UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington
      D. C. 20549





FORM
      10-QSB


QUARTERLY
      REPORT UNDER SECTION 13 or 15 (d)


OF
      THE SECURITIES EXCHANGE ACT OF 1934


For
      the quarterly period ended September 30, 2007


Commission
      file number 0-25909





Australian
      Forest Industries


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





Nevada
            86-0931332(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)





4/95
      Salmon Street, Port Melbourne, Victoria


Australia,
      3207


(Address
      of principal executive offices) (Zip Code)





Issuer's
      telephone number: 011 61 3 8645 4340




Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Exchange Act during the past 12 months (or for such shorter
      period that the registrant was required to file such reports), and (2) has
      been
      subject to such filing requirements for the past 90 days. Yes ___X__
      No_______




State
      the number of shares outstanding of each of the issuer's classes of common
      equity, as of the latest practicable date.




The
      number of shares of the issuer’s outstanding common stock, which is the only
      class of its common equity, on September 30, 2007, was
      257,600,680.





ITEM
      1 FINANCIAL STATEMENTS





CONTENTS





Consolidated
                Balance Sheets
            F-1Consolidated
                Statements of Operations
            F-2Consolidated
                Statements of Cash Flows
            F-3Notes
                to Consolidated Financial Statements
            F-4










AUSTRALIAN
      FOREST INDUSTRIES AND SUBSIDIARY





CONSOLIDATED
      BALANCE SHEETS





ASSETSSeptember
                30,
            
            
            December
                31,2007
            
            
            2006(Unaudited)CURRENT
                ASSETSCash
            
            $
            8,737
            
            
            $
            4,894Accounts
                receivable, net
            
            
            454,590
            
            
            
            1,493,473Inventory
            
            
            5,406
            
            
            
            740,384Prepaid
                expenses and other
            
            
            122,535
            
            
            
            33,121Total
                Current Assets
            
            
            591,268
            
            
            
            2,271,872PROPERTY,
                PLANT AND EQUIPMENT, net of accumulateddepreciation
                of $4,086,769  and $3,189,690 at September 30, 2007
                andDecember
                31, 2006, respectively
            
            
            19,768,012
            
            
            
            17,929,297OTHER
                ASSETSLong-term
                timber supply contract, net of amortization of $176,531
                and$124,345
                at September 30, 2007 and December 31, 2006, respectively
            
            
            798,899
            
            
            
            742,307Total
                Assets
            
            $
            21,158,179
            
            
            $
            20,943,476







LIABILITIES
              AND STOCKHOLDERS’ DEFICITCURRENT
                LIABILITIESBank
                overdraft
            
            $
            3,256,759
            
            
            $
            1,899,238Due
                to National Australia Bank
            
            
            5,863,242
            
            
            
            5,209,380Accounts
                payable
            
            
            7,736,845
            
            
            
            5,311,101Current
                portion of capitalized lease obligations
            
            
            5,537,021
            
            
            
            1,977,755Due
                to Timberman shareholders
            
            
            7,454,632
            
            
            
            6,593,951Related
                party payable
            
            
            721,459
            
            
            
            641,003Accrued
                payroll, related taxes and benefits
            
            
            1,006,996
            
            
            
            1,213,106Total
                Current Liabilities
            
            
            31,576,954
            
            
            
            22,845,534OTHER
                LIABILITIESCapitalized
                lease obligations
            
            
            817,563
            
            
            
            3,410,322Deferred
                capital gain
            
            
            1,598,318
            
            
            
            1,521,804Total
                Liabilities
            
            
            33,992,835
            
            
            
            27,777,660STOCKHOLDERS’
                EQUITYPreferred
                stock, par value $0.001, 5,000,000 sharesauthorized,
                none issued and outstandingCommon
                stock, par value $0.001, 300,000,000 sharesauthorized,
                257,600,680 issued and outstandingin
                2007 and 2006, respectively
            
            
            257,600
            
            
            
            257,600Additional
                paid-in capital
            
            
            4,573,217
            
            
            
            4,573,217Accumulated
                other comprehensive income
            
            
            (967,462
            )
            
            
            302,278Accumulated
                deficit
            
            
            (16,698,011
            )
            
            
            (11,967,279
            )Total
                Stockholders’ Deficit
            
            
            (12,834,656
            )
            
            
            (6,834,184
            )Total
                Liabilities and Stockholders’ Deficit
            
            $
            21,158,179
            
            
            $
            20,943,476





See
      accompanying notes to financial statements.




F-1








AUSTRALIAN
      FOREST INDUSTRIES





CONSOLIDATED
      STATEMENTS OF OPERATIONS (UNAUDITED)











For
                the Three Months Ended
            
            
            For
                the Nine Months EndedSeptember
                30,
            
            
            September
                30,2007
            
            
            2006
            
            
            2007
            
            
            2006REVENUE
                – SALES
            
            $
            477,244
            
            
            $
            4,008,572
            
            
            $
            2,511,403
            
            
            $
            11,350,633COSTS
                AND EXPENSESCost
                of goods sold
            
            
            164,358
            
            
            
            2,414,890
            
            
            
            775,946
            
            
            
            6,525,037Selling,
                general and administrative
            
            
            585,236
            
            
            
            2,706,697
            
            
            
            4,792,956
            
            
            
            6,737,478Provision
                for doubtful accounts
            
            
            1,372
            
            
            
            134,154
            
            
            
            86,251
            
            
            
            266,649Interest
                expense
            
            
            190,268
            
            
            
            254,564
            
            
            
            1,176,953
            
            
            
            647,648Depreciation
                and amortization
            
            
            169,642
            
            
            
            149,162
            
            
            
            493,234
            
            
            
            436,287Total
                Costs and Expenses
            
            
            1,110,876
            
            
            
            5,659,467
            
            
            
            7,325,340
            
            
            
            14,613,099OPERATING
                LOSS
            
            
            (633,632
            )
            
            
            (1,650,895
            )
            
            
            (4,813,937
            )
            
            
            (3,262,466
            )NON-OPERATING
                INCOMEOther
                income
            
            
            21,538
            
            
            
            12,037
            
            
            
            42,401
            
            
            
            145,325Interest
                income
            
            
            
            
            
            
            83,555
            
            
            
            
            
            
            
            247,586Gain
                on disposal of assets
            
            
            14,034
            
            
            
            648
            
            
            
            40,804
            
            
            
            104,203Total
                Non-Operating Income
            
            
            35,572
            
            
            
            96,240
            
            
            
            83,205
            
            
            
            497,114NET
                LOSS
            
            $
            (598,060
            )
            
            
            (1,554,655
            )
            
            $
            (4,730,732
            )
            
            $
            (2,765,352
            )NET
                LOSS PER SHARE(BASIC
                AND DILUTED)
            
            $
            0.01
            
            
            $
            0.01
            
            
            $
            (0.02
            )
            
            $
            (0.01
            )WEIGHTED
                AVERAGE SHARESOUTSTANDING
            
            
            257,600,680
            
            
            
            257,400,680
            
            
            
            257,600,680
            
            
            
            257,400,680








See
      accompanying notes to financial statements.




F-2





AUSTRALIAN
      FOREST INDUSTRIES





CONSOLIDATED
      STATEMENTS OF CASH FLOWS (UNAUDITED)








For
                the Nine Months EndedSeptember
                30,2007
            
            
            2006CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (4,730,732
            )
            
            $
            (2,765,352
            )Adjustments
                to reconcile net loss to cash flows fromoperating
                activities:Depreciation
                and amortization
            
            
            493,234
            
            
            
            407,419Stock
                based compensation
            
            
            
            
            
            
            70,000Amortization
                of leaseback gain
            
            
            (40,804
            )
            
            
            (252,150
            )Changes
                in operating assets and liabilities:(Increase)  decrease
                in prepaid expenses
            
            
            (89,414
            )
            
            
            53,046(Increase)
                decrease in inventories
            
            
            734,978
            
            
            
            (562,603
            )(Increase)
                decrease in receivables
            
            
            1,038,883
            
            
            
            (1,044,880
            )(Increase)
                decrease in Timber contract
            
            
            52,187
            
            
            
            66,662Increase
                (decrease) in accounts payable and other liabilities
            
            
            2,425,744
            
            
            
            1,990,795Increase
                (decrease) in bank overdraft
            
            
            1,357,521
            
            
            
            1,989,217Increase
                (decrease) in related party payable
            
            
            
            
            
            
            13,643Increase
                (decrease) in accrued payroll
            
            
            (206,109
            )
            
            
            299,350Increase
                (decrease) in taxes payable
            
            
            
            
            
            
            69,437Net
                Cash Provided by (Used in) Operating Activities
            
            
            1,035,488
            
            
            
            334,584CASH
                FLOWS FROM INVESTING ACTIVITIESCapital
                additions
            
            
            (85,016
            )
            
            
            (3,833,830
            )Net
                Cash Used in Investing Activities
            
            
            (85,016
            )
            
            
            (3,833,830
            )CASH
                FLOWS FROM FINANCING ACTIVITIESLoans
                from shareholders
            
            
            33,032
            
            
            
            2,777,287Capital
                leases
            
            
            202,559
            
            
            
            554,609National
                Australian Bank loan
            
            
            
            
            
            
            110,880Sale
                leaseback deferred credit
            
            
            76,514
            
            
            
            37,083Net
                Cash Provided By (Used In) Financing Activities
            
            
            312,105
            
            
            
            3,479,859EFFECT
                OF EXCHANGE RATES ON CASH
            
            
            (1,258,734
            )
            
            
            (107,627
            )INCREASE
                (DECREASE) IN CASH
            
            
            3,843
            
            
            
            (127,014
            )CASH
                AT BEGINNING OF PERIOD
            
            
            4,894
            
            
            
            127,014CASH
                AT END OF PERIOD
            
            $
            8,737
            
            
            $







See
      accompanying notes to financial statements.




F-3





AUSTRALIAN
      FOREST INDUSTRIES AND SUBSIDIARY





NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)




September
      30, 2007





NOTE
                A - BASIS OF PRESENTATION





The
      accompanying condensed consolidated financial statements have been prepared
      in
      accordance with generally accepted accounting principles for interim financial
      information. Accordingly, they do not include all of the information and
      footnotes required by generally accepted accounting principles for complete
      financial statements. In the opinion of management, all adjustments (consisting
      of normal recurring accruals) considered necessary in order to make the
      financial statements not misleading have been included. Results for the nine
      months ended September 30, 2007 are not necessarily indicative of the results
      that may be expected for the year ending December 31, 2007. For further
      information, refer to the financial statements and footnotes thereto included
      in
      the Australian Forest Industries annual report on Form 10-KSB for the year
      ended
      December 31, 2006.





NOTE
      B - GOING CONCERN





As
      indicated in the accompanying financial statements, the Company incurred a
      net
      loss of $4,730,732 for the nine months ended September 30, 2007, and has a
      Stockholders’ Deficit of $12,834,656 at September 30,
      2007.   Management's plans include the raising of capital through
      the equity markets to fund future operations, seeking additional acquisitions,
      and generating of revenue through its business. Additionally, even if the
      Company does raise sufficient capital to support its operating expenses and
      generate adequate revenues, there can be no assurances that the revenue will
      be
      sufficient to enable it to develop business to a level where it will generate
      profits and cash flows from operations. Additionally, during the fourth quarter
      of 2006, the Company experienced a severe liquidity problem and was having
      difficulty obtaining logs to operate its businesses. Currently, management
      has
      entered into a processing contract with Weyerhaeuser to process their logs
      for
      which the Company is receiving a processing fee. The Company’s wholly owned
      subsidiary in Australia, Integrated Forest Products, is currently under
      administration in Australia (in the U.S. this is tantamount to a Chapter 11
      Bankruptcy).  There is no assurance that the company will emerge from
      the administrative proceedings and be self-sufficient and profitable. (See
      Note
      D to the Financial Statement.) These matters raise substantial doubt about
      the
      Company's ability to continue as a going concern. However, the accompanying
      consolidated financial statements have been prepared on a going concern basis,
      which contemplates the realization of assets and satisfaction of liabilities
      in
      the normal course of business. These consolidated financial statements do not
      include any adjustments relating to the recovery of the recorded assets or
      the
      classification of the liabilities that might be necessary should the Company
      be
      unable to continue as a going concern.





NOTE
      C – LITIGATION





Oz
      Investmentcorp Pty Ltd. initiated a letter of demand for the $1,578,600 due
      from
      the Timbermans Group for full payment of funds lent to the Timbermans
      Group.  The Company is currently negotiating with Oz and had agreed to
      provide additional collateral.




On
        November 14, 2007, the Company was named as a co-defendant in a lawsuit brought
        in the High Court of Justice Chancery Division, England by Courical Holding
        B.V.
        (“Plaintiff”) whereby it is alleged that the Plaintiff invested $650,000 in
        Zebra Mining Services Limited (“Co-Defendant”) in exchange for 325,000 shares of
        Company common stock and 325,000 warrants to purchase Company common stock
        pursuant to an agreement between the three parties. The Plaintiff alleges
        that
        it never received any consideration for its investment from either the
        Co-Defendant or the Company. Although the Company anticipates submitting
        an
        answer to such Complaint, it has not currently done so as it is considering
        its
        course of action thereto.


NOTE
      D - ADMINISTRATION





The
      Company’s wholly owned subsidiary in Australia, Integrated Forest Products, is
      currently in Administration and is being operated by Court appointed
      administrators.  Administration in Australia is  similar to
      Chapter 11 Bankruptcy or receivership in the U.S.  There is no
      assurance that the Company’s subsidiary will emerge from the administrative
      proceedings.





F-4


ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.





CAUTIONARY
      STATEMENT REGARDING FORWARD LOOKING STATEMENTS





It
      should be noted that this Management's Discussion and Analysis of Financial
      Condition and Results of Operations may contain "forward-looking statements."
      The terms "believe," "anticipate," "intend," "goal," "expect," and similar
      expressions may identify forward-looking statements. These forward-looking
      statements represent the Company's current expectations or beliefs concerning
      future events. The matters covered by these statements are subject to certain
      risks and uncertainties that could cause actual results to differ materially
      from those set forth in the forward-looking statements, including the Company's
      dependence on weather-related factors, introduction and customer acceptance
      of
      new products, the impact of competition and price erosion, as well as supply
      and
      manufacturing restraints and other risks and uncertainties. The foregoing list
      should not be construed as exhaustive, and the Company disclaims any obligation
      subsequently to revise any forward-looking statements to reflect events or
      circumstances after the date of such statements, or to reflect the occurrence
      of
      anticipated or unanticipated events. In light of the significant uncertainties
      inherent in the forward-looking information included herein, the inclusion
      of
      such information should not be regarded as a representation that the strategy,
      objectives or other plans of the Company will be achieved. The Company wishes
      to
      caution readers not to place undue reliance on any such forward-looking
      statements, which speak only as of the date made.





As
      indicated in the accompanying financial statements, the Company incurred a
      net
      loss of $4,730,732 for the nine months ended September 30, 2007, and has a
      Stockholders’ Deficit of $12,834,656 at September 30,
      2007.   Management's plans include the raising of capital through
      the equity markets to fund future operations, seeking additional acquisitions,
      and generating of revenue through its business. Additionally, even if the
      Company does raise sufficient capital to support its operating expenses and
      generate adequate revenues, there can be no assurances that the revenue will
      be
      sufficient to enable it to develop business to a level where it will generate
      profits and cash flows from operations. Additionally, during the fourth quarter
      of 2006, the Company experienced a severe liquidity problem and was having
      difficulty obtaining logs to operate its businesses. Currently, management
      has
      entered into a processing contract with Weyerhaeuser to process their logs
      for
      which the Company is receiving a processing fee. The Company’s wholly owned
      subsidiary in Australia, Integrated Forest Products, is currently under
      administration in Australia (in the U.S. this is tantamount to a Chapter 11
      Bankruptcy).  There is no assurance that the company will emerge from
      the administrative proceedings and be self-sufficient and profitable. (See
      Note
      D to the Financial Statement.) These matters raise substantial doubt about
      the
      Company's ability to continue as a going concern. However, the accompanying
      consolidated financial statements have been prepared on a going concern basis,
      which contemplates the realization of assets and satisfaction of liabilities
      in
      the normal course of business. These consolidated financial statements do not
      include any adjustments relating to the recovery of the recorded assets or
      the
      classification of the liabilities that might be necessary should the Company
      be
      unable to continue as a going concern.





Oz
      Investmentcorp Pty Ltd. initiated a letter of demand for the $1,578,600 due
      from
      the Timbermans Group for full payment of funds lent to the Timbermans
      Group.  The Company is currently negotiating with Oz and had agreed to
      provide additional collateral.




On
        November 14, 2007, the Company was named as a co-defendant in a lawsuit brought
        in the High Court of Justice Chancery Division, England by Courical Holding
        B.V.
        (“Plaintiff”) whereby it is alleged that the Plaintiff invested $650,000 in
        Zebra Mining Services Limited (“Co-Defendant”) in exchange for 325,000 shares of
        Company common stock and 325,000 warrants to purchase Company common stock
        pursuant to an agreement between the three parties. The Plaintiff alleges
        that
        it never received any consideration for its investment from either the
        Co-Defendant or the Company. Although the Company anticipates submitting
        an
        answer to such Complaint, it has not currently done so as it is considering
        its
        course of action thereto.





The
      Company’s wholly owned subsidiary in Australia, Integrated Forest Products, is
      currently in Administration and is being operated by Court appointed
      administrators.  Administration in Australia is similar to Chapter 11
      Bankruptcy or receivership in the U.S.  There is no assurance that the
      Company’s subsidiary will emerge from the administrative
      proceedings.





We
      are currently seeking alternative business operations and any transaction that
      would involve the sale of most or all of our assets.  If and when such
      sale has been completed, we will seek to use the proceeds from such sale, after
      satisfying our current liabilities, to develop or acquire a business or
      businesses which we believe will best serve the long term interests of our
      shareholders. Such businesses may or may not be related to the timber
      industry.





RESULTS
      OF OPERATIONS





Operating
      costs for the three-months ended September 30, 2007 aggregated $1,110,876.
      This
      includes costs incurred in general and administrative selling of
      $585,236.  We incurred an operating loss of $(633,632) and a total net
      loss of $(598,060) or $(0.01) per share.





Operating
      costs for the nine-month period ended September 30, 2007 aggregated
      $(4,813,937). This includes general and administrative selling of $4,792,956
      and
      interest expenses of $1,176,953.  As a result of the above we realized
      a net loss of $(4,730,732) for the nine-month period ended September 30, 2007
      or
      $(0.01) per share.





LIQUIDITY
      AND CAPITAL RESOURCES





On
      September 30, 2007 we had current assets of $21,158,179 and on December 31,
      2006
      we had current assets of $20,943,476.





Net
      cash provided by operating activities for the nine-month period ended September
      30, 2007 was $1,035,488. Net cash used in investing activities for the six-month
      period ended September 30, 2007 was $(85,016).  Net cash provided by
      financing activities was $312,105 for this period.





CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES





The
      Company’s discussion and analysis of its financial condition and results of
      operations are based upon its financial statements, which have been prepared
      in
      accordance with accounting principles generally accepted in the United
      States.  The preparation of these financial statements requires the
      Company to make estimates and judgments that affect the reported amounts of
      assets, liabilities, revenues and expenses, and related disclosure of contingent
      assets and liabilities.  On an on-going basis, the Company evaluates
      its estimates, including those related to bad debts, income taxes and
      contingencies and litigation.  The Company bases its estimates on
      historical experience and on various other assumptions that are believed to
      be
      reasonable under the circumstances, the results of which form the basis for
      making judgments about carrying values of assets and liabilities that are not
      readily apparent from other sources.  Actual results may differ from
      these estimates under different assumptions or conditions.








RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS





Recent
      Accounting Pronouncements Affecting The Company:





In
      June 2006, the Financial Accounting Standards Board (“FASB”) issued
      Interpretation 48, “Accounting for Income Tax Uncertainties” (“FIN 48”). FIN 48
      defines the threshold for recognizing the benefits of tax return positions
      in
      the financial statements as “more-likely-than-not” to be sustained by the taxing
      authority. Recently issued literature also provides guidance on the
      derecognition, measurement and classification of income tax uncertainties,
      along
      with any related interest and penalties. FIN 48 also includes guidance
      concerning accounting for income tax uncertainties in interim periods and
      increases the level of disclosures associated with any recorded income tax
      uncertainties. FIN 48 is effective for fiscal years beginning after
      December 15, 2006.  The Company expects to adopt the provisions
      of FIN 48 beginning in the first quarter of 2007.  The Company is
      currently in the process of determining the impact, if any, of adopting the
      provisions of FIN 48 on its financial position, results of operations and
      liquidity.




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which
      defines fair value, establishes a framework for measuring fair value under
      other
      accounting pronouncements that permit or require fair value measurements,
      changes the methods used to measure fair value and expands disclosures about
      fair value measurements. In particular, disclosures are required to provide
      information on the extent to which fair value is used to measure assets and
      liabilities; the inputs used to develop measurements; and the effect of certain
      of the measurements on earnings (or changes in net assets). SFAS No. 157 is
      effective for fiscal years beginning after November 15, 2007 and interim periods
      within those fiscal years. Early adoption, as of the beginning of an entity’s
      fiscal year, is also permitted, provided interim financial statements have
      not
      yet been issued. The Company expects to adopt the provisions of FIN 48 beginning
      in the first quarter of 2008.  The Company is currently evaluating the
      potential impact, if any, that the adoption of SFAS No. 157 will have on its
      consolidated financial statements.





In
      September 2006, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial Statements” (“SAB No. 108”).
      SAB No. 108 provides guidance on how prior year misstatements should be
      considered when quantifying misstatements in the current year financial
      statements. SAB No. 108 requires registrants to quantify misstatements using
      both a balance sheet and an income statement approach and evaluate whether
      either approach results in quantifying a misstatement that, when all relevant
      quantitative and qualitative factors are considered, is material. SAB No. 108
      does not change the guidance in SAB No. 99, “Materiality,” when evaluating the
      materiality of misstatements.





SAB
      No. 108 is effective for fiscal years ending after November 15, 2006. Upon
      initial application, SAB No. 108 permits a one-time cumulative effect adjustment
      to beginning retained earnings. The Company adopted SAB No. 108 for the fiscal
      year ended December 31, 2006.  Adoption of SAB No. 108 did not have a
      material impact on the consolidated financial statements.





In
        February 2007, the FASB issued SFAS No. 159, The Fair Value Option
        for Financial
        Assets and Financial Liabilities(“SFAS 159”).  SFAS 159 allows entities to measure at
        fair value many financial instruments and certain other assets and liabilities
        that are not otherwise required to be measured at fair value. SFAS 159 is
        effective for fiscal years beginning after November 15, 2007. We have not
        determined what impact, if any, that adoption will have on our results of
        operations, cash flows or financial position.





ITEM
      3. CONTROLS AND PROCEDURES




(a)
      Our principal executive officer and principal financial officer have each
      evaluated the effectiveness of our disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) as of a date within 90 days
      prior to the filing date of this quarterly report and have each concluded that
      our disclosure controls and procedures are adequate.




(b)
      There were no significant changes in our internal controls or in other factors
      that could significantly affect these controls subsequent to the date of their
      evaluation, including any corrective actions with regard to significant
      deficiencies and material weaknesses.




(c)
      Not applicable








PART
      II


Item
      1. Legal Proceedings





Oz
      Investmentcorp Pty Ltd. initiated a letter of demand for the $1,578,600 due
      from
      the Timbermans Group for full payment of funds lent to the Timbermans
      Group.  The Company is currently negotiating with Oz and had agreed to
      provide additional collateral.




On
        November 14, 2007, the Company was named as a co-defendant in a lawsuit brought
        in the High Court of Justice Chancery Division, England by Courical Holding
        B.V.
        (“Plaintiff”) whereby it is alleged that the Plaintiff invested $650,000 in
        Zebra Mining Services Limited (“Co-Defendant”) in exchange for 325,000 shares of
        Company common stock and 325,000 warrants to purchase Company common stock
        pursuant to an agreement between the three parties. The Plaintiff alleges
        that
        it never received any consideration for its investment from either the
        Co-Defendant or the Company. Although the Company anticipates submitting
        an
        answer to such Complaint, it has not currently done so as it is considering
        its
        course of action thereto.
  Item
      2. Changes in Securities


None





Item
      3. Defaults Upon Senior Securities


None





Item
      4. Submission of Matters to a Vote of Security Holders


None





Item
      5. Other Information


None





Item
      6. Exhibits and Reports on Form 8-K





a.
      Exhibit Index





Exhibit
      31.1 Certification of Chief Executive Officer





Exhibit
      31.2 Certification of Chief Financial Officer





Exhibit
      32.1 Certification of Chief Executive Officer





Exhibit
      32.1 Certification of Chief Financial Officer





b.
      Reports on Form 8-K




None.





SIGNATURES


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





AUSTRALIAN
      FOREST INDUSTRIES


/s/
      Michael Timms


Name:
      Michael Timms


Title:
      CEO, President and Chairman of the Board


Date:  November
      16, 2007





/s/
      Colin Baird


Name:
      Colin Baird


Title:
      Chief Financial Officer


Date:
      November 16, 2007