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: September 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]

As of October 31, 2008, there were 47,724,444  shares of the  registrant's  sole
class of common shares outstanding.


<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>
<S>                                                                                             <C>





PART I - FINANCIAL INFORMATION

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

         Consolidated Balance Sheets -September 30, 2008 (Unaudited) and
                           December 31, 2007(Audited)                                             F-1

         Consolidated Statements of Operations (Unaudited)  -
                  Three and Nine months ended September 30, 2008 and 2007                         F-2

         Consolidated Statements of Changes in Shareholders' Equity -
                   (Unudited) September 30, 2008                                                  F-3

         Consolidated  Statements  of  Cash  Flows  (Unaudited)  - Nine
                  months ended September 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 - Not Applicable                                                         8

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

Item 3.  Defaults Upon Senior Securities - Not Applicable                                           8

Item 4.  Submission of Matters to a Vote of Security Holders - Not Applicable                       8

Item 5.  Other Information - Not Applicable                                                         8

Item 6.  Exhibits                                                                                   8

SIGNATURES                                                                                          9

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


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


                                                                    September 30, 2008   December 31, 2007
                                                                   ------------------   ------------------
                                                                      (Unaudited)           (Audited)
ASSETS
Current Assets
Cash                                                                           $ 831            $ 777,171
Accounts Receivable, net                                                         750                3,859
Inventory                                                                      2,239               56,759
Prepaid insurance                                                             11,020               33,766
                                                                   ------------------   ------------------
     Total current assets                                                     14,840              871,555

Property & equipment, net of accumulated depreciation
   and amortization                                                        2,882,225            3,253,410
Other Assets                                                                 344,518               26,278
                                                                   ------------------   ------------------
TOTAL ASSETS                                                             $ 3,241,583          $ 4,151,243
                                                                   ==================   ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable                                                           $ 434,892            $ 194,226
Accounts payable - related parties                                            34,052                    -
Accrued expenses                                                             347,431              191,942
Advances - related parties                                                    10,000                    -
Short term notes payable - related parties                                         -              315,891
                                                                   ------------------   ------------------
      Total Current Liabilities                                              826,375              702,059
                                                                   ------------------   ------------------
Long Term Liabilities
Convertible notes payable - net of discount - related parties                 49,262                    -
Senior secured convertible note - net of discount                            187,188                    -
                                                                   ------------------   ------------------
Total Long Term Liabilities                                                  236,450                    -
                                                                   ------------------   ------------------
Total Liabilities                                                          1,062,825              702,059
                                                                   ------------------   ------------------
Stockholders' Equity
     Common stock, $0.01 par value; 500,000,000  shares authorized,
     47,724,444 and 54,828,756 shares issued and outstanding
     on September 30, 2008 and December 31, 2007, respectively               477,244              548,287
Additional paid-in capital                                                13,905,087           11,853,153
Accumulated Deficit                                                      (12,203,573)          (8,952,256)
                                                                   ------------------   ------------------
Total Stockholders' Equity                                                 2,178,758            3,449,184
                                                                   ------------------   ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                               $ 3,241,583          $ 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                       Nine Months Ended
                                                           September 30,                           September 30,
                                                     2008                2007                2008               2007
                                                ----------------    ----------------    ----------------   ----------------
Revenue                                                $ 37,594           $ 389,697           $ 385,951          $ 487,486
Cost of goods sold                                        4,642             434,313             256,265            561,534
                                                ----------------    ----------------    ----------------   ----------------
Gross profit                                             32,952             (44,616)            129,686            (74,048)


Operating Expenses
Plant expenses                                          314,898             379,564           1,102,838            485,426
General and administrative                              710,882           2,095,565           2,230,821          6,650,409
                                                ----------------    ----------------    ----------------   ----------------
Total Operating Expenses                              1,025,780           2,475,129           3,333,659          7,135,835
                                                ----------------    ----------------    ----------------   ----------------
Loss from operations                                   (992,828)         (2,519,745)         (3,203,973)        (7,209,883)
                                                ----------------    ----------------    ----------------   ----------------
Other Income (Expense)
Interest income                                               -               8,913               1,311             10,954
Interest expense                                        (43,705)            (24,666)            (48,655)           (42,133)
                                                ----------------    ----------------    ----------------   ----------------
Total Other Income (Expense)                            (43,705)            (15,753)            (47,344)           (31,179)
                                                ----------------    ----------------    ----------------   ----------------
Net Loss                                            $(1,036,533)        $(2,535,498)        $(3,251,317)       $(7,241,062)
                                                ================    ================    ================   ================
Per Share Information:
Weighted average number of common
   shares outstanding - Basic and diluted            47,500,965          52,791,432          49,407,753         51,315,424
                                                ================    ================    ================   ================
Net Loss per Share                                      $ (0.02)            $ (0.05)            $ (0.07)           $ (0.14)
                                                ================    ================    ================   ================



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 September 30, 2008
                                  (Unaudited)

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


                                            Common Stock                 Additional      Accumulated Deficit
                                      Shares            Amount             Paid-In                                  Totals
                                                                           Capital
                                     ----------------  ---------------  -----------------  ------------------   ---------------

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                     195,688            1,957          1,210,445                   -         1,212,402
Debt Discount                                      -                -            389,518                   -           389,518
Warrants issued for services                       -                -            298,971                   -           298,971
Net loss                                           -                -                  -          (3,251,317)       (3,251,317)
                                     ------------------------------------------------------------------------------------------
Balance - September 30, 2008              47,724,444        $ 477,244        $13,905,087       $ (12,203,573)      $ 2,178,758
                                     ==========================================================================================

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>



                                                                         Nine Months Ended September 30,
                                                                            2008                  2007
                                                                     -------------------    ------------------

Cash Flows from Operating Activities
Net loss                                                                   $ (3,251,317)         $ (7,241,062)
Adjustments to reconcile net loss to cash used in
   operating activities:
Depreciation                                                                    393,458               146,688
Bad debt expense                                                                 29,866                     -
Deferred loan cost expense                                                       22,731                     -
Interest expense - amortization of debt discount                                 25,968                     -
Share based compensation                                                      1,124,044             5,676,109
Shares issued for service                                                        88,358                     -
Changes in Assets and Liabilities
Accounts receivable                                                             (26,757)              (49,686)
Inventory                                                                        54,520               (31,671)
Prepaid expenses and other current assets                                        22,746               (16,156)
Accounts payable                                                                274,718              (418,572)
Accrued expenses                                                                155,490               129,514
                                                                     -------------------    ------------------
Net Cash Used in Operating Activities                                        (1,086,175)           (1,804,836)

Cash Flows used in Investing Activities
Other Assets                                                                    (42,000)                    -
Acquisition of fixed assets                                                     (22,274)             (945,184)
                                                                     -------------------    ------------------
Net Cash Used in Investing Activities                                           (64,274)             (945,184)

Cash Flows from Financing Activities
Payment of note payable                                                        (315,891)             (230,556)
Loans from shareholders                                                          10,000                67,736
Stock issued for cash                                                            80,000             5,111,500
Offering costs                                                                        -               (90,863)
Proceeds from convertible notes                                                 600,000                     -
                                                                     -------------------    ------------------
Net Cash Provided by Financing Activities                                       374,109             4,857,817
                                                                     -------------------    ------------------

Net (Decrease) increase in Cash                                                (776,340)            2,107,797

Cash and cash equivalents - Beginning of period                                 777,171                19,477
                                                                     -------------------    ------------------
Cash and cash equivalents - End of period                                         $ 831           $ 2,127,274
                                                                     ===================    ==================
Supplemental Disclosure of Cash Flow Information:
Cash Paid During the period for:
Interest                                                                       $ 12,661              $ 40,403
                                                                     ===================    ==================
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 September 30, 2008
                                   (Unaudited)

Note 1. -Basis of Presentation

The accompanying  unaudited interim financial  statements of Momentum  Biofuels,
Inc. (the Company),  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 (SEC), 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  nine  months  ended
September  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
$12,203,573 at September 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.

                                      F-5
<PAGE>




Note 3 - Notes Payable to Related Parties
<TABLE>
<CAPTION>
<S>                                                   <C>                 <C>

Notes payable as of September 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.                   (75,738)                 -


                                                     ---------------     ---------------
  Total                                                  $  49,262         $    315,891
                                                     ===============      ==============
</TABLE>

Note 4 - Advances from Related Parties

During the nine months  ended  September  30,  2008,  a director of the Company,
Jeffery Ploen, who beneficially  owns J. Paul Consulting  Corporation,  advanced
the Company funds of $34,052. The advance is non-interesting  bearing and is due
upon demand.

                                      F-6
<PAGE>



Note 5 - Convertible Notes Payable

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

<TABLE>
<CAPTION>
<S>                                                   <C>                 <C>

                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.       (287,812)

                                                       ---------------     --------------
  Total                                                $      187,188      $           -
                                                       ===============     ==============
</TABLE>

In conjunction with the notes 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 warrants is found in Note 8.

Note 6 - Equity Financing

During the nine months ended September 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.

                                      F-7
<PAGE>



Note 7 - Options

Options were originally issued in conjunction with employment agreements for key
employees and  consultants.  Option activity for the nine months ended September
30, 2008 is as follows:
<TABLE>
<CAPTION>
<S>         <C>           <C>        <C>           <C>        <C>          <C>

              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 September
30, 2008 was $1.00.

</TABLE>

                                      F-8
<PAGE>

<TABLE>
<CAPTION>
<S>          <C>          <C>         <C>            <C>        <C>        <C>


Note 8 - Warrant Activity

Warrants activity for the nine months ended September 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 September
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.

(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.

                                      F-9
<PAGE>




(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-10
<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  September 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 LaPorte  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  September 30, 2008 Compared To The
Three Months Ended September 30, 2007

The Company  recognized revenue of $37,594 for the three months ending September
30,  2008,  compared  to  $389,697  of  revenue  during the three  months  ended
September 30, 2007.

During the three months ended September 30, 2008, the Company incurred $4,642 in
cost of sales,  resulting in a gross  profit of $32,952  compared to $434,313 in
cost of goods sold;  resulting  in a gross loss of $44,616 for the three  months
ended September 30, 2007.  During the three months ended September 30, 2008, the
Company incurred operating expenses of $1,025,780  compared to $2,475,129 during
the three months ended September 30, 2007.  Operating  expenses during the three
months  ended  September  30,  2008  included,  $314,898 in plant  expenses  and
$710,882 in general and administrative  expenses,  compared to $379,564 in plant
expenses and  $2,095,565 in  administrative  expenses for the three months ended
September 30, 2007. Included in the general and administrative  expenses for the
three months ended  September 30, 2008 is $394,395 for executive  stock options.
Included in the general and  administrative  expenses for the three months ended
September  30, 2007 was $794,878 of expenses for  executive  stock  options.  In
addition,  included  in the general and  administrative  expenses  for the three
months ended September 30, 2007 were $547,579  relating to the warrants  awarded
to TES Energy  Development,  LLC and  $450,000  relating  to stock  provided  to
members of the Board of Directors as compensation.

During the three  months ended  September  30,  2008,  the Company  incurred net
interest  expense of $43,705,  compared to $15,753  for the three  months  ended
September  30,  2007.

During the three months ended  September 30, 2008, the Company  recognized a net
loss of $1,036,533  compared with a net loss of $2,535,498  for the three months
ended  September  30, 2007.  The  decrease of  $1,498,965  was due  primarily to
decrease  in warrant  expense,  Board of Director  compensation  and share based
compensation,  as discussed  above.  The net loss per share for the three months
ended  September 30, 2008,  was $0.02 per share compared to a net loss per share
of $0.05 for the three months ending September 30, 2007.

Results of Operations  For The Nine Months Ended  September 30, 2008 Compared To
The Nine Months Ended September 30, 2007

The Company  recognized revenue of $385,951 for the nine months ending September
30, 2008, compared to $487,486 of revenue during the nine months ended September
30, 2007. The Company's revenues were from its activities in processing and sale
of its biodiesel  product.  During the nine months ended September 30, 2008, the
Company incurred cost of goods sold of $256,265,  resulting in a gross profit of
$129,686  compared to $561,534 in cost of goods sold;  resulting in a gross loss
of $74,048 for the nine months ended September 30, 2007.

                                       2
<PAGE>

During the nine months ended September 30, 2008, the Company incurred  operating
expenses of  $3,333,659  compared  to  $7,135,835  during the nine months  ended
September 30, 2007. Included in the operating expenses for the nine months ended
September 30, 2008 are share based compensation costs of $1,124,044  compared to
$4,659,635  for the nine months ended  September 30, 2007. The increase in total
expenses,  net of the share  based  compensation  of $266,585 is a result of the
increased  operations of the Company during the nine months ended  September 30,
2008.  Total expenses  during the nine months ended September 30, 2008 included,
$1,102,838  in plant  expenses  and  $2,230,821  in general  and  administrative
expenses.

During the nine months ended  September 30, 2008,  the Company  recognized a net
loss of $3,251,317  compared  with a net loss of $7,241,062  for the nine months
ending  September  30, 2007.  The decrease of  $3,989,745  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 nine months ended  September 30, 2008, was $0.07 per share compared to a
net loss per share of $0.14 for the nine months ending September 30, 2007.

LIQUIDITY  AND CAPITAL RESOURCES

At September  30,  2008,  the Company had $831 in cash and  $3,240,752  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 nine months ended September 30,
2008 was  $1,086,175.  During the nine months  ended  September  30,  2007,  the
Company used net cash of  $1,804,836  in operating  activities.  During the nine
months ended  September  30, 2008,  net losses of  $3,251,317  were adjusted for
non-cash items that included  $393,458 in depreciation and amortization  expense
and  $1,124,044  in share  based  compensation.  During  the nine  months  ended
September  30, 2007,  net losses of  $7,241,062  were  adjusted for the non-cash
items of $146,688 in  depreciation  and  amortization  expense and $5,676,109 in
share based compensation.

During the nine months ended  September  30,  2008,  the Company used $64,274 in
cash in its investing  activities.  During the nine months ended September 30,
2007, the Company used $945,184 in its investing activities.

Net cash received by financing activities during the nine months ended September
30, 2008 was  $374,109.  During the nine months ended  September  30, 2007,  the
Company received funds of $4,857,817 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 nine  months  ended
September 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.


                                       3

<PAGE>

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.

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.  Management cannot make any assurances it will be able to complete such
a transaction.

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.


                                       4

<PAGE>

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.

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
September 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  September 30, 2008.
Based on the evaluation,  management concluded that there is a material weakness
in our internal control over financial reporting. 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.

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 September 30, 2008.


                                       6

<PAGE>

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 have analyzed our processes for all business units
and the  established  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 have evaluated 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
September  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  September  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.

None.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company did not make any unregistered sales of its securities from July 1,
2008 through September 30, 2008.

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.

                                       8

<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:  November 14, 2008            By: /s/ Gregory A. Enders
                                        ---------------------
                                            Gregory A. Enders,

                                President, Chief Executive Officer,
                                and Principal Accounting Officer


                                       9