----

----

| x      | QUARTERLY REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended SEPTEMBER 30, 2010          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                    |
|  ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15 (d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______to_______ |

| Nevada                          | 88-0448626          |
|---------------------------------|---------------------|
| (State or other jurisdiction of | (IRS Employer       |
| incorporation or organization)  | Identification No.) |

| Large accelerated filer  ̈ | Accelerated filer  ̈   |
|--------------------------------|----------------------------|
| Non-accelerated filer  ̈   | Smaller reporting companyx |

----

|                                                                                                                                                          |   | Page   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                                                          |   |   |
| Consolidated Balance Sheets at September 30, 2010 (Unaudited) and December 31, 2009                                                                           | F-2    |
|                                                                                                                                                          |   |   |
| Consolidated Statement of Operations for the three and nine months ended September 30, 2010, and the three and nine months ended October 31, 2009 (Unaudited) | F-3    |
|                                                                                                                                                          |   |   |
| Consolidated Statement of Changes in Shareholders' Deficit for the nine months ended September 30, 2010 (Unaudited)                                           | F-4    |
|                                                                                                                                                          |   |   |
| Consolidated Statement of Cash Flows for the nine months ended September 30, 2010 and the nine months ended October 31, 2009 (Unaudited)                      | F-5    |
|                                                                                                                                                          |   |   |
| Notes to Financial Statements                                                                                                                                 | F-6    |
|                                                                                                                                                          |   |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                           | 22     |
|                                                                                                                                                          |   |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk                                                                                            | 26     |
|                                                                                                                                                          |   |
| Item 4T. Controls and Procedures                                                                                                                              | 26     |
|                                                                                                                                                          |   |
| Part II – Other Information                                                                                                                             | 27     |
|                                                                                                                                                          |   |
| Signatures                                                                                                                                                    | 29     |
|                                                                                                                                                          |   |

----

|                                                            |   | September 30, |        |   | December 31, |   |
|-----------------------------------------------------------------|--------|---------------|-------------|--------|--------------|--------|
|                                                            |   | 2010          |        |   | 2009         |   |
|                                                            |   | (Unaudited)   |        |   | (Audited)    |   |
| Assets                                                          |   |          |        |   |         |   |
| Cash                                                            |   | $             | 59,544      |   |         | $      | 17,262 |   |
| Accounts receivable                                             |   |          | 4,293       |   |         |   | — |   |
| Deposits                                                        |   |          | —     |   |         |   | — |   |
| Prepaid expenses                                                |   |          | 1,265       |   |         |   | 24,721 |   |
| Notes receivable (Note 5)                                       |   |          | —     |   |         |   | 467 |   |
| Other current assets                                            |   |          | —     |   |         |   | 26 |   |
|                                                            |   |          |        |   |         |   |   |   |
| Total current assets                                            |   |          | 65,101      |   |         |   | 42,476 |   |
|                                                            |   |          |        |   |         |   |   |   |
| Property and equipment, less accumulated depreciation           |   |          |        |   |         |   |   |   |
| of $3,175 (2010) and $1,301 (2009)                              |   |          | 10,932      |   |         |   | 7,937 |   |
| Deferred debt issuance costs (Note 4)                           |   |          | 93,266      |   |         |   | 166,922 |   |
|                                                            |   |          |        |   |         |   |   |   |
| Total long-term assets                                          |   |          | 104,198     |   |         |   | 174,859 |   |
|                                                            |   |          |        |   |         |   |   |   |
| Total assets                                                    |   | $             | 169,299     |   |         | $      | 217,335 |   |
|                                                            |   |          |        |   |         |   |   |   |
| Liabilities and Shareholders’ Deficit                     |   |          |        |   |         |   |   |   |
| Current liabilities:                                            |   |          |        |   |         |   |   |   |
| Accounts and notes payable:                                     |   |          |        |   |         |   |   |   |
| Accounts payable, related party (Note 3)                        |   | $             | 167,565     |   |         | $      | 68,619 |   |
| Accounts payable, other                                         |   |          | 446,041     |   |         |   | 287,349 |   |
| Derivative liability, convertible notes payable (Note 4)        |   |          | 369,985     |   |         |   | 643,834 |   |
| Notes payable, related party (Note 3)                           |   |          | 81,578      |   |         |   | 132,537 |   |
| Notes payable, other (Note 4)                                   |   |          | 235,058     |   |         |   | 32,991 |   |
| Convertible notes payable, net of discount of                   |   |          |        |   |         |   |   |   |
| 66,667 (2010) and -0- (2009) (Note 4)                           |   |          | 83,333      |   |         |   | 30,000 |   |
| Payroll liabilities (Note 7)                                    |   |          | 77,393      |   |         |   | 67,166 |   |
| Accrued expenses                                                |   |          | 11,324      |   |         |   | 5,768 |   |
| Accrued interest payable:                                       |   |          |        |   |         |   |   |   |
| Interest payable, convertible notes (Note 4)                    |   |          | 28,896      |   |         |   | 6,792 |   |
| Interest payable, related party notes (Note 3)                  |   |          | 16,043      |   |         |   | 27,256 |   |
| Interest payable, notes payable other (Note 4)                  |   |          | 8,504       |   |         |   | 11,656 |   |
|                                                            |   |          |        |   |         |   |   |   |
| Total current liabilities                                       |   |          | 1,525,720   |   |         |   | 1,313,968 |   |
|                                                            |   |          |        |   |         |   |   |   |
| Long-term convertible notes payable net of current portion,     |   |          |        |   |         |   |   |   |
| net of discount of $216,944 (2010) and $354,583 (2009) (Note 4) |   |          | 78,056      |   |         |   | 25,417 |   |
|                                                            |   |          |        |   |         |   |   |   |
| Total long-term liabilities                                     |   |          | 78,056      |   |         |   | 25,417 |   |
|                                                            |   |          |        |   |         |   |   |   |
|                                                            |   |          | 1,603,776   |   |         |   | 1,339,385 |   |
|                                                            |   |          |        |   |         |   |   |   |
| Commitments and contingencies                                   |   |          | —     |   |         |   | — |   |
|                                                            |   |          |        |   |         |   |   |   |
| Shareholders’ deficit: (Notes 1 & 9)                  |   |          |        |   |         |   |   |   |
| Preferred stock, $.001 par value; 10,000,000 shares authorized, |   |          |        |   |         |   |   |   |
| -0- (2010) and -0- (2009) shares                                |   |          |        |   |         |   |   |   |
| issued and outstanding                                          |   |          | —     |   |         |   | — |   |
| Common stock, $.001 par value; 500,000,000 shares authorized,   |   |          |        |   |         |   |   |   |
| 326,534,881 (2010) and 289,936,993 (2009) shares                |   |          |        |   |         |   |   |   |
| issued and outstanding                                          |   |          | 326,534     |   |         |   | 289,937 |   |
| Additional paid-in capital                                      |   |          | 13,103,939  |   |         |   | 9,459,316 |   |
| Accumulated deficit                                             |   |          | (14,855,337 | )      |         |   | (10,871,303 | ) |
|                                                            |   |          |        |   |         |   |   |   |
| Total shareholders' deficit of the Company                      |   |          | (1,424,864  | )      |         |   | (1,122,050 | ) |
|                                                            |   |          |        |   |         |   |   |   |
| Non-controlling interest (Note 1)                               |   |          | (9,613      | )      |         |   | — |   |
|                                                            |   |          |        |   |         |   |   |   |
| Total shareholders' deficit                                     |   |          | (1,434,477  | )      |         |   | (1,122,050 | ) |
|                                                            |   |          |        |   |         |   |   |   |
| Total liabilities and shareholders' deficit                     |   | $             | 169,299     |   |         | $      | 217,335 |   |
|                                                            |   |          |        |   |         |   |   |   |

----

|                                                       |   | Three months  |        |   | Three months |   |        | Nine months   |   |   | Nine months |   |
|------------------------------------------------------------|--------|---------------|-------------|--------|--------------|--------|-------------|---------------|--------|--------|-------------|--------|
|                                                       |   | ended         |        |   | ended        |   |        | ended         |   |   | ended       |   |
|                                                       |   | September 30, |        |   | October 31,  |   |        | September 30, |   |   | October 31, |   |
|                                                       |   | 2010          |        |   | 2009         |   |        | 2010          |   |   | 2009        |   |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |
| Revenue                                                    |   | $             | 13,079      |   |         | $      | -           |          |   | $      | 52,019      |   |   | $ | - |   |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Operating costs and expenses:                              |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Reactor production                                         |   |          | 11,112      |   |         |   | —     |          |   |   | 134,886     |   |   |   | — |   |
| Product development expense                                |   |          | 596         |   |         |   | 4,403       |          |   |   | 17,076      |   |   |   | 20,148 |   |
| Selling, general and administrative expenses               |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Related party (Note 3)                                     |   |          | 173,200     |   |         |   | 120,775     |          |   |   | 300,232     |   |   |   | 321,675 |   |
| Stock-based compensation (Notes 3 & 9)                 |   |          | 276,000     |   |         |   | 1,407,044   |          |   |   | 2,350,350   |   |   |   | 4,757,367 |   |
| (Gain) loss on debt extinguishment                         |   |          | -           |   |         |   | (169,880    | )             |   |   | -           |   |   |   | 31,094 |   |
| Other (Note 6)                                             |   |          | 326,809     |   |         |   | 259,798     |          |   |   | 1,081,324   |   |   |   | 800,679 |   |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Total operating costs and expenses                         |   |          | (787,717    | )      |         |   | (1,622,140  | )             |   |   | (3,883,868  | )      |   |   | (5,930,963 | ) |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Loss from operations                                       |   |          | (774,638    | )      |         |   | (1,622,140  | )             |   |   | (3,831,849  | )      |   |   | (5,930,963 | ) |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Other income (expense)                                     |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Unrealized gain on investments (Note 1)                    |   |          | -           |   |         |   | 420,000     |          |   |   | -           |   |   |   | 455,000 |   |
| Interest (expense) income, amortization                    |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| of convertible note discount (Note 4)                      |   |          | (67,500     | )      |         |   | (8,750      | )             |   |   | (245,972    | )      |   |   | (16,952 | ) |
| Interest expense (Notes 3 & 4)                         |   |          | (85,733     | )      |         |   | (84,638     | )             |   |   | (191,730    | )      |   |   | (97,920 | ) |
| Fair value adjustment of derivative liabilities (Note 4)   |   |          | 197,545     |   |         |   | (21,466     | )             |   |   | 285,516     |   |   |   | (15,417 | ) |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
|                                                       |   |          | 44,312      |   |         |   | 305,146     |          |   |   | (152,186    | )      |   |   | 324,711 |   |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Loss before income taxes                                   |   |          | (730,325    | )      |         |   | (1,316,994  | )             |   |   | (3,984,034  | )      |   |   | (5,606,252 | ) |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Income tax provision (Note 8)                              |   |          | -           |   |         |   | -           |          |   |   | -           |   |   |   | - |   |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Net loss                                                   |   |          | (730,325    | )      |         |   | (1,316,994  | )             |   |   | (3,984,034  | )      |   |   | (5,606,252 | ) |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Net loss attributable to non-controlling interest (Note 1) |   |          | 106,896     |   |         |   | -           |          |   |   | 141,971     |   |   |   | - |   |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Net loss attributable to Company                           |   | $             | (623,429    | )      |         | $      | (1,316,994  | )             |   | $      | (3,842,063  | )      |   | $ | (5,606,252 | ) |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Basic and diluted loss per common share                    |   | $             | (0.00       | )      |         | $      | (0.00       | )             |   | $      | (0.01       | )      |   | $ | (0.02 | ) |
|                                                       |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| Weighted average common shares                             |   |          |        |   |         |   |        |          |   |   |        |   |   |   |   |   |
| outstanding (Notes 1 & 9)                              |   |          | 326,392,539 |   |         |   | 283,637,328 |          |   |   | 305,889,853 |   |   |   | 239,754,585 |   |

----

|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |  Total                                                                                                                                       |
|--------------------------------------------------------------|-----------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                | Common stock                                                                                                                                      |                                                                                                                                              | Additional paid-in                                                                                                                                | Accumulated                                                                                           |                                                                                                  | Non-controlling                                                                                                                                   | shareholders                                                                                                                                      |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                | Shares                                                                                                                                            |                                                                                                                                              | Par value                                                                                                                                         |                                                                                                  | capital                                                                                               |                                                                                                                                              | deficit                                                                                                                                           |   | interest |   | deficit |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Balance at January 1, 2010                                   |                                                      |   |       289,936,993                                                                                                                     |                                                                                                                                                                |  $                                                                                                                                                             |            289,937                                                                         |                                                                                                                                              |                                                                                                                                              |          9,459,316                                       |                                                                                                  |  $                                                                                                                                           |       (10,871,303)                                                                                                  |   |  $ |                         - |   |  $ |          (1,122,050) |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| January through June 2010, issuance of                       |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |
|                                                         | common stock in private placements (Note 9)               |   |                                                                                                                                                                |           12,037,500                                                                                              |                                                                                                                                                                |                                                                                                                                              |                12,037                                                  |                                                                                                                                              |                                                                                                  |             197,763                       |                                                                                                                                              |                                                                                                                                              |                         - |   |   |                         - |   |   |             209,800 |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| March 2010, issuance of stock options to                     |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |
|                                                         | officers, directors & consultants (Note 9)            |   |                                                                                                                                                                |                            - |                                                                                                                                                                |                                                                                                                                              |                         - |                                                                                                                                              |                                                                                                  |            354,650                             |                                                                                                                                              |                                                                                                                                              |                         - |   |   |                         - |   |   |             354,650 |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| March 2010, issuance of common stock                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |
|                                                         | for consulting agreements (Note 9)                        |   |                                                                                                                                                                |            2,875,000                                                                                         |                                                                                                                                                                |                                                                                                                                              |                 2,875                                             |                                                                                                                                              |                                                                                                  |              115,000                 |                                                                                                                                              |                                                                                                                                              |                         - |   |   |                         - |   |   |               117,875 |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| March 2010, issuance of common stock to                      |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |
|                                                         | convertible noteholders (Note 9)                          |   |                                                                                                                                                                |             1,378,488                                                                                   |                                                                                                                                                                |                                                                                                                                              |                  1,379                                       |                                                                                                                                              |                                                                                                  |                61,798      |                                                                                                                                              |                                                                                                                                              |                         - |   |   |                         - |   |   |                 63,177 |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| March 2010, issuance of warrants to subsidiary               |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |
|                                                         | officers and consultants in May 2009 (Note 9)             |   |                                                                                                                                                                |                            - |                                                                                                                                                                |                                                                                                                                              |                         - |                                                                                                                                              |                                                                                                  |             516,825                       |                                                                                                                                              |                                                                                                                                              |                         - |   |   |                         - |   |   |              516,825 |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| May 2010, issuance of common stock to                        |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |
|                                                         | debentureholders (Notes 4 & 9)                        |   |                                                                                                                                                                |             6,222,216                                                                                   |                                                                                                                                                                |                                                                                                                                              |                 6,222                                             |                                                                                                                                              |                                                                                                  |               297,111           |                                                                                                                                              |                                                                                                                                              |                         - |   |   |                         - |   |   |             303,333 |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| June 2010, issuance of warrants to subsidiary                |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |
|                                                         | officers and consultants (Note 9)                         |   |                                                                                                                                                                |                            - |                                                                                                                                                                |                                                                                                                                              |                         - |                                                                                                                                              |                                                                                                  |          1,085,000                                       |                                                                                                                                              |                                                                                                                                              |                         - |   |   |                         - |   |   |           1,085,000 |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| May 2010, issuance of warrants to noteholder (Note 9)        |                                                      |   |                            - |                                                                                                                                                                |                                                                                                                                                                |                         - |                                                                                                                                              |                                                                                                                                              |                 3,500 |                                                                                                  |                                                                                                                                              |                         - |   |   |                         - |   |   |                  3,500 |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Issuance of equity by AlumiFuel Power International,         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |
|                                                         | Inc. subsidiary, net of non-controlling interest (Note 1) |   |                                                                                                                                                                |                            - |                                                                                                                                                                |                                                                                                                                              |                         - |                                                                                                                                              |                                                                                                  |             684,512                       |                                                                                                                                              |                                                                                                                                              |                         - |   |   |            (151,584) |   |   |             532,928 |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| July 2010, issuance of common stock                          |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |
|                                                         | for consulting agreements (Note 9)                        |   |                                                                                                                                                                |           13,800,000                                                                                              |                                                                                                                                                                |                                                                                                                                              |                13,800                                                  |                                                                                                                                              |                                                                                                  |            262,200                             |                                                                                                                                              |                                                                                                                                              |                         - |   |   |                         - |   |   |             276,000 |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| August 2010, issuance of common stock                        |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |
|                                                         | for loan extension (Notes 4 & 9)                      |   |                                                                                                                                                                |                284,684                                                                   |                                                                                                                                                                |                                                                                                                                              |                     284                       |                                                                                                                                              |                                                                                                  |                 6,264 |                                                                                                                                              |                                                                                                                                              |                         - |   |   |                         - |   |   |                  6,548 |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| September 2010, issuance of warrants to noteholders (Note 9) |                                                      |   |                            - |                                                                                                                                                                |                                                                                                                                                                |                         - |                                                                                                                                              |                                                                                                                                              |               60,000            |                                                                                                  |                                                                                                                                              |                         - |   |   |                         - |   |   |                60,000 |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                     |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                            - |                                                                                                                                              |                                                                                                                                              |                         - |                                                                                                  |                                                                                                  |                         - |                                                                                                                                              |   |       (3,984,034) |   |   |               141,971 |   |   |        (3,842,063) |
|                                                         |                                                      |   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                              |                                                                                                                                              |                                                                                                                                              |                                                                                                  |                                                                                                  |                                                                                                                                              |                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Balance at September 30, 2010                                |                                                      |   |        326,534,881                                                                                                               |                                                                                                                                                                |  $                                                                                                                                                             |            326,534                                                                         |                                                                                                                                              |                                                                                                                                              |        13,103,939                                                  |                                                                                                  |  $                                                                                                                                           |      (14,855,337)                                                                                                        |   |  $ |                (9,613) |   |  $ |         (1,434,477) |

----

|                                                        |   | Nine months ended |       |   | Nine months ended |   |
|-------------------------------------------------------------|--------|-------------------|------------|--------|-------------------|--------|
|                                                        |   | September 30,     |       |   | October 31,       |   |
|                                                        |   | 2010              |       |   | 2009              |   |
|                                                        |   |              |       |   |              |   |
| Cash flows from operating activities:                       |   |              |       |   |              |   |
| Net loss                                                    |   | $                 | (3,984,034 | )      |              | $      | (5,606,252 | ) |
| Adjustments to reconcile net loss to net cash               |   |              |       |   |              |   |   |   |
| used by operating activities:                               |   |              |       |   |              |   |   |   |
| Stock based compensation (Notes 3 & 9)                  |   |              | 2,350,350  |   |              |   | 4,757,367 |   |
| Shares issued for services (Note 9)                         |   |              | 236,225    |   |              |   | 61,000 |   |
| Loss on debt extinguishment                                 |   |              | -          |   |              |   | (181,191 | ) |
| Debt issuance costs                                         |   |              | -          |   |              |   | 117,000 |   |
| Beneficial conversion feature                               |   |              | -          |   |              |   | 63,000 |   |
| Allowance for bad debt (Note 5)                             |   |              | 88,503     |   |              |   | 208,445 |   |
| Depreciation and amortization                               |   |              | 88,260     |   |              |   | 6,790 |   |
| Unrealized (gain) loss on investments (Note 1)              |   |              | -          |   |              |   | (455,000 | ) |
| (Decrease) increase in derivative liability (Note 4)        |   |              | (255,516   | )      |              |   | 15,417 |   |
| Amortization of discount on debentures payable (Note 4)     |   |              | 215,972    |   |              |   | 16,952 |   |
| Changes in operating assets and liabilities:                |   |              |       |   |              |   |   |   |
| Accounts and other receivables                              |   |              | (3,802     | )      |              |   | 13,651 |   |
| Prepaid expenses and other assets                           |   |              | 23,456     |   |              |   | (29,597 | ) |
| Accounts payable and accrued expenses                       |   |              | 191,752    |   |              |   | 41,389 |   |
| Related party payables (Note 3)                             |   |              | 81,669     |   |              |   | (60,950 | ) |
| Interest payable                                            |   |              | 7,740      |   |              |   | 4,448 |   |
| Net cash used in operating activities                       |   |              | (959,425   | )      |              |   | (1,027,531 | ) |
|                                                        |   |              |       |   |              |   |   |   |
| Cash flows from investing activities:                       |   |              |       |   |              |   |   |   |
| Purchase of equipment                                       |   |              | (4,869     | )      |              |   | (6,938 | ) |
| Issuance of notes receivable (Note 5)                       |   |              | (88,503    | )      |              |   | (63,175 | ) |
| Payments received on notes receivable (Note 5)              |   |              | —    |   |              |   | 633 |   |
| Cash acquired in reverse acquisition (Note 1)               |   |              | —    |   |              |   | 655 |   |
| Net cash used in investing activities                       |   |              | (93,372    | )      |              |   | (68,825 | ) |
|                                                        |   |              |       |   |              |   |   |   |
| Cash flows from financing activities:                       |   |              |       |   |              |   |   |   |
| Proceeds from debentures (Note 4)                           |   |              | -          |   |              |   | 315,000 |   |
| Procceds from convertible notes (Note 4)                    |   |              | 175,000    |   |              |   | - |   |
| Proceeds from notes payable, related (Note 3)               |   |              | 89,100     |   |              |   | 43,247 |   |
| Proceeds from notes payable, other (Note 4)                 |   |              | 300,000    |   |              |   | 30,000 |   |
| Proceeds from sales of common stock (Note 9)                |   |              | 209,800    |   |              |   | 1,096,401 |   |
| Prodeeds from sales of subsidiary equity (Note 1)           |   |              | 571,900    |   |              |   | - |   |
| Payments on notes payable (Note 4)                          |   |              | (97,933    | )      |              |   | - |   |
| Payments on notes payable, related (Note 3)                 |   |              | (140,058   | )      |              |   | (112,313 | ) |
| Proceeds from exercise of warrants to                       |   |              |       |   |              |   |   |   |
| purchase common stock                                       |   |              | -          |   |              |   | 2,650 |   |
| Payments to placement agents (Note 4)                       |   |              | (12,730    | )      |              |   | (173,050 | ) |
| Net cash provided by financing activities                   |   |              | 1,095,079  |   |              |   | 1,201,935 |   |
|                                                        |   |              |       |   |              |   |   |   |
| Net change in cash and cash equivalents                     |   |              | 42,282     |   |              |   | 105,579 |   |
|                                                        |   |              |       |   |              |   |   |   |
| Cash and cash equivalents:                                  |   |              |       |   |              |   |   |   |
| Beginning of period                                         |   |              | 17,262     |   |              |   | 45,454 |   |
|                                                        |   |              |       |   |              |   |   |   |
| End of period                                               |   | $                 | 59,544     |   |              | $      | 151,033 |   |
|                                                        |   |              |       |   |              |   |   |   |
| Supplemental disclosure of cash flow information:           |   |              |       |   |              |   |   |   |
| Cash paid during the period for:                            |   |              |       |   |              |   |   |   |
| Income taxes                                                |   | $                 | -          |   |              | $      | - |   |
| Interest                                                    |   | $                 | 38,966     |   |              | $      | 27,362 |   |
|                                                        |   |              |       |   |              |   |   |   |
| Noncash financing transactions:                             |   |              |       |   |              |   |   |   |
| Notes and interest payable converted to stock               |   | $                 | 140,000    |   |              | $      | 570,523 |   |
| Notes and interest payable converted to stock, related      |   | $                 | -          |   |              | $      | 61,400 |   |
| Accounts payable converted to stock                         |   | $                 | -          |   |              | $      | 90,414 |   |
| Stock issued in exchange for related party accounts payable |   | $                 | -          |   |              | $      | 22,500 |   |

----

----

----

----

| Management fees, rent and bonus payable to officers |   | $      | 158,837 |   |
|-----------------------------------------------------|--------|--------|---------|--------|
|                                                |   |   |    |   |
| Accrued expenses payable to subsidiary officer      |   |   | 8,728   |   |
|                                                |   |   |    |   |
| Total accounts payable, related party               |   | $      | 167,565 |   |

----

| Notes payable to affiliates of Company officers; interest at 8% and due on demand |   | $      | 81,578 |   |
|-----------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                              |   |   |   |   |
| Notes payable, related party                                                      |   |   | 81,578 |   |
|                                                                              |   |   |   |   |
| Interest payable related party                                                    |   |   | 8,504  |   |
|                                                                              |   |   |   |   |
| Total principal and interest payable, related party                               |   | $      | 90,082 |   |

----

----

| Notes payable, non-affiliates; interest at 8% and due on demand |   | $      | 235,058 |   |
|-----------------------------------------------------------------|--------|--------|---------|--------|
|                                                            |   |   |    |   |
| Interest payable, non-affiliates                                |   |   | 16,043  |   |
|                                                            |   |   |    |   |
| Total principal and interest payable, other                     |   | $      | 251,101 |   |

----

----

| Issuance Date | Fair Value | Term    | AssumedConversion Price | Market Price onGrant Date | Volatility Percentage | Interest Rate |
|---------------|------------|---------|-------------------------|---------------------------|-----------------------|---------------|
| 1/19/2010     | $67,667    | 3 years | $0.03                   | $0.04                     | 195%                  | 1.38%         |
| 1/28/2010     | $20,317    | 3 years | $0.04                   | $0.05                     | 195%                  | 1.38%         |

| Fair Value | Term            | AssumedConversion Price | Volatility Percentage | Interest Rate |
|------------|-----------------|-------------------------|-----------------------|---------------|
| $267,691   | 2.0 - 2.3 years | $0.010                  | 164%                  | 0.42%         |

----

| Issuance Date | Fair Value | Term     | AssumedConversionPrice | Market Price onGrant Date | Volatility Percentage | Interest Rate |
|---------------|------------|----------|------------------------|---------------------------|-----------------------|---------------|
| 5/26/2010     | $53,292    | 6 months | $0.019                 | $0.035                    | 95%                   | 0.22%         |
| 6/30/2010     | $42,026    | 9 months | $0.009                 | $0.022                    | 107%                  | 0.22%         |
| 8/24/2010     | $38,182    | 9 months | $0.006                 | $0.011                    | 143%                  | 0.22%         |

| Fair Value | Term         | AssumedConversion Price | Volatility Percentage | Interest Rate |
|------------|--------------|-------------------------|-----------------------|---------------|
| $102,291   | 2 - 8 months | $0.007                  | 107-156%              | 0.01-0.22%    |

----

| Short-term liabilities:                                                                                                                                               |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                                                                                                                                                  |   |   |   |
| September 2008 convertible note; non-affiliate; interest at 12% with a default rate of 18% since December 4, 2009 due date                                            |   | $      | 30,000 |   |
|                                                                                                                                                                  |   |   |   |   |
| May 2010 Convertible note; non-affiliate; interest at 8%; due November 26, 2010; $60,000 face value net of discount of $20,000                                        |   |   | 40,000 |   |
|                                                                                                                                                                  |   |   |   |   |
| June 2010 Convertible note; non-affiliate; interest at 8%; due February 28, 2011; $30,000 face value net of discount of $20,000                                       |   |   | 10,000 |   |
|                                                                                                                                                                  |   |   |   |   |
| August 2010 Convertible note; non-affiliate; interest at 8%; due May 26, 2011; $30,000 face value net of discount of $26,667                                          |   |   | 3,333  |   |
|                                                                                                                                                                  |   |   |   |   |
| Total short-term convertible notes                                                                                                                                    |   | $      | 83,333 |   |
|                                                                                                                                                                  |   |   |   |   |
| Interest payable, short-term convertible notes                                                                                                                        |   |   | 7,877  |   |
|                                                                                                                                                                  |   |   |   |   |
|                                                                                                                                                                  |   |   |   |   |
| Total principal and interest payable, short-term convertible notes                                                                                                    |   | $      | 91,210 |   |
|                                                                                                                                                                  |   |   |   |   |
| Long-term liabilities:                                                                                                                                                |   |   |   |   |
|                                                                                                                                                                  |   |   |   |   |
| Convertible debentures; non-affiliates; interest at 7% and due three years from issue date; outstanding principal of $295,000 face value; net of discount of $216,844 |   | $      | 78,056 |   |
|                                                                                                                                                                  |   |   |   |   |
| Interest payable, long-term convertible notes                                                                                                                         |   |   | 21,017 |   |
|                                                                                                                                                                  |   |   |   |   |
| Total principal and interest payable, other                                                                                                                           |   | $      | 99,073 |   |

----

|                           |   | Three months ended September 30, 2010 |    |   | Three months ended October 31, 2009 |   |    | Nine months ended September 30, 2010 |   |   | Ninemonths ended October 31, 2009 |   |
|--------------------------------|--------|---------------------------------------|---------|--------|-------------------------------------|--------|---------|--------------------------------------|--------|--------|-----------------------------------|--------|
| General and administrative     |   | $                                     | 123,153 |   |                                | $      | 43,818  |                                 |   | $      | 390,542                           |   |   | $ | 129,060 |   |
| Salaries and employee benefits |   |                                  | 112,574 |   |                                |   | 89,423  |                                 |   |   | 322,782                           |   |   |   | 272,913 |   |
| Legal and accounting           |   |                                  | 32,961  |   |                                |   | 27,870  |                                 |   |   | 114,995                           |   |   |   | 117,490 |   |
| Professional services          |   |                                  | 58,121  |   |                                |   | 98,687  |                                 |   |   | 253,005                           |   |   |   | 281,216 |   |
|                           |   | $                                     | 326,809 |   |                                | $      | 259,798 |                                 |   | $      | 1,081,324                         |   |   | $ | 800,679 |   |

----

| Issuance Date | Fair Value | Term    | Conversion Price | Market Price onGrant Date | Volatility Percentage | Interest Rate |
|---------------|------------|---------|------------------|---------------------------|-----------------------|---------------|
| May 5, 2009   | $1,374,647 | 5 years | $0.13            | $0.12                     | 225%                  | 1.9%          |
| May 5, 2009   | $1,374,646 | 6 years | $0.13            | $0.12                     | 225%                  | 2.3%          |
| May 5, 2009   | $1,385,302 | 7 years | $0.13            | $0.12                     | 225%                  | 2.6%          |

----

| Issuance Date | Fair Value | Term    | Conversion Price | Market Price onGrant Date | Volatility Percentage | Interest Rate |
|---------------|------------|---------|------------------|---------------------------|-----------------------|---------------|
| June 2, 2010  | $1,085,000 | 5 years | $0.05            | $0.03                     | 238%                  | 2.13%         |

|                                             |   | Warrants   |   | Weighted-average exercise price                                   |   | Weighted-average grant date fair value          |
|--------------------------------------------------|--------|------------|--------|-------------------------------------------------------------------|--------|-------------------------------------------------|
| Outstanding and exercisable at December 31, 2009 |   | 60,490,263 |   | $          0.15 |   | $       0.10 |
|                                             |   |       |   |                                                              |   |                                            |
| Granted                                          |   | 35,000,000 |   | 0.05                                                              |   | 0.03                                            |
| Expired/Cancelled                                |   | 33,907,235 |   | 0.15                                                              |   | 0.34                                            |
| Exercised                                        |   | -          |   | -                                                                 |   | -                                               |
|                                             |   |       |   |                                                              |   |                                            |
| Outstanding and exercisable at June 30, 2010     |   | 61,583,028 |   | $          0.09 |   | $       0.12 |

| Exercise price range |   | Number of options outstanding |   | Weighted-average exercise price                 |   | Weighted-average remaining life |
|----------------------|--------|-------------------------------|--------|-------------------------------------------------|--------|---------------------------------|
|                 |   |                          |   |                                            |   |                            |
| $0.50                |   | 802,000                       |   | $       0.50 |   | 0.3 years                       |
|                 |   |                          |   |                                            |   |                            |
| $0.25                |   | 27,500                        |   |        0.25  |   | 0.6 years                       |
|                 |   |                          |   |                                            |   |                            |
| $0.10 to $0.18       |   | 24,603,528                    |   | 0.13                                            |   | 1.7 years                       |
|                 |   |                          |   |                                            |   |                            |
| $0.05 to $0.06       |   | 36,150,000                    |   |       0.05        |   | 2.9 years                       |
|                 |   |                          |   |                                            |   |                            |
|                 |   | 61,583,028                    |   | $       0.09 |   | 2.0 years                       |

----

| Issuance Date | Fair Value | Term    | Exercise Price | Market Price onGrant Date | Volatility Percentage | Interest Rate |
|---------------|------------|---------|----------------|---------------------------|-----------------------|---------------|
| March 2010    | $354,650   | 5 years | $0.041         | $0.041                    | 236%                  | 2.38%         |

|                             | Options |   | Weighted-average exercise price |   | Weighted-average remaining contractual life (years) |   | Aggregate intrinsic value |
|----------------------------------|---------|--------|---------------------------------|--------|-----------------------------------------------------|--------|---------------------------|
| Outstanding at December 31, 2009 | 425,000 |   | $0.35                           |   | 2.25                                                |   | $0                        |
|                             |    |   |                            |   |                                                |   |                      |
| Options granted                  | -       |   | -                               |   | -                                                   |   | -                         |
|                             |    |   |                            |   |                                                |   |                      |
| Outstanding atSeptember 30, 2010 | 425,000 |   | $0.35                           |   | 2.25                                                |   | $0                        |

----

|                             | Options    |   | Weighted-average exercise price |   | Weighted-average remaining contractual life (years) |   | Aggregate intrinsic value |
|----------------------------------|------------|--------|---------------------------------|--------|-----------------------------------------------------|--------|---------------------------|
| Outstanding at December 31, 2009 | 11,350,000 |   | $0.10                           |   | 3.6                                                 |   | $0                        |
|                             |       |   |                            |   |                                                |   |                      |
| Options granted                  | 8,650,000  |   | $0.04                           |   | 4.6                                                 |   | $0                        |
|                             |       |   |                            |   |                                                |   |                      |
| Outstanding atJune 30, 2010      | 20,000,000 |   | $0.06                           |   | 3.9                                                 |   | $0                        |

----

----

----

----

|                           |   | Nine months endedSeptember 30, 2010 |      |   | Nine months endedOctober 31, 2009 |   |
|--------------------------------|--------|-------------------------------------|-----------|--------|-----------------------------------|--------|
| General and administrative     |   | $                                   | 390,542   |   |                              | $      | 129,060 |   |
| Salaries and employee benefits |   |                                | 322,782   |   |                              |   | 272,913 |   |
| Legal and accounting           |   |                                | 114,995   |   |                              |   | 117,490 |   |
| Professional services          |   |                                | 253,005   |   |                              |   | 281,216 |   |
|                           |   | $                                   | 1,081,324 |   |                              | $      | 800,679 |   |

|                           |   | Three months endedSeptember 30, 2010 |    |   | Three months endedOctober 31, 2009 |   |
|--------------------------------|--------|--------------------------------------|---------|--------|------------------------------------|--------|
| General and administrative     |   | $                                    | 123,153 |   |                               | $      | 43,818 |   |
| Salaries and employee benefits |   |                                 | 112,574 |   |                               |   | 89,423 |   |
| Legal and accounting           |   |                                 | 32,961  |   |                               |   | 27,870 |   |
| Professional services          |   |                                 | 58,121  |   |                               |   | 98,687 |   |
|                           |   | $                                    | 326,809 |   |                               | $      | 259,798 |   |

----

| •   | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Exhibits: |                                                                                                |
|-----------|-----------------------------------------------------------------------------------------------------|
| 31.1      | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  Filed herewith. |
| 32.1      | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  Filed herewith. |

----

|   | ALUMIFUEL POWER CORPORATION |
|--------|-----------------------------|
|   | (Registrant)                |

| Date: November 10, 2010 | By: /s/ Henry Fong                                         |
|-------------------------|------------------------------------------------------------|
|                    | Henry Fong                                                 |
|                    | Principal Executive Officer andPrincipal Financial Officer |
|                    |                                                       |