**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**







**FORM
      10-QSB**




QUARTERLY
      REPORT UNDER SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      Quarterly Period ended January 31, 2008


Commission
      File Number 333-145967




**PAX
      BIOFUELS INC.**


(Name
      of
      small business issuer in its charter)




**DELAWARE**
            
            **98-0543691**(State
                of incorporation)
            
            (Employer
                ID Number)





**1278
      Laurel Road**


**North
      Saanich, BC**


**Canada
      V8L 5K8**


**(250)
      655-3776**


(Address
      and telephone number of principal executive offices)




Check
      whether the registrant (1) has filed all reports required to be filed by
      Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
      12 months (or for such shorter period that the registrant was required to file
      such reports), and (2) has been subject to such filing requirements for the
      past 90 days.




Yes þ No o




Check
      whether the registrant is a shell company (as defined in Rule 12b-2 of the
      Exchange Act).




Yes þ No o




There
      were 10,713,000 shares of Common Stock, $.001 par value, outstanding as of
      March
      14, 2008.




Transitional
      Small Business Disclosure Format: Yes o No þ







**PAX
      BIOFUELS, INC.**


**(A
      Development Stage Company)**




**Table
      of Contents**




Page**PART
                I. FINANCIAL INFORMATION**
            1ITEM
                1.
            Financial
                Information
            1ITEM
                2.
            Management’s
                Discussion and Analysis or Plan of Operation
            2ITEM
                3.
            Controls
                and Procedures
            4**PART
                II. OTHER INFORMATION**
            5ITEM
                1.
            Legal
                Proceedings
            5ITEM
                2.
            Unregistered
                Sale of Securities
            5ITEM
                3.
            Default
                of Senior Securities
            5ITEM
                4.
            Submission
                of Matters to a Vote of Security Holders
            5ITEM
                5.
            Other
                Information
            5ITEM
                6.
            Exhibits
                and Reports on Form 8-K
            5**SIGNATURES**
            6


1




**PART
      I.**  **FINANCIAL
      INFORMATION**




**ITEM
      1.** **Financial
      Information**




**Index
      to the Financials**


Balance
                  Sheets (Unaudited)
              F–1Statements
                  of Operations (Unaudited)
              F–2Statements
                  of Cash Flows (Unaudited)
              F–3Notes
                  to the Financial Statements
              F–4


1


**PAX
        BIOFUELS INC.**
 **(A
        Development Stage Company)**
 **Balance
        Sheets**
 **(Unaudited)**
  **January 31,**
              
              **April 30,****2008**
              
              **2007****$**
              ****
              **$****ASSETS**Current
                  AssetsCash
              
              
              5,986
              
              
              235,986
              
              
              23Equipment,
                  net
              
              
              1,837
              
              
              1,6627,823
              
              
              1,685**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**Current
                  LiabilitiesAccounts
                  payable and accrued liabilities
              
              
              31,476
              
              
              534Due
                  to related parties
              
              
              78,769
              
              
              18,021Advances
                  payable
              
              
              3,000
              
              
              -113,245
              
              
              18,555**STOCKHOLDERS'
                  DEFICIT**Common
                  StockAuthorized:100,000,000
                  common shares authorized, with a $0.001 par valueIssued
                  and oustanding:10,713,000
                  common shares (January 31, 2008 - 10,663,000)
              
              
              10,713
              
              
              10,663Subscriptions
                  receivable
              
              
              (25,261
              )
              
              (53,670
              )Additional
                  paid-in capital
              
              
              70,587
              
              
              65,637Deficit
                  Accumulated During the Development Stage
              
              
              (161,461
              )
              
              (39,500
              )(105,422
              )
              
              (16,870
              )7,823
              
              
              1,685
 **The
          Accompanying Notes Are an Integral Part of these Financial
          Statements**
 F-1
  **PAX
        BIOFUELS INC.**
 **(A
        Development Stage Company)**
 **Statement
        of Operations**
 **(Unaudited)**
  **Cumulative from****For The**
              
              **For The**
              
              **February 5,****Three Months**
              
              **Nine Months**
              
              **2007****Ended**
              
              **Ended**
              
              **(inception) to****January 31,**
              
              **January 31,**
              
              **January 31,****2008**
              
              **2008**
              
              **2008****$**
              ****
              **$**
              ****
              **$****EXPENSES**Advertising
              
              
              -
              
              
              -
              
              
              16Amortization
              
              
              162
              
              
              324
              
              
              324Communications
              
              
              -
              
              
              264
              
              
              264Foreign
                  exchange (gain) loss
              
              
              (318
              )
              
              (92
              )
              
              (464
              )Interest
                  and bank charges
              
              
              315
              
              
              556
              
              
              580Management
                  fees
              
              
              19,891
              
              
              56,916
              
              
              73,580Miscellaneous
              
              
              17
              
              
              108
              
              
              108Office
                  supplies
              
              
              123
              
              
              756
              
              
              984Printing
                  and reproduction
              
              
              875
              
              
              875
              
              
              875Professional
                  fees
              
              
              19,871
              
              
              55,951
              
              
              56,931Travel
              
              
              5,476
              
              
              6,303
              
              
              28,263**NET
                  LOSS**
              
              
              46,412
              
              
              121,961
              
              
              161,461**NET
                  LOSS PER SHARE - BASIC AND DILUTED**
              
              
              0.00
              
              
              0.01
              
              
              0.02**WEIGHTED
                  AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED**
              
              
              9,419,365
              
              
              10,204,459
              
              
              10,126,300
 **The
          Accompanying Notes Are an Integral Part of these Financial
          Statements**
 F-2


**PAX
        BIOFUELS INC.**
 **(A
        Development Stage Company)**
 **Statement
        of Cash Flows**
 **(Unaudited)**
 
 **Cumulative from****For The**
              
              **February 5,****Nine Months**
              
              **2007****Ended**
              
              **(inception) to****January 31,**
              
              **January 31,****2008**
              
              **2008****$**
              ****
              **$****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  loss
              
              
              (121,961
              )
              
              (161,461
              )Add-back:
                  Amortization
              
              
              324
              
              
              324Change
                in non-cash working capital items:
              
              
              
              
              
              -Accounts
                  payable and accrued liabilities
              
              
              30,942
              
              
              31,476Advances
                  payable
              
              
              3,000
              
              
              3,000Due
                  to related parties
              
              
              60,748
              
              
              78,769Net
                  Cash Used In Operating Activities
              
              
              (26,947
              )
              
              (47,892
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Proceeds
                  from issuance of common stock
              
              
              33,409
              
              
              56,039Net
                  Cash Provided By Financing Activities
              
              
              33,409
              
              
              56,039**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Purchase
                  of equipment
              
              
              (499
              )
              
              (2,161
              )Net
                  Cash Used In Investing Activities
              
              
              (499
              )
              
              (2,161
              )**NET
                  INCREASE (DECREASE) IN CASH**
              
              
              5,963
              
              
              5,986**CASH -
                  BEGINNING**
              
              
              23
              
              
              -**CASH -
                  ENDING**
              
              
              5,986
              
              
              5,986Supplemental
                  cash flow information Cash Paid For:Interest
              
              
              -
              
              
              -Income
                  tax
              
              
              -
              
              
              --
              
              
              -
  **The
          Accompanying Notes Are an Integral Part of these Financial
          Statements**
  F-3


**Pax
      Biofuels Inc.**


**(A
      Development Stage Company)**


**Notes
      to the Financial Statements**


**January
      31, 2008**


**(Unaudited)**




**Note
      1.**  **Basis
      of Presentation**




**Unaudited
      Interim Financial Statements**




The
      accompanying unaudited interim financial statements have been prepared in
      accordance with United States generally accepted accounting principles for
      interim financial information and with the instructions to Form 10-QSB of
      Regulation S-B. They may not include all information and footnotes required
      by
      United States generally accepted accounting principles for complete financial
      statements. However, except as disclosed herein, there have been no material
      changes in the information disclosed in the notes to financial statements for
      the period ended April 30, 2007 included in the Company's Registration Statement
      on Form SB-2 filed with the Securities and Exchange Commission. The interim
      unaudited financial statements should be read in conjunction with those
      financial statements included in the Registration Statement on Form SB-2. In
      the
      opinion of management, all adjustments considered necessary for a fair
      presentation, consisting solely of normal recurring adjustments, have been
      made.
      Operating results for the nine months ended January 31, 2008 are not necessarily
      indicative of the results that may be expected for the year ending April 30,
      2008.


F-4




**ITEM
      2.** **Management’s
      Discussion and Analysis or Plan of Operation**




The
      following discussion and analysis of the financial condition and results of
      our
      operations should be read in conjunction with our financial statements and
      the
      notes thereto. The results shown herein are not necessarily indicative of the
      results to be expected for any future periods.




You
      should read the following discussion and analysis in conjunction with the
      Consolidated Financial Statements filed with our registration statement on
      Form
      SB-2 (the “Registration Statement”), which was filed with the Securities and
      Exchange Commission (the “SEC”) on September 10, 2007, and the notes thereto,
      and the other financial data appearing elsewhere in this quarterly report on
      Form 10-QSB. The information set forth in Management’s Discussion and Analysis
      or Plan of Operations contains certain “forward-looking statements,” including,
      among others (i) expected changes in our revenues and profitability,
      (ii) prospective business opportunities, and (iii) our strategy for
      financing our business. Forward-looking statements are statements other than
      historical information or statements of current condition. Some forward-looking
      statements may be identified by use of terms such as “believes,” “anticipates,”
“intends” or “expects.” These forward-looking statements relate to our plans,
      objectives and expectations for future operations. Although we believe that
      our
      expectations with respect to the forward-looking statements are based upon
      reasonable assumptions within the bounds of our knowledge of our business and
      operations, in light of the risks and uncertainties inherent in all future
      projections, the inclusion of forward-looking statements in this report should
      not be regarded as a representation by us or any other person that our
      objectives or plans will be achieved.




***Plan
      of Operations***




Pax
      Biofuels Inc. (the “Company,” “Pax Biofuels,” “we” or “us”) was formed on
      February 5, 2007, in the state of Delaware. We intend to be in the business
      of
      producing and distributing biodiesel fuel. We intend to construct and operate
      a
      30,000 metric ton per year biodiesel processing plant to be fed with a rapeseed
      oil crushing plant which we also intend to construct and operate. Our plant
      will
      be located in Serbia, formerly part of Yugoslavia. We do not expect to generate
      any revenue until we begin operating the proposed biodiesel plant.




We
      anticipate that our primary source of revenue will be the sale of biodiesel,
      both in blended and unblended forms with petroleum-based diesel fuel. We intend
      to produce and sell biodiesel fuel primarily to wholesalers who purchase pure
      biodiesel (known as B100) or blended fuel such as B20 (which is a blend of
      20
      percent biodiesel, and petrodiesel). Our sales will be dependent on the volume
      and price of the biodiesel fuel we sell in the future. The selling prices we
      realize in the future for our biodiesel will be closely linked to market prices
      of petroleum-based diesel fuel, the supply and demand for biodiesel, as well
      as
      the tax incentives offered by governments of Serbia and other European countries
      for the production and blending of alternative fuels.




During
      the next 12 months we anticipate raising sufficient capital through private
      placements to be able to finance our plan of operations. Once finalized, we
      anticipate acquiring land for our plant through discussions and negotiations
      with local municipalities in Serbia. We anticipate this process will take two
      months and cost approximately $15,000. At that time, we will then contract
      for
      land development, plant construction and request proposals from contractors.
      We
      anticipate that this process will take two to three months. Our estimated costs
      are $125,000.




We
      will
      also request proposals from equipment suppliers at this point and would
      anticipate placing firm orders within three months of the private
      placements.


2


Following
      the establishment of firm timelines for commencing operations at the plant
      we
      anticipate being ready to execute contracts with customers and suppliers. Our
      management anticipates spending considerable time meeting with various farmer
      cooperatives in order to negotiate contracts for supplies of raw materials
      as
      well as re-activating contacts with buyers and commodity brokers to solicit
      firm
      orders. We anticipate our costs in this regard will be approximately $75,000.




As
      of the
      date of this quarterly report, we have not yet commenced any of these activities
      and there can be no assurance that we will be able to do so on the proposed
      schedule or at all.




***Liquidity
      and Capital Resources***




We
      have
      limited capital resources, as, among other things, we are a development stage
      company with no operating history. We have not generated any revenues. We may
      not be able to generate sufficient revenues to become profitable. In addition,
      we may never secure the funding necessary to begin or complete construction
      of
      our biodiesel production facilities and our facilities may never commence
      significant operations. We have no agreements, commitments or understandings
      to
      secure this funding. If we do complete the construction of our biodiesel
      production facility, we may not be able to generate sufficient revenues to
      become profitable. We anticipate that we will experience substantial growth
      involving the construction and start-up of operations of the plant and the
      hiring of employees. This period of growth and the start-up of the plant is
      likely to be a significant challenge to us.




While
      we
      have sufficient funds on hand to commence business operations, our cash reserves
      are not sufficient to meet our obligations for the next 12-month period. As
      a
      result, we will need to seek additional funding in the near future. We currently
      do not have a specific plan of how we will obtain such funding; however, we
      anticipate that additional funding will be in the form of equity financing
      from
      the sale of our common stock. At this time, we cannot provide investors with
      any
      assurance that we will be able to raise sufficient funding from the sale of
      our
      common stock to meet our obligations over the next 12 months. We do not have
      any
      arrangements in place for any future equity financing.




**Results
      of Operations for the Three-Month and Nine-Month Periods Ended January 31,
      2008**




We
      did
      not earn any revenues during the nine-month period ended January 31, 2008.




We
      incurred operating expenses in the amount of $121,961 for the nine-month period
      ended January 31, 2008 and $46,412 for the three month period ended January
      31,
      2008. Operating expenses are comprised of general and administrative expenses,
      management fees, professional fees and travel expenses. General and
      administrative expenses decreased to $1,174 for the three-month period ended
      January 31, 2008, as compared to $649 for the three-month period ended October
      31, 2007. Management fees increased to $19,891 for the three-month period ended
      January 31, 2008, as compared to $18,888 for the three-month period ended
      October 31, 2007. Professional fees increased to $19,871 for the three-month
      period ended January 31, 2008, as compared to $17,791 for the three-month period
      ending October 31, 2007. Travel expenses increased to $5,476 for the three-month
      period ended January 31, 2008, as compared to $0 for the three-month period
      ended October 31, 2007. The professional and management fees were primarily
      incurred in connection with the preparation and filing of our Registration
      Statement. There are no comparable results for the prior year or nine-month
      periods as we had not yet commenced operations.




Our
      net
      loss for the nine-month period ended January 31, 2008 was $121,961, as compared
      to $75,549 for the six-month period ended October 31, 2007 and $38,755 for
      the three-month period ended July 31, 2007. There are no comparable results
      for
      the prior-year or nine-month periods as we had not yet commenced operations.


3




At
      January 31, 2008, we had total assets of $7,823, consisting of cash of $5,986
      and equipment of $1,837. At October 31, 2007 we had total assets of $10,021
      consisting of cash of $8,022 and equipment of $1,999. At July 31, 2007, we
      had
      total assets of $3,949, consisting of cash of $1,787 and equipment of $2,162.
      The increase in cash at October 31, 2007 is a result of private placements
      we
      undertook during the three months ended October 31, 2007, pursuant to which
      we
      issued 40,000 shares of common stock for total cash proceeds of $4,000. The
      decrease in cash from November 1, 2007 to January 31, 2008 of $2,036 was a
      result of reducing accounts payable.




At
      January 31, 2008 we had liabilities of $113,245 consisting of accounts payable
      and accrued liabilities of $31,476, advances payable of $3,000 and amounts
      due
      to related parties of $78,769. At October 31, 2007, we had liabilities of
      $69,031, consisting of accounts payable and accrued liabilities of $12,854,
      advances payable of $3,000, and amounts due to related parties of $53,177.
      At
      July 31, 2007, we had liabilities of $40,092 consisting of accounts payable
      and
      accrued liabilities of $3,373 and amounts due to related parties of $36,719.
      The
      increase in our liabilities from October 31, 2007 to January 31, 2008 of $44,214
      is a result of an increase in amounts due to Hammond Management Corporation
      of
      $20,659, increase in amounts due to Scientific Biofuel Solutions Ltd. of $4,933,
      and an increase in our professional fees payable relating to the filing of
      our
      Registration Statement and the review of our quarterly filings in the amount
      of
      $16,649.




**Off-Balance
      Sheet Arrangements**




We
      have
      no off-balance sheet arrangements.




**ITEM
      3.**  **Controls
      and Procedures**




***Evaluation
      of Disclosure Controls and Procedures***




Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and principal financial officer, we have conducted
      an evaluation of the effectiveness of the design and operation of our disclosure
      controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
      the
      Securities and Exchange Act of 1934, as of the end of the period covered by
      this
      report. Based on this evaluation, our principal executive officer and principal
      financial officer concluded as of the evaluation date that our disclosure
      controls and procedures were effective such that the material information
      required to be included in our SEC reports is recorded, processed, summarized
      and reported within the time periods specified in SEC rules and forms relating
      to our company, particularly during the period when this report was being
      prepared.




Additionally,
      there were no significant changes in our internal controls or in other factors
      that could significantly affect these controls subsequent to the evaluation
      date. We have not identified any significant deficiencies or material weaknesses
      in our internal controls, and therefore there were no corrective actions
      taken.


4




**PART
      II. OTHER INFORMATION**




**ITEM
      1.** **Legal
      Proceedings**




None.




**ITEM
      2.** **Unregistered
      Sale of Securities**




No
      unregistered sales were made during the three-month period ended January 31,
      2008.




**ITEM
      3.** **Default
      of Senior Securities**




None.




**ITEM
      4.** **Submission
      of Matters to a Vote of Security Holders**




None.




**ITEM
      5.** **Other
      Information**




None.




**ITEM
      6.** **Exhibits
      and Reports on Form 8-K**




***EXHIBITS***




**No.**
            
            **Description**31.1
            
            Sec.
                302 Certification of Principal Executive Officer, Financial Officer
&
                Accounting Officer32.1
            
            Sec.
                906 Certification of Principal Executive Officer, Financial Officer
&
                Accounting Officer




5




**SIGNATURES**




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


**PAX
                  BIOFUELS INC.**Date:
                  March 17, 2008
              By:
              /s/
                  Paul Leslie HammondPaul
                  Leslie Hammond
                Principal
                  Executive Officer, Principal Financial Officer and Principal Accounting
                  Officer, President and
                  Director


6


**EXHIBIT
      INDEX**


**No.**
              
              **Description**31.1
              
              Sec.
                  302 Certification of Principal Executive Officer, Financial Officer
&
                  Accounting Officer32.1
              
              Sec.
                  906 Certification of Principal Executive Officer, Financial Officer
&
                  Accounting Officer




7