UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
DC  20549





FORM
10-Q





(Mark
one)





[X]
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
quarterly period ended September 30, 2008





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





For the
transition period from ______ to ______





Commission
file number 000-50048





MOTIVNATION,
INC.


(Exact
name of small business issuer as specified in its charter)





Nevada
            
            82-6008492(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer I.D. No.)





8
Corporate Park, Suite 300


Irvine,
California  92606


(Address
of Principal Executive Offices)





18101 Von
Karman Ave. Ste. 330


Irvine,
California  92612


(Former
Address of Principal Executive Offices)





(949)
266-8979


(Registrant’s
telephone number)





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





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.





Large
accelerated filer
(  )                                                                                     Accelerated
filer (  )





Non-accelerated
filer
(  )                                                                           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 shares outstanding of each of the issuer's classes of common
stock, as of August 12, 2008.




Common
      Stock, Par Value $0.001
            
            80,258,158[Missing Graphic Reference]
            
            [Missing Graphic Reference]Title
      of Class
            
            Number
      of Shares Outstanding as of November 5,
2008









TABLE
OF CONTENTS








Part
      I
            
            
            1Financial
      Statement Item
            
            
            1Financial
      Statements
            
            
            1Balance
      Sheet
            
            
            1Income
      Statement
            
            
            2Cashflow
      Statement
            
            
            3Financial
      Footnotes
            
            
            4Management
      Discussion & Analysis or Plan of Operations
            
            
            15Controls
      and Procedures
            
            
            27Part
      II
            
            
            28Legal
      Proceedings
            
            
            28Changes
      in Securities
            
            
            29Defaults
      Upon Securities
            
            
            29Submission
      to a Vote
            
            
            30Other
      Information
            
            
            30Exhibits
      and Reports
            
            
            30Signatures
            
            
            32








Exhibits








Index
      to Exhibits
            
            
            33Exhibits
            
            
            34








Except as
otherwise noted in this report, “MotivNation,” the “Company,” “we,” “us” and
“our” collectively refer to MotivNation, Inc.























As
      of September 30,
            As
      of December 31,2008
            
            2007(Unaudited)
            
            (Audited)ASSETSCurrent
      AssetsCash
            
            $             33,994
            
            $                      90,672Cash
      in Escrow
            
            17,500
            
            -Prepaid
      expenses and other current assets
            
            605
            
            11,532Net
      assets of TrixMotive held for liquidation
            
            70,497
            
            223,664Total
      Current Assets
            
            122,596
            
            325,868Debt
      issuance cost, net
            
            4,680
            
            23,805TOTAL
      ASSETS
            
            $           127,276
            
            $                    349,673LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      LiabilitiesAccounts
      payable
            
            $             10,810
            
            $                      46,266Accrued
      liabilities
            
            664,099
            
            667,898Net
      liabilities of discontinued operations
            
            25,605
            
            10,588Net
      liabilities of TrixMotive in liquidation
            
            495,137
            
            466,057Convertible
      notes payable, net, current portion
            
            1,450,517
            
            -Short-term
      notes payable to related parties
            
            177,485
            
            157,485Total
      Current Liabilities
            
            2,823,653
            
            1,348,294Long-Term
      DebtConvertible
      notes payable, net of unamortized discount of $1,008,871
    and
            25,023
            
            698,786$1,394,249
      for 2008 and 2007, respectivelyDerivative
      liabilities
            
            5,154,254
            
            3,909,035Total
      Long-Term Liabilities
            
            5,179,277
            
            4,607,821Total
      Liabilities
            
            8,002,930
            
            5,956,115Stockholders'
      DeficitCommon
      Stock, $0.001 par value; 300,000,000 shares authorized;issued
      and outstanding 2008 58,754,158 shares; 2007 16,266,157
    shares
            58,932
            
            16,267Paid-in
      Capital
            
            2,541,889
            
            2,546,761Accumulated
      deficit
            
            (10,476,475)
            
            (8,169,470)Total
      Stockholders' Deficit
            
            (7,875,654)
            
            (5,606,442)TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
            
            $           127,276
            
            $                    349,673








1












For
      three months ended
            
            For
      nine months endedSeptember
      30
            
            September
      302008
            
            2007
            
            2008
            
            2007Operating
      Expenses:Selling,
      general and administrative Expenses
            $         84,590
            
            $          83,341
            
            $     217,813
            
            $      246,630Total
      Operating Expenses
            84,590
            
            83,341
            
            217,813
            
            246,630Operating
      loss
            (84,590)
            
            (83,341)
            
            (217,813)
            
            (246,630)Other
      income(expenses)Interest
      and other income
            2
            
            118
            
            111
            
            3,002Change
      in derivative liabilities
            15,028
            
            126,443
            
            (277,663)
            
            176,470Interest
      expense
            (74,061)
            
            (41,618)
            
            (165,952)
            
            (124,083)Financing
      costs
            (469,650)
            
            (140,867)
            
            (1,394,304)
            
            (349,201)Total
      other income(expenses)
            (528,681)
            
            (55,924)
            
            (1,837,808)
            
            (293,812)Net
      loss before state franchise tax
            (613,271)
            
            (139,265)
            
            (2,055,621)
            
            (540,442)State
      franchise tax
            -
            
            -
            
            2,400
            
            2,400Net
      loss from continuing operations
            (613,271)
            
            (139,265)
            
            (2,058,021)
            
            (542,842)Discontinued
      OperationsNet
      loss from discontinued operations(net
      of applicable taxes of $0 for 2008 and 2007)
            (232,362)
            
            (125,542)
            
            (248,984)
            
            (522,664)Net
      loss
            $     (845,633)
            
            $       (264,807)
            
            $(2,307,005)
            
            $
      (1,065,506)Net
      loss from continuing operations per share-Basic and
Diluted
            $            (0.01)
            
            $             (0.01)
            
            $          (0.07)
            
            $          (0.06)Net
      loss
            $            (0.02)
            
            $             (0.02)
            
            $          (0.08)
            
            $          (0.12)Weighted
      Average Number of Shares
            47,738,158
            
            12,094,313
            
            30,736,780
            
            8,790,853









2












For
      Nine Months Ended September 30,
            2008
            
            2007CASH
      FLOW FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS:Net
      loss
            $   (2,307,005)
            
            $(1,065,506)Add:
      Net loss from discontinued operations, net of tax
            248,984
            
            522,664Adjustments
      to reconcile net loss to net cash used in operating
      activities:Noncash
      interest expense and financing costs
            1,414,304
            
            349,201Change
      in derivative liabilities
            277,663
            
            (176,470)Issuance
      of stocks for services
            1,250
            
            -(Increase)
      Decrease in:Cash
      in Escrow
            (17,500)
            
            -Prepaid
      and other assets
            10,927
            
            452Increase
      (Decrease) in:Accounts
      payable and accrued liabilities
            248,919
            
            268,449Net
      cash flows used in operating activities from continuing
      operations
            (122,458)
            
            (101,210)CASH
      FLOW FROM INVESTING ACTIVITIES FROM CONTINUING OPERATIONS:Net
      cash flows provided by (used in) investing activities from continuing
      operations
            -
            
            -CASH
      FLOW FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS:Proceeds
      from convertible debt
            117,500
            
            -Net
      cash flows provided by (used in) financing activities from continuing
      operations
            117,500
            
            -NET
      CASH USED IN CONTINUING OPERATIONS
            (4,958)
            
            (101,210)NET
      CASH USED IN DISCONTINUED OPERATIONS
            (51,720)
            
            (54,566)NET
      DECREASE IN CASH
            (56,678)
            
            (155,776)CASH
      AT BEGINNING OF YEAR
            90,672
            
            169,052CASH
      AT END OF PERIOD
            $         33,995
            
            $       13,276SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Income
      Taxes Paid
            $           2,400
            
            $                 -Interest
      Paid
            $                   -
            
            $         2,072Noncash
      Investing and Financing  Activities:Conversion
      of notes payable
            $         14,298
            
            $       21,141Transfer
      unamortized discount to paid in capital due to debt
    conversion
            $           5,180
            
            $       15,662Transfer
      derivative liabilities to paid in capital debt conversion
            $         27,425
            
            $       41,471Conversion
      of accrued interest into convertible debt
            $       288,174
            
            $                 -Issuance
      of warrants in lieu of convertible debt
            $         15,000
            
            $                 -Recorded
      a beneficial conversion feature
            $       979,981
            
            $                 -








3






MOTIVATION, INC.




NOTES TO INTERIM
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS






NOTE
1 – NATURE OF BUSINESS





MotivNation  (“the
Company”) was incorporated on April 26, 1946, under the laws of the State of
Idaho. In 2003, the Company merged into its wholly-owned Nevada subsidiary, and
changed its corporate domicile from the State of Idaho to the State of Nevada.
MotivNation, Inc. provides a  range of services that cater to the
custom automotive enthusiast, including the converting, customization, armor
protecting, and installation of custom-built automotives, auto parts and
accessories, as well as restoration and servicing. In fourth quarter of 2007,
the Company discontinued the customizing motorcycles business with Damon’s
Motorcycle Creation.





On July
18, 2008, the Company’s principal operating wholly-owned subsidiary, TrixMotive,
Inc. (“TrixMotive”), has filed protection under Chapter 7 of the United States
Bankruptcy Court in the Central District of California. TrixMotive ceased
operating as of its bankruptcy filing.





NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Presentation of Interim
Information: The financial information at September 30, 2008 and for the
three and nine months ended September 30, 2008 and 2007 are unaudited but
includes all adjustments (consisting only of normal recurring adjustments) that
the Company considers necessary for a fair presentation of the financial
information set forth herein, in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for interim financial
information, and with the instructions to Form 10-QSB. Accordingly, such
information does not include all of the information and footnotes required by
U.S. GAAP for annual financial statements. For further information refer to the
Financial Statements and footnotes thereto included in the Company’s Annual
Report on Form 10-KSB for the year ended December 31, 2007.





The
consolidated balance sheet as of December 31, 2007 has been derived from the
audited consolidated financial statements at that date but does not include all
of the information and footnotes required by U.S. GAAP for complete financial
statements.





The
results for the three and nine months ended September 30, 2008 may not be
indicative of results for the year ending December 31, 2008 or any future
periods.





Principle of Consolidation
and Presentation: The accompanying consolidated financial statements
include the accounts of MotivNation, Inc. and its subsidiaries after elimination
of all intercompany accounts and transactions.  As the Company ceased
the customizing motorcycles business in fourth quarter of 2007 and its
wholly-owned subsidiary, TrixMotive, ceased operations effective as of the
bankruptcy filing date, the accompanying financial statements have been
retroactively adjusted to reflect the impact of the discontinuation of both
businesses. The results of the customizing automobiles and motorcycles segments
have been classified as discontinued operations in the accompanying consolidated
statements of operations for the three and nine months ended September 30, 2008
and 2007.





Use of Estimates: The
preparation of the accompanying consolidated financial statements in conformity
with accounting principles generally accepted in the United States (U.S. GAAP)
requires management to make certain estimates and assumptions that directly
affect the results of reported assets, liabilities, revenue, and expenses.
Actual results may differ from these estimates.








Convertible Notes Payable
and Derivative Liabilities: The Company accounts for convertible notes
payable and warrants in accordance with Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This standard requires the
conversion feature of convertible debt be separated from the host contract and
presented as a derivative instrument if certain conditions are met. Emerging
Issue Task Force (EITF) 00-19, "Accounting for Derivative Financial
Instruments Indexed to and Potentially Settled in a Company's Own Stock"
and EITF 05-2, "The Meaning of
"Conventional Convertible Debt Instrument" in Issue No. 00-19" were also
analyzed to determine whether the debt instrument is to be considered a
conventional convertible debt instrument and classified in stockholders' equity.
The convertible notes payable  were evaluated and determined not
conventional convertible and, therefore, because of certain terms and provisions
including liquidating damages under the associated registration rights agreement
the embedded conversion option was bifurcated and has been accounted for as a
derivative liability instrument. The stock warrants issued in conjunction with
the convertible notes payable were also evaluated and determined to be a
derivative instrument and, therefore, classified as a liability on the balance
sheet. The accounting guidance also requires that the conversion feature and
warrants be recorded at fair value for each reporting period with changes in
fair value recorded in the consolidated statements of operations.






4




MOTIVATION, INC.
  NOTES TO INTERIM
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)


A
Black-Scholes valuation calculation was applied to both the conversion features
and warrants at issuance dates and report dates. The issuance date valuation was
used for the effective debt discount that these instruments represent. The debt
discount is amortized over the three-year life of the debts using the effective
interest method. The reporting date valuations were used to record the fair
value of these instruments at the end of the reporting period with any
difference from prior period calculations reflected in the consolidated
statement of operations.





Net Income (Loss) Per
Share: Basic net income per share includes no dilution and is computed by
dividing net income available to common stockholders by the weighted average
number of common stock outstanding for the period. Diluted net income per share
is computed by dividing net income by the weighted average number of common
shares and the dilutive potential common shares outstanding during the period.
Diluted net loss per common share is computed by dividing net loss by the
weighted average number of common shares and excludes dilutive potential common
shares outstanding, as their effective is anti-dilutive. Dilutive potential
common shares primarily consist of stock warrants, unvested common stocks and
shares issuable under convertible debt.





New Accounting
Pronouncements: In March 2008, the Financial Accounting Standards Board
(“FASB”) issued Statement of Financial Accounting Standards (SFAS) No. 161,
“Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”).
SFAS 161 is intended to improve financial reporting about derivative instruments
and hedging activities by requiring companies to enhance disclosure about how
these instruments and activities affect their financial position, performance
and cash flows. SFAS 161 also improves the transparency about the location and
amounts of derivative instruments in a company’s financial statements and how
they are accounted for under SFAS 133. SFAS 161 is effective for financial
statements issued for fiscal years beginning after November 15, 2008 and interim
periods beginning after that date. As such, the Company is required to adopt
these provisions beginning the quarter ending in February 2009. The Company is
currently evaluating the potential impact of this standard on its consolidated
financial statements.





In
May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally
Accepted Accounting Principles.”  SFAS No. 162 identifies the sources
of accounting principles and the framework for selecting the principles used in
the preparation of financial statements of non-governmental entities that are
presented in conformity with generally accepted accounting principles in the
United States of America.  SFAS No. 162 will be effective 60 days
after the Securities and Exchange Commission approves the Public Company
Accounting Oversight Board’s amendments to AU Section 411.  The
Company does not anticipate the adoption of SFAS No. 162 will have an impact on
its financial statements.




In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts – an interpretation of FASB Statement No.
60.”  SFAS No. 163 requires that an insurance enterprise recognize a
claim liability prior to an event of default (insured event) when there is
evidence that credit deterioration has occurred in an insured financial
obligation.  This Statement also clarifies how SFAS No. 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement to be used to account for premium revenue and claim liabilities.
Those clarifications will increase comparability in financial reporting of
financial guarantee insurance contracts by insurance enterprises. This Statement
requires expanded disclosures about financial guarantee insurance contracts. The
accounting and disclosure requirements of the Statement will improve the quality
of information provided to users of financial statements.  SFAS No. 163
will be effective for financial statements issued for fiscal years beginning
after December 15, 2008.  The Company does not expect the adoption of SFAS
No. 163 will have a material impact on its financial condition or results of
operation.





In
June 2008, the FASB issued FASB SP EITF 03-6-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities.”  SP EITF 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting,
and therefore need to be included in the computation of earnings per share under
the two-class method as described in SFAS No. 128, “Earnings per
Share.”  SP EITF 03-6-1 is effective for financial statements issued
for fiscal years beginning on or after December 15, 2008 and earlier
adoption is prohibited.  The Company is required to adopt SP EITF
03-6-1 in the first quarter of 2009 and is currently evaluating the impact that
SP EITF 03-6-1 will have on its financial statements.




5




MOTIVATION, INC.
  NOTES TO INTERIM
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)


In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in
Consolidated Financial Statements - An Amendment of ARB No. 51." SFAS 160
clarifies the accounting for noncontrolling or minority interests. This
statement requires expanded disclosures in the consolidated financial statements
that clearly identify and distinguish between the interests of the parent's
owners and interests of the noncontrolling owners of a subsidiary. Those
expanded disclosures include a reconciliation of the beginning and ending
balances of the equity attributable to the parent and the noncontrolling owners
and a schedule showing the effects of changes in a parent's ownership interest
in a subsidiary on the equity attributable to the parent. The provisions of SFAS
160 are effective for fiscal years beginning after December 15, 2008. The
Company is currently evaluating the impact of the adoption of SFAS 160 on its
consolidated financial statements.





In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations” (“SFAS 141(R)”). SFAS No. 141(R) will replace SFAS No. 141, and
establishes principles and requirements for how the acquirer in a business
combination recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed and any noncontrolling interest in the
acquire; recognizes and measures the goodwill acquired in the business
combination or gain from a bargain purchase; and determines what information to
disclose to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. SFAS No. 141(R) applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. Currently, the Company does not anticipate that this
statement will have a significant impact on its consolidated financial
statements.





NOTE
3 – GOING CONCERN





The
Company's consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. The Company
incurred losses from continuing operations totaling $2,058,021 for nine months
ended September 30, 2008 and has an accumulated deficit of $10,476,475 and a
working capital deficit of $2,701,057 as of that date.





The
application of the going concern concept is dependent upon the Company’s ability
to receive continued financial support from its creditors, stockholders and
external investors. During 2008, the Company received $117,500 from issuing 8%
callable secured convertible debts. In July 2008, the Company’s principal
operating subsidiary has ceased its operations and filed for Chapter 7
bankruptcy. Subsequently, the Company will continue to build its prototype bike
and seeks for new business opportunities. The ability of the Company to continue
as a going concern is dependent its ability to meet its financing arrangement
and the success of its future operations. The consolidated financial statements
do not include any adjustments that might be necessary if the Company is unable
to continue as a going concern.







NOTE
4 – BALANCE SHEET DETAILS





The
following tables provide details of selected balance sheet items:





September
      30,
            
            December
      31,2008
            
            2007(Unaudited)
            
            (Audited)Accrued
      LiabilitiesAccrued
      payroll and related taxes
            
            $       447,028
            
            $        327,028Credit
      cards payable
            
            -
            
            1,452Accrued
      interest
            
            188,992
            
            336,673Others
            
            28,079
            
            2,745Total
      accrued liabilities
            
            $       664,099
            
            $        667,898












6




MOTIVATION, INC.
  NOTES TO INTERIM
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




NOTE 5 –
CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITIES









Sale of $17,500 Convertible
Debentures









On
September 26, 2008, the Company sold in a private transaction an aggregate of
$17,500 of convertible debentures (the “2008 Second Debentures”). The principal
amount of the 2008 Second Debentures outstanding accrues interest at the rate of
8% per annum payable quarterly. The 2008 Second Debentures are convertible into
shares of the Company’s common stock at 40% of the average of the lowest 3
intra-day trading prices during the 20 trading days immediately prior to the
conversion date. The 2008 Second Debentures are repayable, principal and accrued
interest, on September 26, 2011. The 2008 Second Debentures contain a provision
that prohibits the holder from converting the debenture if such conversion would
result in the holder owning more than 4.99% of the Company’s outstanding common
stock at the time of such conversion.






NOTE 5 –
CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITIES (CONTINUED)









Sale of $100,000 Convertible
Debentures









On April
22, 2008, the Company sold in a private transaction an aggregate of $100,000 of
convertible debentures (the “2008 First Debentures”). The principal amount of
the 2008 First Debentures outstanding accrues interest at the rate of 8% per
annum payable quarterly. The 2008 First Debentures are convertible into shares
of the Company’s common stock at 40% of the average of the lowest 3 intra-day
trading prices during the 20 trading days immediately prior to the conversion
date. The 2008 First Debentures are repayable, principal and accrued interest,
on April 22, 2011. The 2008 First Debentures contain a provision that prohibits
the holder from converting the debenture if such conversion would result in the
holder owning more than 4.99% of the Company’s outstanding common stock at the
time of such conversion.






In
addition, purchasers of the 2008 First Debentures received warrants exercisable
to purchase an aggregate of 10,000,000 shares of the Company’s common stock at
an exercise price of $0.002 per share (the "2008 First Debenture Warrants"). The
2008 First Debenture Warrants shall have a seven year term from date of issuance
and have a cashless exercise feature.




The
Company will file a Registration Statement covering the resale of the common
shares underlying the notes and warrant within 30 days of the closing date. The
Company shall respond to all SEC comments within 10 calendar days of receipt of
said comments and will use its best efforts to cause the Registration Statement
to become effective within 120 days of the closing date. Through to date, the
Company did not file the Registration Statement with the SEC.









Sale of $175,000 Convertible
Debentures









On
November 16, 2007, the Company sold in a private transaction an aggregate of
$175,000 of convertible debentures (the “2007 Debentures”). The principal amount
of the 2007 Debentures outstanding accrues interest at the rate of 8% per annum
payable quarterly. The 2007 Debentures are convertible into shares of the
Company’s common stock at 50% of the average of the lowest 3 intra-day trading
prices during the 20 trading days immediately prior to the conversion date. The
2007 Debentures are repayable, principal and accrued interest, on November 16,
2010. The 2007 Debentures contain a provision that prohibits the holder from
converting the debenture if such conversion would result in the holder owning
more than 4.99% of the Company’s outstanding common stock at the time of such
conversion.






In
addition, purchasers of the 2007 Debentures received warrants exercisable to
purchase an aggregate of 15,000,000 shares of the Company’s common stock at an
exercise price of $0.002 per share (the "2007 Debenture Warrants"). The 2007
Debenture Warrants shall have a seven year term from date of issuance and have a
cashless exercise feature.




The
Company will file a Registration Statement covering the resale of the common
shares underlying the notes and warrant within 30 days of the closing date. The
Company shall respond to all SEC comments within 10 calendar days of receipt of
said comments and will use its best efforts to cause the Registration Statement
to become effective within 120 days of the closing date. Through to date, the
Company did not file the Registration Statement with the SEC.






7




MOTIVATION, INC.
  NOTES TO INTERIM
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




NOTE 5 –
CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITIES (CONTINUED)







Sale of $2,000,000
Convertible Debentures





On
January 30, 2006, the Company completed the sale of $2 million aggregate
principal amount of 8% callable secured convertible notes (the “2005
Debentures”) due in 2009, and issued stock warrants purchasing up to 2.5 million
shares of the Company’s common stock (the “2005 Debenture
Warrants”).  Proceeds from the notes amounted to $1,903,500 after
issuance costs, of which the first traunch of $300,000 (less issuance costs of
$55,000 and $20,000 for prepaid officers’ life insurance) was received on
November 30, 2005, the second traunch of $500,000 (less issuance costs of
$6,000) was received on January 5, 2006, and the third and final traunch of
$1,200,000 (less issuance costs of $15,500) was received on January 30, 2006.
During the first quarter of 2008, the Company has converted $2,750 principal
amount into 2,750,000 shares of the Company’s common stock at the request of the
note holders. There was no conversion during the first quarter of
2007.





The
Company also granted warrants to purchase 2,500,000 shares of common stock in
connection with the financing. The warrants are exercisable at $1.50 per share
for a period of five years, and were fully vested.





The
Company filed a registration statement with the SEC on December 15, 2005 and
amended the registration statement on December 30, 2005, with respect to the
sale of the notes and common stock issuable upon the conversion of the notes.
The issuance costs incurred in connection with the convertible notes are
deferred and being amortized to interest expense over the life of each debenture
traunch.





On
January 31, 2008, related accrued interest of $288,174 was converted into
principal. The converted principal carries interest at 2% per annum and matures
on January 31, 2011.





The
Company is accounting for the conversion option in the debentures and the
associated warrants as derivative liabilities in accordance with SFAS 133,
“Accounting for Derivative
Instruments and Hedging Activities,” EITF 00-19, “Accounting for Derivative Financial
Instruments Indexed to and Potentially Settled in a Company’s Own Stock”
and EITF No. 05-2, “The
Meaning of “Conventional Convertible Debt Instrument” in Issue No.
00-19.”  The Company attributed beneficial conversion features
to the convertible debt using the Black-Scholes Option Pricing Model. The fair
value of the conversion feature has been included as a discount to debt in the
accompanying balance sheet up to the proceeds received from each traunch, with
any excess charged to operations. The discount is being amortized over the life
of each debenture traunch using the interest method.





The
following tables describe the valuation of the conversion feature of each
traunch of the convertible debenture, using the Black Scholes pricing
model:




11/30/05
              Traunch
            1/4/06
              Traunch
            1/30/06
              Traunch
            11/16/07
              Traunch
            1/31/08
              Traunch
            4/22/08
              Traunch
            9/26/08
      TraunchApproximate
      risk free rate
            4.41%
            4.28%
            4.47%
            3.30%
            2.27%
            2.43%
            2.38%Average
      expected life
            3
      years
            3
      years
            3
      years
            3
      years
            3
      years
            3
      years
            3
      yearsDividend
      yield
            0%
            0%
            0%
            0%
            0%
            0%
            0%Volatility
            356.33%
            348.92%
            342.77%
            286.90%
            289.55%
            325.91%
            355.73%Estimated
      fair value of conversion feature
            $599,200
            $998,346
            $2,395,289
            $346,997
            $571,604
            $249,283
            $43,695Charged
      to debt discount
            $300,000
            $500,000
            $1,200,000
            $175,000
            $288,174
            $100,000
            $17,500Charged
      to expenses
            $299,200
            $498,346
            $1,195,289
            $171,997
            $283,434
            $149,283
            $26,195







8





MOTIVATION, INC.
  NOTES TO INTERIM
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




NOTE 5 –
CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITIES (CONTINUED)







The
Company recorded the fair value of the conversion feature as a discount to the
convertible debt in the accompanying balance sheet up to the proceeds received
from each traunch, with any excess charged to expense. Amortization expense
related to the conversion feature discount for the three and nine months ended
September 30, 2008 was $321,681 and $785,872, respectively. Amortization expense
related to the conversion feature discount for the three and nine months ended
September 30, 2007 was $134,494 and $330,077, respectively. Remaining
unamortized discount as of September 30, 2008 was $1,008,871.





The
warrants issued in lieu of the financing were recorded as derivative liabilities
and valued using the Black-Scholes Option Pricing Model with the following
weighted-average assumptions used.





11/30/05
              Traunch
            1/4/06
              Traunch
            1/30/06
              Traunch
            11/16/07
              Traunch
            4/22/08
              TraunchApproximate
      risk free rate
            4.42%
            4.28%
            4.46%
            3.88%
            3.29%Average
      expected life
            5
      years
            5
      years
            5
      years
            7
      years
            7
      yearsDividend
      yield
            0%
            0%
            0%
            0%
            0%Volatility
            356.33%
            348.92%
            342.77%
            286.90%
            325.91%Number
      of warrants granted
            375,000
            625,000
            1,500,000
            15,000,000
            10,000,000Estimated
      fair value of total warrants granted
            $299,975
            $493,692
            $1,184,815
            $59,995
            $15,000





In
accordance with the EITF 00-19, the conversion feature of each convertible
debenture and the stock warrants issued in conjunction with convertible
debentures have been included as long-term liabilities and were originally
valued at fair value at the date of issuance. As a liability, the convertible
features and the stock warrants are revalued each period until and unless the
debt is converted. As of September 30, 2008 and December 31, 2007, the fair
values of the conversion feature and the stock warrants aggregated to $5,136,013
and $3,909,035, respectively.  The Company recorded a loss of $277,663
and a gain of $176,470 for the nine months ended September 30, 2008 and 2007,
respectively. This amount is recorded as “Change in Derivative Liabilities” a
component of other income in the accompanying consolidated statement of
operations.  If the debt is converted prior to maturity, the carrying
value will be transferred to equity.






NOTE
6 – NET LOSS PER SHARE





The
following table sets forth the computation of basic and diluted net loss per
share for the periods:





For
      Three months ended
            
            For
      Nine months endedSeptember
      30,
            
            September
      30,2008
            2007
            
            2008
            2007Numerator:Net
      loss from continuing operations
            $     (613,271)
            $     (139,265)
            
            $   (2,058,021)
            $   (542,842)Net
      loss from discontinued operations
            $     (232,362)
            $     (125,542)
            
            $      (248,984)
            $   (522,664)Net
      loss
            $     (845,633)
            $     (264,807)
            
            $   (2,307,005)
            $(1,065,506)Denominator:Weighted
      average number of shares outstanding
            47,738,158
            12,094,313
            
            30,736,780
            8,790,853Net
      loss per share from continuing operations-basic and
diluted
            $           (0.01)
            $           (0.01)
            
            $            (0.07)
            $         (0.06)Net
      loss per share from discontinued operations-basic and
    diluted
            $           (0.00)
            $           (0.01)
            
            $            (0.01)
            $         (0.06)Net
      loss per share-basic and diluted
            $           (0.02)
            $           (0.02)
            
            $            (0.08)
            $         (0.12)







9




MOTIVATION, INC.
  NOTES TO INTERIM
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE
6 – NET LOSS PER SHARE (CONTINUED)





As of
September 30, 2008, the Company has 27.5 million out-of money stock warrants
excluded from diluted net loss per share computations as their exercise prices
are greater than the average quarterly market price. In accordance with SFAS No.
128, “Earnings Per Share”,the Company has excluded from the calculation of diluted net loss per
share approximately 5,336 and 4,608 shares for the three and nine months ended
September 30, 2008, respectively, relating to its 10% related party convertible
debt that are anti-dilutive.  As of September 30, 2008, depending on
the stock price on the conversion date, up to maximum of 11,009,578,667 shares,
subject to certain adjustments, may be issued upon conversion of the 8% Callable
Secured Convertible Notes and 10% related party debt. For additional
information, see “Note5 – Convertible Notes Payable and Derivative Liabilities”
and “Note 11-Related Party Transactions.”





As of
September 30, 2007, the Company has 2.5 million out-of money stock warrants
excluded from diluted net loss per share computations as their exercise prices
are greater than the average quarterly market price. In accordance with SFAS No.
128, “Earnings Per Share”,the Company has excluded from the calculation of diluted net loss per
share approximately 4,051 and 3,973 shares for the three and nine months ended
September 30, 2007, respectively, relating to its 10% related party convertible
debt that are anti-dilutive.  As of September 30, 2007, depending on
the stock price on the conversion date, up to maximum of 1,094,562,295 shares,
subject to certain adjustments, may be issued upon conversion of the 8% Callable
Secured Convertible Notes. For additional information, see “Note 5 – Convertible
Notes Payable and Derivative Liabilities.”





NOTE
7 – DISCONTINUED OPERATIONS





In July
2008, the Company’s principal operating subsidiary, TrixMotive, Inc., has ceased
operations and filed for Chapter 7 bankruptcy.  In addition, the
Company has discontinued the customizing motorcycles business in the fourth
quarter of 2007.









Pursuant
to SFAS No. 144,“Accounting
for the Impairment or Disposal of Long-Lived Assets,” the accompanying
consolidated financial statements have been retroactively adjusted to reflect
the impact of the discontinuation of TrixMotive and the customizing motorcycles
business. The net operating results, net assets and liabilities, and net cash
flows of both businesses have been reported as “Discontinued
Operations.”









Following
is summarized financial information for the discontinued
operations:




For
      Three Months ended September 30,
            For
      Nine Months ended September 30,2008
            2007
            
            2008
            2007Revenues:Customized
      Automobile
            $            51,920
            $               488,781
            
            $         1,330,390
            $          1,829,916Customized
      Motorcycle
            $                      -
            $                   6,662
            
            $                        -
            $               15,472Total
      Revenues:
            $            51,920
            $               495,443
            
            $         1,330,390
            $          1,845,388Net
      operating loss from discontinued operations:Customized
      Automobile
            $        (184,687)
            $             (123,433)
            
            $          (193,809)
            $           (338,896)Customized
      Motorcycle
            $            (1,129)
            $                 (2,109)
            
            $              (8,629)
            $           (165,024)Net
      operating loss from discontinued operations
            $        (185,816)
            $             (125,542)
            
            $          (202,438)
            $           (503,920)Loss
      on disposal of assets:Customized
      Automobile
            $          (40,158)
            $                           -
            
            $            (40,158)
            $               (1,703)Customized
      Motorcycle
            $            (6,388)
            $                           -
            
            $              (6,388)
            $             (17,041)Total
      loss on disposal of assets
            $          (46,546)
            $                           -
            
            $            (46,546)
            $             (18,744)Net
      Loss from Discontinued Operations
            $        (232,362)
            $             (125,542)
            
            $          (248,984)
            $           (522,664)(Net
      of tax of $0 for 2008 and 2007)







10


MOTIVATION, INC.
  NOTES TO INTERIM
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




NOTE
7 – DISCONTINUED OPERATIONS (CONTINUED)









September
      30, 2008
            December
      31, 2007NET
      ASSETS (LIABILITIES) OF DISCONTINUED OPERATIONS:
            (Unaudited)
            (Audited)Current
      AssetsCash
            $                      (24)
            $                      (24)Inventory
            50,922
            50,922Net
      other assets
            1,650
            13,304Current
      liabilitiesAccounts
      payable
            (22,055)
            (22,055)Accrued
      liabilities
            (55,118)
            (51,755)Other
      liabilities
            (980)
            (980)Net
      assets (liabilities) of discontinued operations
            $               (25,605)
            $               (10,588)September
      30, 2008
            December
      31, 2007NET
      ASSETS (LIABILITIES) IN LIQUIDATION:
            (Unaudited)
            (Audited)Current
      AssetsCash
      in Trustee
            $                 70,458
            $                           -Cash
            -
            5,851Accounts
      receivable, net
            -
            13,953Inventory
            -
            37,057Net
      other assets
            39
            166,803Current
      liabilitiesAccounts
      payable
            (135,773)
            (136,003)Accrued
      liabilities
            (264,671)
            (213,080)Debt
      (a)
            (94,695)
            (116,974)Net
      assets (liabilities) in liquidation
            $             (424,642)
            $             (242,393)(a)
      Net of intercompany payable to parent of $1,422,744 and $1,371,025 as of
      September 30, 2008 andDecember
      31, 2007, respectively.












Summarized
cash flow information for the discontinued operations is as
follows:









For
      Nine Months ended September 30,2008
            2007Net
      cash used by operating activities of discontinued
    operations
            $               (29,440)
            $               (31,903)Net
      cash used by investing activities of discontinued
    operations
            -
            (1,985)Net
      cash used by financing activities of discontinued
    operations
            (22,279)
            (20,678)NET
      CASH USED BY DISCONTINUED OPERATIONS
            $               (51,720)
            $               (54,566)







11


MOTIVATION, INC.
  NOTES TO INTERIM
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





NOTE
8 – BUSINESS AND CREDIT CONCENTRATIONS





The
Company maintains its cash deposit accounts at commercial banks. At times,
account balances may exceed federally insured limits.  The Company has
not experienced any losses on these accounts, and management believes the
Company is not exposed to any significant risk on cash accounts.











NOTE
9 – GUARANTEES AND PRODUCT WARRANTIES





The
Company from time to time enters into certain types of contracts that
contingently require the Company to indemnify parties against third party
claims. These contracts primarily relate to: (i) divestiture agreements, under
which the Company may provide customary indemnifications to purchasers of the
Company’s businesses or assets; (ii) certain real estate leases, under which the
Company may be required to indemnify property owners for environmental and other
liabilities, and other claims arising from the Company’s use of the applicable
premises; and (iii) certain agreements with the Company's officers, directors
and employees, under which the Company may be required to indemnify such persons
for liabilities arising out of their employment relationship.





The terms
of such obligations vary. Generally, a maximum obligation is not explicitly
stated. Because the obligated amounts of these types of agreements often are not
explicitly stated, the overall maximum amount of the obligations cannot be
reasonably estimated. Historically, the Company has not been obligated to make
significant payments for these obligations, and no liabilities have been
recorded for these obligations on its balance sheet as of September 30,
2008.





NOTE
10 – LEGAL PROCEEDINGS





A former
employee of Moonlight Industries filed a workers compensation claim against the
Company. The former employee is alleging that he was injured during the course
of his employment with Moonlight Industries. The damages claimed by the former
employee do not appear to be covered by insurance. Management is responding to
the case vigorously defending it as they believe the claim is frivolous and
potentially fraudulent. In the opinion of the Company’s legal counsel, the
likelihood of an unfavourable outcome is low.







Damon’s
historically leased four (4) units space in city of Brea, California under four
separate non-cancelable operating lease agreements, which expires through
November 30, 2007. Damon’s currently does not occupy the spaces. In July, the
landlord filed claims against Damon’s for the past due rent and charges of all
units, aggregate of $19,657, and the additional amounts due pursuant to the
remaining terms of the lease agreements. The obligations under the remaining
terms of the lease agreements are estimated at a total of $89,086. Subsequently,
Damon’s and the landlord entered into a Surrender Agreement for one unit,
providing that Damon’s agreed to forfeit a security deposit of $1,568 and to pay
a sum of $3,822, representing the unpaid charges and rent through the date of
agreement. In return, the landlord agreed to discharge and release Damon’s from
all obligations under the lease agreement of that unit.









No
provision for any contingent liabilities has been made in the accompanying
consolidated financial statements since management cannot predict the outcome of
the claims or estimate the amount of any loss that may result. In addition, the
Company has received an outside legal opinion from an attorney that states the
outstanding liability is not the Company’s as the original lease was signed by
the previous owners of Damon’s. However, the Company will continue to accrue the
past due rent of $19,657 in the accompanying financial statements until this
matter is resolved.




On
December 7, 2005, a customer of TrixMotive filed a lawsuit in the Superior Court
of Santa Clara County of California against TrixMotive claiming for breach of
contract and warranty, intentional and negligence misrepresentation for a
customized vehicle. The plaintiff seeks $98,827 in compensatory damages and
other unspecified damages plus interest, attorneys’ fees and costs. The
arbitrator after a hearing held on September 22, 2006 awarded that the plaintiff
shall recover from the Company the price of the refrigerator and microwave which
were ordered and paid for by the plaintiff but not installed in the vehicle, and
that all other claims of plaintiff are denied as to the Company. The Plaintiff
rejected the arbitration award on October 19, 2006.  The Company
entered into a settlement agreement on January 28, 2008 to settle the claim in
the amount of $2,000. The Company did not accrue the settlement amount which was
considered immaterial.






12




MOTIVATION, INC.
  NOTES TO INTERIM
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE
10 – LEGAL PROCEEDINGS (CONTINUED)





On July
3, 2007, a claim was filed in the Superior Court of Los Angeles County of
California against TrixMotive, Inc. to seek for a payment of $21,888 due to the
California State Compensation Insurance Fund. The Company agreed to pay $750 per
month commencing January 10, 2008 until the amount as paid in full. The
liability has been accrued already in prior year.





On
January 24, 2008, a customer of TrixMotive filed a lawsuit in the Superior Court
of Middlesex County of New Jersey against TrixMotive claiming for breach of
contract and warranty, intentional and negligence misrepresentation for a
customized vehicle. The claim is in early stage and the outcome of this matter
is not determinable.





While the
outcome of these matters is not determinable, the Company does not expect that
the ultimate costs to resolve these matters will have a material adverse effect
on the Company’s consolidated financial position, results of operations, or cash
flows.





NOTE
11 – RELATED PARTY TRANSACTIONS





The
Company has short-term notes payable to an officer and a related party,
aggregate of $177,485 plus related accrued interest of $54,086 as of September
30, 2008. The notes carry interest at range of 8% to 10% per annum and are
unsecured. On July 2, 2008, the Company, the officer and the related party
agreed to extend the note to December 31, 2008 and to increase the principal by
$20,000 as a cost of extension.  A 10% penalty will be added annually
until the note is paid in full. In addition, the Company granted a conversion
right to the officer allowing him to convert all or any outstanding balance into
the Company’s common stocks at 75% of the average of the lowest three closing
prices during the ten days prior to the date the conversion notice. As a result,
the Company recorded a conversion expense of $115,399 using the Black-Scholes
valuation model:





Approximate
      risk free rate
            1.88%Average
      expected life
            5
      monthsDividend
      yield
            0%Volatility
            249.98%Estimated
      fair value of conversion feature
            $115,399





NOTE
12 – CHANGE OF OFFICERS





On
February 27, 2008 the Chief Financial Officer (“CFO”), Jay Isco, resigned as CFO
and Secretary of the Company.  George Lefevre, the Company’s Chief
Executive Officer (“CEO”), will effective immediately the vacant positions of
CFO and secretary.





NOTE
13 – SEGMENT INFORMATION





The
Company evaluates its reporting segments in accordance with SFAS No. 131, “Disclosures about Segments of an
Enterprise and Related Information.” The Chief Executive Officer has been
identified as the Chief Operating Decision Maker as defined by SFAS No. 131. The
Chief Executive Officer allocates resources to each segment based on their
business prospects, competitive factors, net sales and operating
results.





The
Company previously reported two principal operating segments: (i) custom
motorcycle, and (ii) custom automotive. The custom motorcycle segment provides a
full range of services that cater to motorcycle enthusiast, including the sale,
manufacture and installation of custom-built parts and accessories, the
restoration, repair and servicing and the custom painting work. The custom
automotive segment specializes in creating customized limousines to suit the
tastes and needs of each individual customer.  In fourth quarter of
2007, the Company discontinued the customizing motorcycles business. In July
2008, TrixMotive filed for Chapter 7 Bankruptcy. As a result, both segments are
reclassified to discontinued operations and the Company has no reportable
segment.








13




ITEM
2





MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION







Disclaimer
Regarding Forward Looking Statements






Certain
statements contained in the following description of the business of MotivNation
which are not statements of historical fact are what are known as
"forward-looking statements," which are basically statements about the future,
and which for that reason involve risk and uncertainty, since no one can
accurately predict the future. Words such as "plans," "intends," "seeks,"
"anticipates," "expects," "goal, "hopes" and "objective" often identify such
forward-looking statements, but are not the only indication that a statement is
a forward-looking statement. Such forward-looking statements include statements
of the plans and objectives of the Company’s management with respect to its
present and future operations, and statements which express or imply that such
present and future operations will or may produce revenues, income or profits.
Numerous factors and future events could cause the Company to change such plans
and objectives, or to fail to successfully implement such plans or achieve such
objectives, or to cause such present and future operations to fail to produce
revenues, income or profits.







Plan
of Operation





General







MotivNation,
Inc. provided a range of services that cater to the custom automotive
enthusiast.






The
company’s primary operation and wholly-owned subsidiaryTrixMotive Inc. filed for
bankruptcy in the third quarter of 2008. The company is looking for other
avenues to continue business, and is currently working on finishing its
prototype bike to establish business interest. In addition the company is
looking at licensing the use of Damon’s name.






Our
target clients fall into two categories: the individual custom automotive
enthusiast or collectors of the “one of a kind” custom auto creations, and those
of local fabricators, custom shops, and Original Equipment
Manufacturers.






We also
offer consultative work in the preparation of signature paints blends,
techniques, and design advice related to the dealer’s own project.  For our
original equipment manufacturers we offer services and products that include
signature design for manufactured parts and accessories, which are a party of a
“designer” or “signature” series of products or design
themes.










14




Results
of Operations




Three
Months Ended September 30, 2008 compared to the Three Months Ended September 30,
2007







Revenues
and Loss from Continuing and Discontinued Operations







Our revenue, cost of revenue, selling,
general and administrative expenses, and operating loss for the three months
ended September 30, 2008, as compared to the three months ended September 30,
2007 are as follows:





3
      Months Ended
              September
      30,
              2008
            
            
            3
      Months Ended
              September
      30,
              2007
            
            Percentage
              Change
              Increase
              (Decrease)Revenue
            $
            -
            
            
            -
            
            -
            %Cost
      of revenue
            
            -
            
            
            -
            
            -
            %Gross
      Profit (loss)
            
            -
            
            
            -
            
            -
            %Total
      Operating expenses
            
            84,590
            
            
            83,341
            
            1.5
            %Total
      Other expenses
            
            528,681
            
            
            55,924
            
            845.4
            %Provision
      for income taxes
            
            -
            
            
            -Net
      Loss from Continuing Operations
            
            613,271
            
            
            139,265
            
            340.4
            %Net
      Loss from Discontinued Operations
            
            232,362)
            
            
            125,542
            
            85.1
            %Net
      Loss
            $
            845,633
            
            
            264,807
            
            219.3
            %





Revenues








We had total revenues of $zero
and $zero for the three month period ended September 30, 2008, and 2007
respectively. Due to the bankruptcy of our TrixMotive subsidiary in July of
2008, there were no revenues reported.




Cost of Revenues








We
incurred total costs of $zero and $zero for the three month period ended
September 30, 2008, and 2007, respectively. Due to the bankruptcy of our
TrixMotive subsidiary in July of 2008, there were no revenues
reported.




Operating Expenses




Due to the bankruptcy of our TrixMotive
subsidiary in July of 2008 our operating expenses primarily consist of
administrative expenses and related spending costs to running a public company.
The company’s major expenses decreased by 0.9% for the third quarter of 2008
versus 2007. This primarily occurred from the decrease in salary & wages
expense of 33.3%. In addition decreases in accounting, stock related and rent
expense of approximately 54.5%, 58.3%, and 65.3% respectively. The decrease was
offset by increases in taxes, and legal expense of 100% and 2,163.8% for the
third quarter of 2008 compared to 2007.  Also there were increases in
shipping/delivery and consulting expense of 9.5%, 100% respectively for the same
time period. An additional contribution to the increase was insurance expense of
100% for the same time period in 2008 compared to 2007. Total expenses were
$84,590 for the third quarter of 2008, a 1.5% increase compared to the third
quarter of 2007.  The major expenses incurred during the three months
ended September 30, 2008 and 2007 were:








15





3
      Months
              Ended
              September
      30, 2008
            
            
            3
      Months
              Ended
              September
      30,
              2007
            
            Percentage
              Change
              Increase
              (Decrease)Major
      Expenses:Rent
            $
            1,563
            
            
            4,505
            
            (65.3)
            %Salary
      & Wages
            
            37,500
            
            
            56,250
            
            (33.3)
            %Insurance
            
            848
            
            
            0
            
            100
            %Accounting
      Fees
            
            5,000
            
            
            11,000
            
            (54.5)
            %Consulting
            
            3,625
            
            
            0
            
            100
            %Taxes
            
            22,665
            
            
            0
            
            100
            %Shipping
      and Delivery
            
            403
            
            
            368
            
            9.5
            %Legal
            
            5,150
            
            
            228
            
            2163.8
            %Stock
      Related
            
            3,668
            
            
            8,789
            
            (58.3)
            %Total
      Major Expenses
            
            80,421
            
            
            81,140
            
            (0.9)
            %Total
      Expenses
            
            84,590
            
            
            83,341
            
            1.5
            %





Other
Income and Expenses and Net Loss





Our other income and expenses and net
loss for the three months ended September 30, 2008 and 2007 are as
follows:





3
      Months
              Ended
              September
      30, 2008
            
            
            3
      Months
              Ended
              September
      30, 2007
            
            Percentage
              Change
              Increase
              (Decrease)Other
      income (expenses)Interest
      and other income
            
            2
            
            
            118
            
            (96.3)
            %Change
      in derivative liabilities
            
            15,028
            
            
            126,443
            
            (88.1)
            %Interest
      and other expenses
            
            (74,061)
            
            
            (41,618)
            
            78.0
            %Financing
      costs
            
            (469,650)
            
            
            (140,867)
            
            233.4
            %Total
      other income (expenses)
            
            (528,681)
            
            
            (55,924)
            
            845.4
            %Net
      Loss from Continuing Operations
            $
            845,633
            
            
            264,80)
            
            219.3
            %











During
the three months ended September 30, 2008, our total other expenses increased by
845.4% compared to the three months ended September 30, 2007. This was primarily
due to increase in financing costs and interest/other expense of approximately
233.4% and 78.0% respectively. This increase was slightly offset by a decrease
in interest/other income and a change in derivative liabilities of 96.3%, and
88.1% respectively for the third quarter of 2008 compared to the same period in
2007.  Net loss increased 219.3% primarily due to the 845.4% increase
in total other expenses.














15














Nine
Months Ended September 30, 2008 compared to the Nine Months Ended September 30,
2007







Revenues
and Loss from Continuing and Discontinued Operations







Our revenue, cost of revenue, selling,
general and administrative expenses, and operating loss for the nine months
ended September 30, 2008, as compared to the nine months ended September 30,
2007 are as follows:





9
      Months Ended
              September
      30,
              2008
            
            
            9
      Months Ended
              September
      30,
              2007
            
            Percentage
              Change
              Increase
              (Decrease)Revenue
            $
            -
            
            
            -
            
            -
            %Cost
      of revenue
            
            -
            
            
            -
            
            -
            %Gross
      Profit (loss)
            
            -
            
            
            -
            
            -
            %Total
      Operating expenses
            
            217,813
            
            
            246,630
            
            (11.7)
            %Total
      Other expenses
            
            1,837,808
            
            
            293,812
            
            525.5
            %Provision
      for income taxes
            
            2,400
            
            
            2,400Net
      Loss from continuing operations
            
            2,058,021
            
            
            542,842
            
            279.1
            %Net
      Loss from discontinued operations
            
            248,984
            
            
            522,664
            
            (52.4)
            %Net
      Loss
            $
            2,307,005
            
            
            1,065,506
            
            116.5
            %





Revenues








We had total revenues of $zero
and $zero for the nine month period ended September 30, 2008, and 2007
respectively. Due to the bankruptcy of our TrixMotive subsidiary in July of
2008, there were no revenues reported.




Cost of Revenues








We
incurred total costs of $zero and $zero for the nine month period ended
September 30, 2008, and 2007, respectively. Due to the bankruptcy of our
TrixMotive subsidiary in July of 2008, there were no revenues
reported.




Operating Expenses




Due to the bankruptcy of our TrixMotive
subsidiary in July of 2008 our operating expenses primarily consist of
administrative expenses and related spending costs to running a public company.
The company’s major expenses decreased by 10.8% for the third quarter of 2008
versus 2007. This primarily occurred from the decrease in salary & wages
expense of 25.9%. In addition decreases in rent and accounting expense of
approximately 57.7%, and 36.4% respectively. An additional contribution to the
decrease was stock related expense of 41.3%. The decrease was offset by
increases in consulting, shipping/delivery, and legal expense of 111.2%, 139.9%,
and 7,103.7% for the third quarter of 2008 compared to 2007.  Also
there were increases in taxes, and insurance expense of 1,160.7% and 362.0%
respectively for the same time period.  Total expenses were $217,813
for the third quarter of 2008, a 10.8% decrease compared to the third quarter of
2007.  The major expenses incurred during the nine months ended
September 30, 2008 and 2007 were:






17





9
      Months
              Ended
              September
      30, 2008
            
            
            9
      Months
              Ended
              September
      30,
              2007
            
            Percentage
              Change
              Increase
              (Decrease)Major
      Expenses:Rent
            $
            5,476
            
            
            12,935
            
            (57.7)
            %Salary
      & Wages
            
            125,000
            
            
            168,750
            
            (25.9)
            %Insurance
            
            2,087
            
            
            452
            
            362.0
            %Accounting
      Fees
            
            21,000
            
            
            33,000
            
            (36.4)
            %Consulting
            
            7,625
            
            
            3,611
            
            111.2
            %Taxes
            
            22,665
            
            
            1,798
            
            1,160.7
            %Shipping
      and Delivery
            
            1,241
            
            
            517
            
            139.9
            %Legal
            
            16,389
            
            
            228
            
            7,103.7
            %Stock
      Related
            
            8,072
            
            
            13,742
            
            (41.3)
            %Total
      Major Expenses
            
            209,554
            
            
            235,033
            
            (10.8)
            %Total
      Expenses
            
            217,813
            
            
            246,630
            
            (11.7)
            %





Other
Income and Expenses and Net Loss





Our other income and expenses and net
loss for the nine months ended September 30, 2008 and 2007 are as
follows:





9
      Months
              Ended
              September
      30, 2008
            
            
            9
      Months
              Ended
              September
      30, 2007
            
            Percentage
              Change
              Increase
              (Decrease)Other
      income (expenses)Interest
      and other income
            
            111
            
            
            3,002
            
            (96.3)
            %Change
      in derivative liabilities
            
            (277,663)
            
            
            176,470
            
            (257.3)
            %Interest
      and other expenses
            
            (165,952)
            
            
            (349,201)
            
            33.7
            %Financing
      costs
            
            (1,394,304)
            
            
            (349,201)
            
            299.3
            %Total
      other income (expenses)
            
            (1,837,808)
            
            
            (293,812)
            
            525.5
            %Net
      Loss from Continuing Operations
            $
            2,307,005
            
            
            1,065,506
            
            116.5
            %











During
the nine months ended September 30, 2008, our total other expenses increased by
525.5% compared to the nine months ended September 30, 2007. This was primarily
due to increases in financing costs and interest/other expenses of approximately
299.3% and 33.7% respectively. This was slightly offset by a decrease in
interest/ other income and change in derivative liabilities of 96.3%, and 257.3,
respectively for the nine months ended September 30, 2008, compared to the nine
months ended September 30, 2007. Net loss increased 116.5% primarily due to the
525.5% increase in total other expenses.











18









Liquidity
and Capital Resources




Our cash,
accounts receivable, prepaid expenses, total current assets, total assets, total
current liabilities, and total liabilities as of September 30, 2008, as compared
to December 31, 2007 were as follows:





September
      30,
            
            
            December
      31,2008
            
            
            2007Cash
            $
            33,994
            
            $
            90,672Cash
      in Escrow
            
            17,500
            
            
            -Prepaid
      expenses/other current assets
            
            605
            
            
            11,532Net
      Assets of TrixMotive held for liquidation
            
            70,497
            
            
            223,664Total
      current assets
            
            122,596
            
            
            325,868Total
      assets
            
            127,276
            
            
            349,673Total
      current liabilities
            
            2,823,653
            
            
            1,348,294Total
      liabilities
            
            8,002,930
            
            
            5,956,115





Cash
Requirements





Our cash
obligations are anticipated to increase substantially over the next 12
months.  The cash would be utilized for operational expenses and
general working capital as a result of continued sales growth, continued legal
and professional fees. Historically, we have financed our operations
through cash generated from the sale of equity securities and debt financing, as
well as increased in timing of payments for accounts payable.  At
September 30, 2008, we had a working deficit of $2,701,057.





Operating
activities:





Net cash used in operating activities
from continuing operations was $122,458 for the nine months ended September 30,
2008. This resulted primarily from a net loss of $2,307,005, as well as
increases in cash in escrow of $17,500. An offset to this was the addition of
net loss from discontinued operations, net of tax of $248,984. In addition the
decrease in prepaid and other assets of $10,927 contributed. An additional
offset was an adjustment in issuance of stocks for services of $1,250, non-cash
interest expense and financing costs of $1,414,304 and a change in derivative
liabilities of $277,663.





Investing activities:





Net cash
used in investing activities from continuing operations was $0 for the nine
months ended September 30, 2008





Financing
activities:





Net cash
provided by financing activities from continuing operations was $117,500 for the
nine months ended September 30, 2008, and resulted primarily from proceeds from
convertible debt of $117,500. This was offset by repayments on long-term debt of
$2,780. In addition the company made net repayments to related parties of
$19,500.




Our
liquidity is dependent on our ability to continue to meet our obligations, to
obtain additional financing as may be required and to obtain and maintain
profitability.  Our management continues to look for ways to reduce
operating expenses and secure an infusion of capital through either public or
private investment in order to maintain our liquidity.  These steps
include increasing operating revenues over last year through the growth of the
business by expanding our product line to offer van and hearse conversions to
overseas clientele. The company is constantly testing the market for better
pricing on our costs of goods sold. As well as making timely payments of our
obligations, building our stock and debt sources to provide additional working
capital, and continuing to review our business plan to assure we are moving the
business forward in a cost-effective manner. The company will and continuing
continue to examine the segments of our business that offer the most profitable
opportunity for success and eliminating operations and practices which detract
from our profitability. During the third quarter of 2008 the company was focused
on finishing its prototype bike and seeking new business
opportunities.






19


TrixMotive,
Inc. Bankruptcy






On July
18, 2008 MotivNation’s (the “Company”) principal operating subsidiary,
TrixMotive, Inc. filed Chapter 7 bankruptcy The Company stated that they
bankrupted the subsidiary, which fell victim to the economy, in order to
stabilize ongoing operations and protect the parent company from additional
expenditures by the subsidiary, thus enabling the Company to stay
operational.






Going
Concern






There can
be no assurance that we will be successful in executing our plans to improve
operations or obtain additional debt or equity financing. If the company is
unable to have adequate cash from operations and is unsuccessful in obtaining
financing, the company would have to cut back on operations. In addition there
would be substantial doubt as mentioned in our financial footnotes about our
ability to continue due to a decrease in our working capital and inability to
obtain financing. The operations of the company have continued to be
unprofitable and cash flow negative. The company has been dependent on outside
institutions for additional funding to keep the operations running. The lack of
cash flow has also resulted in increased company liabilities due to the non
payment of federal and state payroll taxes. In addition the company is at
further risk due to lack of workers compensation insurance coverage since the
fourth quarter. If positive cash flow or continued funding can not be achieved,
the company will have to look at other avenues to continue business. This may
possibly include an acquisition or merger of another operation/company by the
exchange of shares. The company wholly owned subsidiary has filed Chapter 7
Bankruptcy and has ceased its current operations.  There can be no
assurance the Parent company will be successful in its attempts to complete
licensing for the use of Damon’s name and establish any business interest for
its custom prototype bike.











Critical
Accounting Policies and Estimates




Our
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenues and expenses for
each period. The following represents a summary of our critical accounting
policies, defined as those policies that we believe are: (a) the most important
to the portrayal of our financial condition and results of operations, and (b)
that require management’s most difficult, subjective or complex judgments, often
as a result of the need to make estimates about the effects of matters that are
inherently uncertain.




Impairment or Disposal of Long-Lived
Assets.The Company reviews long-lived assets for impairment annually,
and whenever circumstances and situations change such that there is an
indication that the carrying amounts may not be recovered. At September 30,
2008, the Company had $zero loss on disposal of assets for continued operation
for the year to date. However the company’s wholly owned subsidiary TrixMotive,
Inc. filed for bankruptcy in July of 2008.





Use of
estimates:  The preparation of the accompanying financial
statements in conformity with accounting principles generally accepted in the
United States (U.S. GAAP) requires our management to make certain estimates and
assumptions that directly affect the results of reported assets, liabilities,
revenue, and expenses.  Actual results may differ from these
estimates.




Revenue Recognition: The
Company’s primary source of revenue comes from the sales of customized
automotive conversions. We recognize revenue based on the completed-contact
method, whereas customer deposits and partial payments of the conversion are
deferred and treated as current liabilities, until the vehicle is completed and
recognized as revenue. Other services such as repairs minor alterations are
recorded when the service is performed.




Allowance for Doubtful
Accounts:   We provide an allowance for doubtful accounts
that is based upon our review of outstanding receivables, historical collection
information, and existing economic conditions.




Cash Equivalents:   For
purposes of the statements of cash flows, we consider all highly liquid debt
instruments with an original maturity of three months or less to be cash
equivalents.






20




Fair Value of Financial
Instruments:   The carrying amounts of the financial
instruments have been estimated by our management to approximate fair
value.




Inventories:   Inventory
includes parts and materials related to the vehicles in the process of being
modified and converted. In addition the company will include the cost of the
unmodified vehicle chassis if purchased in house. Shipping and handling costs
are included in inventory. All inventories are valued at the lower of cost or
market.





The
Company performs periodic inventory procedures and at times identifies supply
inventory that is considered excess inventory or obsolete. The Company writes
the obsolete and excessive inventory down to the lower of cost or market and the
amount is included in general and administrative expenses for the
period.




Property and Equipment:
Property and Equipment are valued at cost.   Maintenance and
repair costs are charged to expenses as incurred. Depreciation is computed on
the straight-line method based on the following estimated useful lives of the
assets: 3 to 7 years for office equipment, and 7 years for furniture and
fixtures, and 10 years for machinery and tools.




Income Taxes. The Company’s
income tax expense involves using the deferred tax assets and liabilities
included on the balance sheet. These tax assets and liabilities are recognized
for the expected tax consequences of temporary differences between the tax bases
of assets and liabilities and their reported amounts. Management judgment is
required in determining the Company’s provision for income taxes, deferred tax
assets and liabilities.





Net Loss Per Common
Share:   The Company accounts for income (loss) per share
in accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS 128"). SFAS No. 128 requires that presentation of
basic and diluted earnings per share for entities with complex capital
structures. Basic earnings per share includes no dilution and is computed by
dividing net income (loss) available to common stockholders by the weighted
average number of common stock outstanding for the period. Diluted earnings per
share reflect the potential dilution of securities that could share in the
earnings of an entity. Diluted net loss per common share does not differ from
basic net loss per common share due to the lack of dilutive items in the
Company.







Risks
and Uncertainties




Our business, and the value of our
common stock, is affected by certain risks and uncertainties, some of which
include the following:




We
Have Historically Lost Money And Losses May Continue In The Future, Which May
Cause Us To Curtail Operations.




Since our
inception, we have not been profitable and we may not be profitable in the
future. We may continue to incur losses on a quarterly or annual basis for a
number of reasons, some within and others outside our control. (See “Our Limited Operating History Makes
It Difficult To Forecast Our Future Results”and “We Are Subject to Price Volatility
Due to Our Operations Materially Fluctuating.”)   No
assurances can be given that we will be successful in reaching or maintaining
profitable operations. Accordingly, we may experience liquidity and cash flow
problems. If our losses continue, our ability to operate may be severely
impacted.




If
We Are Unable To Secure Future Capital, We Will Be Unable To Continue Our
Operations.





The
growth of our business will require the commitment of substantial capital
resources.  We have not been profitable in our
operations.  If funds are not available from operations, we will need
additional funds. We may seek such additional funding through public and private
financing, including debt or equity financing.  Adequate funds for
these purposes, whether through financial markets or from other sources, may not
be available when we need them. Even if funds are available, the terms under
which the funds are available to us may not be acceptable to
us.  Insufficient funds may require us to delay, reduce or eliminate
some or all of our planned activities.







21


Our Independent Auditors Have Noted In
Their Opinion That We Have Suffered Recurring Losses, Which Raises Substantial
Doubt About Our Ability To Continue As A Going Concern.





To
successfully execute our current strategy, we will need to improve our working
capital position.  The report of our independent auditors accompanying
our financial statements for the year ended December 31, 2007 and the notes to
our unaudited financial statements for the nine and three months ended September
30, 2008, however it includes an explanatory paragraph indicating there is a
substantial doubt about the Company’s ability to continue as a going concern due
to recurring losses.  We plan to overcome the circumstances that
impact our ability to remain a going concern through a combination of increased
revenues and decreased costs, with interim cash flow deficiencies being
addressed through additional debt and/or equity financing.  There can
be no assurances that these plans will be successful.








Our
Limited Operating History Renders Makes It Difficult To Forecast Our Future
Results.





We
had been a non-operating company for many years prior to the acquisition of
Damon’s and Moonlight Industries. In 2007 we shut down the Damon’s division and
in the third quarter of 2008 TrixMotive, Inc. filed for bankruptcy. Therefore,
we have a limited operating history and our business and prospects must be
considered in light of the risks and uncertainties inherent in a
development-stage venture, many of which are beyond our control,
including:




·
            our
      ability to distribute, sell and market our services and
      products;






·
            our
      ability to develop and offer new services and
  products;






·
            the
      performance of our automotive products and
  accessories;






·
            the
      significant and ongoing funds needed to achieve our production, marketing
      and sales objectives;






·
            the
      appeal of our services and products to
  consumers;






·
            our
      ability to generate adequate revenue to support our
      operations;






·
            our
      ability to maintain positive cash flow resulting from extended periods of
      monetary responsibility in the form of labor for extensive custom works in
      progress;






·
            the
      loss or injury of our principal design or technical staff;
    and






·
            changes
      in environmental regulation and enforcement relating to our operations,
      including those governing VOC
emissions.






·
            Our
      ability to maintain the operations of its
  acquisitions







We cannot
provide assurances that our business strategy will be successful or that we will
successfully address those risks and the risks described herein.





In
addition, as a result of our limited operating history, our historical financial
and operating information is of limited value in predicting our future operating
results. We may not accurately forecast customer behavior and recognize or
respond to emerging trends, changing preferences or competitive factors facing
us, and, therefore, we may fail to make accurate financial forecasts. Our
current and future expense levels are based largely on our investment plans and
estimates of future revenue. As a result, we may be unable to adjust our
spending in a timely manner to compensate for any unexpected revenue shortfall,
which could force us to curtail or cease our business operations.








We
Are Subject to Price Volatility Due to Our Operations Materially
Fluctuating




As a
result of the evolving nature of the markets in which we compete, as well as the
current nature of the public markets and our current financial condition, we
believe that our operating results may fluctuate materially, as a result of
which quarter-to-quarter comparisons of our results of operations may not be
meaningful. If in some future quarter, whether as a result of such a fluctuation
or otherwise, our results of operations fall below the expectations of
investors, the trading price of our common stock would likely be materially and
adversely affected. You should not rely on our results of any interim period as
an indication of our future performance. Additionally, our quarterly results of
operations may fluctuate significantly in the future as a result of a variety of
factors, many of which are outside our control. Factors that may cause our
quarterly results to fluctuate include, among others:






22


·
            our
      ability to retain existing
customers;






·
            our
      ability to attract new customers at a steady
  rate;






·
            our
      ability to maintain customer
satisfaction;






·
            the
      extent to which our products and services gain market
      acceptance;






·
            introductions
      of products and services by
competitors;






·
            price
      competition in the markets in which we
compete;






·
            our
      ability to attract, train, and retain skilled
  management,






·
            the
      amount and timing of operating costs and capital expenditures relating to
      the expansion of our business, operations, and infrastructure;
      and






·
            general
      economic conditions and economic conditions specific to the aftermarket
      automotive parts, service and accessories
  industry.







We
May Not Be Able To Compete Effectively In Markets Where Our Competitors Have
More Resources




The
automobile customization and accessories market is competitive and there are no
substantial barriers to entry.  We expect that competition will
intensify and that new competitors may enter the market in the
future.  Increased competition may result in reduce profit margins on
our products and services.  In addition, many of our competitors have
longer operating histories, larger customer bases, longer relationships with
clients, and significantly greater financial, technical, marketing, and public
relations resources than us.  We may not successfully compete in any
market in which we conduct currently or in the future. The fact that we compete
with established competitors who have substantially greater financial resources
and longer operating histories than us, enables them to engage in substantial
advertising and promotion and attract a greater number of customers and business
than we currently attract. While this competition is already intense, if it
increases, it could have an even greater adverse impact on our revenues and
profitability.





We
Could Fail To Attract Or Retain Key Personnel, Which Could Be Detrimental To Our
Operations




We are
largely dependent on duties performed by the officer of the company George R.
Lefevre. Our intellectual property and our ability to successfully market and
distribute our products and services may be at risk from the unanticipated
accident, injury, illness, incapacitation, or death of Mr. Lefevre or the loss
of other principal staff.  Upon such occurrence, unforeseen expenses,
delays, losses, and diminished abilities to deliver signature work that our
client’s desire may be encountered.  We maintain “key person” life
insurance on Mr. Lefevre.





The
company has recently lost key personnel in 2007 and 2008. In 2007 the closing of
the Damon’s facility due to a lack of business and cash flow resulted in the
loss of Richard Perez the co-founder of Damon’s Motorcycle Creations. In
addition Jay Isco the CFO and Secretary of the company, and president and
treasurer of the Trixmotive subsidiary resigned from all positions in February
of 2008, due to non payment of salaries. In June of 2008 Leslie McPhail resigned
as chief operating officer of Motivnation, the parent company. Leslie remained
on as the president of the subsidiary Trixmotive Inc., and departed upon filing
the Bankruptcy of TrixMotive Inc. The current CEO and CFO George Lefevre have
also gone without salary for all of 2007 and 2008; there can be no assurance
that the company will be able to retain his services without payment of
salary.





Our success may also depend on our
ability to attract and retain other qualified management and sales and marketing
personnel.  We compete for such persons with other companies and other
organizations, some of which have substantially greater capital resources than
we do.  We cannot give you any assurance that we will be successful in
recruiting or retaining personnel of the requisite caliber or in adequate
numbers to enable us to conduct our business.








23





We
are subject to federal, state and local government regulations affecting
automotive customization and restoration that may affect our
operations.





Our
business is subject to certain federal, state and local government regulations,
including those of the Environmental Protection Agency ("EPA") and comparable
state agencies that regulate emissions of Volatile Organic Compounds ("VOC") and
other air contaminants, the Occupational Safety and Health Administration
("OSHA"), and regulations governing the disposal of oil, grease, tires,
batteries and the prevention of pollution, and State tax authorities where
vehicle sales may be affected as well as State motor vehicle regulators with an
interest in our manufacturing, sales and distribution of finished products . Any
changes in the laws or regulations imposed on us by these agencies could
significantly increase our costs of doing business and could have a very
negative effect on our business.





State tax and motor vehicle regulations
are migratory and in some cases regulating bodies may decide that a code or
regulation may apply to our business when there was no history of such
application.  We may in the process of conducting our business or
yielding to a customer request have inadvertently or in ignorance created a
possible infraction of these regulations.  We may encounter a
situation in which a regulator from a State tax authority or motor vehicle
regulator would decide that we have not been in compliance and insist on a
material change in the way we have done business that could seriously impact our
ability to continue to market our products to our customers.  We may
further encounter a corrective measure by a similar regulator that would take
action more aggressive that a correction of our process or practice that could
include a back payment, a fine or termination of our ability to do business
within a particular state.  These applications of regulations that our
business has not historically been subject to by any of these state regulators
would have a serious negative impact on our business.





In the event our business operations
and facilities are subject to a number of federal, state and local environmental
laws and regulations, such application of these laws, regulations to our
operations may require us to make significant additional capital expenditures to
ensure compliance in the future. Our failure to comply with environmental laws
could result in the termination of our operations, impositions of fines, or
liabilities in excess of our capital resources.





Our painting operations are subject to
air quality management standards and enforcement by The South Coast Air Quality
Management District (AQMD).  AQMD requires licensing and conducts
inspections from time to time relative to vapor as a result of our paint
operations.  If we were found to require adjustment or replacement of
our paint and ventilation equipment as a result of an unfavorable AQMD
inspection or suspension or change of our license with AQMD we could risk
experiencing an interruption in production that would have a negative impact on
revenue and profits.








Product liability claims could severely
damage our business and we may have insufficient insurance
coverage.





Given
the nature of our products and services, we expect that we will be subject to
potential product liability claims that could, in the absence of sufficient
insurance coverage, have a material adverse impact on our
business.  There can be no assurance that our liability insurance
coverage is adequate to cover all product liability claims.  If such
coverage is found to be insufficient, our business operations could be adversely
affected.





Our Success Is Dependent Upon The
Popularity Of Customized Automotives.





Although
our products and services are not limited to that of customized stretched
automotives, the success of our business is depended upon the popularity of the
custom automotive industry. There can be no assurance, however, that the current
popularity of custom automotives will continue. If such popularity declines, our
business operations may be adversely affected.




We
do not own any patents or registered trademarks or trade names. Protecting our
proprietary technology and other intellectual property may be costly and
ineffective, and if we are unable to protect our intellectual property, we may
not be able to compete effectively in our market.






Our
business success will depend materially on our ability to protect our trademarks
and trade names, to preserve our trade secrets, and to avoid infringing the
proprietary rights of third parties. In general, our proprietary rights will be
protected only to the extent that protection is available and to the extent we
have the financial and other resources to enforce any rights we
hold.




24




We
do not own any patents or registered trademarks or trade names.  We
may apply for federal and other governmental trademark registrations in the
future, but we cannot assure you that any of our trademark applications will
result in a registered and protectable trademark.  Any registered or
unregistered trademarks held or asserted by us may be canceled, infringed,
circumvented or declared generic, or determined to be infringing on other marks
owned by third parties. We intend to rely upon trade secrets, proprietary
know-how and continuing technological innovation to become competitive in our
market. We cannot assure you that others may not independently develop the same
or similar technologies or otherwise obtain access to our technology and trade
secrets.






Costly
litigation might be necessary to protect our intellectual property or to
determine the scope and validity of third-party proprietary rights. If an
adverse outcome in litigation finds that we have infringed on proprietary rights
of others, we may be required to pay substantial damages and may have to
discontinue use of our products or re-design our products. Any claim of
infringement may involve substantial expenditures and divert the time and effort
of management.




We
Have Never Paid Dividends on Our Common Stock and You May Never Receive
Dividends.





We have
not paid any cash dividends on our common stock to date and we do not anticipate
paying cash dividends in the foreseeable future.  We intend to retain
earnings, if any, to finance the development and expansion of our
business.  Future dividend policy will be at the discretion of our
Board of Directors and will be contingent upon future earnings, if any, our
financial condition, capital requirements, general business conditions and other
factors.  There can be no assurance that cash dividends of any kind
will ever be paid.





Our
Common Stock May Be Affected By Limited Trading Volume And May Fluctuate
Significantly, Which May Affect Our Shareholders’ Ability To Sell Shares Of Our
Common Stock




There has
been a limited public market for our common stock and there can be no assurance
that a more active trading market for our common stock will develop. An absence
of an active trading market could adversely affect our shareholders’ ability to
sell our common stock in short time periods, or possibly at all. Our common
stock has experienced, and is likely to experience in the future, significant
price and volume fluctuations, which could adversely affect the market price of
our common stock without regard to our operating performance. In addition, we
believe that factors such as quarterly fluctuations in our financial results and
changes in the overall economy or the condition of the financial markets could
cause the price of our common stock to fluctuate substantially. These
fluctuations may also cause short sellers to enter the market from time to time
in the belief that we will have poor results in the future. We cannot predict
the actions of market participants and, therefore, can offer no assurances that
the market for our stock will be stable or appreciate over time. These factors
may negatively impact shareholders’ ability to sell shares of our common
stock.





Because
Our Stock Is Considered A Penny Stock, Any Investment In Our Stock Is Considered
To Be A High-Risk Investment And Is Subject To Restrictions On
Marketability.





Trading
of our common stock is conducted over-the-counter through the NASD Electronic
Bulletin Board and covered by Rule 15g-9 under the Securities Exchange Act of
1934.  Under  this  rule,  broker/dealers
who recommend these securities  to persons other than established
customers and accredited investors
must  make  a  special  written  suitability
determination for the purchaser and
receive  the  purchaser’s  written  agreement  to  a  transaction
prior to sale. Securities are exempt from this rule if the market price is at
least $5.00 per share.





The
Securities and Exchange Commission adopted regulations that generally define a
“penny stock” as any equity security that has a market price of less than $5.00
per share. Additionally, if the equity security is not registered or authorized
on a national securities exchange or the NASDAQ and the issuer has net tangible
assets under $2,000,000, the equity security also would constitute a “penny
stock.”  Our common stock does constitute a penny stock because our
common stock has a market price less than $5.00 per share and our common stock
is not quoted on NASDAQ.  As our common stock falls within the
definition of penny stock, these regulations require the delivery, prior to any
transaction involving our common stock, of a disclosure schedule explaining the
penny stock market and the risks associated with it. Furthermore, the ability of
broker/dealers to sell our common stock and the ability of shareholders to sell
our common stock in the secondary market may be limited.  As a result,
the market liquidity for our common stock is adversely
affected.  We  can  provide  no  assurance  that
trading in our common stock will not be subject to these or other regulations in
the
future,  which  may  negatively  affect  the  market
for our common stock.
Furthermore,  this  lack  of  liquidity  also
may make it more difficult for
us  to  raise  capital  in  the  future.







25


Future
Acquisitions May Disrupt Our Business And Deplete Our Financial
Resources




Any
future acquisitions we make could disrupt our business and seriously harm our
financial condition.  While we have no current agreements to do so, we
may consider investments in complementary companies and products.  In
the event of any future acquisitions, we may:




·
            issue
      stock that would dilute our current stockholders’ percentage
      ownership;






·
            incur
      debt;






·
            assume
      liabilities;






·
            incur
      amortization expenses related to goodwill and other intangible assets;
      or






·
            incur
      large and immediate write-offs.







The use
of debt or leverage to finance our future acquisitions should allow us to make
acquisitions with an amount of cash in excess of what may be currently available
to us. If we use debt to leverage up our assets, we may not be able to meet our
debt obligations if our internal projections are incorrect or if there is a
market downturn. This may result in a default and the loss in foreclosure
proceedings of the acquired business or the possible bankruptcy of our
business.




Our
operation of any acquired business will also involve numerous risks,
including:




·
            integration
      of the operations of the acquired business and its
    products;






·
            unanticipated
      costs;






·
            diversion
      of management’s attention from our core
  business;






·
            adverse
      effects on existing business relationships with suppliers and
      customers;






·
            risks
      associated with entering markets in which we have limited prior
      experience; and






·
            potential
      loss of key employees, particularly those of the purchased
      organizations.










ITEM
4T. CONTROLS AND PROCEDURES




Evaluation
of Disclosure Controls and Procedures





We
maintain a set of disclosure controls and procedures designed to ensure that
information required to be disclosed by us in our reports filed under the
Securities Exchange Act, is recorded, processed, summarized and reported within
the time periods specified by the SEC’s rules and forms.  Disclosure
controls are also designed with the objective of ensuring that this information
is accumulated and communicated to our management, including our chief executive
officer and chief financial officer, as appropriate, to allow timely decisions
regarding required disclosure.




Based
upon their evaluation as of the end of the period covered by this report, our
chief executive officer/ chief financial officer concluded that our disclosure
controls and procedures are not effective to ensure that information required to
be included in our periodic SEC filings is recorded, processed, summarized, and
reported within the time periods specified in the SEC rules and forms. The
company has identified a material weakness as defined in Public Company
Accounting Oversight Board Standard No. 2 in our internal control over financial
reporting.Management
has identified the following two material weaknesses which have caused
management to conclude that, as of September 30, 2008, our disclosure controls
and procedures were not effective at the reasonable assurance
level:






26





1.            We
do not have sufficient segregation of duties within accounting functions, which
is a basic internal control.  Due to our size and nature, segregation
of all conflicting duties may not always be possible and may not be economically
feasible.  However, to the extent possible, the initiation of
transactions, the custody of assets and the recording of transactions should be
performed by separate individuals.  Management evaluated the impact of
our failure to have segregation of duties on our assessment of our disclosure
controls and procedures and has concluded that the control deficiency that
resulted represented a material weakness.








2.           We
do not have adequate reporting procedures in place to assure that we report
timely and fully our activities as required and will likely have errors or
omissions due to these inadequacies.







Remediation
of Material Weaknesses






We have
attempted to remediate the material weaknesses in our disclosure controls and
procedures identified above whereby we have hired additional administrative
person and will retain an outside professional firm to assist in the separation
of duties on an ongoing basis.  We will continue to monitor and assess
the costs and benefits of additional staffing.






Changes
in Internal Control over Financial Reporting






Except as
noted above, there were no changes in our internal control over financial
reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act,
during our most recently completed fiscal quarter that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.










PART
II








ITEM
1.                      LEGAL
PROCEEDINGS





Damon’s
historically leased four (4) units space in city of Brea, California under four
separate non-cancelable operating lease agreements, which expires through
November 30, 2007. Damon’s currently does not occupy the spaces. In July, the
landlord filed claims against Damon’s for the past due rent and charges of all
units, aggregate of $19,657, and the additional amounts due pursuant to the
remaining terms of the lease agreements. The obligations under the remaining
terms of the lease agreements are estimated at a total of $89,086. Subsequently,
Damon’s and the landlord entered into a Surrender Agreement for one unit,
providing that Damon’s agreed to forfeit a security deposit of $1,568 and to pay
a sum of $3,822, representing the unpaid charges and rent through the date of
agreement. In return, the landlord agreed to discharge and release Damon’s from
all obligations under the lease agreement of that unit.




No
provision for any contingent liabilities has been made in the accompanying
consolidated financial statements since management cannot predict the outcome of
the claims or estimate the amount of any loss that may result. In addition, the
Company has received an outside legal opinion from an attorney that states the
outstanding liability is not the Company’s as the original lease was signed by
the previous owners of Damon’s. However, the Company will continue to accrue the
past due rent of $19,657 in the accompanying financial statements until this
matter is resolved.




On
December 7, 2005, a customer of TrixMotive filed a lawsuit in the Superior Court
of Santa Clara County of California against TrixMotive claiming for breach of
contract and warranty, intentional and negligence misrepresentation for a
customized vehicle. The plaintiff seeks $98,827 in compensatory damages and
other unspecified damages plus interest, attorneys’ fees and costs. Subsequent
to year end, there was a settlement court appearance by which the Company and
the Plaintiff agreed to settle the claim in the amount of $2,000. Final
settlement agreement is being processed. No liability was accrued as of December
31, 2006 as the settlement amount was considered insignificant.






27





On July
3, 2007, a claim was filed in the Superior Court of Los Angeles County of
California against TrixMotive, Inc. to seek for a payment of $21,888 due to the
California State Compensation Insurance Fund. The Company agreed to pay $750 per
month commencing January 10, 2008 until the amount as paid in full. The
liability has been accrued already in prior year.





On
January 24, 2008, a customer of TrixMotive filed a lawsuit in the Superior Court
of Middlesex County of New Jersey against TrixMotive claiming for breach of
contract and warranty, intentional and negligence misrepresentation for a
customized vehicle. The claim is in early stage and the outcome of this matter
is not determinable.





On July
18, 2008, the Company’s principal operating wholly-owned subsidiary, TrixMotive,
Inc. (“TrixMotive”), has filed protection under Chapter 7 of the United States
Bankruptcy Court in the Central District of California. TrixMotive ceased
operating as of its bankruptcy filing.





The
Company is also currently party to various legal proceedings and claims, either
asserted or unasserted, which arise in the ordinary course of business. While
the outcome of these matters cannot be predicted with certainty, management do
not believe that the outcome of any of these claims or any of the above
mentioned legal matters will have a material adverse effect on the Company’s
consolidated financial position, results of operations, or cash
flows.





While the
outcome of these matters is not determinable, the Company does not expect that
the ultimate costs to resolve these matters will have a material adverse effect
on the Company’s financial position, results of operations, or cash
flows.





ITEM
2.                      CHANGES
IN SECURITIES





Except as
set forth below, there were no unregistered sales of equity securities by the
Company during the nine month period ended September 30, 2008.





For the
first quarter of 2008, 1,485,000 shares of common stock were issued to AJW
Offshore, LTD pursuant to Rule 144 for the conversion of $1,471.50 of
convertible debt.





For the
first quarter of 2008, 327,250 shares of common stock were issued to AJW
Partners, LLC pursuant to Rule 144 for the conversion of $324.28 of convertible
debt.





For the
first quarter of 2008, 896,500 shares of common stock were issued to AJW
Qualified Partners, LLC pursuant to Rule 144 for the conversion of $888.35 of
convertible debt.





For the
first quarter of 2008, 41,250 shares of common stock were issued to New
Millennium Capital Partners II, LLC pursuant to Rule 144 for the conversion of
$40.88 of convertible debt.





For the
second quarter of 2008, 6,109,560 shares of common stock were issued to AJW
Offshore, LTD pursuant to Rule 144 for the conversion of $3,291.14 of
convertible debt.





For the
second quarter of 2008, 1,346,366 shares of common stock were issued to AJW
Partners, LLC pursuant to Rule 144 for the conversion of $725.27 of convertible
debt.





For the
second quarter of 2008, 3,688,364 shares of common stock were issued to AJW
Qualified Partners, LLC pursuant to Rule 144 for the conversion of $1,986.87 of
convertible debt.





For the
second quarter of 2008, 169,710 shares of common stock were issued to New
Millennium Capital Partners II, LLC pursuant to Rule 144 for the conversion of
$91.42 of convertible debt.





For the
third quarter of 2008, 13,998,960 shares of common stock were issued to AJW
Offshore, LTD pursuant to Rule 144 for the conversion of $2,934.21 of
convertible debt.





28


For the
third quarter of 2008, 3,084,956 shares of common stock were issued to AJW
Partners, LLC pursuant to Rule 144 for the conversion of $646.61 of convertible
debt.





For the
third quarter of 2008, 8,451,224 shares of common stock were issued to AJW
Qualified Partners, LLC pursuant to Rule 144 for the conversion of $1,771.39 of
convertible debt.





For the
third quarter of 2008, 388,860 shares of common stock were issued to New
Millennium Capital Partners II, LLC pursuant to Rule 144 for the conversion of
$81.51 of convertible debt.





Enter s-8
shares





ITEM
3.                      DEFAULTS
UPON SENIOR SECURITIES





None.








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




None.




ITEM
5.                      OTHER
INFORMATION







Entry
into Material Definitive Agreements






On
January 31, 2008, MotivNation, Inc. reallocated $249,406.69 in interest to a
callable secured convertible note to AJW Master Fund, Ltd. The maturity date of
the note is January 31, 2011, and is to pay interest at a rate of 2% per annum.
The convertible notes mature in three years, at a 2% per annum interest rate and
call for quarterly interest payments with the principal due on
maturity.  If MotivNation defaults on the interest payments, the
investors will have the right to convert the notes into fully paid and
non-assessable shares of common stock. Conversion price is a fifty percent
discount at which the market price will be the average of the three lowest
trading days within a twenty day trading period prior to the date the Conversion
Notice is sent to the Borrower.






On
January 31, 2008, MotivNation, Inc. reallocated $4,359.54 in interest to a
callable secured convertible note to New Millennium Capital Partners II, LLC.
The maturity date of the note is January 31, 2011, and is to pay interest at a
rate of 2% per annum. The convertible notes mature in three years, at a 2% per
annum interest rate and call for quarterly interest payments with the principal
due on maturity.  If MotivNation defaults on the interest payments,
the investors will have the right to convert the notes into fully paid and
non-assessable shares of common stock. Conversion price is a fifty percent
discount at which the market price will be the average of the three lowest
trading days within a twenty day trading period prior to the date the Conversion
Notice is sent to the Borrower.






On
January 31, 2008, MotivNation, Inc. reallocated $34,407.57 in interest to a
callable secured convertible note to AJW Partners, LLC. The maturity date of the
note is January 31, 2011, and is to pay interest at a rate of 2% per annum. The
convertible notes mature in three years, at a 2% per annum interest rate and
call for quarterly interest payments with the principal due on
maturity.  If MotivNation defaults on the interest payments, the
investors will have the right to convert the notes into fully paid and
non-assessable shares of common stock. Conversion price is a fifty percent
discount at which the market price will be the average of the three lowest
trading days within a twenty day trading period prior to the date the Conversion
Notice is sent to the Borrower.




On June
27, 2008, MotivNation, Inc. issued convertible notes to New Millennium Capital
Partners II, LLC in exchange for Gross proceeds of $50,000.







29


The
convertible notes mature in three years, at an 8% per annum interest rate and
call for monthly interest payments with the principal due on
maturity.  If MotivNation defaults on the interest payments, the
investors will have the right to convert the notes into fully paid and
non-assessable shares of common stock.  Conversion price is a forty
percent discount at which the market price will be the average of the three
lowest trading days within a twenty day trading period prior to the date the
Conversion Notice is sent to the Borrower.




On July
18, 2008 MotivNation’s (the “Company”) principal operating subsidiary,
TrixMotive, Inc. filed Chapter 7 bankruptcy The Company stated that they
bankrupted the subsidiary, which fell victim to the economy, in order to
stabilize ongoing operations and protect the parent company from additional
expenditures by the subsidiary, thus enabling the Company to stay
operational.




On
September 26, 2008, MotivNation, Inc. issued convertible notes to New Millennium
Capital Partners II, LLC in exchange for Gross proceeds of $17,500.





The
convertible notes mature in three years, at an 8% per annum interest rate and
call for monthly interest payments with the principal due on
maturity.  If MotivNation defaults on the interest payments, the
investors will have the right to convert the notes into fully paid and
non-assessable shares of common stock.  Conversion price is a forty
percent discount at which the market price will be the average of the three
lowest trading days within a twenty day trading period prior to the date the
Conversion Notice is sent to the Borrower.





ITEM
6.                      EXHIBITS AND REPORTS ON FORM
8-K





(a)
 Exhibits





Exhibit
31.1 – Certification by our President required by Rule 13a-14(a) or Rule
15d-14(a).





Exhibit
31.2 – Certification by our Interim Chief Financial Officer required by Rule
13a-14(a) or Rule 15d-14(a).





Exhibit
32.1 – Certification by our President required by Rule 13a-14(b) or Rule
15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350.





Exhibit
32.2 – Certification by our Interim Chief Financial Officer required by Rule
13a-14(b) or Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350.





(b)  Reports on Form
8K.




On
February 27, 2008.  Jay Isco, the CFO and Secretary of the Company
resigned effective immediately. Subsequent to the resignation, George Lefevre
the Company’s CEO and Director has been elected by the Company’s Board of
Director to the vacant positions of CFO and Secretary of MotivNation Inc., on
February 27, 2008.






On April
25, 2008.  Mark Absher resigned as Director of the
Company.






On April
22, 2008, Motivnation, Inc. issued convertible notes to New Millennium Capital
Partners II, LLC in exchange for Gross proceeds of $50,000.






On July
18, 2008 MotivNation’s (the “Company”) principal operating subsidiary,
TrixMotive, Inc. filed Chapter 7 bankruptcy The Company stated that they
bankrupted the subsidiary, which fell victim to the economy, in order to
stabilize ongoing operations and protect the parent company from additional
expenditures by the subsidiary, thus enabling the Company to stay
operational.









30







SIGNATURES





Pursuant
to the requirements of Section 13 or 15(b) of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.








Dated:
November 14,
2008                                                                                                           MotivNation,
Inc.





/s/ George R. Lefevre


By:


George R. Lefevre CEO











31













INDEX
      TO EXHIBITSExhibit
      31.1 – Certification required by Rule 13a-14(a) or Rule
      15d-14(a).
              
              Exhibit
      31.2 – Certification required by Rule 13a-14(a) or Rule
      15d-14(a).
              
              Exhibit
      32.1 – Certification Required by Rule 13a-14(b) or Rule 15d-14(b) and
      section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
      1350.
              
              Exhibit
      32.1 – Certification Required by Rule 13a-14(b) or Rule 15d-14(b) and
      section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
      1350.
            33
              
              34
              
              35
              
              36





32