UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

                                    FORM 10-Q
(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

         For the quarterly period ended: June 30, 2008

      [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

    For the transition period from _____________________ to ________________

                        Commission file number 000-50619

                             MOMENTUM BIOFUELS, INC.
                             -----------------------
                       (Name of registrant in its Charter)

            COLORADO                                 84-1069035
            --------                                 ----------
   (STATE OR OTHER JURISDICTION                    (I.R.S. EMPLOYER
   OF INCORPORATION OR ORGANIZATION)              IDENTIFICATION NUMBER)


             2600 South Shore Blvd, Suite 100 League City, TX 77573


                                 (281) 334-5161


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

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


Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated  filer [ ] (Do
not check if a smaller reporting company) Smaller reporting company [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [ X]


Indicate  the number of share  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

As of August 14, 2008,  there were 47,528,756  shares of the  registrant's  sole
class of common shares outstanding.


<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                              <C>


PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements       (Unaudited)                                                  Page
                                                                                                 ----

         Unaudited Consolidated Balance Sheets -June 30, 2008 and
                           December 31, 2007                                                      F-1

         Unaudited  Consolidated Statements of Operations  -
                  Three and Six Months ended June 30, 2008 and 2007 and                           F-2

         Unaudited Consolidated Statements of Changes in Stockholders' Equity -
                                                     June 30, 2008                                F-3

         Unaudited Consolidated Statements of Cash Flows -
                  Six months ended June 30, 2008 and 2007 and                                     F-4

         Notes to the Unaudited Consolidated Financial Statements                                 F-5

Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                                         1

Item 3.  Quantitative and Qualitative Disclosures About Market Risk - Not Applicable                5

Item 4. Controls and Procedures                                                                     6

Item 4T.  Controls and Procedures                                                                   6

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                                          8

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                8

Item 3.  Defaults Upon Senior Securities - Not Applicable                                           9

Item 4.  Submission of Matters to a Vote of Security Holders - Not Applicable                       9

Item 5.  Other Information - Not Applicable                                                         9

Item 6.  Exhibits                                                                                   9

SIGNATURES                                                                                          10

</TABLE>


<PAGE>





PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements.

For financial  information,  please see the financial  statements  and the notes
thereto, attached hereto and incorporated herein by this reference.

The financial  statements have been prepared by Momentum Biofuels,  Inc. without
audit  pursuant to the rules and  regulations  of the  Securities  and  Exchange
Commission.  Certain information and footnote  disclosures  normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles  have  been  condensed  or  omitted  as  allowed  by such  rules  and
regulations,  and management  believes that the disclosures are adequate to make
the information presented not misleading. These financial statements include all
of the adjustments which, in the opinion of management,  are necessary to a fair
presentation  of  financial  position  and  results  of  operations.   All  such
adjustments are of a normal and recurring  nature.  These  financial  statements
should be read in conjunction with the audited financial  statements at December
31, 2007, included in the Company's Form 10-KSB.


<PAGE>

<TABLE>
<CAPTION>
                     MOMENTUM BIOFUELS, INC. AND SUBSIDIARY
                          Consolidated Balance Sheets
                                  (Unaudited)
<S>                                                                 <C>                    <C>


                                                                      June 30, 2008              December 31, 2007
                                                                    -------------------    ------------------------------
 ASSETS
Current Assets
Cash                                                                       $   196,270           $   777,171
Accounts Receivable, net                                                        14,645                 3,859
Inventory                                                                       19,136                56,759
Prepaid insurance                                                               26,646                33,766
                                                                    -------------------    ------------------
Total current assets                                                           256,697               871,555

Property & equipment, net of accumulated
  depreciation and amortization                                              2,991,723             3,253,410
Other Assets                                                                   367,249                26,278
                                                                    -------------------    ------------------
TOTAL ASSETS                                                               $ 3,615,669           $ 4,151,243
                                                                    ===================    ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable                                                           $   376,439           $   194,226
Accounts payable - related parties                                              25,186                     -
Accrued expenses                                                               264,584               191,942
Advances - related parties                                                      10,000                     -
Short term notes payable - related parties                                           -               315,891
                                                                    -------------------    ------------------
Total Current Liabilities                                                      676,209               702,059
                                                                    -------------------    ------------------
Long Term Liabilities
Convertible notes payable - net of discount - related parties                   43,850                     -
Senior secured convertible note - net of discount                              166,632                     -
                                                                    -------------------    ------------------

Total Long Term Liabilities                                                    210,482                     -
                                                                    ------------------     ------------------
Total Liabilities                                                              886,691               702,059
                                                                    -------------------    ------------------

Stockholders' Equity
Common stock, $0.01 par value;  500,000,000  shares  authorized,
47,528,756 and 54,828,756 shares issued and outstanding on
June 30, 2008 and December 31, 2007, respectively                              475,287               548,287
Additional paid-in capital                                                  13,424,292            11,853,153
Accumulated Deficit                                                        (11,170,601)           (8,952,256)
                                                                    -------------------    ------------------
Total Stockholders' Equity                                                   2,728,978             3,449,184
                                                                    -------------------    ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 $ 3,615,669           $ 4,151,243
                                                                    ===================    ==================


  See the accompanying notes to the consolidated financial statements.

                                      F-1

</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                     MOMENTUM BIOFUELS, INC. AND SUBSIDIARY
                     Consolidated Statements of Operations
                                  (Unaudited)
<S>                                             <C>                 <C>                 <C>                <C>


                                                    Three Months Ended June 30,             Six Months Ended June 30,
                                                     2008                2007                2008               2007
                                                ----------------    ----------------    ----------------   ----------------


Revenue                                              $     (572)        $   137,760          $  348,357         $  137,760
Cost of goods sold                                            -             167,192             251,623            167,192
                                                ----------------    ----------------    ----------------   ----------------
Gross profit                                               (572)            (29,432)             96,734            (29,432)


Operating Expenses
Plant expenses                                          357,591                   -             787,939                  -
Pre-operating plant expenses                                  -              54,541                   -            105,861
General and administrative                              741,474           4,189,541           1,519,939          4,554,845
                                                ----------------    ----------------    ----------------   ----------------
Total Operating Expenses                              1,099,065           4,244,082           2,307,878          4,660,706
                                                ----------------    ----------------    ----------------   ----------------
Loss from operations                                 (1,099,637)         (4,273,514)         (2,211,144)        (4,690,138)
                                                ----------------    ----------------    ----------------   ----------------
Other Income (Expense)
Interest income                                             229                 853               1,311              2,042
Interest expense                                         (6,202)             (9,551)             (8,512)           (17,468)
                                                ----------------    ----------------    ----------------   ----------------
Total Other Income (Expense)                             (5,973)             (8,698)             (7,201)           (15,426)
                                                ----------------    ----------------    ----------------   ----------------
Net Loss                                             (1,105,610)         (4,282,212)         (2,218,345)        (4,705,564)
                                                ================    ================    ================   ================
Per Share Information:
Weighted average number of common
shares outstanding   - Basic and diluted             47,528,756         51,253,770           49,435,545         50,568,071
                                                ================    ================    ================   ================
Net Loss per Share                                   $    (0.02)        $    (0.08)          $    (0.04)        $    (0.09)
                                                ================    ================    ================   ================


See the accompanying notes to the consolidated financial statements.

                                      F-2

</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                     MOMENTUM BIOFUELS, INC. AND SUBSIDIARY
                 Consolidated Statement of Stockholders' Equity
                         For the Period from January 1,
                           2008 through June 30, 2008

<S>                                  <C>               <C>              <C>                <C>                  <C>

                                             Common Stock                Additional
                                                                          Paid-In               Accumulated
                                      Shares            Amount            Capital               Deficit             Totals
                                     ----------------  ---------------  -----------------  ------------------   ---------------
Balance - December 31, 2007               54,828,756        $ 548,287        $11,853,153        $  (8,952,256)      $ 3,449,184
Cancelled shares                          (7,500,000)         (75,000)            75,000                                     -
Shares issued in private
placement for cash                           200,000            2,000             78,000                                80,000
Share based compensation                                                         729,649                               729,649
Debt Discount                                                                    389,519                               389,519
Warrants issued for services                                                     298,971                               298,971
Net loss                                                                                           (2,218,345)       (2,218,345)
                                     ------------------------------------------------------------------------------------------

Balance - June 30, 2008                   47,528,756        $ 475,287        $13,424,292        $ (11,170,601)      $ 2,728,978
                                     ==========================================================================================


See the accompanying notes to the consolidated financial statements.

                                      F-3

</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                     MOMENTUM BIOFUELS, INC. AND SUBSIDIARY
                     Consolidated Statements of Cash Flows
                                  (Unaudited)
<S>                                                                  <C>                    <C>

                                                                            Six Months Ended June 30,
                                                                            2008                  2007
                                                                     -------------------    ------------------
Cash Flows from Operating Activities
Net loss                                                                   $ (2,218,345)         $ (4,705,564)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation                                                                    261,687                18,020
Bad debt expense                                                                 29,866                     -
Share based compensation                                                        729,649             3,864,756
Changes in Assets and Liabilities
Accounts receivable                                                             (40,652)              (20,837)
Inventory                                                                        37,623               (54,741)
Prepaid expenses and other current assets                                         7,120                 2,626
Accounts payable                                                                207,399               (64,591)
Accrued expenses                                                                 72,643               201,102
                                                                     -------------------    ------------------
Net Cash Used in Operating Activities                                          (913,010)             (759,229)

Cash Flows used in Investing Activities
Other Assets                                                                    (42,000)                    -
Acquisition of fixed assets                                                           -              (941,160)
                                                                     -------------------    ------------------
Net Cash Used in Investing Activities                                           (42,000)             (941,160)

Cash Flows from Financing Activities
Payment of note payable                                                        (315,891)             (165,000)
Loans from shareholders                                                          10,000               126,813
Stock issued for cash                                                            80,000             1,820,000
Offering costs                                                                        -               (66,500)
Proceeds from convertible notes                                                 600,000                     -
                                                                     -------------------    ------------------
Net Cash Provided (Used) by Financing Activities                                374,109             1,715,313
                                                                     -------------------    ------------------
Net Increase (Decrease) in Cash                                                (580,901)               14,924

Cash and cash equivalents - Beginning of period                                 777,171                19,477
                                                                     -------------------    ------------------
Cash and cash equivalents - End of period                                  $    196,270          $     34,401
                                                                     ===================    ==================
Supplemental Disclosure of Cash Flow Information:
Cash Paid During the period for:
Interest                                                                   $      8,512          $     30,472
                                                                     ===================    ==================
Income Taxes                                                               $          -          $          -
                                                                     ===================    ==================
Non-Cash Transactions - Investing activities:
Warrants issued for services                                               $    298,971          $          -
                                                                     ===================    ==================
Capitalized interest during construction period                            $          -          $     36,953
                                                                     ===================    ==================
Financing activities
Cancellation of common shares                                              $     75,000          $          -
                                                                     ===================    ==================
Note payable converted to stock                                            $          -          $    500,000
                                                                     ===================    ==================


 See the accompanying notes to the consolidated financial statements.

                                      F-4

</TABLE>


<PAGE>

                             Momentum Biofuels, Inc.
       Notes to the Consolidated Financial Statements As of June 30, 2008
                                   (Unaudited)

Note 1. -Basis of Presentation

The accompanying  unaudited interim financial  statements of Momentum  Biofuels,
Inc.,  have been prepared in accordance  with  accounting  principles  generally
accepted  in the United  States of America and the rules of the  Securities  and
Exchange  Commission,  and  should  be  read in  conjunction  with  the  audited
financial  statements  and notes thereto  contained in Momentum's  Annual Report
filed  with  the  SEC  on  Form  10-KSB.  In  the  opinion  of  management,  all
adjustments,  consisting of normal recurring  adjustments,  necessary for a fair
presentation of financial position and the results of operations for the interim
periods  presented  have been  reflected  herein.  The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. Notes to the financial  statements which substantially  duplicate
the disclosure  contained in the audited financial statements for fiscal 2007 as
reported in the Form 10-KSB have been omitted.

Note 2 - Going Concern

In  Momentum's  Annual  Report  on Form  10-KSB  for  2007,  the  Report  of the
Independent  Registered Public Accounting Firm includes an explanatory paragraph
that describes  substantial  doubt about the Company's  ability to continue as a
going concern. Momentum's financial statements for the six months ended June 30,
2008 have  been  prepared  on a going  concern  basis,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business.  The Company had an accumulated  deficit of $11,170,600 at June 30,
2008.
Momentum's  ability to continue as a going concern is dependent upon its ability
to develop  additional  sources of capital and,  ultimately,  achieve profitable
operations.  The accompanying  consolidated  financial statements do not include
any adjustments that might result from the outcome of these uncertainties.

Note 3 - Notes Payable to Related Parties

                                      F-5

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<CAPTION>
<S>                                                                       <C>




Notes payable as of June 30, 2008 and December 31, 2007 consisted of the following:
                Description                                                                  2008                   2007
------------------------------------------------                                         ---------------        ---------------

Non-interest bearing note payable to Ultimate Investments Corporation, a company
wholly-owned by a shareholder. The note was paid in full in January, 2008.                    $        -       $     315,891

Notes payable originally issued to Richard Robert,  Richard Cilento,  David Fick
and J. Paul Consulting.  The interest rate is 10% per annum,  payable quarterly.
These notes are secured by all of the assets and property of Momentum. The notes
may be converted  into shares of MMBI's common stock at any time at a conversion
price of $0.40 per share. If the notes are prepaid before May 1, 2010,  Momentum
will issue the lenders a warrant to Purchase one share of Momentum  common stock
for each  $1.00  principal  amount  of the  note.  Momentum  does  not  consider
prepayment likely. The notes mature on May 1, 2013.                                                125,000              -

The loan discount was calculated using the Beneficial  conversion  feature.  The
warrants were valued per the Black Scholes method. The assumptions used to value
the Warrants included an expected term of 7 years, a risk-free  interest rate of
3.78%,  expected  volatility  using  comparable  company  volatility of 215%, an
exercise  price of $0.40 and a stock  price on the date of grant of  $0.50.  The
discount will be amortized over the life of the notes.                                             (81,250)             -
                                                                                              ---------------     ---------------
                                         Total                                               $      43,850     $     315,891
                                                                                              ===============     ==+============
</TABLE>

Note 4 - Advances from Related Parties

Non-interest  bearing  advance from Jeff Ploen,  who  beneficially  owns J. Paul
Consulting Corporation. The advance is due upon demand with no maturity date.

                                      F-6

<PAGE>
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<CAPTION>
<S>                                                                                             <C>                <C>




Note 5 - Convertible Notes Payable

Notes payable as of June 30, 2008 and December 31, 2007 consisted of the following:

                         Description                                                            2008               2007
                         -----------                                                            ----               ----

Notes  payable  originally  issued to ten lenders.  The interest rate is 10% per
annum,  payable  quarterly.  These  notes are  secured  by all of the assets and
property of Momentum.  The notes may be converted  into shares of MMBI's  common
stock at any time at a  conversion  price of $0.40 per  share.  If the notes are
prepaid  before  May 1,  2010,  Momentum  will  issue the  lenders a warrant  to
Purchase one share of Momentum common stock for each $1.00  principal  amount of
the note. Momentum does not consider prepayment likely.
The notes mature on May 1, 2013.                                                       $      475,000      $     -

The loan discount was calculated using the Beneficial  conversion  feature.  The
warrants were valued per the Black Scholes method. The assumptions used to value
the Warrants included an expected term of 7 years, a risk-free  interest rate of
3.78%,  expected  volatility  using  comparable  company  volatility of 215%, an
exercise  price of $0.40 and a stock  price on the date of grant of  $0.50.  The
discount will be amortized over the life of the notes.                                      (308,368)            -
                                                                                          ---------------     ---------------
                                                    Total                             $      166,632      $      -
                                                                                          ===============     ==============
</TABLE>

In conjunction  with the note payable referred to above and in Note 3, a lending
agent was paid a placement  fee of $42,000.  In  addition,  the agent was issued
600,000  warrants with an exercise  price of $0.40.  Further  explanation of the
valuation of the warants is found in Note 8.

Note 6 - Equity Financing

During the six months ended June 30, 2008, Momentum issued 200,000 shares of its
restricted common stock for cash of $80,000.  The shares were sold at a price of
$0.40 per share.

On February  12, 2008,  the Board of  Directors of Momentum  voted to cancel the
shares of the common  stock held by the Momentum  Employees & Consultant  Trust.
The Momentum  Employees & Consultant  Trust held 7,500,000  shares of restricted
common  stock.  The shares were  previously  controlled by Charles  Phillips,  a
shareholder and former director of Momentum,  and the shares were cancelled with
his consent.

Note 7 - Options

Options were originally issued in conjunction with employment agreements for key
employees and consultants.

                                      F-7

<PAGE>
<TABLE>
<CAPTION>



<S>         <C>           <C>        <C>           <C>        <C>          <C>

Option activity for the six months ended June 30, 2008 is as follows:

              Expiration   Exercise
Grant Date    Date         Price      Beginning     Granted      Forfeited    Ending
----------- ------------- ---------- ------------- ---------- ------------ -----------
 04/20/07    04/20/12      $1.00         2,250,000                           2,250,000
 10/15/07    10/15/10      $1.00            50,000                 (50,000)       -
 10/16/07    10/16/12      $1.00         7,000,000              (1,000,000)  6,000,000
 11/01/07    11/01/12      $1.00         1,000,000                           1,000,000
                                      ------------ ---------- ------------- ----------
                                        10,300,000              (1,050,000)  9,250,000
                                      ============ ========== ============= ==========



The weighted average  exercise price for all options  outstanding as of June 30,
2008 was $1.  Note 8 - Warrant  Activity  Warrants  activity  for the six months
ended June 30, 2008 is as follows:

              Expiration   Exercise
 Grant Date   Date         Price       Beginning      Granted     Exercised    Ending
------------ ------------ ----------- -------------- ---------- ---------- ------------
 06/27/2006   06/27/2016   $1.00          100,000 (1)                           100,000
 11/30/2006   11/30/2016   $1.00           10,000 (2)                            10,000
 12/31/2006   12/31/2016   $1.00           10,000 (2)                            10,000
 01/31/2007   01/31/2017   $1.00           10,000 (3)                            10,000
 02/01/2007   02/01/2012   $1.00            2,000 (3)                             2,000
 08/31/2007   08/31/2009   $1.00        1,000,000 (4)                         1,000,000
 10/04/2007   10/04/2009   $1.00          150,000 (5)                           150,000
 06/25/2008   06/25/2015   $0.40                  (6)    300,000                300,000
 06/25/2008   06/25/2015   $0.40                  (7)    600,000                600,000
                                      --------------- ---------- ---------- -----------
                                      $ 1,282,000        900,000            $ 2,182,000
                                      =============== ========== ========== ===========
</TABLE>

The weighted average exercise price for all warrants  outstanding as of June 30,
2008 was $1.

(1) Momentum  calculated  the relative fair value of these  warrants at $162,822
using the  Black-Scholes  option  pricing  model and  allocated a portion of the
original proceeds to these warrants as a discount to the note through additional
paid-in capital. The assumptions used to value the warrants included an expected
term of 10 years, a risk-free interest rate of 4.98%,  expected volatility using
comparable company volatility of 145%, an exercise price of $1 and a stock price
on the date of grant of $1.65.

                                      F-8

<PAGE>




(2) Momentum  calculated  the fair value of these  warrants at $33,558 using the
Black-Scholes  option  pricing model and this amount has been charged to general
and  administrative  expenses and credited to additional paid-in capital for the
period from inception (May 8, 2006) through  December 31, 2006. The  assumptions
used to value the  warrants  include an expected  term of 10 years,  a risk free
interest rate of 4.98%,  expected volatility using comparable company volatility
of 145%, an exercise price of $1 and an average stock price on the date of grant
of $1.65.

(3) Momentum  calculated  the fair value of these  warrants at $18,895 using the
Black-Scholes  option  pricing model and this amount has been charged to general
and  administrative  expenses and credited to additional paid-in capital for the
year ending  December  31,  2007.  The  assumptions  used to value the  warrants
include  an  expected  term of 10  years,  a risk free  interest  rate of 4.98%,
expected  volatility  using comparable  company  volatility of 145%, an exercise
price  of $1 and a stock  price on the date of  grant  of  $1.60.

(4) Momentum  calculated  the fair value of these warrants at $547,579 using the
Black-Scholes  option  pricing model and this amount has been charged to general
and  administrative  expenses and credited to additional paid-in capital for the
year ending  December  31,  2007.  The  assumptions  used to value the  warrants
include  an  expected  term of 2 years,  a risk  free  interest  rate of  6.50%,
expected  volatility  using comparable  company  volatility of 154%, an exercise
price of $1 and a stock price on the date of grant of $0.95.

(5) Momentum  calculated  the fair value of these  warrants at $95,746 using the
Black-Scholes  option  pricing model and this amount has been charged to general
and  administrative  expenses and credited to additional paid-in capital for the
year ending  December  31,  2007.  The  assumptions  used to value the  warrants
include  an  expected  term of 2 years,  a risk  free  interest  rate of  4.17%,
expected  volatility  using comparable  company  volatility of 186%, an exercise
price of $1 and a stock price on the date of grant of $0.80.

(6) Momentum  calculated  the fair value of these warrants at $149,624 using the
Black-Scholes  option  pricing  model and  allocated  a portion of the  original
proceeds to these warrants as a discount to the note through  additional paid-in
capital. The assumptions used to value the warrants included an expected term of
7  years,  a  risk-free  interest  rate  of  3.78%,  expected  volatility  using
comparable  company  volatility of 215%, an exercise  price of $0.40 and a stock
price on the date of grant of $0.50.  The relative fair value of these  warrants
was  combined  with  the  value  of the  beneficial  conversion  feature  of the
convertible notes described in Note 9, and recorded as a discount on the notes.

(7) Momentum  calculated  the fair value of these warrants at $298,971 using the
Black-Scholes  option  pricing  model and  allocated  a portion of the  original
proceeds to these warrants as a discount to the note through  additional paid-in
capital. The assumptions used to value the warrants included an expected term of
7  years,  a  risk-free  interest  rate  of  3.78%,  expected  volatility  using
comparable  company  volatility of 215%, an exercise  price of $0.40 and a stock
price on the date of grant of $0.50.

                                      F-9

<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FORWARD-LOOKING STATEMENTS CAUTIONARY

This Item 2 and the report on Form 10-Q for the period  ended June 30,  2008 may
contain  "forward-looking  statements"  regarding Momentum  Biofuels,  Inc. (the
"Company"  or  "Momentum").  In some  cases,  you can  identify  forward-looking
statements by terminology such as "may," "will," "should,"  "could,"  "expects,"
"plans,"  "intends,"   "anticipates,"   "believes,"   "estimates,"   "predicts,"
"potential"  or  "continue"  or the negative of such terms and other  comparable
terminology.  These  forward-looking  statements  include,  without  limitation,
statements about our market opportunity, our strategies,  competition,  expected
activities and  expenditures as we pursue our business plan, and the adequacy of
our  available  cash  resources.  Although  we  believe  that  the  expectations
reflected in any forward-looking  statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements.  Actual results
may differ  materially from the predictions  discussed in these  forward-looking
statements.  Changes in the  circumstances  upon  which we base our  predictions
and/or  forward-looking  statements could materially  affect our actual results.
Additional factors that could materially affect these forward-looking statements
and/or  predictions  include,  among other  things:  (1) our  limited  operating
history; (2) our ability to pay down existing debt; (3) the Company's ability to
obtain  contracts with suppliers of raw materials (for the Company's  production
of biodiesel fuel) and distributors of the Company's biodiesel fuel product; (4)
the risks inherent in the mutual  performance  of such supplier and  distributor
contracts  (including  the Company's  production  performance  (5) the Company's
ability to secure and retain  management  capable of  managing  growth;  (6) the
Company's ability to raise necessary financing to execute the Company's business
plan; (7) potential litigation with our shareholders, creditors and/or former or
current  investors;  (8) the  Company's  ability to comply  with all  applicable
federal, state and local government and international rules and regulations; and
(9) other factors over which we have little or no control.

The  independent  registered  public  accounting  firm's report on the Company's
financial  statements  as of  December  31,  2007,  includes  a "going  concern"
explanatory  paragraph  that  describes  substantial  doubt about the  Company's
ability to  continue  as a going  concern.  Management's  plans in regard to the
factors prompting the explanatory paragraph are discussed below and also in Note
2 to the unaudited quarterly financial statements.

PLAN OF OPERATIONS

Momentum is a "pure play" biodiesel  producer focused on servicing the U.S. Gulf
Coast and in the future,  international  biodiesel  markets.  Momentum  plans to
manufacture high quality, low cost and socially responsible biodiesel fuels that
complement and integrate with the existing  diesel fuel supply chain.  Biodiesel
is a domestic,  renewable  fuel for use in diesel  engines  that is derived from
natural vegetable oils and animal fats. Biodiesel contains no petroleum, but can
be used in any concentration with petroleum-based diesel fuel in existing diesel
engines without engine modification.

                                       1

<PAGE>





Our initial  plant in LaPorte,  Texas,  has been  completed  and is currently in
limited production. The Company's initial focus will be on efficiently operating
the La Porte  plant at its planned  capacity  and on sales of our  product.  Our
marketing  strategy  will  focus  on  wholesale  distribution  to fuel  jobbers,
corporate fleets and government users. We will also use established  alternative
fuel brokers where appropriate.

RESULTS OF OPERATIONS

Results of Operations For Three Months Ended June 30, 2008 Compared To The Three
Months  Ended June 30,  2007 The  Company  recognized  revenue of $(572) for the
three  months  ending June 30, 2008  compared to $137,760 of revenue  during the
three months  ended June 30,  2007.  During the three months ended June 30, 2008
there were no cost of sales compared to $167,192 for the three months ended June
30, 2007.

During the three months ended June 30, 2008, the Company incurred total expenses
of  $1,099,065  compared to  $4,244,082  during the three  months ended June 30,
2007.  Included in the total  expenses  for the three months ended June 30, 2008
are share based  compensation  costs of $394,395  compared to $3,864,756 for the
three  months ended June 30, 2007.  The increase in total  expenses,  net of the
share based compensation of $325,344 is a result of the increased  operations of
the Company during the three months ended June 30, 2008.  Total expenses  during
the six months  ended June 30, 2008  included,  $357,591 in plant  expenses  and
$741,474 in general and administrative expenses.

During the three months ended June 30, 2008,  the Company  recognized a net loss
of $1,105,610 compared with a net loss of $4,282,212 for the three months ending
June 30, 2007. The decrease of $3,176,602 was due primarily to decrease in share
based   compensation   and  increases  in  plant   operations  and  general  and
administrative  expenses,  as  discussed  above.  The net loss per share for the
three months ended June 30, 2008, was $0.02 per share compared to a net loss per
share of $0.08 for the three months ending June 30, 2007.

Results of Operations For The Six Months Ended June 30, 2008 Compared To The Six
Months Ended June 30, 2007

The Company  recognized  revenue of $348,357 for the six months  ending June 30,
2008 compared to $137,760 of revenue  during the six months ended June 30, 2007.
The Company's  revenues were from its  activities in processing  and sale of its
biodiesel  product.  During the six  months  ended June 30,  2008,  the  Company
incurred cost of goods sold of $251,623,  resulting in a gross profit of $96,734
compared to $167,192 in cost of goods sold, resulting in a gross loss of $29,432
for the six months ended June 30, 2007.

During the six months ended June 30, 2008,  the Company  incurred total expenses
of $2,307,878  compared to $4,660,706 during the six months ended June 30, 2007.
Included in the total  expenses for the six months ended June 30, 2008 are share
based  compensation  costs of $729,649 compared to $3,864,756 for the six months
ended June 30,  2007.  The  increase in total  expenses,  net of the share based
compensation of $782,279 is a result of the increased  operations of the Company
during the six months ended June 30, 2008.  Total expenses during the six months
ended June 30, 2008  included,  $787,940 in plant  expenses  and  $1,519,939  in
general and administrative expenses.

                                       2

<PAGE>




During the six months ended June 30, 2008, the Company  recognized a net loss of
$2,218,345 compared with a net loss of $4,705,564 for the six months ending June
30, 2007.  The  decrease of  $2,478,219  was due  primarily to decrease in share
based   compensation   and  increases  in  plant   operations  and  general  and
administrative  expenses, as discussed above. The net loss per share for the six
months ended June 30, 2008, was $0.04 per share compared to a net loss per share
of $0.09 for the six months ending June 30, 2007.

LIQUIDITY AND CAPITAL RESOURCES

At June 30,  2008,  the Company had  $196,270  in cash and  $3,419,399  in other
assets with which to conduct its operations.  There can be no assurance that the
Company  will be able to carry out its  business  plan.  Historically,  our cash
needs have been satisfied  primarily through proceeds from private placements of
our equity  securities and debt  instruments,  but we cannot guarantee that such
financing  activities will be sufficient to fund our current and future projects
and our ability to meet our cash and working  capital  needs.  No commitments to
provide  additional  funds have been made by management  or other  stockholders.
Irrespective of whether the Company's cash assets prove to be inadequate to meet
the Company's  operational needs, the Company might seek to compensate providers
of services by issuances of its common stock in lieu of cash.

Net cash used in operating  activities during the six months ended June 30, 2008
was  $913,011.  During the six months ended June 30, 2007,  the Company used net
cash of $759,229 in operating  activities.  During the six months ended June 30,
2008,  net losses of $2,218,345  were adjusted for non-cash  items that included
$261,687 in depreciation  and  amortization  expense and $729,649 in share based
compensation.  During  the six  months  ended  June  30,  2007,  net  losses  of
$4,705,564  were adjusted for the non-cash item of $18,020 in  depreciation  and
amortization expense and $3,864,756 in share based compensation.

During the six months ended June 30, 2008, the Company used $42,000 in cash from
its investing activities. During the six months ended June 30, 2007, the Company
used  $941,160  from its  investing  activities.

Net cash received by financing  activities  during the six months ended June 30,
2008 was  $374,109.  During the six  months  ended June 30,  2007,  the  Company
received funds of $1,715,313 from its financing activities.

On March 7, 2008,  Momentum initiated a private placement of 8,000,000 shares of
common stock at a price of $0.40 per share. During the six months ended June 30,
2008, the Company sold 200,000 shares of its restricted common stock for cash of
$80,000. The shares were sold for $0.40 per share.

On January 11, 2008, the Company made final payment on the outstanding  $400,000
promissory note held by Ultimate  Investment Corp  ("Ultimate").  The promissory
note had an issue date of June 30, 2006 and had been accruing interest at a rate
of 12% per annum,  at the default rate.  The final  payment was $319,792,  cash,
including accrued interest of $3,901.

On June 25, 2008,  the Company  closed  $600,000 of Senior  Secured  Convertible
Debt.  The  notes  are held by  fourteen  different  lenders,  four of which are
related  parties.  The  note  has an issue  date of June  25,  2008 and  accrues
interest  at 10% per annum,  payable  quarterly.  Note  holders  may at any time
convert  the  balance of the note into common  shares at a  conversion  price of
$0.40. The notes mature on May 1, 2013.

                                       3

<PAGE>




In addition to the Convertible  Notes, the Company has issued Investor  Warrants
exercisable  for a total of 300,000  shares of the Company's  common stock.  The
warrants  have an exercise  price of $0.40 per share and a term of 7 years.  The
warrants provide for cashless exercise and have piggy back registration rights.

The Company  issued 1 warrant for each $1.00 note sold, to the Placement  Agent,
in total 600,000 were issued to the Agent.  The warrants have an exercise  price
of $0.40 per share and a term of 7 years.  The  warrants  provide  for  cashless
exercise and have piggy back registration rights.

Management will need to seek and obtain additional funding, via loans or private
placements  of stock,  for future  operations  and to provide  required  working
capital.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The  preparation of financial  statements  included in this Quarterly  Report on
Form 10-Q requires  management to make estimates and assumptions that affect the
reported  amounts  of  assets  and  liabilities  at the  date  of the  financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. On an on-going basis,  management  evaluates its estimates and
judgments.   Management   bases  its   estimates  and  judgments  on  historical
experiences  and on various  other  factors that are  believed to be  reasonable
under  the  circumstances,  the  results  of which  form the  basis  for  making
judgments  about the  carrying  value of  assets  and  liabilities  that are not
readily  apparent  from other  sources.  Actual  results  may differ  from these
estimates  under  different  assumptions  or  conditions.  The more  significant
accounting  estimates  inherent in the  preparation  of the Company's  financial
statements  include estimates as to the valuation of equity related  instruments
issued,  and valuation  allowance for deferred income tax assets. Our accounting
policies  are  described in the notes to  financial  statements  included in the
Annual  Report  on Form  10-K.  The more  critical  accounting  policies  are as
described below.

The  Company  believes  that the  following  are  some of the  more  significant
accounting  policies and methods used by the Company: o revenue  recognition;  o
value  of  long-lived  assets;  o  inventories;  and  o  income  taxes.  REVENUE
RECOGNITION  The  Company  will  recognize  revenue  when the  product  has been
delivered  to the  customer,  the  sales  price is fixed  or  determinable,  and
collectability is reasonably assured.

                                       4

<PAGE>




INVENTORIES

Inventories  are stated at the lower of average  cost basis or market.  Abnormal
amounts of idle facility expenses, freight, handling costs, and wasted materials
are recognized as current period charges. Fixed production overhead is allocated
to the costs of conversion into inventories  based on the normal capacity of the
production facility.

VALUATION OF LONG-LIVED ASSETS

The Company  assesses the  impairment of long-lived  assets  whenever  events or
changes  in   circumstances   indicate  that  the  carrying  value  may  not  be
recoverable.  Factors the Company  considers  important  which could  trigger an
impairment  review  include  negative  projected  operating  performance  by the
Company and significant  negative industry or economic trends.  The Company does
not believe that there has been any  impairment to long-lived  assets as of June
30, 2008.

INCOME TAXES

Momentum and its  subsidiary  file a consolidated  federal tax return.  Momentum
uses the asset and liability method in accounting for income taxes. Deferred tax
assets and  liabilities  are  recognized for temporary  differences  between the
financial   statement   carrying  amounts  and  the  tax  bases  of  assets  and
liabilities,  and are measured using the tax rates expected to be in effect when
the differences  reverse.  Deferred tax assets are also recognized for operating
loss and tax  credit  carryforwards.  The  effect on  deferred  tax  assets  and
liabilities  of a change in tax rates is recognized in the results of operations
in the period that includes the enactment date. A valuation allowance is used to
reduce deferred tax assets when uncertainty  exists regarding their  realization

RECENTLY  ISSUED  ACCOUNTING  PRONOUNCEMENTS

The Company has  reviewed  recently  issued  accounting  pronouncements  and the
Company  does not  expect  that  the  adoption  of  recently  issued  accounting
pronouncements will have a material impact on its financial position, results of
operations or cash flows.

ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK -

NOT APPLICABLE

                                       5

<PAGE>




ITEM 4 CONTROLS AND PROCEDURES

Disclosures Controls and Procedures

Under the supervision and with the  participation  of our management,  including
our principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure  controls and  procedures,  as such term is defined
under Rule 13a-15(e)  promulgated under the Securities  Exchange Act of 1934, as
amended  (the  Exchange  Act).  As a result of this  evaluation,  we  identified
material  weaknesses  in our  internal  control over  financial  reporting as of
December 31, 2007.  Accordingly,  we concluded that our disclosure  controls and
procedures were not effective as of December 31, 2007.

As required by SEC Rule 15d-15(b),  our Chief  Executive  Officer carried out an
evaluation  under the supervision and with the  participation of our management,
of the effectiveness of the design and operation of our disclosure  controls and
procedures  pursuant  to  Exchange  Act Rule  15d-14 as of the end of the period
covered by this report. Based on the foregoing  evaluation,  our Chief Executive
Officer has  concluded  that our  disclosure  controls  and  procedures  are not
effective  in  timely  alerting  them to  material  information  required  to be
included in our periodic SEC filings and to ensure that information  required to
be disclosed in our periodic SEC filings is accumulated and  communicated to our
management,  including our Chief Executive  Officer,  to allow timely  decisions
regarding  required  disclosure  as a result of the  deficiency  in our internal
control over financial reporting discussed below.

The material  weakness  identified  in our annual  report on Form 10-KSB for the
year  ended  December  31,  2007 was  related to a lack of an  accounting  staff
resulting in a lack of segregation of duties and accounting  technical expertise
necessary for an effective system of internal control.

ITEM 4T. CONTROLS AND PROCEDURES

Management's Quarterly Report on Internal Control over Financial Reporting.

Management's  assessment  of  the  effectiveness  of the  registrant's  internal
control over financial  reporting is as of the period ended June 30, 2008. Based
on the evaluation, management concluded that there is a material weakness in our
internal control over financial reporting.  The material weakness relates to the
monitoring  and review of work performed by contracted  accounting  personnel in
the preparation of audit and financial statements,  footnotes and financial data
provided to Momentum's  registered public accounting firm in connection with the
annual audit. Until October 2007, all of our financial reporting was carried out
by our  Chief  Financial  Officer,  and we  did  not  have  an  audit  committee
established  until October 12, 2007. This lack of an accounting staff results in
a lack of segregation of duties and accounting technical expertise necessary for
an  effective  system of  internal  control.

A  material  weakness  is  a  control  deficiency,  or  combination  of  control
deficiencies,  in ICFR  such  that  there  is a  reasonable  possibility  that a
material  misstatement of our annual or interim financial statements will not be
prevented or detected on a timely  basis by  employees  in the normal  course of
their assigned functions.

                                       6

<PAGE>




Notwithstanding  this  material  weakness,  we  believe  that  the  consolidated
financial  statements  included in this report fairly  present,  in all material
respects,  our consolidated  financial  position and results of operations as of
and for the period  ended June 30,  2008.  Remediation  of Material  Weakness As
discussed in  Management's  Annual  Report on Internal  Control  over  Financial
Reporting,  as of December  31,  2007,  there were  material  weaknesses  in our
internal  control over financial  reporting.  We are in the process of analyzing
our processes for all business units and the  establishment  of formal  policies
and  procedures  with  necessary  segregation  of duties,  which will  establish
mitigating  controls to compensate  for the risk due to lack of  segregation  of
duties.  In  addition,  we are  evaluating  the  necessary  steps to improve our
controls over  financial  reporting and we are in the initial  planning phase of
upgrading,  where  possible,  certain  of  our  information  technology  systems
impacting financial reporting.

Through these steps, we believe we are addressing the deficiencies that affected
our internal  control over financial  reporting as of December 31, 2007 and June
30,  2008.  However,  the  effectiveness  of any system of internal  controls is
subject to inherent  limitations and there can be no assurance that our internal
control over financial reporting will prevent or detect all errors.  Because the
remedial actions require hiring of additional  personnel,  upgrading  certain of
our information technology systems, and relying extensively on manual review and
approval,  the  successful  operation  of these  controls  for at least  several
quarters  may be required  before  management  may be able to conclude  that the
material weakness has been remediated.

The aggregate costs of remediation are unknown at this time.

Changes in Internal Control Over Financial Reporting.

There  was no change in our  internal  control  over  financial  reporting  that
occurred during the period ended June 30, 2008, that has materially affected, or
is reasonably likely to materially  affect,  our internal control over financial
reporting.

                                       7

<PAGE>




                           PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

In February 2008, Momentum received notice of its inclusion in a legal complaint
filed  against  Vertex  Energy by Purity  Water  Company  of San  Antonio in the
Circuit  Court of Mobile,  Alabama.  The  complaint  alleges  that  Vertex,  the
defendant, contracted with Purity Water, the plaintiff, to remove water from two
million gallons of Biodiesel  stored in Alabama.  The complaint  further alleges
that Vertex engaged several other companies,  including Momentum Biofuels, Inc.,
as  subcontractors to service the contract.  Momentum  submitted an affidavit to
the court on April 25,  2008,  attesting  that the  Company  had no  contractual
agreement  with either the  plaintiff or any of the other  parties  named in the
complaint.  Momentum has since been dismissed from the suit without prejudice by
the presiding District Court in Mobile, Alabama.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
<TABLE>
<CAPTION>
<S>           <C>            <C>                      <C>               <C>

The Company made the following unregistered sales of its securities from May 1, 2008 through June 30, 2008.

Date of Sale  Title of       No. of Shares            Consideration    Class of Purchaser
             Securities
--------------------------------------------------------------------------------------------------------------------
6/25/08  Convertible Notes  1,500,000                $600,000          Business Associate
6/25/08  Warrants             300,000                $600,000          Business Associate
6/25/08  Warrants             600,000                $600,000          Business Associate
</TABLE>

Exemption From Registration Claimed

All of the sales by the Company of its unregistered  securities were made by the
Company in reliance upon Section 4(2) of the Act. All of the individuals  and/or
entities listed above that purchased the unregistered  securities were all known
to the Company and its management,  through pre-existing business relationships,
as long standing business  associates,  friends,  and employees.  All purchasers
were provided access to all material information,  which they requested, and all
information  necessary to verify such  information  and were afforded  access to
management of the Company in connection with their purchases.  All purchasers of
the unregistered securities acquired such securities for investment and not with
a view  toward  distribution,  acknowledging  such  intent to the  Company.  All
certificates  or  agreements  representing  such  securities  that  were  issued
contained restrictive legends,  prohibiting further transfer of the certificates
or agreements representing such securities, without such securities either being
first registered or otherwise exempt from  registration in any further resale or
disposition.

                                       8

<PAGE>



ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS.

The  following is a complete  list of exhibits  filed as part of this Form 10-Q.
Exhibit  numbers  correspond  to the numbers in the Exhibit Table of Item 601 of
Regulation S-K.

          31.1  Certification by the Chief Executive Officer pursuant to Section
          302 of the Sarbanes-Oxley Act.

          32.1  Certification by the Chief Executive Officer pursuant to Section
          906 of the Sarbanes-Oxley Act.

                                       9

<PAGE>




                                   SIGNATURES


In accordance with the  requirements of the Securities  Exchange Act of 1934, as
amended,  the  registrant  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                                           MOMENTUM BIOFUELS, INC.
                                              (The Registrant)


Date:  August 19, 2008               By: /s/ Gregory A. Enders
                                         ---------------------
                                             Gregory A. Enders,
                                             President, Chief Executive Officer,
                                             and Principal Accounting Officer


                                       10