~to ~~per share. The warrants were valued at $363~~time,~~328~~ ~~using~~enters ~~the~~into ~~Black~~private ~~Scholes~~notes ~~valuation~~primarily ~~method using the following factors; risk free interest rate of .85%,~~from ~~strike~~its ~~prices~~major ~~of $0~~shareholders.~~50,~~ ~~market price of $0.495, volatility of 163% , and no yield. The value of the warrants was expensed as compensation expense in the year ended July 31, 2011.~~

In June 2011 the company issued 100,000 warrants to purchase 100,000 shares of common stock to a director for his services. The warrants had a term of two years and a strike price of $0.50 per share. The warrants were valued at $115,865 using the Black Scholes valuation method using the following factors; risk free interest rate of .85%, strike prices of $0.50, market price of $1.35, volatility of 163% , and no yield. The value of the warrants was expensed as compensation expense in the year ended July 31, 2011.


	April 30, 2012		July 31, 2011
John Ryer, secured promissory note, dated December 8, 2010, due July 25, 2011, interest at 10%	$	0	$	20,000
William Stratton, secured by 10% of proceeds at Coquille Bay, dated June 6, 2011 due July 31, 2012, interest at 8%		0		50,000
JAK Financial LLC, unsecured promissory note, dated December 7, 2011 due in 60 equal daily installments of $23,000, currently in default.		933,167		0
Various short-term working capital loans		20,000		0
Guarantee of Term Notes Payable to a Bank, debt due 1/31/12 (currently in default), monthly interest due monthly at 8,9 and 12%. Collateralized by the assets of e-biofuels and subject to recovery under the e-Biofuels Chapter 7 bankruptcy filing.		7,365,167		9,923,335

Total		8,318,334		9,993,335

Less: current portion		8,318,334		9,993,335

Long-term notes payable		0		0

~~During~~Current ~~the~~maturities ~~year ended July 31, 2011, the Company issued 1,300,000 warrants to purchase 1,300,000 shares~~ of ~~common~~notes ~~stock~~payable ~~for~~are ~~services.~~as ~~The~~follows: ~~warrants have terms ranging from 2 to 5 years and strike prices ranging from $0.25 to $1.35.~~

During the year ended July 31, 2011, a total of 1,225,000 warrants were exercised. 400,000 warrants (200,000 at $0.10 and 200,000 at $0.20) were exercised in return for the forgiveness of $56,000 of accounts payable and $4,000 of notes payable. 825,000 warrants were exercised in a cashless exercise for 609,744 shares of common stock.


7/31/12		8,318,334
7/31/13		0
7/31/14		0
7/31/15		0
7/31/16		0
Thereafter		0

Total	$	8,318,334

~~During~~15 the quarter ended October 31, 2011, the Company issued 500,000 shares of common stock and 500,000 warrants with a term of two years and at an exercise price of $1.00/share to Caravan Trading LLC as part of the Feedstock Supply Agreement for e-biofuels, The common stock was valued at fair market value on the day of the agreement of $0.85 for a total of $425,000. The warrants were valued at $313,135 using the Black Scholes valuation method using the following factors; risk free interest rate of .30%, strike prices of $1.00, market price of $0.85, volatility of 164.86% , and no yield. The total of $738,135 was capitalized as prepaid expense and will be amortized over the two-year agreement. As of January 31, 2012, $99,345 has been expensed and $638,790 is in prepaid expenses.

DuringTable the quarter ended October 31, 2011, the Company issued 50,000 warrants with a term of five years and an exercise price of $1.05/share for consulting services, The warrants were valued at $51,682 using the Black Scholes valuation method using the following factors; risk free interest rate of .99%, strike prices of $1.05, market price of $1.10, volatility of 166.10%, and no yield. The $51,682 was capitalized as prepaid expense and will be amortized over the six-month period of the agreement. As of January 31, 2012, $22,970 has been expensed and $28,712 is in prepaid expenses. Contents

~~During~~Notes ~~the~~Payable ~~quarter~~– ~~ended~~Related ~~October 31,~~Party ~~2011, the Company issued 2,542,001 warrants in relation to the September stock financing. See note 9 for further details. The warrants have a term of five years and a strike price of $1.00.~~

During the six months ended January 31, 2012, 800,000 warrants (400,000 at $0.10 and 400,000 at $0.20) were exercised in a cash-less exercise into 611,764 shares of common stock. Also during the six months ended January 31, 2012, 400,000 options with a strike price of $0.20 expired.


	April 30, 2012		July 31, 2011
Officer—9.0% demand note		587,061		540,286
Employee—8% demand note		0		0

Total		587,061		540,286

Less Current		587,061		540,286

Long Term		0		0

~~The~~DEBT ~~following schedule summarizes pertinent information with regard to the stock warrants for the six months ended January 31, 2012 and the year ended July 31, 2011:~~

	January 31,2012				July 31, 2011
	Weighted AverageShares-ExerciseOutstanding-Price				Weighted AverageShares-ExerciseOutstanding-Price
Beginning of period		3,325,000	$	.558		2,200,000	$	0.154
Granted		3,092,001		1.00		2,350,000		0.74
Exercised		800,000		0.15		1,225,000		0.186
Forfeited		—		—		—		—
Expired		400,000		0.20		—		—
End of period		5,217,001		0.91		3,325,000	$	0.558
Exercisable		5,217,001		—		3,325,000		—

As of April 30, 2012, the Company currently has no debt facilities in place other than as noted in the tables above.

16In connection with the acquisition of e-biofuels, LLC as a wholly-owned subsidiary, the Company guaranteed senior debt under the First Merchants Bank, N.A. Term Loans. The following is a description of the terms and conditions of each facility as of January 31, 2012:

First Merchants Bank, N.A. Term Loans: The Company, through its e-Biofuels subsidiary, had three term loans with First Merchants Bank: Term Loan A has a balance due of $1,535,283 and an interest rate of 8%; Term Loan B has a balance due of $2,764,842 with an interest rate of 9%; and Term Loan C has a balance due of $3,065,042 with an interest rate of 12%. ~~SHAREHOLDER~~The ~~EQUITY~~Term ~~TRANSACTIONS~~loans expired on January 31, 2012, are currently in default, and are secured by all of the assets of e-biofuels; the personal guarantees of Craig Ducey, Chad Ducey, Brian Carmichael and Bruce Carmichael and by a corporate guarantee of the Company. As a result of the bankruptcy filing of e-Biofuels, the bank has filed suit against the Company and the other guarantors in connection with defaults on the notes. (See Litigation). Due to the guarantee, the Company has moved the debt from its bankrupt subsidiary’s books to the books of the parent company. A resulting reduction in the paid in capital account was taken in the amount of the payable balance.

AsJAK ofFinancial: ~~July 31,~~In ~~2010~~December 2011, the Company ~~had~~entered ~~21,364,813~~into ~~shares~~an ~~issued~~unsecured promissory note with JAK Financial LLC to fund the payment of a Severance, Confidentiality and ~~outstanding~~Nondisclosure Agreement with a former consultant (See Note 4 for further details). The ~~Company~~original ~~also~~amount ~~had~~of the note was $1,200,000 and the effective interest rate on the note was 96.5%. The note was to be paid with 60 daily payments of $23,000 beginning on December 20, 2011 and continuing for the next 60 business days. The Company made 16 such payments before it was no longer able to do so. The balance due as ~~shares~~of ~~owed~~April 30, ~~but~~2012 ~~not~~was ~~issued~~$933,167 with accrued interest of $94,534. The Company is currently in default on this note.

InOther ~~August~~Debt: ~~2010,~~The ~~the~~ Company ~~issued~~has ~~400,000~~private ~~shares~~notes and ~~100,000~~debt ~~warrants~~with ~~for~~its ~~consulting~~President ~~services. The~~that ~~shares~~totals ~~were valued at market price of~~ $~~0.32 for $128~~587,~~000.~~061 ~~The~~as ~~warrants had a term~~ of ~~two~~April 30, ~~years and a strike price of $0~~2012.25 ~~per share. The warrants were valued at $22,572 using the Black Scholes valuation method using the following factors; risk~~Generally ~~free~~this ~~interest~~debt ~~rate~~is ofunsecured ~~.47%,~~and ~~strike~~bear ~~prices of $0.25,~~ market ~~price~~interest ofrates ~~$0.32, volatility of 173% ,~~ and noflexible ~~yield~~terms. The ~~total~~Company ~~value~~also ofhas ~~the~~one ~~stock~~short-term ~~and~~working ~~warrants,~~capital ~~$150,572,~~loan ~~was~~in ~~capitalized as a prepaid expense and amortized over~~ the ~~one~~amount ~~year period~~ of ~~the consulting~~$20,000 ~~agreement.~~as As of ~~July~~April 3130, ~~2011 all $150,572 has been expensed and nothing remains in prepaid expenses~~2012.

~~In August~~Interest ofexpense ~~2010,~~and 1financing charges relating to the above notes was $2,~~000~~470,~~000~~641 ~~shares~~and ~~that~~$356,320 ~~were~~for ~~owed~~the ~~but~~nine ~~not~~months ~~issued~~ended asApril 30, 2012 ofand ~~July 31~~2011, ~~2010~~respectively. ~~were~~See ~~issued~~Note 9 for additional information on financing charges included in interest expense.

~~In November 2010 the Company issued 400,000 shares to Greg Thagard in connection with the exercise of 400,000 warrants~~6. ~~200,000~~RELATED ~~warrants~~PARTY ~~were~~TRANSACTIONS exercised at $0.10 and 200,000 warrants were exercised at $0.20 for a total of $60,000. In exchange for the exercise, Mr. Thagard forgave $56,000 of accounts payable and $4,000 of notes payable due him from the Company.

InThe ~~November~~Company ~~2010 the~~has entered into transactions with its chief executive officer, Jeffrey T. Wilson and a Company ~~issued~~owned ~~310~~and controlled by Mr. Wilson,~~581~~ ~~shares~~H.N. Corporation. The amount outstanding as of April 30, 2012 owed to ~~Malcolm~~HN ~~Henley~~Corporation inwas ~~connection~~$90,000 ~~with~~and ~~the~~such ~~cashless~~amounts ~~exercise~~are ofincluded ~~warrants.~~in the totals due Mr. ~~Henley~~Wilson. ~~exercised~~The ~~200,000~~Company ~~warrants~~had ataccrued $0salaries payable to Mr.10 Wilson ~~and~~of ~~200~~$371,~~000~~537 ~~warrants~~as atof $0April 30, 2012 and July 31, 2011.~~20.~~

InThe ~~December~~Company ~~2010~~owes ~~the~~its ~~Company~~Chief ~~issued~~Executive ~~250~~Officer,~~000~~ Jeffrey ~~shares~~T. toWilson, ~~Coquille~~as ~~Bay~~a ~~Production~~result of loans to the Company, ina ~~connection~~total ~~with~~of ~~the~~$587,061 ~~purchase~~in principal as of ~~its~~April 30, ~~interest~~2012 ~~in the~~(including ~~Coquille~~$90,000 ~~Bay~~owed ~~field~~to ~~and~~HN ~~pipeline~~Corporation as discussed above). ~~The~~Interest ~~shares~~rates ~~were~~on ~~valued~~the atloans ~~market~~are ~~value~~fixed ofat $09%.51 ~~per~~Accrued ~~share~~interest ~~for~~as aof April 30, ~~total~~2012 ~~purchase~~relating ~~price~~to ofthese loans is $~~127~~131,~~500~~287.

InMr. Thagard, ~~January~~a ~~2011~~director of the Company ~~issued~~and ~~200~~Chairman of the Board,~~000~~ ~~shares~~has received compensation as a consultant to ~~John~~the ~~Heskett~~Company and its subsidiaries in ~~connection~~the ~~with~~fiscal year ending July 31, 2011 in the ~~purchase~~amounts of ~~Heskett~~$84,000. ~~Holding~~In IINovember of 2010, Mr. Thagard used $4,000 of notes payable and ~~its~~$56,000 ~~interest~~of inaccounts payable ~~Arrakis~~due him to exercise options that he held. ~~The~~See ~~shares~~note ~~were~~9 ~~valued~~for atfurther ~~market~~details. ~~value~~Mr. Thagard settled his accounts payable due him in the amount of $~~0.50~~154,500 ~~per share~~in exchange for arestricted ~~total~~common ~~value~~stock in an amount of 259,542 shares and $~~100~~20,000 in cash on June 21, 2011.

InMr. Craig ~~January~~Ducey, ~~2011~~former ~~the~~president ~~Company~~of ~~issued 1~~e-biofuels,~~500,000~~ ~~shares~~is topart ~~Metro~~owner ~~Energy~~along ~~in connection~~ with Mr. Chad ~~the~~Ducey ~~purchase~~ of ~~certain~~Werks ~~oil~~Management, ~~and~~a ~~gas~~company ~~assets.~~that ~~The~~provided ~~shares~~management ~~were~~services ~~valued~~to ate-biofuels. ~~market~~Prior ~~value~~to ofFebruary ~~$0.40~~2012, ~~per~~Werks ~~share~~Management ~~for~~received a ~~total~~contracted ~~purchase~~amount ~~price~~per ofmonth ~~$600,000.~~in consulting

In16 January 2011 the Company issued 1,041,669 shares to Chrisjo Energy and others in connection with the purchase of their interest in the Coquille Bay pipeline. The shares were valued at market value of $0.40 per share for a total purchase price of $416,668.

InTable April 2011 the Company issued 400,000 shares to certain individuals for a consulting services agreement rendered to the Company. 200,000 of the shares are for services rendered and 200,000 are for services to be rendered over the six-month period of the agreement. The shares were valued at market value of $0.50 per share on the date of the agreement for a total amount of $200,000. $100,000 was expensed and $100,000 was capitalized as a prepaid expense to be amortized over the six-month life of the agreement. As of July 31, 2011, $66,668 has been expensed and $33,332 remains in prepaid expenses. As of October 31, 2011, the remaining $33,332 has been expensed and $0 remains in prepaid expenses. Contents

In fees ~~April~~for ~~2011~~such ~~the~~services. ~~Company~~The ~~issued~~contracted ~~219~~amount was $70,~~943~~000 ~~shares~~per month through October of 2010, $60,000 per month from November of 2010 to ~~various~~April ~~individuals~~of in2011, ~~connection~~and ~~with~~$62,833 ~~the~~per ~~conversion~~month from May of ~~certain~~2011 ~~notes~~to January ~~payable~~of 2012. Mr. Craig Ducey and ~~related~~Mr. Chad ~~accrued~~Ducey ~~interest~~provided ~~totaling~~management ~~$74~~services for e-biofuels through January 31,~~781~~ 2012. The Company recorded expenses to ~~common~~Werks ~~stock~~Management in the total of $758,500 for the year ended July 31, 2011 and $377,000 for the nine months ended April 20, 2012. The ~~shares were~~Company ~~converted~~owed atWerks Management $0~~.34~~ ~~per~~and ~~share~~$90,238 as of April 30, 2012 and July 31, 2011, respectively. In February 2012, the Company terminated the Werks Management Agreement.

InDuring ~~April~~July of 2011, the ~~company~~Company ~~issued~~entered ~~975,000~~into ~~warrants~~a toloan ~~purchase~~agreement ~~975,000~~loaning ~~shares~~Mr. Chad ofDucey ~~common stock~~$340,000 toat ~~its~~an ~~directors~~interest ~~and~~rate ~~key employees for their services~~of 5%. The ~~warrants~~loan had a term of ~~two~~25 years, ~~and~~was ~~a strike price of $0.50 per share. The warrants were valued at $363~~unsecured,~~328~~ ~~using~~and ~~the~~matured ~~Black~~in ~~Scholes~~July ~~valuation method using the following factors; risk free interest rate~~ of 2036.~~85%,~~ ~~strike~~The ~~prices~~loan ofwas ~~$0.50,~~paid ~~market~~off ~~price~~in ofOctober $02011.~~495,~~ ~~volatility of 163% , and no yield.~~ The ~~value~~balance of the ~~warrants~~note was ~~expensed~~$0 as ~~compensation~~of ~~expense in the year ended July~~October 31, 2011.

In ~~April~~September of 2011, Mr. Brian Carmichael, a former owner of Werks Management and Sales Manager for e-Biofuels, signed a new consulting agreement with e-biofuels and will receive a commission of $0.015 per gallon of biodiesel sold through the Middletown, Indiana plant. The agreement was subsequently modified and the amount reduced as the Company ~~issued~~began ~~40,000~~selling ~~shares~~larger volumes of biodiesel to ~~various~~Mr. Carmichael’s ~~individuals~~company, Element Renewable Energy. The agreement has a term of one year and automatically renews in ~~connection~~one ~~with~~year ~~service~~increments. ~~rendered~~Mr. Carmichael no longer owns an interest in Werks Management as a result of this agreement. The Company instituted sales controls during fiscal 2011 to provide additional management oversight of sales contracts to Element, wherein the CFO is required to approve any sales contracts by the Company to Element to insure the contracts are arms-length. The ~~shares~~total ~~were valued~~paid atto ~~market~~Mr. Carmichael ~~value~~and ofhis company in relation to this agreement was $0294,799 for the year ended July 31, 2011.90 ~~per~~The ~~share~~contract ~~for~~with aMr. Carmichael ~~total~~was ~~expense~~subsequently terminated in October 2011 by mutual consent of ~~$36~~both parties.~~000.~~

In ~~May~~April 2011 the ~~Company~~company issued ~~450~~975,000 ~~shares~~warrants to purchase 975,000 shares ~~Terry~~of ~~Louviere~~common instock ~~connection~~to ~~with~~its ~~the~~directors ~~settlement~~and key employees for their services. The warrants had a term of ~~certain~~two ~~outstanding~~years ~~accounts~~and ~~payable~~a ~~related~~strike toprice ~~Coquille~~of ~~Bay~~$0.50 ~~Accounts~~per ~~payable~~share. ofThe warrants were valued at $~~288~~363,~~310~~328 ~~was~~using ~~converted~~the toBlack ~~common~~Scholes ~~stock~~valuation atmethod ausing ~~conversion~~the following factors; risk free interest rate of .85%, strike prices of $0.50, market price of $0.64495, ~~per~~volatility ~~share~~of 163% , and no yield. The value of the warrants was expensed as compensation expense in the year ended July 31, 2011. See Note 8 for further information pertaining to the warrants.

In ~~May~~June of 2011 the company issued 100,000 $3warrants to purchase 100,~~750,~~000 shares of ~~notes~~common stock ~~payable~~to –a ~~related~~director ~~parties~~for ~~were~~his ~~converted~~services. toThe ~~common~~warrants ~~stock~~had ~~along~~a ~~with~~term ~~the~~of ~~related~~two ~~accrued interest.~~years Aand ~~total~~a strike price of $~~4,037,969~~0.50 (per share. The warrants were valued at $3115,~~750~~865 using the Black Scholes valuation method using the following factors; risk free interest rate of .85%,~~000~~ strike prices of ~~principal~~$0.50, ~~and~~market price of $~~287~~1.35,~~969~~ volatility of ~~accrued~~163% ~~interest)~~, ~~was~~and ~~converted~~no ~~into~~yield. ~~5,047,461~~The ~~shares~~value of ~~common~~the ~~stock~~warrants atwas aexpensed ~~negotiated~~as ~~price~~compensation ofexpense ~~$0.80~~in ~~per~~the ~~share~~year ended July 31, 2011.

In ~~May~~October 2011, the Company ~~issued~~agreed ~~250~~to purchase out of cash flow over 3 weeks, 2,000,000 shares toof ~~Vinmar~~Imperial incommon ~~connection~~stock ~~with~~from ~~the~~Craig ~~settlement~~and Chad ofDucey for a ~~lawsuit~~total purchase price of $2,000,000. The ~~shares~~stock purchase was necessitated by tax liabilities incurred by the Ducey’s in the conversion of their notes receivable from the Company to restricted common stock in June 2011 and due to the fact that the Ducey’s personally guarantee the Company’s senior debt and were ~~valued~~unable atto $0obtain credit elsewhere to pay their tax liabilities.~~87 per~~ ~~share~~As ~~which~~part ~~was~~of the ~~market~~share ~~value~~purchase, onthe Company retired the ~~date~~note receivable from Mr. Chad Ducey in exchange for common stock. As of April 30, 2012, the ~~settlement~~2,000,000 shares are being held as treasury stock.

In January ~~June~~2012, ~~2011~~ the Company ~~issued~~entered ~~425,000~~into ~~shares~~an agreement to ~~Aventine~~ inassign ~~connection~~capital ~~with~~leases ~~the~~to ~~settlement~~a ofcompany acontrolled ~~lawsuit~~by Craig Ducey. ~~The~~Fixed ~~shares~~assets ~~were~~with ~~valued~~a atnet book value of $~~0.90~~337,453 ~~per~~were ~~share~~assigned ~~which~~along ~~was~~with ~~the~~capital ~~market~~lease ~~value~~payable onin the ~~date~~amount of $228,358. The Company recognized a net loss on the ~~settlement~~assignment transaction of $109,095.

~~In June of 2011, the Company issued 50,000 warrants for services~~7. ~~The warrants had a term of two years and a strike price of $0.70 per share. The warrants were valued at $38~~LITIGATION,~~883~~ ~~using~~COMMITMENTS ~~the~~AND ~~Black~~CONTINGENCIES Scholes valuation method using the following factors; risk free interest rate of .85%, strike prices of $0.70, market price of $0.98, volatility of 163% , and no yield. The total value of the warrants has been expensed during the year ended July 31, 2011.

InThe ~~June~~Company ~~2011~~is ~~the~~a ~~company~~named ~~issued~~defendant ~~100~~in lawsuits,~~000~~ ~~warrants~~is toa ~~purchase~~party ~~100,000~~in ~~shares~~governmental ofproceedings, ~~common~~and ~~stock~~is subject to ~~a director for his~~claims ~~services.~~of ~~The~~third ~~warrants~~parties ~~had~~from atime ~~term~~to oftime ~~two~~arising ~~years~~in ~~and~~the aordinary ~~strike~~course ~~price~~ of $0business.50 ~~per share.~~ The ~~warrants~~outcome ~~were~~of ~~valued~~lawsuits ator ~~$115,865~~other ~~using~~proceedings ~~the~~and ~~Black~~claims ~~Scholes~~against ~~valuation~~the ~~method~~Company ~~using~~cannot ~~the~~be ~~following~~predicted ~~factors;~~with ~~risk~~certainty ~~free~~and ~~interest~~at ~~rate~~the ofpresent ~~.85%,~~time ~~strike~~management ~~prices~~cannot ofestimate ~~$0.50,~~or ~~market~~predict ~~price~~the ofimpact ~~$1.35,~~that ~~volatility~~any ofsuch ~~163%~~claims ,may ~~and~~have noon ~~yield.~~the ~~The~~financial ~~value~~position of the ~~warrants was expensed as compensation expense in the year ended July 31, 2011~~Company.

17Investigations and Subpoenas to Produce Documents by the Securities and Exchange Commission and others:

InOn ~~June~~May 25, ~~of 2011~~2012, the Company received ~~issued~~a ~~535~~subpoena for the period of January 1,~~714~~ ~~shares~~2010 to ~~Ron~~the ~~Frank~~present, ~~and~~as ~~Barbara~~part ~~Lyons~~of ~~in connection~~a ~~with~~fact-finding inquiry from the ~~conversion~~Division of ~~notes~~Enforcement ~~payable.~~of Athe ~~$500,000~~Securities ~~loan~~ and aExchange ~~$25,000~~Commission ~~loan~~(“SEC”). ~~were~~The ~~borrowed~~subpoena inrequires ~~June~~us ofto ~~2011.~~produce ~~Both~~numerous documents ofrelated ~~these~~to ~~loans~~the ~~were~~Company ~~converted~~and toour ~~common~~wholly-owned ~~stock~~subsidiary, ~~immediately~~E-Biofuels, LLC. The ~~loans~~subpoena ~~converted~~demands at the ~~average~~production ~~closing price~~ of ~~the~~documents ~~Company’s common~~related ~~stock~~to ~~for~~ the ~~thirty~~operations, accounting, business ~~days~~practices, ~~immediately~~purchase ~~preceding~~and ~~the~~sales ~~conversion~~of ~~date.~~biodiesel, ~~The~~tax ~~loans~~credits ~~were~~and incentives ~~converted~~from atany ~~$0.98~~state, ~~per~~federal ~~share.~~or Noagency, ~~beneficial~~the ~~conversion~~production ~~feature~~process ~~was~~of ~~recorded on~~ the ~~transactions~~biodiesel, ~~because~~including, the ~~loan~~purchase ~~was~~of ~~converted~~any ~~immediately~~products ~~and~~related ~~was effectively~~to ~~treated~~the asmanufacturing aof ~~stock~~biodiesel, ~~sale.~~financing, ~~There~~stock ~~was~~issuances, noexecutives ~~interest~~and ~~expense~~employees. ~~related~~The topurpose ~~these~~of ~~notes.~~the subpoena Nois ~~balance~~to ~~remains~~determine onwhether ~~these~~any ~~loans~~federal aslaws ofhave ~~July 31,~~been ~~2011~~violated.

In ~~June~~addition, ~~2011~~on May 24, 2012, the Company ~~issued~~and E-Biofuels, 30LLC,~~000~~ ~~shares~~received tosubpoenas ~~various individuals~~ in connection with ~~services~~a ~~rendered.~~Grand ~~The~~Jury ~~shares~~investigation ~~were~~into ~~valued~~the atactivities ~~market~~of ~~value~~the Company and E-Biofuels, LLC, for the period of $0January 1, 2006 to the present.90 ~~per~~In ~~share~~conjunction ~~for~~with athe ~~total~~Grand ~~expense~~Jury investigation, on May 24, 2012, the United States District Court of ~~$27~~the Southern District of Indiana authorized search warrants to obtain records,~~000~~ documents and evidence related to the ongoing investigation. The search warrants were executed on May 24, 2012.

InThe ~~June~~Company ~~2011~~intends to fully cooperate with the investigations. Currently, the Company ~~issued~~cannot ~~259~~estimate the ultimate financial impact,~~542~~ ~~shares~~if toany, ~~Greg~~resulting ~~Thagard~~from inthe ~~connection~~investigations. ~~with~~In the ~~settlement~~event that violations of ~~certain~~state ~~outstanding accounts~~or ~~payable~~federal are determined, such determination could have a material negative impact on the operations of the Company. ~~Accounts~~In ~~payable~~addition, if it is determined that the Company’s subsidiary, E-biofuels, LLC, received improper tax credits for the sale of ~~$154~~biodiesel,~~500~~ ~~was~~then ~~converted~~the atresults ~~$0.60~~could ~~per~~have ~~share~~a material impact on the Company. (See Form 8-K dated May 25, 2012 incorporated herein by reference).

In17 June of 2011, the Company issued 300,000 shares and 500,000 warrants for consulting services. The shares were valued at market price of $1.49 for $447,000. The warrants had a term of five years and a strike price of $1.00 per share. The warrants were valued at $704,706 using the Black Scholes valuation method using the following factors; risk free interest rate of .85%, strike prices of $1.00, market price of $1.49, volatility of 163% , and no yield. The total value of the stock and warrants, $1,151,706, was capitalized as a prepaid expense and will be amortized over the five-year period of the consulting agreement. As of July 31, 2011, $28,793 has been expensed and $1,122,914 remains in prepaid expenses. During the quarter ended October 31, 2011, this consulting agreement was terminated and the remaining $1,122,914 was expensed. As of January 31, 2012, $0 remains in prepaid expenses related to this agreement.

InTable June of 2011, the Company issued 500,000 warrants for consulting services. The warrants had a term of five years and a strike price of $1.00 per share. The warrants were valued at $704,706 using the Black Scholes valuation method using the following factors; risk free interest rate of .85%, strike prices of $1.00, market price of $1.49, volatility of 163% , and no yield. The total value of the warrants, $704,706, was capitalized as a prepaid expense and will be amortized over the five-year period of the consulting agreement. As of July 31, 2011, $17,618 has been expensed and $687,088 remains in prepaid expenses. During the six months ended January 31, 2012, the Company felt that the consulting services under the contract were not being performed and management made the decision expense the remainder of the prepaid asset. $687,088 was expensed and $0 remains in prepaid expenses as of January 31, 2012, relating to this agreement. Contents

InFirst ~~June~~Merchants ~~2011~~Bank, ~~the~~National ~~Company~~Association, ~~issued~~v. ~~100~~Craig D. Ducey,~~000~~ ~~shares~~Chad ~~and~~D. ~~$150~~Ducey,~~000~~ toBrian Carmichael, ~~MDEChem~~R. Bruce Carmichael and Imperial Petroleum, Inc.; inMarion ~~connection~~Superior ~~with~~Court; Cause : 49D14-1204-PL-017213. First Merchants Bank, the ~~execution~~senior lender to e-Biofuels, LLC has filed suit to recover $7,365,167 plus accrued interest, etc. from the Guarantors of the debt of e-Biofuels, LLC as a ~~license~~result ~~agreement~~of ~~related~~its tobankruptcy ~~SANDKLENE~~filing ~~950~~on April 4, 2012. The ~~cost~~Company executed an Indemnity Agreement with the other co-guarantors of the ~~licensing~~e-Biofuels ~~agreement~~debt ~~was~~at ~~$250,000~~the sotime of the ~~shares~~acquisition ~~were~~of ~~valued~~e-Biofuels and athas $1received demands from the co-guarantors under the agreement.00 ~~per~~The ~~share~~Company intends to vigorously defend itself in this lawsuit.

~~In June 2011 the Company issued 50~~E-Biofuels,~~000~~ ~~shares~~LLC toBankruptcy: ~~Ben Campbell in connection with the purchase of certain mining claims in Utah. The shares were valued at market value of $1.49 per share for a total purchase price of $74,500.~~

InOn ~~June~~April 4, ~~of 2011~~2012, the Company’s wholly-owned ~~issued~~subsidiary, ~~100~~e-Biofuels,~~000~~ ~~warrants~~LLC tofiled ~~purchase~~a ~~100,000~~voluntary ~~shares~~petition offor ~~common~~protection ~~stock~~from ~~to as~~creditors aunder ~~signing~~Chapter ~~bonus~~7 toof aTitle ~~new~~11 ~~employee.~~of ~~The~~the ~~warrants~~Bankruptcy ~~had~~Code awith ~~term~~the ofUnited ~~two~~States ~~years~~Bankruptcy ~~and~~Court afor ~~strike~~the ~~price~~Southern District of ~~$1.35~~Indiana ~~per~~under ~~share~~Case Number 12-03816-FJO-7A. The ~~warrants~~Court ~~were~~appointed ~~valued~~Richard atE. ~~$114~~Boston,~~143~~ ~~using~~27 ~~the~~North ~~Black~~5th ~~Scholes~~St., ~~valuation~~Richmond, ~~method~~IN ~~using~~47374 ~~the~~as ~~following~~U.S ~~factors;~~Trustee ~~risk~~on ~~free~~that ~~interest~~date. ~~rate~~The of e-Biofuels subsidiary represented approximately 99.856% of the Company’s revenues. In the filing, ~~strike~~e-Biofuels ~~prices~~listed total assets of $~~1.35~~11,354,800.51 ~~market~~and ~~price~~total liabilities of $~~1.49~~17,321,036.88. ~~volatility~~(See ofForm ~~163%~~8-K dated April 4, ~~and~~2012 noincorporated ~~yield~~herein by reference). ~~The~~Intercompany ~~value~~accounts ofreceivable due to e-Biofuels from the ~~warrants~~Company ~~was~~and ~~expensed~~its assubsidiaries ~~compensation~~were ~~expense~~listed as follows in the ~~year~~bankruptcy ~~ended~~petition: ~~July 31~~Imperial Petroleum, ~~2011~~Inc.: $46,542.67; Arrakis Oil Recovery, LLC: $271,311.71; and Imperial Chemical Company: $60,934.75 for a total of $378,788.93.

InOther ~~July~~Potential ~~2011~~Claims ~~the Company issued 99,163 shares to certain individuals in connection with their cashless exercise of warrants. 100,000 warrants were exercised at $0.25and 25,000 were exercised at $0.50.~~

In ~~July~~December of 2011, the Company, ~~issued~~as ~~200~~co-borrower with e-Biofuels,~~000~~ ~~shares~~entered ~~in connection~~into an unsecured promissory note with JAK Financial LLC to fund the ~~exercise~~payment of a Severance, Confidentiality and Nondisclosure Agreement with a former consultant (See Note 4 for further details). The original amount of the note was $1,200,000 ~~warrants~~and atthe $0effective interest rate on the note was 96.105%. AThe note ~~payable~~was into ~~the~~be ~~amount~~paid with 60 daily payments of $2023,000 ~~was~~beginning ~~forgiven~~on December 20, in2011 ~~exchange~~and continuing for the ~~conversion~~next 60 business days. The Company ~~also~~made ~~issued~~16 31such payments before it was no longer able to do so. The balance due as of April 30,~~250~~ ~~shares~~2012 ~~for~~was ~~the~~$933,167 with accrued interest of $94,534. The Company is currently in default on ~~the~~this note. No demands have been made by JAK Financial at this time as a result of ~~$3,125~~the default.

AsThe Company ofhas ~~July 31,~~accrued ~~2011~~revenue payable, legal and petty suspense accounts in the ~~Company~~amount ~~has~~of 34$173,~~905~~907,~~136~~ ~~shares~~$409,671 and $8,948, respectively, as of ~~common~~April 30, ~~stock~~2012. ~~issued~~The ~~and~~Company ~~outstanding~~has accrued revenue payable, legal and ~~100~~petty suspense accounts in the amount of $173,~~000~~907, ~~shares~~$409,671 ~~shown~~and $8,948, respectively, as ~~owed~~of ~~but~~July 31, 2011. The Company has continued to research owner account information in order to properly distribute legal suspense accounts in the normal course of business. Suspense accounts are ~~not~~cleared ~~issued~~out annually and paid to the owners.

InWe ~~August~~are subject to a variety of ~~2011,~~laws ~~the~~and ~~Company~~regulations ~~issued~~in ~~100,000~~all ~~shares~~jurisdictions ofin which ~~common~~we ~~stock~~operate. We also are involved in legal proceedings, claims or investigations that ~~were~~are ~~shown~~incidental asto ~~owed~~the ~~but~~conduct ~~not~~of ~~issued~~our asbusiness and cannot be avoided. Some of these proceedings allege damages against us relating to property damage claims ~~July 31~~(including injuries due to product failure and other product liability related matters), ~~2011~~employment matters, and commercial or contractual disputes. We vigorously defend ourselves against all claims which require such action. In future periods, we could be subjected to cash costs or non-cash charges to earnings if any of these matters is resolved on unfavorable terms.

~~In September of 2011, the Company issued 10,000 shares for services~~8. ~~The~~STOCK ~~shares~~WARRANTS ~~were~~AND ~~valued~~OPTIONS ~~at the market price on the date of issuance for a total of $10,900.~~

In ~~September~~April of 2011, the ~~Company~~company issued ~~100~~975,000 ~~shares~~warrants into ~~connection with~~purchase ~~the~~975,000 ~~extension~~shares of common stock to its ~~senior~~directors ~~bank~~and ~~debt~~key employees tofor ~~the~~their ~~parties~~services. ~~that~~The ~~executed~~warrants ~~the~~had ~~personal~~a ~~guarantees~~term of ~~the~~two ~~debt~~years and a strike price of $0.50 per share. The ~~shares~~warrants were valued at $363,328 using the ~~market~~Black ~~price~~Scholes onvaluation method using the ~~date~~following offactors; ~~issuance~~risk ~~for~~free ainterest ~~total~~rate of ~~$100,000~~.85%, strike ~~This~~prices ~~amount~~of ~~has~~$0.50, ~~been~~market ~~capitalized~~price inof ~~prepaid expenses~~$0.495, ~~and~~volatility ~~will~~of be163% ~~amortized~~, ~~over~~and ~~the~~no ~~six~~yield. ~~months~~The value of the ~~loan~~warrants ~~extension.~~was Asexpensed ofas ~~October 31,~~compensation ~~2011,~~expense ~~$50,000~~in ~~has~~the ~~been~~year ~~expensed~~ended ~~and $50~~July 31,~~000~~ ~~remains in prepaid expenses~~2011.

~~During~~In ~~the~~June ~~quarter ended October 31,~~ 2011, the ~~Company~~company issued ~~500~~100,000 ~~shares~~warrants ofto ~~common~~purchase ~~stock and 500~~100,000 ~~warrants~~shares ~~with a term~~ of ~~two~~common ~~years~~stock ~~and~~to ata andirector ~~exercise~~for ~~price~~his ~~of $1~~services.~~00/share~~ toThe ~~Caravan Trading~~warrants ~~LLC~~had asa ~~part~~term of ~~the~~two ~~Feedstock~~years ~~Supply~~and ~~Agreement~~a ~~for~~strike ~~e-biofuels,~~price ~~The common stock was valued at fair market value on the day~~ of ~~the agreement of~~ $0.8550 ~~for~~per ~~a total of $425,000~~share. The warrants were valued at $~~313~~115,~~135~~865 using the Black Scholes valuation method using the following factors; risk free interest rate of .3085%, strike prices of $10.0050, market price of $01.8535, volatility of ~~164.86~~163% , and no yield. The ~~total~~value of ~~$738,135~~the warrants was ~~capitalized~~expensed as ~~prepaid~~compensation expense ~~and~~in ~~will be amortized over~~ the ~~two-~~ year ~~agreement.~~ended ~~As of January~~July 31, ~~2012, $99,345 has been expensed and $638,790 remains in prepaid expenses~~2011.

18During the year ended July 31, 2011, the Company issued 1,300,000 warrants to purchase 1,300,000 shares of common stock for services. The warrants have terms ranging from 2 to 5 years and strike prices ranging from $0.25 to $1.35.

During the ~~quarter~~year ended ~~January~~July 31, ~~2012~~2011, ~~the~~a ~~Company~~total ~~issued~~of ~~300~~1,225,000 ~~shares~~warrants ofwere ~~common~~exercised. ~~stock~~400,000 inwarrants ~~relation~~(200,000 toat a$0.10 ~~non-compete~~and ~~agreement.~~200,000 ~~The~~at ~~shares~~$0.20) were ~~valued~~exercised atin ~~market~~return ~~value~~for on the ~~date~~forgiveness of ~~the~~$56,000 ~~agreement~~of ~~and~~accounts ~~valued~~payable atand $~~177~~4,000 of notes payable. ~~See~~825,000 ~~Note~~warrants 4were exercised in a cashless exercise for ~~further~~609,744 ~~details~~shares of common stock.

During the ~~six~~quarter ~~months~~ ended ~~January~~October 31, ~~2012~~2011, ~~800~~the Company issued 500,000 ~~warrants~~shares ~~(400~~of common stock and 500,000 warrants with a term of two years and at an exercise price of $01.1000/share ~~and~~to ~~400~~Caravan Trading LLC as part of the Feedstock Supply Agreement for e-biofuels,~~000~~ The common stock was valued at fair market value on the day of the agreement of $0.~~20)~~85 for a total of $425,000. The warrants were ~~exercised~~valued inat a$313,135 ~~cash-less~~using ~~exercise~~the ~~into~~Black ~~611~~Scholes valuation method using the following factors; risk free interest rate of .30%,~~764~~ ~~shares~~strike prices of ~~common~~$1.00, ~~stock~~market price of $0.85, volatility of 164.86% , and no yield. The total of $738,135 was capitalized as prepaid expense on E-biofuel’s books and was to be amortized over the two-year agreement. See Note 9 for further details.

~~September~~18 ~~2011 Stock Financing and Derivative Liability~~

OnTable June 9, 2011, Imperial Petroleum, Inc. (hereinafter referred to as the “Company”, “we,” “us” or “our”) entered into an engagement agreement (the “Engagement Agreement”) with Rodman & Renshaw, LLC to act as our exclusive placement agent (the “Placement Agent”) in connection with an offering of the Company’s securities (the “Offering”). On September 21, 2011 (the “Closing Date”), pursuant to a securities purchase agreement (the “Securities Purchase Agreement”), the Company completed the closing of the Offering for total subscription proceeds of $3,177,501.50 through the issuance of (i) 4,236,669 shares of our common stock at a price of $0.75 per share (the “Purchased Shares”) and (ii) five-year warrants (the “Warrants”) exercisable into 2,118,334 shares of common stock (the “Warrants Shares”) equal to 50% of the Purchased Shares at an exercise price of $1.00 per share to certain accredited investors (the “Investors”). The number of shares of common stock to be received upon the exercise of the Warrants and the exercise price of the Warrants are subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the common stock that occur after the Closing Date.Contents

InDuring ~~connection~~the ~~with~~quarter ~~the~~ended ~~Offering~~October 31, we2011, ~~granted~~ the ~~Investors~~Company ~~registration~~issued ~~rights~~50,000 ~~pursuant~~warrants towith a term ~~registration rights agreement dated as~~ of ~~the Closing~~five ~~Date~~years ~~(the~~and ~~“Registration~~an ~~Rights~~exercise ~~Agreement”),~~price inof ~~which we agreed to register (~~$1~~) 100%~~.05/share offor ~~the~~consulting ~~Purchased~~services, ~~Shares;~~The ~~(2) all~~warrants ~~Warrant~~were ~~Shares~~valued ~~then~~at ~~issuable~~$51,682 ~~upon~~using ~~exercise of~~ the ~~Warrants~~Black ~~(assuming~~Scholes onvaluation ~~such~~method ~~date~~using the ~~Warrants~~following ~~are exercised~~factors; inrisk ~~full~~free ~~without~~interest ~~regard~~rate toof ~~any~~.99%, ~~exercise~~strike ~~limitations~~prices ~~therein)~~of ~~and~~$1.05, market ~~(3) any~~price ~~securities~~of ~~issued or then issuable upon any stock split~~$1.10, ~~dividend~~volatility orof ~~other distribution~~166.10%, ~~recapitalization~~and orno ~~similar~~yield. ~~event~~The ~~with~~$51,682 ~~respect~~was tocapitalized ~~the~~as ~~foregoing~~prepaid ~~(the “Registrable~~expense ~~Securities”)~~and onwill ~~a registration statement or registration statements (the “Registration Statements”) to~~ be ~~initially~~amortized ~~filed~~over ~~with~~ the ~~Securities~~six-month ~~and~~period ~~Exchange~~of ~~Commission (~~the ~~“SEC”)~~agreement. ~~within~~As ~~seventy~~of ~~five (75)~~April ~~calendar~~30, ~~days~~2012, ~~after~~$37,326 ~~the~~has ~~Closing~~been ~~Date~~expensed ~~(the “Filing Date”)~~ and ~~use~~$14,356 ~~our~~is ~~best efforts to have it declared effective within 120 calendar days after the Closing Date or within such other applicable Effectiveness Date as provided~~ in ~~the~~ ~~Registration~~prepaid ~~Rights Agreement~~expenses.

~~Subject~~During to the ~~terms~~quarter ofended ~~the~~October 31, ~~Registration Rights Agreement~~2011, ~~upon~~ the ~~occurrence~~Company ofissued ~~any event that shall incur liquidated damages~~2, ~~including~~542,001 ~~but~~warrants ~~not limited to, that the initial Registration Statement is not filed on or prior to the Filing Date, or we fail to file a pre-effective amendment and otherwise respond~~ in ~~writing~~relation to ~~SEC comments on~~ the Registration Statement within twenty (20) calendar days upon receipt of such comments, or the Registration Statement including the Registrable Securities is not declared effective by the applicable Effectiveness Date, we shall pay to each ~~Investor~~September anstock ~~amount in cash, on monthly anniversary of each such Event Date as defined in the Registration Rights Agreement (the “Event Date”), equal to the product of (1) the product of (A) 1~~financing.0% ~~multiplied~~The bywarrants ~~(B) the quotient~~have ofa ~~(I) the~~term ~~number~~ of ~~such~~five ~~Investor’s~~years ~~Registrable Securities that are not then covered by a Registration Statement that is then effective~~ and ~~available for use by such Investor divided by (II)~~ the ~~total~~strike ~~number of such Investor’s Registrable Securities multiplied by (2) the aggregate purchase~~ price ~~paid~~has bybeen ~~such~~reduced ~~Investor~~from ~~pursuant to~~ the ~~Securities~~original ~~Purchase~~issuance ~~Agreement; provided , however , that, in the event that none~~ of ~~such Investor’s Registrable Securities are then covered by a Registration Statement that is effective and available for use by such Investor, the quotient of (I) divided by (II) in clause (~~$1~~)(B) herein~~.00 ~~shall be deemed~~ to ~~equal 1~~$0.14/shares ~~Under~~as ~~the~~a ~~Registration Rights~~result ~~Agreement, the maximum aggregate liquidated damages payable to an Investor shall be 8%~~ of the ~~aggregate~~Settlement ~~subscription~~and ~~amount~~Release ~~paid by such Investor pursuant to the Securities Purchase~~ Agreement. Asdated ~~of January~~April 3130, 2012,. ~~the~~(See ~~company~~note ~~has~~9 ~~incurred~~for ~~$95,325~~further ~~in late fees and $976 in interest expense related to the failure to file the Registration Statement~~details.)

~~Pursuant~~During to the ~~terms~~nine ofmonths ~~the~~ended ~~Engagement~~April 30, ~~Agreement~~2012, ~~for~~800,000 ~~the~~warrants ~~Placement~~(400,000 ~~Agent’s~~at ~~service~~$0.10 weand ~~paid~~400,000 ~~a cash placement fee equal to 7% of the~~at ~~aggregate~~$0.20) ~~purchase price paid by Investors that~~ were ~~placed~~exercised in ~~the Offering, and we agreed to pay~~ a cash-less ~~fee equal to 7% of the aggregate cash~~ exercise ~~price~~into ~~to be received by the Company upon the exercise of the Warrants~~611,764 ~~payable~~shares ~~only in the event~~ of ~~the~~common ~~receipt by the Company of any proceeds of such cash exercise~~stock. WeAlso ~~also~~during ~~agreed~~the tonine ~~issue~~months ~~the~~ended ~~placement~~April 30, ~~agent~~2012, ~~423~~400,~~667~~000 ~~warrants~~options inwith ~~relation to the offering. The warrants have~~ a ~~term of 5 years and a~~ strike price of $10.0020 expired.

~~Total~~In ~~cash~~May ~~received~~2012, ~~from~~subsequent ~~the~~to ~~financing was $2~~quarter-end,~~921,576~~ ~~which is~~ the ~~total~~Company ~~proceeds~~issued ~~of $3~~600,~~177,501~~000 ~~less~~warrants ~~$222,425~~to inits ~~broker~~Board ~~fees~~members ~~and~~at ~~$33,500 in~~a ~~closing~~strike ~~fees.~~price of $0.15/share.

~~Pursuant~~The tofollowing ~~the~~schedule ~~terms~~summarizes ofpertinent ~~the~~information ~~stock~~with ~~purchase~~regard ~~agreement,~~to the purchasers have per share purchase price protection. Under this protection, until the three year anniversary of the closing date, if the Company, directly or indirectly, issues or sells any shares of common stock orwarrants ~~common stock equivalents~~ for ~~a consideration per share that is less than $0.75, then immediately after such Dilutive Issuance,~~ the ~~Company~~nine ~~shall~~months ~~issue to each purchaser, without the payment of additional consideration, a number of additional shares of common stock equal to the product of (i) the fraction obtained by~~ended ~~dividing (A)~~April ~~the~~30, ~~sum~~2012 ~~of the number of Initial Shares (as defined below)~~ and ~~Additional Shares (as defined below) then held by such Purchaser on~~ the ~~date~~year ofended ~~the Dilutive Issuance by (B)~~July ~~the sum of the number of Initial Shares issued to such Purchaser on the Closing Date and all Additional Shares issued to such Purchaser after the Closing Date~~31, ~~multiplied~~2011: by (ii) the difference between (A) the aggregate number of shares of Common Stock that would have been issued to such Purchaser at the Closing if the applicable portion of the Subscription Amount was divided by the Discounted Per Share Purchase Price minus (B) the aggregate number of shares of Common Stock equal to the sum of the Initial Shares, plus, to the extent there has been a previous issuance of Additional Shares to such Purchaser, the number of Additional Shares previously issued to such Purchaser.

This purchase price protection creates a derivative liability. The Company initially valued and recorded this derivative liability at $588,116 upon the closing of the financing on September 21, 2011. The Company used historical trends to make an estimate of how many shares might have to be issued in the future under the price protection provision. That estimate was then valued using the black schools method. As of January 31, 2012, the value of the derivative was revalued, based on information at January 31, 2012, at $281,184 and a resulting gain on valuation of derivative liability of $306,932 was recorded for the six months ended January 31, 2012.


	April 30,2012				July 31, 2011
	Weighted Average Shares-Exercise Outstanding-Price				Weighted Average Shares-Exercise Outstanding-Price
Beginning of period		3,325,000	$	0.558		2,200,000	$	0.154
Granted		3,092,001		1.00		2,350,000		0.74
Exercised		800,000		0.15		1,225,000		0.186
Forfeited		—		—		—		—
Expired		400,000		0.20		—		—

End of period		5,217,001		0.49		3,325,000	$	0.558

Exercisable		5,217,001		—		3,325,000		—

199. SHAREHOLDER EQUITY TRANSACTIONS

10As of July 31, 2010, the Company had 21,364,813 shares issued and outstanding. ~~LEASE~~The ~~OBLIGATIONS~~Company also had 1,000,000 shares owed but not issued.

~~The~~In ~~Company~~August ~~maintains~~2010, ~~office~~the ~~space~~Company atissued ~~101~~400,000 NWshares ~~1st~~and ~~Street~~100,000 ~~Suite~~warrants ~~213,~~for ~~Evansville,~~consulting ~~IN 47708~~services. The ~~Company~~shares ~~maintains~~were ~~its~~valued at market price of ~~current~~$0.32 ~~office~~for ~~space~~$128,000. ~~under~~The warrants had a 3term ~~year~~of ~~lease,~~two ~~ending~~years ~~March~~and a strike price of ~~2014,~~$0.25 per share. The warrants were valued at $22,572 using the Black Scholes valuation method using the following factors; risk free interest rate of .47%, strike prices of $20.25,~~583~~ market price of $0.3332, ~~per~~volatility ~~month~~of 173% , and no yield. ~~This~~The ~~lease~~total value of the stock and warrants, $150,572, was capitalized as a prepaid expense and amortized over the one year period of the consulting agreement. isAs ~~currently~~of July 31, 2011 all $150,572 has been expensed and nothing remains in ~~default~~prepaid expenses.

~~Our~~In ~~wholly-owned subsidiary, Imperial Chemical Company’s principal executive offices are located at 4533 Brittmoore Road, Houston, TX under a 5 year lease, ending~~ August of ~~2016~~2010, ~~at the rate of $10~~1,~~500 per month beginning in August 2011. The Company leases certain vehicles~~000,000 ~~equipment~~shares ~~and~~that ~~railcars for its biodiesel operation in Middletown, IN under lease contracts with Stark Leasing, Trinity Industries and others. There are two vehicle~~were ~~leases,~~owed ~~ending~~but ~~from~~not ~~March~~issued ~~2013~~as ~~to March~~ of ~~2014~~July 31, ~~ranging~~2010 ~~from~~were ~~$535 to $552 per month~~issued. Leases for two pieces of lab equipment end in September and April of 2014 and are $1,824 and $524 per month. Additional centrifuge equipment used in the biodiesel operations are leased on a month-to-month basis and are $10,500 per month. The Company has three lease obligations related to railcars. The first railcar lease is with GLNX and is for the use of 20 railcars. The GLNX lease ends in January 2014 and is $9,800 per month. Six railcars are also leased from Rampart Range through March 2012 at $3,900 per month. An additional 39 railcars are leased through Trinity until February 2014 at $19,500 per month. The Company is currently in default on the Trinity railcar lease and is working to return these cars to Trinity.

~~The~~In November 2010 the Company ~~also~~issued ~~leases~~400,000 ashares ~~rail~~to ~~spur~~Greg Thagard in ~~Muncie~~connection with the exercise of 400,000 ~~Indiana~~warrants. 200,000 warrants were exercised at $0.10 and 200,000 warrants were exercised at $0.20 for ~~use~~a intotal ~~its biodiesel~~of ~~operations~~$60,000. ~~The~~In ~~rail~~exchange ~~spur~~for isthe ~~leased~~exercise, ~~through~~Mr. Thagard ~~May~~forgave ~~2012~~$56,000 ~~and~~of ~~costs~~accounts payable and $24,~~065~~000 ~~per~~of ~~month~~notes payable due him from the Company.

~~Total~~In ~~future~~November ~~lease~~2010 ~~payments~~the ~~for~~Company ~~the~~issued ~~years~~310,581 ~~ended~~shares to Malcolm Henley in ~~July~~connection with the cashless exercise of warrants. Mr. 31Henley exercised 200,000 ~~under~~warrants ~~all~~at of$0.10 ~~the~~and ~~above~~200,000 ~~operating~~warrants ~~leases~~at ~~are:~~$0.20.

		2012				2013				2014				2015				2016				Thereafter				Total
Total operating lease obligations		$	148,177			$	281,383			$	209,675			$	126,524			$	126,000				10,500			$	902,259

In December 2010 the Company issued 250,000 shares to Coquille Bay Production Company in connection with the purchase of its interest in the Coquille Bay field and pipeline. The shares were valued at market value of $0.51 per share for a total purchase price of $127,500.

11In January 2011 the Company issued 200,000 shares to John Heskett in connection with the purchase of Heskett Holding II and its interest in Arrakis. ~~ACCRUED~~The ~~EXPENSES~~shares were valued at market value of $0.50 per share for a total value of $100,000.

~~The~~In January 2011 the Company ~~has~~issued ~~accrued~~1,500,000 ~~expenses~~shares asto ~~follows:~~Metro Energy in connection with the purchase of certain oil and gas assets. The shares were valued at market value of $0.40 per share for a total purchase price of $600,000.

	January 31, 2012		July 31, 2011
Revenue in suspense		592,525	$	592,525
Accrued officer salary—CEO		358,547		377,678
Accrued interest on notes		416,679		221,584
Accrued Settlements		5,673		250,574
Accrued feedstock purchase liabilities		2,745,135		2,945,135
Accrued income taxes		355,000		355,000
Other		391,401		441,353
		4,864,960		5,183,849

In January 2011 the Company issued 1,041,669 shares to Chrisjo Energy and others in connection with the purchase of their interest in the Coquille Bay pipeline. The shares were valued at market value of $0.40 per share for a total purchase price of $416,668.

2019

12.Table FAIRof VALUE MEASUREMENTS Contents

WeIn ~~adopted~~April ~~ASC~~2011 ~~Topic 820-10, “Fair Value Measurements” at~~ the ~~beginning~~Company ofissued ~~fiscal~~400,000 ~~year~~shares ~~2010~~ to ~~measure the fair value of~~ certain ofindividuals ~~its~~for ~~financial~~a ~~assets~~consulting services ~~required~~agreement rendered to bethe ~~measured on a recurring basis~~Company. ~~The~~200,000 ~~adoption~~ of ~~ASC~~the ~~Topic~~shares ~~820-10~~are ~~did~~for ~~not~~services ~~impact~~rendered ~~our~~and ~~combined~~200,000 ~~financial~~are ~~position~~for orservices ~~results~~to ofbe ~~operations. ASC~~rendered ~~Topic~~over ~~820~~the six-10month ~~establishes~~period aof ~~fair value hierarchy that prioritizes~~ the ~~inputs~~agreement. toThe ~~valuation~~shares ~~techniques~~were ~~used~~valued toat ~~measure~~market ~~fair~~ value of $0.50 ~~The~~per ~~hierarchy~~share ~~gives~~on the ~~highest~~date of ~~priority~~the toagreement ~~unadjusted~~for ~~quoted~~a ~~prices~~total inamount ~~active~~of ~~markets~~$200,000. ~~for~~$100,000 ~~identical~~was ~~assets~~expensed orand ~~liabilities~~$100,000 ~~(Level~~was 1capitalized ~~measurements)~~as ~~and~~a ~~the lowest~~prepaid ~~priority~~expense to ~~unobservable~~be ~~inputs~~amortized ~~(Level~~over 3the ~~measurements). ASC Topic 820~~six-10month ~~defines~~life ~~fair~~of ~~value as~~ the ~~price~~agreement. ~~that~~As ~~would~~of beJuly 31, ~~received~~2011, to$66,668 ~~sell~~has anbeen ~~asset~~expensed orand ~~paid~~$33,332 remains ~~to transfer a liability~~ in anprepaid ~~orderly transaction between market participants on the measurement date~~expenses. AAs ~~fair~~of ~~value~~October 31, ~~measurement~~2011, ~~assumes that~~ the ~~transaction~~remaining to$33,332 ~~sell~~has ~~the~~been ~~asset~~expensed orand ~~transfer~~$0 ~~the~~remains ~~liability occurs~~ in ~~the~~prepaid ~~principal market for the asset or liability~~expenses. ~~The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:~~

~~Level~~In ~~1. Valuations~~April ~~based~~2011 onthe ~~quoted~~Company ~~prices~~issued 219,943 shares to various individuals in ~~active~~connection ~~markets~~with ~~for~~the ~~identical~~conversion ~~assets~~of orcertain ~~liabilities~~notes ~~that an~~payable ~~entity~~and ~~has~~related ~~the~~accrued ~~ability~~interest totaling $74,781 to ~~access~~common stock. The shares were converted at $0.34 per share.

~~Level~~In ~~2. Valuations~~April ~~based~~2011 onthe ~~quoted~~company ~~prices~~issued ~~for~~975,000 ~~similar~~warrants ~~assets~~to orpurchase ~~liabilities~~975,000 shares of common ~~quoted~~stock ~~prices~~to its directors and key employees for ~~identical~~their ~~assets~~services. orThe ~~liabilities~~warrants inhad ~~markets~~a ~~that~~term ~~are~~of ~~not~~two ~~active,~~years orand ~~other~~a ~~inputs~~strike ~~that~~price ~~are~~of ~~observable~~$0.50 orper ~~can~~share. beThe ~~corroborated~~warrants bywere ~~observable~~valued ~~data~~at ~~for~~$363,328 ~~substantially~~using the ~~full~~Black ~~term~~Scholes valuation method using the following factors; risk free interest rate of .85%, strike prices of $0.50, market price of $0.495, volatility of 163% , and no yield. The value of the ~~assets~~warrants orwas ~~liabilities~~expensed as compensation expense in the year ended July 31, 2011.

~~Level~~In 3.April ~~Valuations~~2011 ~~based~~the onCompany ~~inputs~~issued ~~that~~40,000 ~~are~~shares ~~supported~~to byvarious ~~little~~individuals orin noconnection ~~market~~with ~~activity~~service ~~and~~rendered ~~that are significant~~ to the ~~fair~~Company. ~~value~~The ofshares ~~the~~were ~~assets~~valued orat ~~liabilities~~market value of $0.90 Weper ~~have~~share nofor ~~level~~a 3total ~~assets~~expense orof ~~liabilities~~$36.000.

~~The~~In ~~tables~~May ~~below~~2011 ~~present~~the ~~reconciliation~~Company ~~for~~issued ~~all~~450,000 ~~assets~~shares ~~and~~to ~~liabilities~~Terry ~~measured~~Louviere atin ~~fair~~connection ~~value~~with onthe asettlement ~~recurring~~of ~~basis~~certain asoutstanding accounts payable related to Coquille Bay. Accounts payable of ~~January 31~~$288,310 ~~2012~~was ~~and~~converted ~~July 31,~~to ~~2011~~common stock at a conversion price of $0.64 per share.

	January 31, 2012
	Fair Value Measurements
	Level 1Quoted Pricesin ActiveMarketsIdenticalAssets		Level 2SignificantOtherObservableInputs		Level 3SignificantUnobservableInputs		Assets/LiabilitiesAt FairValue
Assets:
Cash	$	139,147		—		—	$	139,148
Accounts receivable		—	$	931,062		—	$	931,062
Liabilities
Accounts payable, accrued and other liabilities		—	$	7,934,776		—	$	7,934,776
Notes payable		—	$	11,702,630		—	$	11,702,630

In May of 2011, $3,750,000 of notes payable – related parties were converted to common stock along with the related accrued interest. A total of $4,037,969 ($3,750,000 of principal and $287,969 of accrued interest) was converted into 5,047,461 shares of common stock at a negotiated price of $0.80 per share.

	July 31, 2011
	Fair Value Measurements
	Level 1Quoted Pricesin ActiveMarketsIdenticalAssets		Level 2SignificantOtherObservableInputs		Level 3SignificantUnobservableInputs		Assets/LiabilitiesAt FairValue
Assets:
Cash	$	900,883		—		—	$	900,883
Accounts receivable		—	$	4,894,073		—	$	4,894,073
Note receivable		—	$	339,429		—	$	339,429
Liabilities
Accounts payable, accrued and other liabilities		—	$	9,392,557		—	$	9,392,557
Notes payable		—	$	14,238,008		—	$	14,238,008

In May 2011 the Company issued 250,000 shares to Vinmar in connection with the settlement of a lawsuit. The shares were valued at $0.87 per share which was the market value on the date of the settlement.

21In June 2011 the Company issued 425,000 shares to Aventine in connection with the settlement of a lawsuit. The shares were valued at $0.90 per share which was the market value on the date of the settlement.

13In June of 2011, the Company issued 50,000 warrants for services. ~~Sale~~The warrants had a term of ~~Oil~~two years and ~~Gas~~a ~~Properties~~strike price of $0.70 per share. The warrants were valued at $38,883 using the Black Scholes valuation method using the following factors; risk free interest rate of .85%, strike prices of $0.70, market price of $0.98, volatility of 163% , and no yield. The total value of the warrants has been expensed during the year ended July 31, 2011.

In ~~February~~June ~~2012,~~2011 ~~Imperial~~the ~~Petroleum~~company issued 100,000 ~~Inc.~~warrants ~~closed~~to anpurchase ~~Asset~~100,000 ~~Sales~~shares ~~Agreement~~of ~~(the~~common ~~“Agreement”)~~stock ~~with~~to ~~Eleven Energy~~a ~~Corporation~~director ~~finalizing~~for ~~the~~his services. ~~sale~~The ofwarrants ~~the~~had ~~Company’s~~a ~~share,~~term ~~effective~~of ~~January 31,~~two ~~2012,~~years inand ~~the~~a ~~ownership~~strike price of ~~the~~$0.50 ~~Coquille~~per ~~Bay~~share. ~~Field~~The ~~located~~warrants inwere ~~Plaquemines~~valued ~~Parish~~at $115,865 ~~Louisiana.~~using ~~Per~~ the ~~terms~~Black ofScholes ~~the~~valuation ~~Agreement,~~method using the ~~Company~~following ~~received consideration~~factors; ofrisk ~~$100~~free ~~cash,~~interest ~~was~~rate ~~relieved~~ of ~~plugging~~.85%, ~~liabilities~~strike ~~associated~~prices ~~with~~of ~~the wells~~$0.50, market ~~and~~price ~~was~~of ~~relieved~~$1.35, volatility of ~~the~~163% ~~requirement~~, toand ~~provide~~no ayield. ~~plugging~~The ~~bond~~value ~~with~~of the ~~State~~warrants ofwas ~~Louisiana~~expensed ~~Department~~as ofcompensation ~~Natural~~expense ~~Resources~~ in the ~~amount~~year ofended $1July 31,~~400,000~~ 2011.

~~Included~~In inJune of 2011, the ~~terms~~Company ofissued ~~the~~535,714 ~~Agreement~~shares ~~was~~to ~~the~~Ron ~~sale~~Frank ofand ~~100%~~Barbara ofLyons in connection with the ~~equity~~conversion of ~~Hillside~~notes ~~Oil~~payable. A $500,000 loan and ~~Gas~~a $25,000 anloan ~~Approved~~were ~~Operator~~borrowed ~~which~~in June of 2011. Both ~~had~~of ~~been~~these ~~operating~~loans were converted to common stock immediately. The loans converted at the ~~Coquille~~average ~~Bay~~closing ~~facility~~price asof athe ~~contract~~Company’s ~~operator~~common stock for the ~~Company.~~thirty ~~Prior~~business todays immediately preceding the ~~Agreement,~~conversion ~~Hillside~~date. ~~Oil~~The ~~and~~loans ~~Gas~~were ~~was~~converted ~~owned~~at by$0.98 per ~~Greg~~share. ~~Thagard,~~No ~~Chairman~~beneficial ofconversion feature was recorded on the ~~Company’s~~transactions ~~Board~~because ofthe ~~Directors.~~loan Inwas ~~consideration~~converted ~~for~~immediately ~~the~~and was effectively treated as a stock sale. ofThere ~~Hillside Oil~~was ~~and~~no ~~Gas,~~interest Mrexpense related to these notes. ~~Thagard~~ ~~received~~No ~~$100~~balance remains on these loans as of July 31, 2011.

In ~~determining~~June ~~the~~2011 ~~amount of consideration to accept,~~ the Company ~~reviewed~~issued ~~the current~~30,000 ~~operating~~shares ~~costs~~to ofvarious ~~maintaining~~individuals ~~the~~in ~~assets~~connection ~~and the estimated costs associated~~ with services ~~returning the assets to an acceptable, operational status~~rendered. The ~~monthly~~shares ~~cost~~were ofvalued ~~maintaining~~at ~~the~~market ~~assets~~value ~~totaled~~of ~~approximately~~ $~~60,000~~0.90 Anper ~~independent~~share ~~third~~for ~~party estimated~~a ~~the~~total ~~costs~~expense of ~~restoring the assets to a level necessary to continue production at approximately~~ $~~750~~27,000 ~~to $1,000~~.~~000.~~

~~The~~In ~~fixed~~June ~~assets~~2011 of the Company ~~Coquille~~issued ~~Bay~~259,542 ~~Field~~shares ~~had~~to aGreg ~~net~~Thagard ~~book~~in ~~value~~connection ofwith ~~$4,240,783~~the ~~and~~settlement ~~had~~of acertain ~~related~~outstanding ~~asset~~accounts ~~retirement~~payable. ~~obligation~~Accounts payable of $~~472~~154,~~855.~~500 ~~Cash~~was ~~proceeds~~converted ~~from~~at ~~the sale were~~ $~~100~~0.60 ~~During~~per ~~the six months ended January 31, 2012, the Company recognized a loss of $3,767,828 relating to this transaction~~share.

AsIn aJune ~~result~~ of ~~the~~2011, ~~sale of~~ the ~~Coquille~~Company ~~Bay~~issued ~~Field~~300,000 ~~the~~shares ~~Company~~and ~~will~~500,000 nowarrants ~~longer~~for ~~have~~consulting ~~any~~services. ~~business~~The ~~operations~~shares ~~related~~were tovalued ~~traditional~~at ~~oil~~market ~~and~~price of ~~gas~~$1.49 ~~production~~for $447,000. ~~During~~The ~~the~~warrants ~~six~~had ~~months~~a ~~ended~~term ~~January 31,~~of ~~2012,~~five ~~the~~years ~~Coquille~~and ~~Bay~~a ~~project~~strike ~~produced~~price of $~~133,775~~1.00 inper ~~revenue~~share. ~~and~~The ~~had~~warrants ~~related production~~were ~~costs~~valued ofat $~~395~~704,~~981~~706 ~~for~~using athe ~~net~~Black ~~loss~~Scholes ofvaluation ~~$262,206.~~method ~~During~~using the ~~year~~following ~~ended~~factors; ~~July 31,~~risk ~~2011~~free interest rate of .85%, ~~the~~strike prices ~~Coquille~~of ~~Bay~~$1.00, ~~project~~market ~~produced~~price of $~~398~~1.49,~~988~~ involatility ~~revenue~~of 163% , and ~~had~~no ~~related~~yield. ~~production~~The ~~costs~~total value of the stock and warrants, $1,~~096~~151,~~727~~706, ~~for~~was capitalized as a ~~net~~prepaid ~~loss~~expense and will be amortized over the five-year period of the consulting agreement. As of July 31, 2011, $~~697~~28,~~739.~~793 ~~The~~has ~~oil~~been expensed and ~~gas operations~~$1,122,914 ofremains ~~Coquille~~in ~~Bay~~prepaid ~~were~~expenses. ~~not~~During ~~reported~~the asquarter aended ~~discontinued~~October 31, ~~operation~~2011, onthis ~~these~~consulting ~~financial~~agreement ~~statements~~was ~~because~~terminated and the ~~amounts~~remaining ~~are~~$1,122,914 ~~not~~was ~~material~~expensed. toAs ~~the~~of ~~financial~~April 01, ~~statements~~2012, $0 asremains ain ~~whole~~prepaid expenses related to this agreement.

14In June of 2011, the Company issued 500,000 warrants for consulting services. ~~SUBSEQUENT~~The ~~EVENTS~~warrants had a term of five years and a strike price of $1.00 per share. The warrants were valued at $704,706 using the Black Scholes valuation method using the following factors; risk free interest rate of .85%, strike prices of $1.00, market price of $1.49, volatility of 163% , and no yield. The total value of the warrants, $704,706, was capitalized as a prepaid expense and will be amortized over the five-year period of the consulting agreement. As of July 31, 2011, $17,618 has been expensed and $687,088 remains in prepaid expenses. During the six months ended January 31, 2012, the Company felt that the consulting services under the contract were not being performed and management made the decision to expense the remainder of the prepaid asset. $687,088 was expensed and $0 remains in prepaid expenses as of April 30, 2012, relating to this agreement.

~~The~~20 Company has evaluated events and transactions for potential recognition or disclosure through the date these financial statements were issued. There were no subsequent events requiring recognition or disclosure in these financial statements other then as noted below.

InTable February 2012, Mr. Robert Willmann resigned from the Board due to time constraints. There were no disputes between Mr. Willmann and management of the Company or with its auditors. Contents

In ~~February~~June ~~2012~~2011 the Company issued 100,000 Mrshares and $150,000 to MDEChem Inc. ~~Aaron~~ ~~Wilson~~in ~~was~~connection with ~~terminated~~the ~~from~~execution ~~his~~of ~~position~~a aslicense ~~President~~agreement related to SANDKLENE 950. The cost of ~~Arrakis~~the ~~Oil~~licensing ~~Recovery~~agreement was $250,000 ~~LLC~~so ~~due~~the toshares ~~cash constraints~~were valued at $1.00 per share.

OnIn ~~March 6,~~June ~~2012,~~2011 ~~e-biofuels,~~the ~~LLC~~Company ~~received~~issued a50,000 ~~Notice~~shares ~~of Default from Trinity Industries Leasing Company related~~ to ~~their~~Ben ~~outstanding~~Campbell ~~note~~in ~~and~~connection ~~railcar~~with ~~lease balances. Per~~ the ~~default~~purchase ~~notice,~~of ~~the~~certain ~~outstanding~~mining ~~principle~~claims ~~and~~in ~~interest~~Utah. ~~balance~~The onshares ~~the~~were ~~note~~valued ~~payment~~at ~~due~~market tovalue ~~Trinity as~~ of ~~March 2012 is~~ $~~590,003~~1.49 ~~Per~~per ~~the~~share ~~default~~for ~~notice,~~a ~~the unpaid railcar rental~~total ~~invoices~~purchase ~~due~~price ~~to Trinity as~~ of ~~March 2012 totaled~~ $4474,~~434~~500.

~~Item~~In 2June of 2011, the Company issued 100,000 warrants to purchase 100,000 shares of common stock to as a signing bonus to a new employee. ~~Management’s~~The ~~Discussion~~warrants had a term of two years and ~~Analysis~~a strike price of ~~Financial~~$1.35 ~~Condition~~per share. The warrants were valued at $114,143 using the Black Scholes valuation method using the following factors; risk free interest rate of .85%, strike prices of $1.35, market price of $1.49, volatility of 163% , and ~~Results~~no yield. The value of ~~Operations~~the warrants was expensed as compensation expense in the year ended July 31, 2011.

~~RESULTS~~In OFJuly ~~OPERATIONS~~2011 the Company issued 99,163 shares to certain individuals in connection with their cashless exercise of warrants. 100,000 warrants were exercised at $0.25and 25,000 were exercised at $0.50.

~~The~~In ~~factors~~July ~~which most significantly affect the Company’s results~~ of ~~operations are (i) the sale prices of biodiesel~~2011, ~~biodiesel feedstocks, crude oil and natural gas, (ii)~~ the ~~level~~Company ofissued ~~biodiesel~~200,000 ~~crude~~shares ~~oil~~in connection ~~and~~with ~~natural gas sales, (iii)~~ the ~~level~~exercise of ~~direct and lease operating expenses~~200,000 ~~and~~warrants ~~(iv) the~~at ~~level of and interest rates on borrowings~~$0. ~~The same factors listed above will apply to the sale of minerals and metals mined by the Company~~10. AsA anote ~~result~~payable ofin the ~~collapse~~amount of ~~the world economies into recession~~$20,000 ~~crude~~was ~~oil~~forgiven ~~and natural gas prices decreased significantly during fiscal 2009 from 2008 and have rebounded somewhat~~ in ~~fiscal~~exchange ~~2010, 2011, and 2012. Commodity prices~~ for ~~crude~~the ~~oil based on West Texas Intermediate (“WTI”) prices quoted at approximately $98/Bbl for oil and $2~~conversion.47 ~~per~~The ~~Mmbtu~~Company ~~for~~also ~~natural~~issued ~~gas at January~~ 31,250 ~~2012.~~shares ~~Since that~~for time crude oil prices rebounded slightly with crude oil prices currently around $107/bbl and while natural gas has continued to decline with natural gas at around $2.33/Mmbtu. Diesel prices are impacted by crude oil prices and determine biodiesel prices to a large degree. Biodiesel prices have steadily climbed during calendar 2011 until the ~~September-October~~accrued ~~2011~~interest ~~timeframe when prices declined slightly from previous highs of about $5.43/gal to around $5.00 per gal and were quoted at approximately $4.74 per gallon at January 31, 2012 based~~ on the ~~average~~note ~~spot price. Currently biodiesel is quoted at $4.60/gallon. The following graph shows the relation~~ of ~~biodiesel and diesel fuel prices compared to crude oil prices on a~~ $~~/gallon basis~~3,125.

22As of July 31, 2011, the Company has 34,905,136 shares of common stock issued and outstanding and 100,000 shares shown as owed but not issued.

~~The~~In ~~impact~~August of ~~the volatility of fuel prices has contributed to uncertainty in the energy markets. If pricing remains high~~2011, ~~by demand or artificial methods employed by~~ the ~~oil~~Company ~~producing~~issued ~~countries~~100,000 ~~the~~shares ~~impact will be positive on revenues and cash flow and the exploitation~~ of ~~existing~~common ~~properties~~stock ~~owned~~that bywere ~~the~~shown ~~Company,~~as ~~however,~~owed ~~continued~~but ~~high~~not ~~prices~~issued ~~will~~as ~~reduce the availability~~ of quality acquisitions and could change the Company’s future growth strategy. At the present time the Company believes it has a substantial inventory of quality development opportunities to sustain its growth strategy without ~~additional acquisitions. The Company expects oil and gas prices to continue to widely fluctuate and to be influenced by global economic turmoil~~July 31, ~~Asian economies and potential disruptions in supplies, in particular events in the Middle East and North Korea~~2011. Feedstock prices, and in particular waste grease prices, generally track biodiesel prices. Virgin oil feedstocks however are at times priced too high for use as a biodiesel feedstock. Since the highest value for most waste greases is obtained by selling these commodities to the biodiesel industry, we expect that despite volatility in biodiesel prices, these waste grease feedstocks will continue to track biodiesel prices, both upward and downward and therefore maintain an acceptable margin for biodiesel production.

~~Because~~In ~~our~~September ~~biodiesel~~of ~~plant is a feedstock flexible facility~~2011, ~~we can take advantage of variations in feedstock prices and utilize multiple feedstocks in our plant. For~~ the ~~quarter~~Company ~~ended~~issued ~~January 31~~10,000 ~~2012,~~shares ~~gross~~for ~~margins declined from last fiscal year’s average of $0~~services.~~50/gallon~~ toThe ~~approximately~~shares 6%were ofvalued at the market price ofon ~~biodiesel or about $0.18/gallon due to uncertainty in~~ the ~~future~~date of ~~tax~~issuance ~~incentives and turmoil in the market resulting from enforcement issues related to RFS2. We expect our margins to remain at these levels until clarity is achieved in the marketplace and the demand~~ for ~~biodiesel~~a ~~production~~total ~~increases sometime in the middle~~ of ~~calendar year 2012~~$10,900.

~~Six~~In ~~months~~September ~~ended~~of ~~January 31~~2011, ~~2012~~the ~~compared~~Company issued 100,000 shares in connection with the extension of its senior bank debt to ~~Six~~the parties that executed the personal guarantees of the debt. The shares were valued at the market price on the date of issuance for a total of $100,000. This amount has been capitalized in prepaid expenses and will be amortized over the six months ~~ended~~of ~~January~~the loan extension. As of April 3130, ~~2011~~2012, $100,000 has been expensed and $0 remains in prepaid expenses.

~~Revenues~~During ~~for~~ the ~~six~~quarter ~~months~~ended ~~ending January~~October 31, ~~2012~~2011, ~~were~~the ~~$49~~Company issued 500,~~828~~000 shares of common stock and 500,~~772~~000 ~~compared~~warrants towith ~~revenues~~a term of ~~$29,117,392~~ ~~for~~two ~~the~~years ~~comparable~~and ~~quarter~~at ~~ended~~an ~~January 31,~~exercise ~~2011.~~price ~~The~~of ~~significant~~$1.00/share ~~increase~~to isCaravan ~~the~~Trading LLC ~~result~~as part of the ~~expansion~~Feedstock ofSupply ~~operations~~Agreement atfor e-biofuels, ~~LLC,~~The ~~which~~common ~~accounted~~stock ~~for~~was ~~99%~~valued ofat ~~our~~fair ~~total~~market ~~revenues~~value ~~for~~on the ~~period.~~day ~~Coquille~~of ~~Bay~~the ~~continued~~agreement ~~to suffer~~of ~~from~~$0.85 for a ~~lack~~total of ~~available~~$425,000. ~~gas~~The ~~for~~warrants ~~gas~~were ~~lift~~valued ~~and~~at as$313,135 ausing ~~result~~the Black Scholes valuation method using the ~~Company~~following ~~continued~~factors; torisk ~~conserve~~free ~~natural~~interest ~~gas~~rate ~~and~~of ~~limits~~.30%, ~~sales~~strike prices of $1.00, Wemarket ~~presently~~price ~~expect~~of ~~that~~$0.85, ~~our~~volatility ~~biodiesel~~of ~~sales~~164.86% ~~will~~, ~~account~~and ~~for~~no ~~the~~yield. ~~majority~~The total of ~~our~~$738,135 ~~revenues~~was ~~during~~capitalized ~~the~~as ~~current~~prepaid ~~fiscal~~expense on E-biofuels books and was tol be amortized over the two-year ~~until~~agreement. ~~such~~As ~~time~~of asJanuary 31, we2012, ~~are~~$99,345 ~~operational~~has onbeen ~~our~~expensed ~~tar~~and ~~sand~~$638,790 ~~business~~remains in prepaid expenses. On April 4, 2012, E-biofuels filed for bankruptcy. See Note 14 for further details.

~~Total~~During ~~operating expenses for~~ the ~~six~~quarter ~~months~~ ended January 31, 2012 ~~were $52~~,~~755,885~~ ~~compared~~the toCompany ~~$28~~issued 300,~~672,681~~000 ~~for~~shares ~~the~~of ~~same~~common ~~period~~stock ~~ended~~in relation to a ~~year~~non-compete ~~earlier~~agreement. The ~~Direct~~shares ~~operating~~were ~~expenses~~valued ~~have~~at ~~increased~~market ~~due~~value toon the ~~costs~~date ~~associated~~of ~~with~~the ~~e-biofuels~~agreement and valued at $177,000. ~~Our~~See ~~gross~~Note ~~margin~~4 ~~from~~for ~~the~~further ~~production~~details. of

23During the nine months ended April 30, 2012, 800,000 warrants (400,000 at $0.10 and 400,000 at $0.20) were exercised in a cash-less exercise into 611,764 shares of common stock.

~~biodiesel~~During ~~is approximately 6%. We experienced limited activity in Coquille Bay field for~~ the ~~period.~~nine ~~General and administrative costs (“G&A”) for the six~~ months ended ~~January~~ April 3130, 2012 ~~were $5~~,~~795,966~~ ~~compared to $2,037,685 for~~ the ~~six~~Company ~~months~~issued ~~ended January 31~~156, ~~2011. Administrative costs include approximately $1,681,947 in non-cash write-offs associated with the termination of certain prepaid consulting~~427 ~~agreements.~~shares ~~We expect G&A costs~~ to ~~decline as~~ a ~~result~~management ofconsultant ~~the elimination~~ of ~~these non-cash charges and we do not anticipate~~ the ~~addition~~Company. ofThe ~~significant~~shares ~~staff~~were valued at ~~e-biofuels and as a result we anticipate increased overall margins. Interest costs increased to~~ $10.59,~~644,961for~~ ~~the~~market ~~six~~value ~~months~~on ~~ended January 31, 2012 compared to $803,063for~~ the ~~six~~date ~~months ended January 31, 2012 as a result~~ of the ~~acquisition~~grant, ~~of e-biofuels~~ and ~~its debt~~expensed. ~~We expect interest rates to remain at or near the current levels in fiscal 2012.~~

~~The~~September Company incurred a net after tax loss of $8,162,687($0.210 per share) for the six months ended January 31, 2012 compared to an after tax gain of $433,552 ($0.019 per share) for the prior year six months ended January 31, 2011. ~~The~~Stock ~~net~~Financing loss for the current six months is primarily the result of the sale of the Coquille Bay Field, which resulted in a loss of $3,767,827; increased costs charged to G&A as discussed above; losses in our oil and ~~gas~~Derivative ~~operations~~Liability ~~and weakness in the market for biodiesel during January 2012.~~

~~Three~~On ~~months~~June 9, 2011, ~~ended~~Imperial ~~January 31~~Petroleum, ~~2012~~Inc. ~~compared~~(hereinafter referred to ~~three~~as ~~months~~the ~~ended~~“Company”, ~~January~~“we,” “us” or “our”) entered into an engagement agreement (the “Engagement Agreement”) with Rodman 31& Renshaw, LLC to act as our exclusive placement agent (the “Placement Agent”) in connection with an offering of the Company’s securities (the “Offering”). On September 21, 2011 (the “Closing Date”), pursuant to a securities purchase agreement (the “Securities Purchase Agreement”), the Company completed the closing of the Offering for total subscription proceeds of $3,177,501.50 through the issuance of (i) 4,236,669 shares of our common stock at a price of $0.75 per share (the “Purchased Shares”) and (ii) five-year warrants (the “Warrants”) exercisable into 2,118,334 shares of common stock (the “Warrants Shares”) equal to 50% of the Purchased Shares at an exercise price of $1.00 per share to certain accredited investors (the “Investors”). The number of shares of common stock to be received upon the exercise of the Warrants and the exercise price of the Warrants are subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the common stock that occur after the Closing Date.

~~Revenues~~In ~~for~~connection with the ~~three~~Offering, ~~months~~we ~~ending~~granted ~~January 31,~~the ~~2012~~Investors ~~were~~registration ~~$13,227,815~~rights ~~compared~~pursuant to ~~revenues~~a ofregistration ~~$13,090,859~~rights ~~for~~agreement ~~the~~dated ~~comparable~~as ~~quarter~~of ~~ended January 31,~~the ~~2011.~~Closing ~~The~~Date ~~lack~~(the of“Registration ~~significant~~Rights ~~growth~~Agreement”), in which ~~revenues~~we ~~compared~~agreed to ~~the~~register ~~prior~~(1) 100% ~~period~~of isthe ~~due~~Purchased toShares; ~~the~~(2) all ~~uncertainty~~Warrant ~~experienced~~Shares inthen ~~the~~issuable ~~biodiesel~~upon ~~market~~exercise ~~related~~of to the ~~expiration~~Warrants of(assuming ~~tax~~on ~~incentives~~such ~~and~~date ~~turmoil~~the inWarrants ~~the~~are ~~market~~exercised ~~resulting~~in ~~from enforcement~~full ~~issues~~without ~~related~~regard to ~~RFS2.~~any ~~E-biofuels~~exercise ~~accounted~~limitations ~~for~~therein) and ~~99%~~(3) any ofsecurities ~~our~~issued ~~total~~or ~~revenues~~then ~~for~~issuable ~~the~~upon ~~period~~any stock split, asdividend ~~Coquille~~or ~~Bay~~other ~~continued~~distribution, torecapitalization ~~suffer~~or ~~from~~similar aevent ~~lack~~with ofrespect ~~available~~to ~~gas~~the ~~for~~foregoing ~~gas~~(the ~~lift~~“Registrable ~~and~~Securities”) ason a ~~result~~registration statement or registration statements (the ~~Company~~“Registration ~~continued~~Statements”) to ~~conserve~~be ~~natural~~initially ~~gas~~filed with the Securities and ~~limits~~ ~~sales.~~Exchange WeCommission ~~presently~~(the ~~expect~~“SEC”) ~~that~~within ~~our~~seventy ~~biodiesel~~five ~~sales~~(75) calendar ~~will~~days ~~account~~after ~~for~~the Closing Date (the ~~majority~~“Filing Date”) ofand use our ~~revenues~~best ~~during~~efforts to have it declared effective within 120 calendar days after the ~~current~~Closing ~~fiscal~~Date ~~year~~or ~~until~~within such ~~time~~other asapplicable weEffectiveness ~~are~~Date ~~operational~~as onprovided ~~our~~in ~~tar~~the ~~sand~~Registration ~~business~~Rights Agreement.

~~Total~~21 operating expenses for the quarter ended January 31, 2012 were $15,804,224 compared to $13,461,529 for the same period ended a year earlier. Direct operating expenses have increased due to the costs associated with e-biofuels. Our gross margin from the production of biodiesel is approximately 6%. We experienced limited activity in Coquille Bay field for the period. General and administrative costs (“G&A”) for the three months ended January 31, 2012 were $2,887,867 compared to $731,839 for the three months ended January 31, 2011. Administrative costs include approximately $695,117 in non-cash write-offs associated with the termination of certain prepaid consulting agreements. We expect G&A costs to decline as a result of the elimination of these non-cash charges and we do not anticipate the addition of significant staff at e-biofuels and as a result we anticipate increased overall margins. Interest costs increased to $888,275for the three months ended January 31, 2012 compared to $471,483for the three months ended January 31, 2012 as a result of the acquisition of e-biofuels and its debt.

TheTable Company incurred a net after tax loss of $7,064,656($0.175 per share) for the three months ended January 31, 2012 compared to an after tax loss of $255,821 ($0.011 per share) for the prior year three months ended January 31, 2011. The net loss for the current three months is primarily the result of the sale of the Coquille Bay Field, which resulted in a loss of $3,767,827; increased costs charged to G&A as discussed above; losses in our oil and gas operations and weakness in the market for biodiesel during January 2012. Contents

~~FINANCIAL~~Subject ~~CONDITION~~to the terms of the Registration Rights Agreement, upon the occurrence of any event that shall incur liquidated damages, including, but not limited to, that the initial Registration Statement is not filed on or prior to the Filing Date, or we fail to file a pre-effective amendment and otherwise respond in writing to SEC comments on the Registration Statement within twenty (20) calendar days upon receipt of such comments, or the Registration Statement including the Registrable Securities is not declared effective by the applicable Effectiveness Date, we shall pay to each Investor an amount in cash, on monthly anniversary of each such Event Date as defined in the Registration Rights Agreement (the “Event Date”), equal to the product of (1) the product of (A) 1.0% multiplied by (B) the quotient of (I) the number of such Investor’s Registrable Securities that are not then covered by a Registration Statement that is then effective and available for use by such Investor divided by (II) the total number of such Investor’s Registrable Securities multiplied by (2) the aggregate purchase price paid by such Investor pursuant to the Securities Purchase Agreement; provided , however , that, in the event that none of such Investor’s Registrable Securities are then covered by a Registration Statement that is effective and available for use by such Investor, the quotient of (I) divided by (II) in clause (1)(B) herein shall be deemed to equal 1. Under the Registration Rights Agreement, the maximum aggregate liquidated damages payable to an Investor shall be 8% of the aggregate subscription amount paid by such Investor pursuant to the Securities Purchase Agreement. As of January 31, 2012, the company has incurred $95,325 in late fees and $976 in interest expense related to the failure to file the Registration Statement.

~~Capital~~Pursuant to the terms of the Engagement Agreement, for the Placement Agent’s service we paid a cash placement fee equal to 7% of the ~~Resources~~aggregate purchase price paid by Investors that were placed in the Offering, and ~~Liquidity~~we agreed to pay a cash fee equal to 7% of the aggregate cash exercise price to be received by the Company upon the exercise of the Warrants, payable only in the event of the receipt by the Company of any proceeds of such cash exercise. We also agreed to issue the placement agent 423,667 warrants in relation to the offering. The warrants have a term of 5 years and a strike price of $1.00.

InTotal ~~connection~~cash ~~with~~received from the ~~acquisition~~financing ofwas ~~e-biofuels~~$2, ~~LLC as a wholly-owned subsidiary~~921,576 ~~the~~which ~~Company assumed~~is ~~senior debt under~~ the ~~following~~total ~~facilities:~~proceeds ~~(1.) First~~of ~~Merchants Bank~~$3,177,501 ~~N.A.~~less ~~Term~~$222,425 ~~Loans;~~in ~~(2.) Cienna~~broker ~~Capital/Small~~fees ~~Business Administration (“SBA”) Mortgage Note; (3.) SBA facilitated equipment loan~~ and $33,500 ~~(4.) certain~~in ~~Capital~~closing ~~Leases for vehicles~~fees. ~~See Note 5 for further information pertaining to the debt.~~

~~The~~Pursuant ~~Company~~to ~~has also~~the ~~has~~terms ~~obtained~~of ~~certain~~the ~~unsecured~~stock ~~loans~~purchase ~~from~~agreement, ~~various~~the ~~individuals~~purchasers ~~and~~have ~~from~~per ~~its~~share ~~former~~purchase ~~Chairman~~price protection. ~~and~~Under ~~President,~~this ~~Jeffrey T. Wilson~~protection, inuntil the ~~approximate~~three ~~amounts~~year anniversary of $1the closing date,~~466,378~~ ~~and~~if ~~$538~~the Company,~~786~~ asdirectly ofor ~~January 31~~indirectly, ~~2012.~~issues ~~With~~or ~~the~~sells ~~exception~~any shares of common stock or common stock equivalents for a ~~loan~~consideration ~~from~~per share that is less than ~~JAK~~$0.75, ~~Financial~~then immediately after such Dilutive Issuance, ~~which~~the ~~bears~~Company ~~interest~~shall atissue anto ~~annual~~each ~~rate~~purchaser, without the payment of ~~96.5%~~additional consideration, ~~these~~a ~~loans~~number ~~bear~~of ~~market~~additional ~~rates~~shares of ~~interest~~common ~~and~~stock ~~flexible~~equal ~~terms~~to ~~and~~the ~~are~~product ~~generally~~of ~~unsecured.~~(i) the ~~With~~fraction obtained by dividing (A) the ~~exception~~sum of the ~~loan~~number ~~from~~of ~~JAK~~Initial ~~Financial,~~Shares ~~which~~(as ~~was~~defined ~~used~~below) toand ~~fund~~Additional Shares (as defined below) then held by such Purchaser on the ~~Severance, Confidentiality~~date ~~and~~of ~~Nondisclosure~~the ~~Agreement~~Dilutive ~~described~~Issuance inby ~~Note~~(B) the 4,sum ~~these~~of ~~funds~~the ~~have~~number ~~been~~of ~~used~~Initial Shares issued to ~~maintain~~such Purchaser on the ~~Company’s~~Closing ~~biodiesel,~~Date ~~oil~~ and ~~gas~~all ~~and~~Additional ~~mining~~Shares ~~activities~~issued ~~and~~to ~~fund~~such ~~its~~Purchaser ~~overhead~~after ~~requirements.~~the AsClosing ofDate, ~~January~~multiplied by (ii) ~~31,~~the ~~2012,~~difference between (A) the ~~Company~~aggregate ~~has~~number of shares of Common Stock that would have been issued to such ~~accrued~~Purchaser ~~salaries~~at ~~due~~the ~~its~~Closing ~~former~~if ~~Chairman~~the ~~and~~applicable ~~President~~portion of ~~$358,547.~~the ~~Management~~Subscription ~~believes~~Amount ~~that~~was divided by the ~~Company~~Discounted ~~may~~Per ~~need~~Share toPurchase ~~borrow~~Price ~~additional~~minus ~~funds~~(B) the ~~from~~aggregate ~~these~~number ~~sources~~of inshares of Common Stock equal to the ~~future~~sum of the Initial Shares, ~~however~~plus, to the extent there ishas nobeen ~~assurance~~a ~~such~~previous ~~funding~~issuance ~~sources~~of ~~will~~Additional ~~continue~~Shares to ~~make advances~~such toPurchaser, the ~~Company~~number of Additional Shares previously issued to such Purchaser.

AtThis ~~January 31,~~purchase ~~2012,~~price ~~the~~protection ~~Company~~creates ~~had~~a ~~current~~derivative ~~assets~~liability. ofThe ~~$2,803,573,~~Company ~~including~~initially ~~$139,147~~valued ~~in cash~~ and ~~cash~~recorded ~~equivalents,~~this derivative liability at $~~109~~588,~~385~~116 inupon ~~trade~~the ~~and~~closing ~~oil~~of ~~and~~the ~~gas~~financing ~~accounts~~on ~~receivable~~September 21, ~~$504,328~~2011. The inCompany ~~prepaid~~used ~~expenses,~~historical ~~$1,178,750~~trends ~~related~~ to amake ~~non-compete~~an ~~agreement,~~estimate ~~$821,677~~of inhow ~~advanced~~many ~~biofuels~~shares ~~funds~~might ~~due~~have ~~from~~to ~~the~~be ~~USDA~~issued ~~and~~in the ~~IRS~~future ~~and~~under ~~$40,086~~the inprice ~~inventories~~protection provision. ~~The~~ ~~Company~~That ~~had~~estimate ~~current~~was ~~liabilities~~then ofvalued ~~$17,675,474,~~using ~~which~~the ~~resulted~~black inschools ~~negative~~method. ~~working~~As ~~capital~~ of ~~$14~~January 31,~~871~~ 2012,~~901.~~ ~~The~~the value ~~negative~~of ~~working~~the ~~capital~~derivative ~~position~~was isrevalued, ~~comprised~~based ofon ~~senior~~information ~~debt~~at ofJanuary 31, $72012,~~502,780;~~ ~~trade~~at ~~accounts payable of~~ $2281,~~667,812;~~184 ofand ~~accrued~~a ~~expenses payable~~resulting ofgain ~~$4,864,960consisting~~on ~~primarily~~valuation of ~~accrued~~derivative ~~liabilities~~liability ~~for feedstock purchases~~ of $2306,~~745,135,~~932 ~~accrued~~was ~~salaries~~recorded ~~payable~~for to the ~~Company’s~~nine ~~President~~months ofended ~~$358~~April 30,~~547,~~ ~~accrued~~2012. ~~income~~In ~~taxes~~April of ~~$355~~2012,~~000,~~ ~~and~~a settlement ~~oil~~agreement ~~and~~was ~~gas~~reached ~~suspense~~( ~~accounts;~~see ~~notes payable~~details tobelow ) that rescinded the ~~related~~purchase ~~parties~~price ofprotection, ~~$538~~therefore,~~786;~~ ~~and~~there ~~short-term~~is ~~unsecured~~no ~~third~~derivative ~~party~~liability ~~notes~~as ~~payable~~ of $1April 30,~~699,132~~ 2012.

~~Seasonality~~In April 2012, the Company issued an additional 1,148,927 shares to the PIPE participants in connection with the adjustment of the original issuance price under the terms of the stock purchase agreement from $0.75/share to $0.59/share. The strike price on 2,542,001 warrants held by the PIPE participants and placement agent was also adjusted from $1.00 to $0.59.

~~The~~As ~~results~~a result of ~~operations~~the completion of a series of Settlement and Release Agreements effective April 30, 2012, with accredited investors (“Purchasers”) from the Company’s ~~are~~Private ~~seasonal~~Placement previously ~~due~~completed on September 21, 2011, the Company agreed to ~~seasonal~~issue ~~fluctuations~~a total of 19,217,340 shares of its restricted common stock and to reset the strike price on 2,542,001 warrants from $0.59 to $0.14. The Purchasers had alleged various claims against the Company in connection with the ~~market~~Securities ~~prices~~Purchase ~~for~~Agreement ~~biodiesel~~executed in connection with the Private Placement, ~~crude~~including ~~oil~~breach of the agreement, the right to rescind their investment and ~~natural~~failure ~~gas~~to file the required Registration Statement in connection with the issuance of the shares. ~~Due~~As a result of the failure of the Company to ~~these~~file ~~seasonal~~the ~~fluctuations~~Registration Statement, ~~results~~the Purchasers were entitled to monetary damages payable in cash of ~~operations~~up to 8% of their initial investment as well ~~for~~as ~~individual~~the ~~quarterly~~continuing ~~periods~~right ~~may~~to ~~not~~rescind betheir ~~indicative~~investment and receive a return of ~~results,~~those ~~which~~funds. ~~may~~As bea ~~realized~~result onof anthe ~~annual~~execution ~~basis~~of the confidential Settlement and Release Agreements, the Company (i.) ~~Because~~agreed ofto ~~regional~~issue ~~issues~~a ~~with~~total ~~cold~~of ~~weather~~19,217,340 ~~biodiesel~~shares ~~sales~~of ~~are~~its restricted ~~generally~~common ~~lower~~stock in ~~colder~~full ~~climates~~settlement ~~during~~of all claims from those Purchasers; (ii.) amended the ~~winter~~warrant ~~months~~exercise price to $0.14/share ~~The~~for ~~Company~~warrants previously issued to the Purchasers and (iii.) amended the Securities Purchase Agreement to remove ~~estimates~~any ~~that~~requirements ~~seasonal~~to ~~issues~~register ~~related~~any of the Purchasers’ shares, except as a “piggyback” registration and eliminated any future rights previously granted to ~~weather~~the ~~impacts~~Purchasers ~~result~~to participate in asubsequent ~~loss~~equity or debt financings of the Company. All of the shares issued in connection with the Settlement and Release Agreements are restricted and are subject to the holding period requirements and sales volume limitations under Rule 144 of ~~about~~the ~~8-10%~~Securities Act of 1934 as amended. All of the Purchasers executed the Settlement and Releae Agreements. The shares are shown as owed but not issued as of April 30, 2012. The shares were issued subsequent to April 30, 2012.

2422

InflationTable andof Prices Contents

The ~~Company’s revenues and the~~ value of ~~its~~the ~~biofuels~~additional 20,366,267shares ~~oil~~ and ~~natural~~repricing ~~gas~~of ~~and~~the ~~mining~~warrants ~~properties~~from ~~have~~$1.00 ~~been and will be affected by~~to ~~changes~~$0.59 into ~~the~~$0.14 ~~prices~~was ~~for biodiesel~~$2, ~~crude oil~~722, ~~natural gas and gold prices~~753. ~~The~~That ~~Company’s~~amount ~~ability~~was tooffset ~~obtain~~by ~~additional~~the ~~capital~~$281,184 onderivative ~~attractive~~liability ~~terms~~and ~~is also substantially dependent on~~ the ~~price~~$196,631 ofaccrued ~~these commodities. Prices~~ for ~~these~~registration ~~commodities are~~rights ~~subject~~penalties toand ~~significant~~the ~~fluctuations~~difference ~~that~~of ~~are~~$2,244,938 ~~beyond~~was ~~the~~expensed ~~Company’s ability~~ to ~~control~~financing orcharges ~~predict.~~during ~~Government incentives significantly affect~~ the ~~price~~quarter ofended April 30, ~~biodiesel as discussed previously~~2012.

~~Off~~10. ~~Balance~~LEASE ~~Sheet~~OBLIGATIONS ~~Arrangements~~

~~None~~The Company maintains office space at 101 NW 1st Street, Suite 213, Evansville, IN 47708. The Company maintains its current office space under a 3 year lease, ending March of 2014, at the rate of $2,583.33 per month. This lease agreement is currently in default.

~~Contractual~~Our ~~Obligations~~wholly-owned subsidiary, Imperial Chemical Company’s principal executive offices are located at 4533 Brittmoore Road, Houston, TX under a 5 year lease, ending August of 2016, at the rate of $10,500 per month beginning in August 2011. This lease agreement is currently in default.

~~See~~Total ~~above~~future lease payments for the years ended July 31, ~~Capital~~under ~~Resources~~all ~~and~~of ~~Liquidity.~~the above operating leases are:

Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk.


	2012		2013		2014		2015		2016		Thereafter		Total
Total operating lease obligations	$	70,750	$	157,000	$	149,250	$	126,000	$	126,000		0	$	0

~~Commodity~~11. ~~Risk~~ACCRUED EXPENSES

~~Our~~The ~~major~~Company ~~commodity~~has ~~price~~accrued ~~risk~~expenses ~~exposure~~as isfollows: to the prices received for our biodiesel and prices paid for biodiesel feedstock. Realized prices for our production are the spot prices applicable to biodiesel. Purchase prices for biodiesel feedstocks are generally based on spot prices and are under short term contracts, usually month to month. Prices received for biodiesel are volatile and unpredictable and are beyond our control.

The breakeven price for biodiesel assuming that feedstock costs remain constant and do not decrease with decreasing biodiesel prices is approximately $4.13 per gallon. Currently biodiesel prices are approximately $4.60 per gallon. However, it should be noted that as shown earlier, changes in waste grease prices generally mirror biodiesel prices due to the fact that the highest value that can be obtained by marketers of waste greases is currently in sales to biodiesel producers. Consequently, it is likely that as long as abundant supplies of waste greases remain available for biodiesel production, very little impact would actually occur due to price adjustments in biodiesel until such prices reach the marginal price under which such waste greases can be sold as animal feed additives.


	April 30, 2012		July 31, 2011
Revenue in suspense		592,525		592,525
Accrued officer salary—CEO		371,537		377,678
Accrued settlements		0		250,574
Accrued feedstock purchase liabilities		0		2,945,135
Accrued interest on notes		202,563		221,584
Accrued income taxes		355,000		355,000
Other		391,556		441,353

	$	1,913,181	$	5,183,849

~~Government incentives significantly affect the price of biodiesel in the market, as discussed above~~12. ~~The~~FAIR ~~Blender’s~~VALUE ~~Credit~~MEASUREMENTS ($1.00/gallon tax credit received by parties that blend B100 with petroleum diesel) expired at the end of calendar 2011. While the Company generally does not receive this credit, indirectly, the subsidy has an impact on overall biodiesel prices and their relation to petroleum diesel prices. Previously in early 2010, when the Blender’s Tax Credit was allowed to expire, as a result of the mandated requirements imposed by RFS2, RIN values increased over a period of a few months and offset the impact to biodiesel prices by the loss of the credit. RIN values are again increasing as a result of the expired 2011 Blender’s Tax Credit. In December 2011, RIN values were approximately $1.24 per RIN. Current RIN prices are approximately $1.46 per RIN. As a result, we would estimate that the short term impact to a loss of the Blender’s Tax Credit would be reduction in revenues over a three month period.

AWe ~~legislative~~adopted ~~change that~~ASC ~~eliminated~~Topic 820-10, “Fair Value Measurements” at the ~~RFS2~~beginning ~~incentives~~of ~~could~~fiscal ~~have~~year a2010 ~~material~~to ~~adverse~~measure ~~effect~~the fair value of certain of its financial assets required to be measured on a recurring basis. The adoption of ASC Topic 820-10 did not impact our ~~biodiesel~~combined ~~sales~~financial position or results of operations. ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices byin ~~reducing~~active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price ofthat ~~biodiesel~~would be received to sell an ~~equivalent~~asset ~~price~~or ~~for~~paid ~~petroleum~~to ~~diesel~~transfer ~~and~~a byliability ~~eliminating~~in an orderly transaction between market participants on the measurement ~~significant~~date. ~~demand~~A ~~premium~~fair value measurement assumes that ~~biodiesel currently~~the ~~receives~~transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability. The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:

~~Interest~~Level ~~Rate~~1. Valuations ~~Risk~~based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.

WeLevel ~~have~~2. Valuations ~~long-term~~based ~~debt~~on ~~subject~~quoted toprices ~~risk~~for ofsimilar ~~loss~~assets ~~associated~~or ~~with~~liabilities, quoted ~~movements~~prices for identical assets or liabilities in ~~interest~~markets ~~rates~~that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

~~Item~~Level 43. ~~Controls~~Valuations based on inputs that are supported by little or no market activity and ~~Procedures~~that are significant to the fair value of the assets or liabilities. We have no level 3 assets or liabilities.

~~Controls~~23 ~~and Procedures.~~

InTable connection with the preparation of this quarterly report on Form 10-K/A, our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of January 31, 2012, pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation , our Chief Financial Officer concluded that as of January 31, 2012 our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the Security and Exchange Commission’s rules and forms; and to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to management, including our certifying officers, as appropriate, to allow timely decisions regarding required disclosures. Contents

~~Management’s~~The ~~Report~~tables below present reconciliation for all assets and liabilities measured at fair value on ~~Internal~~a ~~Control~~recurring ~~over~~basis ~~Financial~~as ~~Reporting~~of April 30, 2012 and July 31, 2011.

Our Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(c) and (d) of the Exchange Act. Our internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, financial disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable and in accordance with generally accepted accounting principles of the United States of America (GAAP).


	April 30, 2012
	Fair Value Measurements
	Level 1 Quoted Prices in Active Markets Identical Assets		Level 2 Significant Other Observable Inputs		Level 3 Significant Unobservable Inputs		Assets/ Liabilities At Fair Value
Assets:
Cash	$	20,190		—		—	$	20,190
Accounts receivable		—	$	4,157		—	$	4,157
Liabilities
Accounts payable, accrued and other liabilities		—	$	3,015,226		—	$	3,015,226
Notes payable		—	$	8,905,395		—	$	8,905,395

	July 31, 2011
	Fair Value Measurements
	Level 1 Quoted Prices in Active Markets Identical Assets		Level 2 Significant Other Observable Inputs		Level 3 Significant Unobservable Inputs		Assets/ Liabilities At Fair Value
Assets:
Cash	$	900,883		—		—	$	900,883
Accounts receivable		—	$	4,894,073		—	$	4,894,073
Note receivable		—	$	339,429		—	$	339,429
Liabilities
Accounts payable, accrued and other liabilities		—	$	9,392,557		—	$	9,392,557
Notes payable		—	$	14,238,008		—	$	14,238,008

~~Because~~13. ofSale ~~its inherent limitations, a system~~ of ~~internal~~Oil ~~control over financial reporting can provide only reasonable assurance~~ and ~~may~~Gas ~~not~~Properties prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, effectiveness of internal control over financial reporting may vary over time.

25In February 2012, Imperial Petroleum, Inc. closed an Asset Sales Agreement (the “Agreement”) with Eleven Energy Corporation finalizing the sale of the Company’s share, effective January 31, 2012, in the ownership of the Coquille Bay Field located in Plaquemines Parish, Louisiana. Per the terms of the Agreement, the Company received consideration of $100 cash, was relieved of plugging liabilities associated with the wells, and was relieved of the requirement to provide a plugging bond with the State of Louisiana Department of Natural Resources in the amount of $1,400,000.

AIncluded ~~significant~~in ~~deficiency~~the isterms aof ~~control~~the ~~deficiency,~~Agreement orwas ~~combination~~the sale of ~~control~~100% ~~deficiencies, that~~of ~~adversely affects~~ the ~~company’s~~equity ~~ability~~of toHillside ~~initiate,~~Oil ~~authorize,~~and ~~record~~Gas, ~~process,~~an orApproved ~~report~~Operator ~~external~~which had ~~financial~~been ~~data~~operating ~~reliably~~the inCoquille ~~accordance~~Bay ~~with~~facility ~~generally~~as ~~accepted accounting principles such that there is more than~~ a ~~remote~~contract ~~likelihood~~operator ~~that~~for ~~a misstatement of~~ the ~~company’s~~Company. ~~annual~~Prior orto ~~interim~~the ~~financial~~Agreement, ~~statements~~Hillside ~~that~~Oil isand ~~more~~Gas ~~than~~was ~~inconsequential~~owned ~~will~~by ~~not~~Greg ~~be prevented or detected. An internal control material weakness is a significant deficiency~~Thagard, orChairman ~~combination~~ of ~~significant deficiencies,~~the ~~that~~Company’s ~~results~~Board inof ~~more~~Directors. ~~than~~In aconsideration ~~remote~~for ~~likelihood~~the ~~that~~sale ~~a material misstatement~~ of ~~the~~Hillside Oil ~~annual~~and orGas, ~~interim~~Mr. Thagard ~~financial~~received ~~statements will not be prevented or detected~~$100.

AsIn ~~part~~determining ~~of our compliance efforts relative to Section 404 of~~ the ~~Sarbanes-Oxley~~amount ~~Act~~ of ~~2002,~~consideration ~~our~~to ~~management assessed the effectiveness of our internal control over financial reporting as of January 31~~accept, ~~2012. In making this assessment, management used~~ the ~~criteria~~Company ~~set~~reviewed ~~forth in~~ the ~~Internal Control – Integrated Framework by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). We evaluated~~ ~~control~~current ~~deficiencies identified through our test of the design and~~ operating ~~effectiveness~~costs of ~~controls~~maintaining ~~over financial reporting to determine whether~~ the ~~deficiencies,~~assets ~~individually~~and ~~or in combination, are significant deficiencies or material weaknesses. In performing~~ the ~~assessment,~~estimated ~~our~~costs ~~management~~associated ~~had~~with ~~identified~~returning ~~two material weaknesses in internal control over financial reporting existing as of July 31, 2011 which included (i.) a segregation of duties issue related to a lack of accounting personnel and (ii.)~~ the ~~inability~~assets ~~of the Company’s prior accounting system~~ to ~~adequately~~an ~~track~~acceptable, ~~real-time~~operational ~~purchases of feedstock and sales of biodiesel on a contract-by-contract basis~~status. InThe ~~connection~~monthly ~~with~~cost ~~the remediation~~ of ~~these issues,~~maintaining the ~~Company~~assets ~~took~~totaled ~~the~~approximately ~~following steps: (i.) we added additional accounting personnel~~$60, ~~including a Chief Financial Officer, a Controller and a logistics individual at e-biofuels, and (ii~~000.) weAn ~~implemented~~independent athird ~~new accounting system at e-biofuels~~party toestimated ~~allow our accounting staff to more effectively track sales and inventory and to improve~~ the ~~overall~~costs ~~accuracy~~ of ~~our~~restoring ~~reporting~~the ~~and~~assets weto ~~consolidated~~a ~~our~~level ~~overall~~necessary ~~accounting~~to ~~functions~~continue ~~under~~production ~~the control of our accounting staff~~ at ~~e-biofuels~~approximately ~~and under the direction of our new CFO. Our evaluation of the significance of each deficiency and their remediation included both quantitative and qualitative factors. Based on that evaluation~~$750,000 ~~the~~to ~~Company’s management concluded that as of January 31~~$1, ~~2012~~000, ~~and as of the date that the evaluation of the effectiveness of our internal controls and procedures was completed, the Company’s internal controls are now effective~~000.

~~Changes~~The infixed ~~Internal~~assets ~~Controls~~of the Coquille Bay Field had a net book value of $4,240,783 and had a related asset retirement obligation of $472,855. Cash proceeds from the sale were $100. During the nine months ended April 30, 2012, the Company recognized a loss of $3,767,827 relating to this transaction.

No14. ~~changes~~DISCONTINUED ~~were~~OPERATIONS ~~made during the quarter ended January 31, 2012.~~

26On April 4, 2012, the Registrant’s wholly-owned subsidiary, e-Biofuels, LLC filed a voluntary petition for protection from creditors under Chapter 7 of Title 11 of the Bankruptcy Code with the United States Bankruptcy Court for the Southern District of Indiana under Case Number 12-03816-FJO-7A. The Court appointed Richard E. Boston, 27 North 5th St., Richmond, IN 47374 as U.S Trustee on that date. The e-Biofuels subsidiary represented approximately 99.6% of the Company’s revenues. In the filing, e-Biofuels listed total assets of $11,354,800.51 and total liabilities of $17,321,036.88. Intercompany accounts receivable due to e-Biofuels from the Company and its subsidiaries were listed as follows in

~~PART~~24 ~~II OTHER INFORMATION~~

ItemTable 1.of Legal Proceedings.Contents

~~See~~ ~~Note~~the 7bankruptcy ~~above~~petition: Imperial Petroleum, Inc.: $46,542.67; Arrakis Oil Recovery, LLC: $271,311.71; and Imperial Chemical Company: $60,934.75 for a total of $378,788.93. The Company guaranteed the debt of e-Biofuels to First Merchants Bank in conjunction with the acquisition.

~~Item~~The ~~1A.~~table ~~Risk~~below ~~Factors~~shows the portion of the balance sheet attributable to e-Biofuels at 7-31-2011.

In addition to the other information set forth elsewhere in this Form 10-Q, you should carefully consider the following factors when evaluating the Company. An investment in the Company is subject to risks inherent in our business. The trading price of the shares of the Company is affected by the performance of our business relative to, among other things, competition, market conditions and general economic and industry conditions. The value of an investment in the Company may decrease, resulting in a loss. The risk factors listed below are not all inclusive.


	e-Biofuels			Total Company
	July 31, 2011			July 31, 2011
Assets
Cash	$	626,325		$	1,307,654
Total Current Assets		6,634,718			8,162,140
Net Property, Plant and Equipment		9,246,996			14,158,113
Other Assets		950,535			2,214,468

Total Assets		16,832,249			24,534,720

Liabilities and Stockholder’s Equity
Total Current Liabilities		17,799,475			21,095,322
Long Term Liabilities		2,535,243			3,008,098
Total Stockholder’s Equity		(3,502,470	)		431,300
Total Liabilities and Stockholder’s Equity		16,832,249			24,534,720

AnAs ~~investment in us involves~~ a ~~high~~result ~~degree~~ of ~~risk and may result in~~ the ~~loss~~bankruptcy offiling ~~all or part~~ of ~~your~~e-Biofuels, ~~investment. You~~the ~~should~~Company ~~consider~~recorded ~~carefully~~a ~~all~~gain of ~~the information set out in this document and the risks attaching to an investment in us~~$5, ~~including~~369,281 in ~~particular, the risks described~~ ~~below. The information below does not purport to be an exhaustive list and should be considered in conjunction with~~ the ~~contents~~quarter ofended ~~the~~April 30, ~~rest of this document~~2012.

We15. ~~have~~SUBSEQUENT aEVENTS ~~history of operating losses.~~

WeThe ~~have~~Company ~~had~~has aevaluated ~~history~~events ofand ~~net~~transactions for potential recognition or disclosure through the date these ~~operating~~financial ~~losses~~statements were issued. There iswere no ~~assurance~~subsequent ~~that~~events ~~our~~requiring ~~current~~recognition ~~fiscal~~or ~~year~~disclosure ~~results~~in ~~can~~these befinancial ~~sustained~~statements other then as noted below.

~~The~~In ~~federal~~April ~~excise~~of ~~tax credit for biodiesel is set to expire on December 31~~2012, ~~2011 and Congress has not enacted legislation to extend this credit. If~~ the ~~credit~~Company isissued ~~not renewed~~600,000 ~~our~~warrants ~~cost~~with ofa ~~producing~~strike ~~biodiesel may increase and our sales~~ price ~~for~~of ~~biodiesel~~$0.15 ~~could be~~to ~~reduced,~~its ~~which~~board ~~could have an adverse effect on our financial position~~members.

InSubsequent ~~October~~to ~~2004,~~April ~~Congress passed a biodiesel tax incentive~~30, ~~structured as a federal excise tax credit~~2012, ~~as part of~~ the ~~American~~Company ~~Jobs~~issued Creation Act of 2004. The credit amounted to one cent for each percentage point of vegetable oil or animal fat biodiesel that was blended with petrodiesel (and one-half cent for each percentage point of recycled oils and other non-agricultural biodiesel)19, ~~subsequently amended and increased to one cent. For example~~217,340 ~~blenders~~shares ~~that~~in ~~blended~~connection ~~B20~~with ~~made~~the ~~from~~Settlement ~~soy, canola~~ and ~~other~~Release ~~vegetable~~Agreement ~~oils~~with ~~and animal fats received a 20¢ per gallon excise tax credit. The tax incentive generally was taken by petroleum distributors and was passed on to~~ the ~~consumer. It~~Purchasers ~~was~~of ~~designed to lower~~ the ~~cost~~company’s ofprivate ~~biodiesel~~placement tocompleted ~~consumers in both~~September ~~taxable~~21, ~~and tax-exempt markets~~2011. ~~The~~ ~~tax~~(See ~~credit~~Note ~~was~~9). ~~scheduled~~The toshares ~~expire~~were atowed ~~the end of 2006,~~ but ~~was~~not ~~extended~~issued inas ~~the Energy Policy Act~~ of ~~2005~~April ~~to December 31~~30, ~~2008 and most recently it was extended to December 31, 2011~~2012.

~~Congress~~The ~~did~~Company ~~not~~entered ~~enact~~into ~~any~~a ~~legislation~~Settlement ~~to extend this tax credit beyond December 31, 2009~~ and ~~it expired at that time. In~~ ~~December~~Release ~~2009,~~Agreement ~~the~~with ~~United States House of Representatives passed~~ a ~~bill~~consultant ~~extending this credit~~ to ~~December 31, 2010. On March 10, 2010,~~ the ~~United~~Company ~~States~~under ~~Senate~~which ~~passed a similar bill as part of~~ the ~~American~~Company ~~Workers,~~agreed ~~State and Business Relief Act, H.R. 4213. In addition~~ to ~~extending~~issue ~~the~~a ~~credit~~Note toPayable ~~December 31,~~in ~~2011, both bills retroactively apply~~ the ~~credit~~amount ~~to the beginning~~ of ~~2010. If the tax credit is not renewed~~$470,000 ~~our~~secured ~~biodiesel sales prices could potentially decrease~~ by ~~$1.00~~the ~~per~~Company’s ~~gallon. If~~interest ~~biodiesel~~in ~~feedstock~~its ~~costs~~oil dosands ~~not~~project ~~decrease~~in ~~significantly~~Kentucky ~~relative~~and topayable ~~biodiesel~~monthly ~~prices,~~over we3 ~~will~~years beginning ~~realize a negative gross margin on biodiesel.~~October ~~As a result~~1, ~~we would cease producing biodiesel, which could have an adverse effect on our financial condition~~2012.

The ~~current~~Company ~~volatility~~issued 52,238 shares in ~~global~~connection ~~economic~~with ~~conditions~~a Settlement and ~~the~~Release ~~financial~~Agreement to a ~~markets~~former ~~may~~private ~~adversely~~note ~~affect~~holder ~~our~~of ~~industry,~~the ~~business~~Company ~~and~~in ~~results~~connection ofwith ~~operations~~a default notice received by the Company.

The ~~volatility~~Company ~~and disruption to the~~entered ~~capital~~into ~~and~~an ~~credit~~investor ~~markets~~awareness ~~since~~campaign ~~mid-2008~~for ~~have~~a ~~affected~~period ~~global~~of ~~economic~~two ~~conditions,~~years ~~resulting~~beginning in ~~significant~~early ~~recessionary~~May ~~pressures~~2012 ~~and~~valued ~~declines~~at in$300,000 ~~consumer confidence and economic growth. These conditions have led~~ to ~~economic~~assist ~~contractions in~~ the ~~developed~~Company ~~economies and reduced growth rates~~ in ~~the~~providing ~~emerging~~public ~~markets. Despite~~relations ~~fiscal~~ and ~~monetary~~media ~~intervention,~~support. itIn isconnection ~~possible~~with that ~~further declines in consumer spending and global growth rates may occur in the foreseeable future. Reduced consumer spending may cause changes in customer order patterns including order cancellations~~agreement, ~~and changes in~~ the ~~level~~Company ofissued ~~inventory held by our customers~~2, ~~which may adversely affect our industry~~000, ~~business and results of~~000 ~~operations. The~~shares ~~impact~~ of ~~the~~its ~~credit~~restricted ~~crisis~~common stock and ~~economic~~400,000 ~~slowdown~~warrants ~~will~~exercisable ~~vary~~for bya ~~region~~period ~~and country. The diversity~~ of ~~our~~two ~~geographic~~years ~~customer~~at ~~and operating footprint limits our reliance and exposure to any single economy~~$0.25/share.

~~These~~On May 25, ~~conditions~~2012, ~~have~~the ~~also~~Company ~~resulted~~received in a ~~substantial~~subpoena ~~tightening~~for of the ~~credit~~period ~~markets~~of January 1, ~~including~~2010 ~~lending~~to bythe ~~financial~~present, ~~institutions~~as ~~and other~~part ~~sources~~ of ~~credit~~a ~~and~~fact-finding ~~liquidity. This~~inquiry ~~tightening~~from of the ~~credit~~Division ~~markets~~of ~~has~~Enforcement ~~increased~~of the ~~cost~~Securities ~~of capital~~ and ~~reduced~~Exchange ~~the~~Commission ~~availability~~(“SEC”). ofThe ~~credit. We~~subpoena requires ~~cannot~~us ~~predict~~to ~~how~~produce ~~long~~numerous ~~the~~documents ~~current~~related ~~economic~~to ~~and~~the ~~capital~~Company and ~~credit~~our ~~market~~wholly-owned ~~conditions will~~subsidiary, ~~continue~~E-Biofuels, ~~whether~~LLC. ~~they~~The ~~will~~subpoena ~~deteriorate~~demands ~~and~~the ~~which~~production ~~aspects~~ of ~~our~~documents ~~products~~related orto ~~business~~the ~~could~~operations, beaccounting, ~~adversely~~business ~~affected. However~~practices, ifpurchase ~~current~~and ~~levels~~sales of biodiesel, ~~economic~~tax ~~and~~credits ~~capital~~ and ~~credit~~incentives ~~market~~from ~~disruption~~any ~~and~~state, ~~volatility~~federal ~~continue~~ or ~~worsen~~agency, ~~there~~the ~~can be~~production noprocess ~~assurance~~of ~~that~~the ~~we will not experience an adverse impact~~biodiesel, ~~which may be material~~including, ~~on our business,~~ the ~~cost~~purchase of ~~and~~any ~~access~~products related to ~~capital~~the ~~and~~manufacturing ~~credit~~of ~~markets~~biodiesel, ~~and~~financing, ~~our~~stock ~~results of operations. In addition~~issuances, weexecutives ~~monitor the financial condition of our~~and ~~customers on a regular basis based on public information or data provided directly to us~~employees. If ~~the~~The ~~financial~~purpose ~~condition~~ of ~~one~~the ofsubpoena ~~our~~is ~~major~~to ~~customers~~determine ~~was~~whether ~~negatively~~any ~~impacted~~federal bylaws ~~market~~have ~~conditions~~been ~~or liquidity, we could be adversely impacted in terms of accounts receivable and/or inventory specifically attributable to them~~violated.

27In addition, on May 24, 2012, the Company and E-Biofuels, LLC, received subpoenas in connection with a Grand Jury investigation into the activities of the Company and E-Biofuels, LLC, for the period of January 1, 2006 to the present. In conjunction with the Grand Jury investigation, on May 24, 2012, the United States District Court of the Southern District of Indiana authorized search warrants to obtain records, documents and evidence related to the ongoing investigation. The search warrants were executed on May 24, 2012.

The ~~industries~~Company inintends ~~which~~to wefully ~~compete~~cooperate with the investigations. Currently, the Company cannot estimate the ultimate financial impact, if any, resulting from the investigations. In the event that violations of state or federal are ~~highly~~determined, ~~competitive~~such determination could have a material negative impact on the operations of the Company. In addition, if it is determined that the Company’s subsidiary, E-biofuels, LLC, received improper tax credits for the sale of biodiesel, then the results could have a material impact on the Company. (See Form 8-K dated May 25, 2012 incorporated herein by reference).

~~The~~First ~~biodiesel~~Merchants ~~industry~~Bank, asNational ~~well~~Association, asv. ~~the~~Craig ~~oil~~D. ~~and gas business~~Ducey, ~~are~~Chad ~~highly competitive~~D. ~~There~~ isDucey, ~~competition~~Brian Carmichael, ~~within~~R. ~~these~~Bruce ~~industries~~Carmichael and ~~also~~ ~~with~~Imperial ~~other industries in supplying the energy~~Petroleum, ~~fuel~~Inc.; ~~and~~Marion ~~chemical~~Superior ~~needs~~Court; ofCause ~~industry~~: ~~and individual consumers~~49D14-1204-PL-017213. We ~~will~~First ~~compete~~Merchants ~~with~~Bank, ~~other firms in~~ the ~~sale~~senior orlender ~~purchase~~to ~~of various goods or services in many national and international markets. We will compete with large national and multi~~e-~~national~~Biofuels, ~~companies~~LLC ~~that~~filed ~~have~~suit ~~longer~~to ~~operating~~recover ~~histories~~$7, ~~greater financial~~365,167 ~~technical~~plus ~~and~~accrued ~~other~~interest, ~~resources and greater name recognition than we do~~etc. In ~~addition,~~from ~~we will compete with~~the ~~several~~Guarantors ~~smaller companies capable~~ of ~~competing effectively on a regional or local basis, and~~ the ~~number~~debt of ~~these~~e-Biofuels, ~~smaller~~LLC ~~companies~~as ~~is increasing. Our competitors may be able to respond more quickly to new or emerging technologies and services and changes in customer requirements. As~~ a result of ~~competition,~~its webankruptcy ~~may~~filing ~~lose~~on ~~market share or be unable to maintain or increase prices for our products and/or services or to acquire additional business opportunities~~April 4, ~~which~~2012. ~~could~~The ~~have~~Company aexecuted ~~material adverse~~an ~~effect~~Indemnity onAgreement ~~our~~with ~~business,~~the ~~financial~~other ~~condition,~~co-guarantors ~~results~~ of ~~operations~~the ~~and~~e-Biofuels ~~cash~~debt ~~flows. Although~~at wethe ~~will~~time ~~employ~~of ~~all~~the ~~methods~~acquisition of ~~competition~~e-Biofuels ~~which are lawful~~ and ~~appropriate for such purposes, no assurances can be made that they will be~~ ~~successful. A~~has ~~key~~received ~~component~~demands offrom ~~our competitive position, particularly given~~ the ~~expected commodity~~co-~~based~~guarantors ~~nature~~under ofthe ~~many~~agreement. ofThe ~~our~~Company ~~products,~~intends ~~will be our ability~~ to ~~manage~~vigorously ~~expenses~~defend ~~successfully,~~itself ~~which~~in ~~requires~~this ~~continuous management focus on reducing unit costs and improving efficiency~~lawsuit. No ~~assurances can be given that we will be able to successfully manage such expenses.~~

~~Our~~25 competitive position in the markets in which we participate is, in part, subject to external factors in addition to those that we can impact. Natural disasters, changes in laws or regulations, war or other outbreak of hostilities, or other political factors in any of the countries or regions in which we operate or do business, or in countries or regions that are key suppliers of strategic raw materials, could negatively impact our competitive position and our ability to maintain market share.

FluctuationsTable in commodity prices may cause a reduction in the demand or profitability of the products or services we produce. Contents

~~Prices~~Item ~~for alternative fuels tend to fluctuate widely based on a variety of political and economic factors~~2. ~~These price~~ ~~fluctuations~~Management’s ~~heavily~~Discussion ~~influence the oil~~ and ~~gas~~Analysis ~~industry. Lower energy prices for existing products tend to limit the demand for alternative forms~~ of ~~energy~~Financial ~~services~~Condition and ~~related~~Results products and infrastructure. Historically, the markets for alternative fuels have been volatile, and they are likely to continue to be volatile. Wide fluctuations in alternative fuel prices may result from relatively minor changes in the supply of ~~and demand for oil and natural gas, market uncertainty and other factors that are beyond our control, including:~~ Operations.

•RESULTS ~~worldwide~~OF ~~and~~OPERATIONS ~~domestic supplies of oil and gas;~~

•The factors which most significantly affect the ~~price~~Company’s results of operations are (i) the sale prices of crude oil and~~/or~~ ~~availability~~natural gas, (ii) the level of ~~biodiesel~~crude ~~feedstocks;~~oil and natural gas sales, (iii) the level of direct and lease operating expenses, and (iv) the level of and interest rates on borrowings. The same factors listed above will apply to the sale of minerals and metals mined by the Company. As the Company initiates production on its mining properties, results of operations will be affected by: (i) commodity prices for copper and gold, (ii) the quantity and quality of the ores recovered and processed, and (iii) the level of operating expenses associated with the mining operations.

•As ~~weather~~a ~~conditions;~~result of the collapse of the world economies into recession, crude oil and natural gas prices decreased significantly during fiscal 2009 from 2008. Commodity prices rebounded in fiscal 2010 with West Texas Intermediate (“WTI”) prices quoted at approximately $95/Bbl for oil and $3.25 per Mmbtu for natural gas at April 30, 2011. Since that time oil prices have increased as a result of unrest in the Middle East and natural gas prices have declined slightly due to over-supply in the last few years. Much volatility exists in world oil and gas pricing due to factors in the Middle East and uncertainties with stability. If pricing remains high, by demand or artificial methods employed by the oil producing countries, the impact will be positive on cash flow and the exploitation of existing properties owned by the Company, however, continued high prices will reduce the availability of quality acquisitions and could change the Company’s future growth strategy. At the present time the Company believes it has a substantial inventory of quality development opportunities, particularly related to its oil sands business, to sustain its growth strategy without additional acquisitions. The Company expects oil and gas prices to continue to widely fluctuate and to be influenced by global economic turmoil, Asian economies and potential disruptions in supplies, in particular events in the Middle East and North Korea.

•Prices for gold had remained relatively stable and has edged significantly higher during the ~~level~~past several years and had generally reflected the relatively low inflation rates predominate in the economies of ~~consumer~~the ~~demand;~~industrialized nations. Recently, gold prices began a significant upward price adjustment, which may reflect a shift from the traditional dependence upon gold as a financial hedge against inflation and most likely reflects a “flight to gold” in the face of global economic turmoil. Current spot prices for gold are approximately $1,590.00 per ounce and are expected to continue to remain at or near those levels. The Company does not expect to realize any substantial increase in the price of gold in the future.

•Copper prices have fluctuated dramatically since the ~~price~~Company’s acquisition of its copper property with prices ranging from a low of about $0.65 per pound in August 1993 to about $4.00 per pound today. Currently, copper prices have edged significantly downward. Wide variations in copper prices have resulted from the increased demand for electrical wire and copper related products as a result of the continued high growth rate of the economies of the industrialized nations and as a result of periodic reductions in the availability of ~~alternative~~scrap ~~fuels;~~copper for recycling. Continued fluctuations in the spot price for copper are expected to result from variations in the availability of scrap copper and the continued strong demand from emerging nations.

•Three months ended April 30, 2012 compared to the ~~availability~~three ofmonths ~~pipeline~~ended ~~and~~April 30, ~~refining~~2011. ~~capacity;~~

•Revenues for the ~~price~~three ~~and~~months ~~level~~ending April 30, 2012 were $2,015 compared to revenues of ~~foreign~~$64,684 ~~imports;~~for the comparable quarter ended April 30, 2011, excluding revenues from the discontinued biofuels operations. We have only limited interests in oil and gas properties, all operated by others, and as a result we do not expect the Company to have significant revenues until such time as our oil sand operations are commenced later this summer.

•Total ~~domestic~~direct expenses for the quarter ended April 30, 2012 were $0 compared to $310,191 for the same quarter ended a year earlier. Direct operating expenses have decreased due to the sale of Coquille Bay. We expect direct costs to increase significantly once oil sand operations commence. General and ~~foreign~~administrative ~~governmental~~costs (“G&A”) ~~regulations~~for the quarter ended April 30, 2012 were $609,313 compared to $567,194 for the quarter ended April 30, 2011. We expect G&A costs to increase once oil sand operations are commenced. Interest costs were $2,268,300 for the quarter ended April 30, 2012 compared to $119,068 for the prior quarter. Interest costs associated with the guarantee of the First Merchants debt of e-Biofuels is included in the current quarter as well as the financing expenses associated with the PIPE deal’s re-pricing of the shares and ~~taxes;~~warrants.

•The ~~the~~Company ~~ability~~incurred a net after tax income of $1,080,612 ($0.026 per share) ($2,223,304 from continuing activities and ($1,142,692) from discontinued activities) for the ~~members~~quarter ended April 30, 2012 compared to an after tax net income of $2,368,168 ($0.09 per share) (($939,391) from continuing activities and $3,307,559 from discontinued activities) for the ~~Organization~~prior year quarter ended April 30, 2011. The net gain for the current quarter is primarily the result of ~~Petroleum~~the ~~Exporting~~gain ~~Countries~~as toa ~~agree~~result toof ~~and~~the ~~maintain~~bankruptcy ~~oil~~filing ~~price~~of ~~and~~e-Biofuels, ~~production~~LLC of ~~controls;~~$5,369,281.

•Nine ~~political~~months ~~instability~~ended orApril 30, ~~armed~~2012 ~~conflict~~compared into ~~oil-producing~~the ~~regions;~~Nine ~~and~~months ended April 30, 2011.

•Revenues for the ~~overall~~nine ~~global~~months ~~economic~~ending ~~environment~~April 30, 2012 were $149,540 compared to revenues of $168,863 for the comparable period ended April 30, 2011, excluding revenues from the discontinued biofuels operations. We have only limited interests in oil and gas properties, all operated by others, and as a result we do not expect the Company to have significant revenues until such time as our oil sand operations are commenced later this summer.

~~These~~Direct ~~factors~~expenses ~~and~~were ~~the~~$424,314 ~~volatility~~for of the ~~commodity~~nine ~~markets~~months ~~make~~ended itApril 30, ~~extremely~~2012 ~~difficult~~compared to $664,234 ~~predict~~for ~~future~~the ~~alternative~~same ~~fuel~~period ~~price~~ended ~~movements~~April 30, ~~with any certainty~~2011. ~~There~~ ~~may~~Operating beexpenses aare ~~decrease~~expected into ~~the~~increase ~~demand~~as ~~for our~~oil ~~products~~sand oroperations ~~services~~commence ~~and~~later ~~our~~this ~~profitability could be adversely affected~~summer.

We26 ~~are reliant on certain strategic raw materials for our operations.~~

WeTable are reliant on certain strategic raw materials (such as soybean oil, waste greases and fats and methanol) for our operations. We have implemented certain risk management tools, such as hedging, as appropriate, to mitigate short-term market fluctuations in raw material supply and costs. There can be no assurance, however, that such measures will result in cost savings or that all market fluctuation exposure will be eliminated. In addition, natural disasters, changes in laws or regulations, war or other outbreak of hostilities, or other political factors in any of the countries or regions in which we operate or do business, or in countries or regions that are key suppliers of strategic raw materials, could affect availability and costs of raw materials. Contents

~~While~~General ~~temporary shortages of raw materials may occasionally occur, these items have historically been sufficiently available to cover current requirements. However, their continuous availability~~ and ~~price~~administrative ~~are~~costs ~~impacted~~were ~~by natural disasters~~$4, ~~plant interruptions occurring during periods of high demand~~102,162 ~~domestic~~for ~~and~~the ~~world~~nine ~~market~~months ~~and~~ending ~~political conditions~~April 30, ~~changes~~2012 incompared ~~government~~to ~~regulation~~$989,718 ~~and~~for ~~war~~the orsame ~~other~~period ~~outbreak~~a ofyear ~~hostilities~~earlier. In ~~addition,~~G&A asexpenses weare ~~increase~~expected ~~our~~to ~~biodiesel~~continue ~~capacity,~~to weincrease ~~will~~in ~~require~~subsequent ~~larger~~quarters ~~supplies~~as ofthe ~~raw~~Company’s ~~materials~~oil ~~which~~sand ~~have~~operations ~~not~~commence. ~~yet~~Interest ~~been~~expense ~~secured and may not be available~~ for the ~~foregoing~~nine ~~reasons,~~months ~~or may~~was be$2,470,641 ~~available~~in ~~only~~2012 atcompared ~~prices higher than current levels. Our operations or products may~~to $356,320 atfor ~~times,~~the besame ~~adversely~~period ~~affected~~in ~~by these factors~~2011.

28The Company had an after-tax net loss of $7,082,083 ($0.18 per share) (($5,215,261) from continuing activities and ($1,866,812) from discontinued activities) for the nine months ended April 30, 2012 compared to a net income of $2,801,720 ($0.12 per share)(($1,369,436) from continuing activities and $4,171,156 from discontinued activities) for the comparable nine months ended April 30, 2011. The net loss for the nine months ending April 30, 2012 is primarily the result of the loss due to the sale of Coquille Bay and the write down and settlement entered into with respect to the non-compete agreement and offset somewhat by the gain as a result of the bankruptcy filing of e-Biofuels, LLC.

~~Our ability to market our biodiesel may be impaired by capacity constraints,~~FINANCIAL ~~modifications~~CONDITION ~~to third party facilities and by weather issues.~~

WeCapital ~~generally~~Resources ~~sell our biodiesel to large retail outlets such as Element Renewable, Fusion Renewables, Flying J, Pilot~~ and ~~others~~Liquidity and much of that product is transported by truck. As such adverse weather conditions or modifications to facilities owned by others could limit our ability to sell our products and result in increased inventories or plant shut-downs.

~~Changes~~In inconnection ~~technology~~with ~~may~~the ~~render~~acquisition ~~our~~of ~~products~~e-biofuels, orLLC ~~services~~as a wholly-owned subsidiary, the Company executed a guarantee and indemnity agreement with respect to senior debt under the First Merchants ~~obsolete~~Bank, N.A. Term Loans. The outstanding amount due under those notes payable is $7,365,167 as of April 30, 2012. See Note 5 for further information pertaining to the debt.

The ~~alternative~~Company ~~fuel~~has ~~industry~~also ~~may~~has beobtained ~~substantially~~certain ~~affected~~unsecured byloans ~~rapid~~from various individuals, companies and ~~significant~~from ~~changes~~its ~~in technology. Examples~~former ~~include~~Chairman ~~competitive~~and ~~product~~current ~~technologies~~President, ~~such~~Jeffrey asT. ~~green~~Wilson, ~~gasoline~~in the approximate amounts of $933,167 and ~~renewable~~$587,061 ~~diesel~~as ~~produced~~of ~~from~~April 30, ~~catalytic~~2012. ~~hydroforming~~With the exception of ~~renewable~~a ~~feedstock~~loan ~~oils~~from ~~and~~JAK ~~competitive~~Financial, ~~process~~these ~~technologies~~loans ~~such~~bear asmarket ~~advanced~~rates ~~biodiesel continuous~~of ~~reactor~~interest and ~~washing~~flexible ~~designs~~terms ~~that~~and ~~increase~~are ~~throughput~~generally unsecured. ~~These~~ ~~changes~~With ~~may~~the ~~render~~exception ~~obsolete~~of ~~certain~~the ~~existing~~loan ~~products~~from JAK Financial, ~~energy~~which ~~sources~~was used to fund the Severance, ~~services~~Confidentiality and ~~technologies~~Nondisclosure ~~currently~~Agreement ~~used~~described byin ~~us. We~~Note ~~cannot~~4, ~~assure~~these ~~you~~funds ~~that~~have ~~the~~been ~~technologies~~ used by orto ~~relied~~maintain ~~upon~~the byCompany’s usactivities ~~will~~and ~~not~~fund beits ~~subject~~overhead torequirements. ~~such~~As ~~obsolescence.~~of April ~~While~~30, we2012, ~~may~~the ~~attempt~~Company tohas ~~adapt~~accrued ~~and~~salaries due ~~apply~~its ~~the~~former ~~services~~Chairman ~~provided~~and bycurrent usPresident toof ~~newer technologies~~$371,537. weManagement ~~cannot~~believes ~~assure~~that ~~you~~the ~~that~~Company wemay ~~will~~need ~~have~~to ~~sufficient~~borrow ~~resources~~additional tofunds ~~fund~~from these ~~changes~~sources ~~or that~~in ~~these~~the ~~changes~~future, however there is no assurance such funding sources will ~~ultimately~~continue ~~prove~~to ~~successful~~make advances to the Company.

~~Failure~~At toApril 30, ~~comply~~2012, ~~with~~the ~~governmental~~Company ~~regulations~~had ~~could~~current ~~result~~assets of $887,894, including $20,190 in cash and cash equivalents, $4,157 in trade and oil and gas accounts receivable, $825,125 in non-compete agreements, and $28,106 in prepaid expenses. The Company had current liabilities of $11,920,621, which resulted in negative working capital of $11,032,727. The negative working capital position is comprised of senior debt under the ~~imposition~~First Merchants guarantee of ~~penalties~~$7,365,167; ~~fines~~trade oraccounts ~~restrictions~~payable onof ~~operations~~$981,225; ~~and~~of ~~remedial~~accrued expenses payable of $1,913,181 consisting primarily of accrued liabilities for accrued salaries payable to the Company’s President of $371,537, accrued income taxes of $355,000, and oil and gas suspense accounts; notes payable to the Company’s President of $587,061; and short-term unsecured third party notes payable of $933,167.

~~The~~Seasonality biofuel industry subject to extensive federal, state, local and foreign laws and regulations related to the general population’s health and safety and those associated with compliance and permitting obligations (including those related to the use, storage, handling, discharge, emission and disposal of municipal solid waste and other waste, pollutants or hazardous substances or waste, or discharges and air and other emissions) as well as land use and development. Existing laws also impose obligations to clean up contaminated properties or to pay for the cost of such remediation, often upon parties that did not actually cause the contamination. Compliance with these laws, regulations and obligations could require substantial capital expenditures. Failure to comply could result in the imposition of penalties, fines or restrictions on operations and remedial liabilities. These costs and liabilities could adversely affect our operations.

~~Changes~~The inresults ~~environmental~~of ~~laws~~operations ~~and~~of ~~regulations~~the ~~occur~~Company ~~frequently,~~are ~~and~~seasonal ~~any~~due ~~changes~~to ~~that~~seasonal ~~result~~fluctuations in ~~more~~the ~~stringent~~market orprices ~~costly~~for ~~waste~~crude ~~handling, storage,~~oil ~~transport,~~and ~~disposal~~natural orgas. ~~cleanup~~Due ~~requirements could require us~~ to ~~make~~these ~~significant~~seasonal ~~expenditures~~fluctuations, toresults ~~attain~~of ~~and~~operations ~~maintain~~for individual ~~compliance~~quarterly ~~and~~periods may ~~otherwise~~not ~~have~~be aindicative ~~material~~of ~~adverse~~results, ~~effect~~which onmay ~~our~~be ~~business~~realized ~~segments in general and~~ on ~~our~~an ~~results~~annual ~~of operations, competitive position or financial condition~~basis. We ~~are~~Because ~~unable to predict the effect~~ of ~~additional~~regional ~~environmental~~issues ~~laws~~with ~~and~~cold ~~regulations~~weather, ~~which~~oil sales may be ~~adopted~~impacted in the future, ~~including~~due ~~whether~~to ~~any~~delays ~~such~~in ~~laws~~mining oractivity ~~regulations~~associated ~~would~~with ~~materially~~the oil ~~adversely~~sands ~~increase our cost of doing business or affect our operations in any area~~project.

~~Under~~Inflation ~~certain environmental laws~~ and ~~regulations,~~ wePrices could be held strictly liable for the removal or remediation of previously released materials or property contamination regardless of whether we were responsible for the release or contamination, or if current or prior operations were conducted consistent with accepted standards of practice. Such liabilities can be significant and, if imposed, could have a material adverse effect on our financial condition or results of operations.

~~Our~~The ~~biofuels~~Company’s ~~operations~~revenues ~~may~~and the value of its oil and natural gas and mining properties have been and will be ~~harmed~~affected ifby changes in the ~~government~~prices ~~were~~for tocrude ~~change~~oil, ~~current~~natural ~~laws~~gas and ~~regulations~~gold prices. The Company’s ability to obtain additional capital on attractive terms is also substantially dependent on the price of these commodities. Prices for these commodities are subject to significant fluctuations that are beyond the Company’s ability to control or predict.

~~Alternative~~Off ~~fuels~~Balance ~~businesses~~Sheet ~~benefit~~Arrangements from tax credits and government subsidies and is highly regulated. If any of the state or federal laws and regulations relating to the tax credits, government subsidies, RFS2, RINS change, the ability to recover capital expenditures from our alternative fuels business could be harmed. Our biofuels platform is subject to federal, state, and local laws and regulations governing the application and use of alternative energy products, including those related specifically to biodiesel. For instance, biodiesel products benefit from being the only alternative fuel certified by the U.S. Environmental Protection Agency that fulfills the requirements of Section 211(B) of the Clean Air Act. If agency determinations, laws, and regulations relating to the application and use of alternative energy are changed, the marketability and sales of biodiesel production could be materially adversely affected.

~~Market conditions or transportation impediments may hinder access to raw goods and distribution markets~~None.

~~Market~~Contractual ~~conditions,~~Obligations the unavailability of satisfactory transportation, or the location of our manufacturing complex from more lucrative markets may hinder our access to raw goods and/or distribution markets. The availability of a ready market for biodiesel depends on a number of factors, including the demand for and supply of biodiesel and the proximity of the plant to trucking and terminal facilities. The sale of large quantities of biodiesel necessitates that we transport our biodiesel to other markets since the Indiana regional market is not expected to absorb all of our contemplated production. Currently, common carrier pipelines are not transporting biodiesel. This leaves trucks, barges, and rail cars as the means of distribution of our product from the plant to these storage terminals for further distribution. However, the current availability of rail cars is limited and at times unavailable because of repairs or improvements, or as a result of priority transportation agreements with other shippers. If transportation is restricted or is unavailable, we may not be able to sell into more lucrative markets and consequently our cash flow from sales of biodiesel could be restricted.

~~The~~See ~~biodiesel industry also faces several challenges to wide biodiesel acceptance~~above, ~~including~~Capital ~~cold~~Resources ~~temperature limitations, storage stability, fuel quality standards,~~ and ~~exhaust emissions~~Liquidity. If the industry does not satisfy consumers that these issues have been resolved or are being resolved, biodiesel may not gain widespread acceptance which may have an adverse impact on our cash flow from sales of biodiesel.

~~Our~~27 ~~insurance may not protect us against our business and operating risks.~~

WeTable maintain insurance for some, but not all, of the potential risks and liabilities associated with our business. For some risks, we may not obtain insurance if we believe the cost of available insurance is excessive relative to the risks presented. As a result of market conditions, Contents

29Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk.

~~premiums~~Commodity ~~and~~Risk deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance policies may become unavailable or available only for reduced amounts of coverage. As a result, we may not be able to renew our existing insurance policies or procure other desirable insurance on commercially reasonable terms, if at all. Although we will maintain insurance at levels we believe are appropriate for our business and consistent with industry practice, we will not be fully insured against all risks which cannot be sourced on economic terms. In addition, pollution and environmental risks generally are not fully insurable. Losses and liabilities from uninsured and underinsured events and delay in the payment of insurance proceeds could have a material adverse effect on our financial condition and results of operations.

IfOur amajor ~~significant~~commodity ~~accident~~price orrisk ~~other~~exposure ~~event~~is ~~resulting in damage~~ to ~~our~~the ~~operations~~prices ~~(including~~received ~~severe~~for ~~weather,~~our natural ~~terrorist~~gas ~~acts,~~and ~~war,~~oil ~~civil disturbances,~~production. ~~pollution,~~Realized orprices ~~environmental~~for ~~damage)~~our ~~occurs~~production ~~and~~are isthe ~~not~~spot ~~fully~~prices ~~covered~~applicable byto ~~insurance~~natural orgas aand ~~recoverable~~crude ~~indemnity~~oil. ~~from~~Prices areceived ~~customer,~~for itnatural ~~could~~gas ~~adversely~~and ~~affect~~oil ~~our~~are ~~financial~~volatile ~~condition~~and unpredictable and ~~results~~are ofbeyond ~~operations~~our control.

WeInterest ~~depend~~Rate onRisk ~~key personnel, the loss of any of whom could materially adversely affect our future operations.~~

~~Our~~We ~~success will depend to a significant extent upon the efforts and abilities of our executive officers. The loss of the services of one or more of these key employees could~~ have ano ~~material adverse effect on us. Our business will also be dependent upon our ability to attract and retain qualified personnel. Acquiring or retaining these personnel could prove more~~long-term ~~difficult~~debt tosubject ~~hire or cost substantially more than estimated. This could cause us~~ to ~~incur~~risk ~~greater~~of ~~costs,~~loss orassociated ~~prevent~~with usmovements ~~from~~in ~~pursuing~~interest ~~our expansion strategy as quickly as we would otherwise wish to do~~rates.

WeItem ~~depend~~4. ~~heavily~~Controls ~~on the services of Tim Jones our interim Chief Executive Officer, chief financial officer,~~ and ~~President of e-biofuels, LLC~~Procedures. We have employment agreements with Mr. Jones. We do not presently have a “key person” life insurance policy on the lives of any of these individuals to offset our losses in the event of their death.

~~If we are unable to effectively manage the commodity price risk~~ Evaluation of ~~our~~Disclosure ~~raw~~Controls ~~materials~~and orProcedures ~~finished goods, we may have unexpected losses.~~

WeIn ~~hedge~~connection ~~our~~with ~~raw~~the ~~materials~~preparation ~~and/or~~of ~~finished~~this ~~products~~quarterly ~~for~~report ~~our~~on ~~biofuels~~Form ~~segment~~10-K/A, toour Chief ~~some~~Financial ~~degree~~Officer, toevaluated ~~manage~~the effectiveness of the ~~commodity~~ ~~price~~design ~~risk~~and operation of ~~such~~our ~~items.~~disclosure controls and procedures as of April ~~This~~30, ~~requires~~2012, pursuant to Rule 13a-15 under the ~~purchase~~Securities orExchange ~~sale~~Act of ~~commodity~~1934, ~~futures~~as ~~contracts~~amended ~~and/or~~(the ~~options~~“Exchange Act”). onBased ~~those~~upon ~~contracts~~that orevaluation ~~similar~~, ~~financial~~our ~~instruments. We~~Chief ~~may~~Financial beOfficer ~~forced~~concluded tothat ~~make~~as ~~cash~~of ~~deposits~~April 30, ~~available~~2012 toour ~~counterparties~~disclosure ~~as they~~controls ~~mark-to-market~~and ~~these~~procedures ~~financial~~were ~~hedges. This~~effective ~~funding~~to ~~requirement~~provide ~~may~~reasonable ~~limit~~assurance ~~the~~that ~~level~~information ofrequired ~~commodity~~to ~~price~~be ~~risk~~disclosed ~~management~~by us in reports that we ~~are~~file ~~prudently~~or ~~able~~submit tounder ~~complete. If~~the weExchange doAct, ~~not~~is orrecorded, ~~are~~processed, ~~not~~summarized ~~capable~~and ofreported, ~~managing~~within the ~~commodity~~time ~~price~~periods ~~risk~~specified ofin ~~our raw~~the ~~materials~~Security and~~/or~~ ~~finished~~Exchange ~~products~~Commission’s ~~for~~rules ~~our~~and ~~biofuels~~forms; ~~segment,~~and to ensure that information required to be disclosed by us in the reports that we ~~may~~file ~~incur~~under ~~losses~~the asExchange aAct ~~result~~is ofaccumulated ~~price~~and ~~fluctuations~~communicated ~~with~~to ~~respect~~management, including our certifying officers, as appropriate, to ~~these~~allow ~~raw~~timely ~~materials~~decisions ~~and/or~~regarding ~~finished~~required ~~products~~disclosures.

IfManagement’s weReport ~~are~~on ~~unable~~Internal toControl ~~acquire~~over orFinancial ~~renew permits and approvals required for our operations, we may be forced to suspend or cease operations altogether~~Reporting.

~~The~~Our ~~operation~~Management ofis ~~our~~responsible ~~manufacturing~~for ~~plant~~establishing ~~requires numerous permits~~ and ~~approvals~~maintaining ~~from governmental~~adequate ~~agencies. We~~internal ~~may~~control ~~not~~over befinancial ~~able~~reporting toas ~~obtain~~defined ~~all~~in ~~necessary permits~~ Rules 13a-15(~~or modifications thereto~~c) and ~~approvals~~(d) of ~~and,~~the asExchange aAct. ~~result,~~Our ~~our~~internal ~~operations~~controls ~~may~~are bedesigned ~~adversely~~to ~~affected. In~~provide ~~addition,~~reasonable ~~obtaining~~assurance ~~all~~that ~~necessary~~the ~~renewal~~reported ~~permits~~financial ~~(or modifications~~information tois ~~existing~~presented ~~permits)~~fairly, ~~and~~financial ~~approvals~~disclosures ~~for~~are ~~future~~adequate ~~expansions may necessitate substantial expenditures~~ and ~~may~~that ~~create~~the ajudgments ~~significant~~inherent ~~risk~~in the preparation of ~~expensive~~financial ~~delays~~statements orare ~~loss~~reasonable ofand ~~value~~in ifaccordance awith ~~project~~generally isaccepted ~~unable~~accounting toprinciples ~~function~~of asthe ~~planned~~United ~~due~~States toof ~~changing requirements~~America (GAAP).

~~The~~Because ~~lack~~of its inherent limitations, a system of ~~business~~internal ~~diversification~~control over financial reporting can provide only reasonable assurance and may ~~adversely~~not ~~affect~~prevent ~~our~~or ~~results~~detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Further, because of ~~operations~~changes in conditions, effectiveness of internal control over financial reporting may vary over time.

~~Unlike~~A ~~other~~significant ~~entities~~deficiency ~~which~~is ~~may~~a ~~have~~control deficiency, or combination of control deficiencies, that adversely affects the company’s ~~resources~~ability to ~~complete~~initiate, ~~several~~authorize, ~~business~~record, ~~combinations~~process, ofor ~~entities~~report ~~operating~~external financial data reliably in ~~multiple~~accordance ~~industries or~~with ~~multiple~~generally ~~areas~~accepted ofaccounting aprinciples ~~single~~such ~~industry,~~that itthere is ~~possible~~more than a remote likelihood that wea misstatement of the company’s annual or interim financial statements that is more than inconsequential will not ~~have~~be ~~the~~prevented ~~resources~~or todetected. ~~diversify~~An ~~effectively~~internal ~~our~~control ~~operations~~material weakness is a significant deficiency, or ~~benefit~~combination ~~from~~of ~~the~~significant ~~possible~~deficiencies, ~~spreading~~that results in more than a remote likelihood that a material misstatement of ~~risks~~the annual or ~~offsetting~~interim offinancial ~~losses~~statements will not be prevented or detected.

~~Our~~As ~~indebtedness~~part ~~may~~of ~~limit~~our compliance efforts relative to Section 404 of the Sarbanes-Oxley Act of 2002, our ~~ability~~management assessed the effectiveness of our internal control over financial reporting as of April 30, 2012. In making this assessment, management used the criteria set forth in the Internal Control – Integrated Framework by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). We evaluated control deficiencies identified through our test of the design and operating effectiveness of controls over financial reporting to ~~borrow~~determine ~~additional~~whether ~~funds~~the deficiencies, individually or ~~capitalize~~in oncombination, ~~acquisition~~are significant deficiencies or ~~other~~material weaknesses. ~~business~~In ~~opportunities~~performing the assessment, our management had identified two material weaknesses in internal control over financial reporting existing as of July 31, 2011 which included (i.) a segregation of duties issue related to a lack of accounting personnel and (ii.) the inability of the Company’s prior accounting system to adequately track real-time purchases of feedstock and sales of biodiesel on a contract-by-contract basis. In connection with the remediation of these issues, the Company took the following steps: (i.) we added additional accounting personnel, including a Chief Financial Officer, a Controller and a logistics individual at e-biofuels, and (ii.) we implemented a new accounting system at e-biofuels to allow our accounting staff to more effectively track sales and inventory and to improve the overall accuracy of our reporting and we consolidated our overall accounting functions under the control of our accounting staff at e-biofuels and under the direction of our new CFO. Our evaluation of the significance of each deficiency and their remediation included both quantitative and qualitative factors.

~~Our~~With ~~biofuels~~the ~~subsidiary~~bankruptcy ~~operates~~filing ~~under~~of ane-Biofuels ~~extension~~and tothe ~~its~~resignation ~~credit~~of ~~facility~~our ~~through~~Chief ~~January~~Financial Officer on April 314, 2012., ~~There~~and isthe ~~no assurance~~loss ~~that~~of the ~~bank~~balance ~~will~~of ~~grant~~our anaccounting ~~additional~~staff ~~extension~~associated ofwith ~~time~~that ifoperation, wethe Company’s ~~are~~management ~~unable~~has toconcluded ~~secure~~that ~~alternative~~as ~~financing.~~of April ~~The~~30, ~~restrictions~~2012, ~~governing~~and ~~this~~as ~~indebtedness~~of ~~may~~the ~~reduce~~date that the evaluation of the effectiveness of our ~~ability~~internal tocontrols ~~incur~~and ~~additional~~procedures ~~indebtedness~~was completed, ~~engage~~the inCompany’s ~~certain transactions~~internal orcontrols ~~capitalize~~are onagain ~~acquisition~~defective orin the ~~other~~area ~~business~~of ~~opportunities. If~~a wesegregation ~~are~~of ~~unable~~duties issue related to ~~meet~~a ~~our~~lack ~~future~~of ~~debt~~accounting ~~service~~personnel. ~~obligations~~Until ~~and~~the ~~other~~company ~~financial~~can ~~obligations,~~afford weto ~~could~~hire beadequate ~~forced~~accounting staff, the Company intends to ~~restructure~~rely oron ~~refinance~~third ~~such~~party ~~indebtedness~~accounting ~~and~~consultants ~~other financial~~to ~~transactions,~~assist ~~seek~~in ~~additional~~the ~~equity~~compilation orof its ~~sell~~financial ~~assets~~accounting records.

~~Item~~28 ~~2. Unregistered Sales of Equity Securities and Use of Proceeds.~~

NotTable applicable.of Contents

~~Item~~Changes 3.in ~~Defaults~~Internal ~~Upon~~Controls ~~Senior Securities.~~

~~Not~~No changes were made during the quarter ended April 30, 2012, except with respect to the resignation of Timothy A. Jones as Chief ~~applicable~~Financial Officer and the appointment of Jeffrey T. Wilson to that position.

~~Item~~PART 4.II ~~Submission~~OTHER ofINFORMATION ~~Matters to a Vote of Security Holders.~~

~~Not~~Item ~~applicable~~1. Legal Proceedings.

30See Note 7 above.

Item 51A. ~~Other~~Risk ~~Information~~Factors.

~~Not~~In addition ~~applicable~~to the other information set forth elsewhere in this Form 10-Q, you should carefully consider the following factors when evaluating the Company. An investment in the Company is subject to risks inherent in our business. The trading price of the shares of the Company is affected by the performance of our business relative to, among other things, competition, market conditions and general economic and industry conditions. The value of an investment in the Company may decrease, resulting in a loss. The risk factors listed below are not all inclusive.

~~Item~~An 6investment in us involves a high degree of risk and may result in the loss of all or part of your investment. You ~~Exhibits~~should consider carefully all of the information set out in this document and the risks attaching to an investment in us, including, in particular, the risks described below. The information below does not purport to be an exhaustive list and should be considered in conjunction with the contents of the rest of this document.

10.		Purchase and Sale Agreement, dated January 31, 2012 incorporated herein by reference to Form 8-K filed February 16, 2012.
31.1		Section 302 Certification of CFO
32.		Section 906 Certification by CFO
101		The following materials from Imperial Petroleum, Inc.’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Income; (iii) Condensed Consolidated Statements of Cash Flows; (iv) Condensed Consolidated Statements of Shareholders’ Equity; and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

We are under investigation by the Securities and Exchange Commission and others.

31On May 25, 2012, the Company received a subpoena for the period of January 1, 2010 to the present, as part of a fact-finding inquiry from the Division of Enforcement of the Securities and Exchange Commission (“SEC”). The subpoena requires us to produce numerous documents related to the Company and our wholly-owned subsidiary, E-Biofuels, LLC. The subpoena demands the production of documents related to the operations, accounting, business practices, purchase and sales of biodiesel, tax credits and incentives from any state, federal or agency, the production process of the biodiesel, including, the purchase of any products related to the manufacturing of biodiesel, financing, stock issuances, executives and employees. The purpose of the subpoena is to determine whether any federal laws have been violated.

~~SIGNATURES~~In addition, on May 24, 2012, the Company and E-Biofuels, LLC, received subpoenas in connection with a Grand Jury investigation into the activities of the Company and E-Biofuels, LLC, for the period of January 1, 2006 to the present. In conjunction with the Grand Jury investigation, on May 24, 2012, the United States District Court of the Southern District of Indiana authorized search warrants to obtain records, documents and evidence related to the ongoing investigation. The search warrants were executed on May 24, 2012.

~~Pursuant~~The Company intends to fully cooperate with the ~~requirements~~investigations. ofCurrently, the ~~Securities~~Company ~~Exchange~~cannot ~~Act~~estimate ofthe ~~1934~~ultimate financial impact, if any, resulting from the ~~Registrant~~investigations. ~~has~~In ~~duly~~the ~~caused~~event ~~this~~that ~~report~~violations toof bestate ~~signed~~or federal are determined, such determination could have a material negative impact on ~~its~~the ~~behalf~~operations byof the Company. In addition, if it is determined that the Company’s subsidiary, E-biofuels, LLC, received improper tax credits for the sale of biodiesel, then the results could have a material impact ~~undersigned~~on ~~there~~the ~~unto~~Company. ~~duly~~(See ~~authorized~~Form 8-K dated May 25, 2012 incorporated herein by reference).

~~Imperial~~The ~~Petroleum, Inc. By: /~~Company’s/ ~~Tim~~major revenue ~~Jones~~generating ~~Tim~~subsidiary ~~Jones,~~is ~~Chief~~in ~~Financial~~bankruptcy. ~~Officer~~

~~Dated:~~On ~~March~~April 214, 2012, the Company’s wholly-owned subsidiary, e-Biofuels, LLC filed a voluntary petition for protection from creditors under Chapter 7 of Title 11 of the Bankruptcy Code with the United States Bankruptcy Court for the Southern District of Indiana under Case Number 12-03816-FJO-7A. The Court appointed Richard E. Boston, 27 North 5th St., Richmond, IN 47374 as U.S Trustee on that date. The e-Biofuels subsidiary represented approximately 99.6% of the Company’s revenues. In the filing, e-Biofuels listed total assets of $11,354,800.51 and total liabilities of $17,321,036.88. (See Form 8-K dated April 4, 2012 incorporated herein by reference). Intercompany accounts receivable due to e-Biofuels from the Company and its subsidiaries were listed as follows in the bankruptcy petition: Imperial Petroleum, Inc.: $46,542.67; Arrakis Oil Recovery, LLC: $271,311.71; and Imperial Chemical Company: $60,934.75 for a total of $378,788.93. At this time we are unable to determine the ultimate financial impact of the bankruptcy to the Company, however, until such time as the Company’s other revenue generating efforts are successful, any action taken by the Bankruptcy Trustee may adversely affect the ability of the Company to complete its joint venture operations and establish revenues from its oil sands project.

32We have been sued by First Merchants Bank to enforce the guarantee of e-Biofuels’ debt.

The Company executed a guarantee and indemnity agreement pertaining to the debt of e-Biofuels owed to First Merchants Bank in conjunction with the acquisition of e-Biofuels in May 2010. The Company is defending itself with respect to this action, however, at the present time the Company has very limited resources to sustain its legal defense and if the bank is able to obtain a judgment in the matter against the Company, we may not be able to complete our planned joint venture oil sand project and re-establish revenues in any meaningful manner.

Our ability to raise capital and retain and attract new partners may be impacted by the issues facing the Company.

Uncertainty related to the outcome of the investigations, the bank’s lawsuit or any action taken by the Trustee in relation to the e-Biofuels bankruptcy may impinge upon our ability to raise capital or attract or retain financial partners for our oil sand and oil and gas projects.

We have a history of operating losses.

We have had a history of net operating losses.

Our oil sands technology is new and has not been operated under field conditions.

While we have extensively tested the viability of our oil sands technology under controlled conditions, our technology is new and has not been field tested. Delays or issues in operating the technology under normal and continuous operating conditions may impact our ability to generate revenues and obtain profitability.

The current volatility in global economic conditions and the financial markets may adversely affect our industry, business and results of operations.

The volatility and disruption to the capital and credit markets since mid-2008 have affected global economic conditions, resulting in significant recessionary pressures and declines in consumer confidence and economic growth. These conditions have led to economic contractions in the developed economies and reduced growth rates in the emerging markets. Despite fiscal and monetary intervention, it is possible that further declines in consumer spending and global growth rates may occur in the foreseeable future. Reduced consumer spending may cause changes in customer order patterns including order cancellations, and changes in the level of inventory held by our customers, which may adversely affect our industry, business and results of operations. The impact of the credit crisis and economic slowdown will vary by region and country. The diversity of our geographic customer and operating footprint limits our reliance and exposure to any single economy.

These conditions have also resulted in a substantial tightening of the credit markets, including lending by financial institutions and other sources of credit and liquidity. This tightening of the credit markets has increased the cost of capital and reduced the availability of credit. We cannot predict how long the current economic and capital and credit market conditions will continue, whether they will deteriorate and which aspects of our products or business could be adversely affected. However, if current levels of economic and capital and credit market disruption and volatility continue or worsen, there can be no assurance that we will not experience an adverse impact, which may be material, on our business, the cost of and access to capital and credit markets, and our results of operations. In addition, we monitor the financial condition of our customers on a regular basis based on public information or data provided directly to us. If the financial condition of one of our major customers was negatively impacted by market conditions or liquidity, we could be adversely impacted in terms of accounts receivable and/or inventory specifically attributable to them.

The industries in which we compete are highly competitive.

The oil and gas business is highly competitive. There is competition within these industries and also with other industries in supplying the energy, fuel and chemical needs of industry and individual consumers. We will compete with other firms in the sale or purchase of various goods or services in many national and international markets. We will compete with large national and multi-national companies that have longer operating histories, greater financial, technical and other resources and greater name recognition than we do. In addition, we will compete with several smaller companies capable of competing effectively on a regional or local basis, and the number of these smaller companies is increasing. Our competitors may be able to respond more quickly to new or emerging technologies and services and changes in customer requirements. As a result of competition, we may lose market share or be unable to maintain or increase prices for our products and/or services or to acquire additional business opportunities, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Although we will employ all methods of competition which are lawful and appropriate for such purposes, no assurances can be made that they will be successful. A key component of our competitive position, particularly given the expected commodity-based nature of many of our products, will be our ability to manage expenses successfully, which requires continuous management focus on reducing unit costs and improving efficiency. No assurances can be given that we will be able to successfully manage such expenses.

Our competitive position in the markets in which we participate is, in part, subject to external factors in addition to those that we can impact. Natural disasters, changes in laws or regulations, war or other outbreak of hostilities, or other political factors in any of the countries or regions in which we operate or do business, or in countries or regions that are key suppliers of strategic raw materials, could negatively impact our competitive position and our ability to maintain market share.

Fluctuations in commodity prices may cause a reduction in the demand or profitability of the products or services we produce.

Prices for oil and natural gas tend to fluctuate widely based on a variety of political and economic factors. These price fluctuations heavily influence the oil and gas industry. Lower energy prices for existing products tend to limit the demand for all forms of energy services and related products and infrastructure. Historically, the markets for crude oil have been volatile, and they are likely to continue to be volatile. Wide fluctuations in commodity prices may result from relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty and other factors that are beyond our control, including:

•

worldwide and domestic supplies of oil and gas;

•

weather conditions;

•

the level of consumer demand;

•

the availability of pipeline and refining capacity;

•

the price and level of foreign imports;

•

domestic and foreign governmental regulations and taxes;

•

the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls;

•

political instability or armed conflict in oil-producing regions; and

•

the overall global economic environment.

These factors and the volatility of the commodity markets make it extremely difficult to predict future commodity price movements with any certainty. There may be a decrease in the demand for our products or services and our profitability could be adversely affected.

Changes in technology may render our products or services obsolete.

The alternative fuel industry may be substantially affected by rapid and significant changes in technology. Examples include competitive product technologies, such as green gasoline and renewable diesel produced from catalytic hydroforming of renewable feedstock oils and competitive process technologies such as advanced biodiesel continuous reactor and washing designs that increase throughput. These changes may render obsolete certain existing products, energy sources, services and technologies currently used by us. We cannot assure you that the technologies used by or relied upon by us will not be subject to such obsolescence. While we may attempt to adapt and apply the services provided by us to newer technologies, we cannot assure you that we will have sufficient resources to fund these changes or that these changes will ultimately prove successful and that alternatives to fossil energy may become more abundant and significantly impact our operations.

Failure to comply with governmental regulations could result in the imposition of penalties, fines or restrictions on operations and remedial liabilities.

The oil and natural gas industry is subject to extensive federal, state, local and foreign laws and regulations related to the general population’s health and safety and those associated with compliance and permitting obligations (including those related to the use, storage, handling, discharge, emission and disposal of municipal solid waste and other waste, pollutants or hazardous substances or waste, or discharges and air and other emissions) as well as land use and development. Existing laws also impose obligations to clean up contaminated properties or to pay for the cost of such remediation, often upon parties that did not actually cause the contamination. Compliance with these laws, regulations and obligations could require substantial capital expenditures. Failure to comply could result in the imposition of penalties, fines or restrictions on operations and remedial liabilities. These costs and liabilities could adversely affect our operations.

Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly waste handling, storage, transport, disposal or cleanup requirements could require us to make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on our business segments in general and on our results of operations, competitive position or financial condition. We are unable to predict the effect of additional environmental laws and regulations which may be adopted in the future, including whether any such laws or regulations would materially adversely increase our cost of doing business or affect our operations in any area.

Under certain environmental laws and regulations, we could be held strictly liable for the removal or remediation of previously released materials or property contamination regardless of whether we were responsible for the release or contamination, or if current or prior operations were conducted consistent with accepted standards of practice. Such liabilities can be significant and, if imposed, could have a material adverse effect on our financial condition or results of operations.

Our insurance may not protect us against our business and operating risks.

We maintain insurance for some, but not all, of the potential risks and liabilities associated with our business. For some risks, we may not obtain insurance if we believe the cost of available insurance is excessive relative to the risks presented. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance policies may become unavailable or available only for reduced amounts of coverage. As a result, we may not be able to renew our existing insurance policies or procure other desirable insurance on commercially reasonable terms, if at all. Although we will maintain insurance at levels we believe are appropriate for our business and consistent with industry practice, we will not be fully insured against all risks which cannot be sourced on economic terms. In addition, pollution and environmental risks generally are not fully insurable. Losses and liabilities from uninsured and underinsured events and delay in the payment of insurance proceeds could have a material adverse effect on our financial condition and results of operations.

If a significant accident or other event resulting in damage to our operations (including severe weather, terrorist acts, war, civil disturbances, pollution, or environmental damage) occurs and is not fully covered by insurance or a recoverable indemnity from a customer, it could adversely affect our financial condition and results of operations.

We depend on key personnel, the loss of any of whom could materially adversely affect our future operations.

Our success will depend to a significant extent upon the efforts and abilities of our executive officers. The loss of the services of one or more of these key employees could have a material adverse effect on us. Our business will also be dependent upon our ability to attract and retain qualified personnel. Acquiring or retaining these personnel could prove more difficult to hire or cost substantially more than estimated. This could cause us to incur greater costs, or prevent us from pursuing our expansion strategy as quickly as we would otherwise wish to do.

We depend heavily on the services of Jeffrey T. Wilson, our Chief Executive Officer, chief financial officer, and President. We do not have an employment agreement with Mr. Wilson. We do not presently have a “key person” life insurance policy on the lives of any of these individuals to offset our losses in the event of their death.

If we are unable to effectively manage the commodity price risk of our finished goods, we may have unexpected losses.

We do not presently hedge our finished products. If we do not or are not capable of managing the commodity price risk of our finished products, we may incur losses as a result of price fluctuations with respect to these finished products.

If we are unable to acquire or renew permits and approvals required for our operations, we may be forced to suspend or cease operations altogether.

The operation of our oil sands plant requires numerous permits and approvals from governmental agencies. We may not be able to obtain all necessary permits (or modifications thereto) and approvals and, as a result, our operations may be adversely affected. In addition, obtaining all necessary renewal permits (or modifications to existing permits) and approvals for future expansions may necessitate substantial expenditures and may create a significant risk of expensive delays or loss of value if a project is unable to function as planned due to changing requirements.

The lack of business diversification may adversely affect our results of operations.

Unlike other entities which may have the resources to complete several business combinations of entities operating in multiple industries or multiple areas of a single industry, it is possible that we will not have the resources to diversify effectively our operations or benefit from the possible spreading of risks or offsetting of losses.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3.

Defaults Upon Senior Securities.

Not applicable.

Item 4.

Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 5.

Other Information.

Not applicable.

Item 6.

Exhibits.



10.		Purchase and Sale Agreement, dated January 31, 2012 incorporated herein by reference to Form 8-K filed February 16, 2012.

31.1		Section 302 Certification of CEO

32.		Section 906 Certification by CEO

101		The following materials from Imperial Petroleum, Inc.’s Quarterly Report on Form 10-Q for the quarter ended April 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Income; (iii) Condensed Consolidated Statements of Cash Flows; (iv) Condensed Consolidated Statements of Shareholders’ Equity; and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized.


Imperial Petroleum, Inc.

By:		/s/ Jeffrey T. Wilson
		Jeffrey T. Wilson, President and Chief Executive Officer

Dated: June 14, 2012

Filing Compare · IMPERIAL PETROLEUM INC