UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-QSB

|[ X ] | Quarterly report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
|----- | ------------------------------------------------------------------------------------
|      | For the quarterly period endedMarch 31, 2007                                        



|[    ] | Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
|------ | -------------------------------------------------------------------------------------
|       | For the transition period from _______ to
      _______.                             
|       |                                                                                      
|       | Commission file number000-50907                                                      



PURE BIOFUELS CORP.

|(Exact
      name of small business issuer as specified in its charter)
|-----------------------------------------------------------------------
|                                                                       
|Nevada(State of Incorporation)                                         
|                                                                       

9440 Little Santa Monica Blvd., Suite 401 Beverly Hills, CA 90210

Telephone No.:  1-310-402-5916

(Address and telephone number of Registrants principal

executive offices and principal place of business)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x

As of March 31, 2007, the Company had 62,435,428 outstanding shares of common stock.

Transitional Small Business Disclosure Format (Check one): Yes o No x



| | 1
| | -



---







TABLE OF CONTENTS

|                                                                     | **Page**
|-------------------------------------------------------------------- | --------
|PART I - FINANCIAL INFORMATION                                       | 3       
|Item 1.  Financial Statements                                        | 3       
|Item 2.  Managements Discussion and Analysis or Plan of Operation   | 14      
|Item 3.  Controls and Procedures                                     | 20      
|                                                                     |         
|PART II - OTHER INFORMATION                                          | 21      
|Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds | 21      
|Item 6. Exhibits                                                     | 21      
|                                                                     |         
|SIGNATURES                                                           | 22      

| | 2
| | -



---





PART I - FINANCIAL INFORMATION

**Item 1. Financial Statements**



Pure Biofuels Corp.

(formerly Metasun Enterprises, Inc.)

(A Development Stage Company)

(Unaudited)

March 31, 2007

|                                                                                   | Index
|---------------------------------------------------------------------------------- | -----
|Consolidated Balance Sheets                                                        | 4    
|Consolidated
                Statements of Operations and Other Comprehensive Loss | 5    
|Consolidated Statements of Stockholders Equity                                    | 6    
|Consolidated Statements of Cash Flows                                              | 7    
|Notes to the Consolidated Financial Statements                                     | 8    







3




---



Pure Biofuels Corp.
(A Development Stage Company) 
Consolidated Balance Sheets

|                                                     | March 31,   |             | December 31, |  
|---------------------------------------------------- | ----------- | ----------- | ------------ | -
|                                                     | 2007        |             | 2006         |  
|                                                     | (unaudited) |             |              |  
|ASSETS                                               |             |             |              |  
|                                                     |             |             |              |  
|Current Assets                                       |             |             |              |  
|                                                     |             |             |              |  
|Cash                                                 | $           | 54,493      |              | $
|Accounts receivable                                  |             | 31,595      |              |  
|Prepaid expenses and deposits                        |             | 74,868      |              |  
|                                                     |             |             |              |  
|                                                     |             | 160,956     |              |  
|VAT Receivable (Note 5)                              |             | 322,043     |              |  
|Property, Plant and Equipment, net (Note 6)          |             | 5,028,063   |              |  
|                                                     |             |             |              |  
|Total Assets                                         | $           | 5,511,062   |              | $
|                                                    
|                                                     |             |             |              |  
|LIABILITIES AND STOCKHOLDERS EQUITY                 |             |             |              |  
|                                                     |             |             |              |  
|Current Liabilities                                  |             |             |              |  
|                                                     |             |             |              |  
|Accounts payable and accrued liabilities             | $           | 1,181,556   |              | $
|Due to related parties (Note 8)                      |             | 66,480      |              |  
|Current portion of long term debt (Note 7)           |             | 600,000     |              |  
|                                                     |             |             |              |  
|                                                     |             | 1,848,036   |              |  
|Long Term Debt (Note 7)                              |             | 600,000     |              |  
|                                                     |             |             |              |  
|Total Liabilities                                    |             | 2,448,036   |              |  
|                                                     |             |             |              |  
|Minority interest (Note 1)                           |             |             |              |  
|                                                     |             |             |              |  
|Commitment and Contingencies (Notes 2 and 9)         |             |             |              |  
|                                                     |             |             |              |  
|Stockholders Equity                                 |             |             |              |  
|                                                     |             |             |              |  
|Common stock (Note 10)                               |             |             |              |  
|Authorized: 93,750,000 shares, par value $0.001      |             |             |              |  
|Issued: 62,435,428 shares (2006 - 62,132,419 shares) |             | 62,435      |              |  
|Additional paid-in capital                           |             | 5,044,978   |              |  
|Accumulated other comprehensive loss                 |             | 2,441       |              |  
|Subscriptions received in advance                    |             |            |              |  
|Deficit accumulated during the development stage     |             | (2,046,828) |              |  
|                                                     |             |             |              |  
|Total Stockholders Equity                           |             | 3,063,026   |              |  
|                                                     |             |             |              |  
|Total Liabilities and Stockholders Equity           | $           | 5,511,062   |              | $

The accompanying notes are an integral part of these consolidated financial statements

4

---



Pure Biofuels Corp.
(A Development Stage Company)
Consolidated Statements of Operations and Other Comprehensive Loss (unaudited)

|                                              | For the period from |             | For the      |  
|--------------------------------------------- | ------------------- | ----------- | ------------ | -
|                                              | May 10, 2006        |             | Three Months |  
|                                              | (Date of Inception) |             | Ended        |  
|                                              | to March 31,        |             | March 31,    |  
|                                              | 2007                |             | 2007         |  
|                                             
|Operating Expenses                            |                     |             |              |  
|                                              |                     |             |              |  
|Consulting fees (Note 9)                      | $                   | 1,145,175   |              | $
|General and administrative                    |                     | 299,582     |              |  
|Professional fees                             |                     | 166,337     |              |  
|Wages                                         |                     | 435,734     |              |  
|                                              |                     |             |              |  
|Net Loss                                      | $                   | (2,046,828) |              | $
|                                              |                     |             |              |  
|Other Comprehensive Loss                      |                     |             |              |  
|                                              |                     |             |              |  
|Foreign currency translation adjustment       |                     | 2,441       |              |  
|                                              |                     |             |              |  
|Comprehensive Loss                            | $                   | (2,044,387) |              | $
|                                             
|Net Loss Per Share  Basic and Diluted        | $                   | (0.05)      |              | $
|                                              |                     |             |              |  
|Weighted Average Number of Shares Outstanding |                     | 42,660,000  |              |  

The accompanying notes are an integral part of these consolidated financial statements

5

---



Pure Biofuels Corp.
(A Development Stage Company) 
Consolidated Statements of Stockholders Equity

|                                  |  |              |   |          |   |            |   |               |   | Accumulated   |   | Deficit     |   |            
|--------------------------------- |  | ------------ | - | -------- | - | ---------- | - | ------------- | - | ------------- | - | ----------- | - | -----------
|                                  |  |              |   |          |   |            |   |               |   | Other         |   | Accumulated |   |            
|                                  |  | Number of    |   |          |   | Additional |   | Subscriptions |   | Comprehensive |   | During the  |   |            
|                                  |  | Common       |   |          |   | Paidin    |   | Received      |   | Income        |   | Development |   |            
|                                  |  | Shares       |   | Amount   |   | Capital    |   | In Advance    |   | (Loss)        |   | Stage       |   | Total      
|                                 
|Balance  May 10, 2006            |  | 1,000        | $ | 304      | $ |           | $ |              | $ |              | $ |            | $ | 304        
|                                 
|Adjustment for change in par      |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|value                             |  |             |   | (303)    |   | 303        |   |              |   |              |   |            |   |           
|                                 
|Recapitalization transactions     |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|Shares of Pure Biofuels Corp.     |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|(Note 10(a))                      |  | 71,359,405   |   | 71,359   |   | 1,740,626  |   |              |   |              |   |            |   | 1,811,985  
|Cancellation of Metasun           |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|Software Corp. shares             |  | (43,912,167) |   | (43,912) |   | 43,912     |   |              |   |              |   |            |   |           
|Recapitalization adjustment       |  | 29,999,970   |   | 29,999   |   | (210,526)  |   |              |   |              |   |            |   | (180,527)  
|Shares acquired by legal parent   |  | (1,000)      |   | (1)      |   |           |   |              |   |              |   |            |   | (1)        
|                                 
|Issuance of common stock for      |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|cash, October 12, 2006 @          |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|$0.75                             |  | 3,853,547    |   | 3,854    |   | 2,886,306  |   |              |   |              |   |            |   | 2,890,160  
|                                 
|Issuance of common stock for      |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|cash, November 10, 2006 @         |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|$0.75                             |  | 426,666      |   | 427      |   | 319,573    |   |              |   |              |   |            |   | 320,000    
|                                 
|Issuance of common stock for      |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|cash, December 19, 2006 @         |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|$0.75                             |  | 404,998      |   | 405      |   | 303,344    |   |              |   |              |   |            |   | 303,749    
|                                 
|Finders fee                      |  |             |   |         |   | (195,000)  |   |              |   |              |   |            |   | (195,000)  
|                                 
|Subscriptions received in advance |  |             |   |         |   |           |   | 96,277        |   |              |   |            |   | 96,277     
|                                 
|Net loss                          |  |             |   |         |   |           |   |              |   |              |   | (1,075,611) |   | (1,075,611)
|                                 
|Balance  December 31, 2006       |  | 62,132,419   |   | 62,132   |   | 4,888,538  |   | 96,277        |   |              |   | (1,075,611) |   | 3,971,336  
|                                 
|Issuance of common stock for      |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|cash, March 23, 2007 @            |  | 303,009      |   | 303      |   | 156,440    |   | (96,277)      |   |              |   |            |   | 60,466     
|$0.75                             |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|                                 
|Foreign currency translation      |  |             |   |         |   |           |   |              |   | 2,441         |   |            |   | 2,441      
|adjustment                        |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|                                 
|Net loss                          |  |             |   |         |   |           |   |              |   |              |   | (971,217)   |   | (971,217)  
|                                 
|Balance  March 31, 2007,         |  |              |   |          |   |            |   |               |   |               |   |             |   |            
|(unaudited)                       |  | 62,435,428   | $ | 62,435   | $ | 5,044,978  | $ |              | $ | 2,441         | $ | (2,046,828) | $ | 3,063,026  

Effective August 7, 2006, the Company effected a one and one-quarter (1.25) for one (1) forward stock split of the authorized, issued and outstanding common stock, without a change to the par value (Note 10). All share
amounts have been retroactively adjusted for all periods presented.

The accompanying notes are an integral part of these consolidated financial statements

6

---



Pure Biofuels Corp.
  (A Development Stage Company) 
  Consolidated Statements of Cash Flows 
(unaudited)

|                                                                     | From               |             | For
          the      |  
|-------------------------------------------------------------------- | ------------------ | ----------- | ---------------------- | -
|                                                                     | May 10, 2006 (Date |             | Three
          Months |  
|                                                                     | of Inception)      |             | Ended                  |  
|                                                                     | to March 31,       |             | March
          31,    |  
|                                                                     | 2007               |             | 2007                   |  
|Cash Flows
        From Operating Activities                         |                    |             |                        |  
|                                                                     |                    |             |                        |  
|Net
        Loss                                                     | $                  | (2,046,828) |                        | $
|                                                                     |                    |             |                        |  
|Adjustments
        to reconcile net loss to cash used in            |                    |             |                        |  
|operating
        activities:                                        |                    |             |                        |  
|                                                                     |                    |             |                        |  
|Accrued
        consulting fees                                      |                    | 97,500      |                        |  
|Depreciation                                                         |                    | 7,807       |                        |  
|                                                                     |                    |             |                        |  
|Changes
        in operating assets and liabilities                  |                    |             |                        |  
|                                                                     |                    |             |                        |  
|Accounts
        receivable                                          |                    | (192,782)   |                        |  
|Prepaid
        expenses and deposits                                |                    | 107,329     |                        |  
|Accounts
        payable and accrued liabilities                     |                    | 334,957     |                        |  
|                                                                     |                    |             |                        |  
|Net
        Cash Used In Operating Activities                        |                    | (1,692,017) |                        |  
|                                                                     |                    |             |                        |  
|Cash Flows
        From Investing Activities                         |                    |             |                        |  
|                                                                     |                    |             |                        |  
|VAT
        receivable                                               |                    | (322,043)   |                        |  
|Net
        cash acquired on acquisition                             |                    | 1,812,202   |                        |  
|Property,
        plant and equipment                                |                    | (3,374,603) |                        |  
|                                                                     |                    |             |                        |  
|Net
        Cash Used In Investing Activities                        |                    | (1,884,444) |                        |  
|                                                                     |                    |             |                        |  
|Cash Flows
        From Financing Activities                         |                    |             |                        |  
|                                                                     |                    |             |                        |  
|Due
        to related parties                                       |                    | (31,020)    |                        |  
|Subscriptions
        received in advance                            |                    |            |                        |  
|Proceeds
        from the issuance of common stock                   |                    | 3,670,652   |                        |  
|                                                                     |                    |             |                        |  
|Net
        Cash Provided by Financing Activities                    |                    | 3,639,632   |                        |  
|                                                                    
|                                                                     |                    |             |                        |  
|Effect
        of exchange rates on cash                             |                    | (8,678)     |                        |  
|                                                                     |                    |             |                        |  
|Net Increase
        (Decrease) in Cash                              |                    | 54,493      |                        |  
|                                                                     |                    |             |                        |  
|Cash  Beginning                                                     |                    |            |                        |  
|                                                                     |                    |             |                        |  
|Cash  Ending                                                        |                    | $ 54,493    |                        |  
|                                                                    
|                                                                     |                    |             |                        |  
|Supplemental
        Disclosures of Cash Flow Information            |                    |             |                        |  
|                                                                     |                    |             |                        |  
|Interest paid                                                        |                    |            |                        |  
|Income
        taxes paid                                            |                    |            |                        |  
|                                                                     |                    |             |                        |  
|Supplemental
        Disclosures of Non-Cash Investing and Financing |                    |             |                        |  
|Activities                                                           |                    |             |                        |  
|                                                                     |                    |             |                        |  
|Purchase
        of land through long-term debt                      | $                  | 1,200,000   |                        | $

The accompanying notes are
    an integral part of these consolidated financial statements

7

---



Pure Biofuels Corp.
  (A Development Stage Company)
  Notes to the Consolidated Financial Statements 
(unaudited)

|1. | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The following unaudited interim
        consolidated financial statements have been prepared in accordance with
        generally accepted accounting principles for interim financial information
        and with the instructions to Form 10-QSB and Regulation S-B as promulgated
        by the Securities and Exchange Commission. Accordingly, these financial
        statements do not include all of the disclosures required by generally
        accepted accounting principles for complete financial statements. These
        unaudited interim consolidated financial statements should be read in
        conjunction with the Companys audited consolidated financial statements
        for the year ended December 31, 2006. In the opinion of management, the
        unaudited interim consolidated financial statements furnished herein
        include all adjustments, all of which are of a normal recurring nature,
        necessary for a fair statement of the results for the interim period
        presented. Operating results for the three- month period ended March
        31, 2007 are not necessarily indicative of the results that may be expected
        for the year ending December 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   | The preparation of financial
        statements in accordance with U.S. generally accepted accounting principles
        requires management to make estimates and assumptions that affect the
        reported amounts of assets and liabilities and disclosures of contingent
        assets and liabilities at the date of the consolidated financial statements
        and the reported amounts of revenues and expenses during the period.
        Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | These unaudited interim consolidated
        financial statements include the accounts of Pure Biofuels Corp. and
        its two 99.99% owned subsidiaries, Pure Biofuels Del Peru S.A.C. and
        Palma Industrial S.A.C. Minority interest has not been presented on the
        Consolidated Balance Sheet due to the accumulated losses have exceeded
        the minority stockholders equity. In accordance with APBO No. 18, the
        minority interest has been written down to zero on the accompanying balance
        sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|2. | Going Concern Uncertainty                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   | The Company is in the development
        stage and planned principal activities have commenced, but the Company
        has not generated any significant revenue. In a development stage company,
        management devotes most of its activities to developing a market for
        its products and services. These financial statements have been prepared
        on a going concern basis, which implies the Company will continue to
        realize its assets and discharge its liabilities in the normal course
        of business. The Company is unlikely to pay dividends or generate significant
        earnings in the immediate or foreseeable future. The continuation of
        the Company as a going concern and the ability of the Company to emerge
        from the development stage is dependent upon the continued financial
        support from its stockholders, the ability of the Company to obtain necessary
        equity financing to continue operations and to generate sustainable significant
        revenue. There is no guarantee that the Company will be able to raise
        adequate equity financing or generate profitable operations. As at March
        31, 2007, the Company has a working capital deficit of $1,687,080
        and has accumulated losses of $2,046,828 since inception. These financial
        statements do not include any adjustments to the recoverability and classification
        of recorded asset amounts and classification of liabilities that might
        be necessary should the Company be unable to continue as a going concern.
        Management intends to raise additional funds through debt or equity financing.
|  
|3. | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   | The reporting currency of the
        Company is the US dollar. The Companys subsidiaries use their local
        currency, Peruvian Nuevos Soles (PEN), as their functional currency.
        Assets and liabilities are translated using the exchange rates prevailing
        at the balance sheet date. Translation adjustments resulting from this
        process are included in accumulated other comprehensive income in the
        statement of stockholders equity. Transaction gains and losses
        that arise from exchange rate fluctuations on transactions denominated
        in a currency other than the functional currency are included in the
        results of operations as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   | Translation adjustments amounted
        to $2,441 as of March 31, 2007. Asset and liability amounts at March
        31, 2007 and December 31, 2006 were translated at 3.183 PEN to $1.00
        USD and 3.194 PEN to $1.00 USD, respectively. Equity accounts were
        stated at their historical rate. The average translation rates applied
        to income statement accounts for the three months ended March 31, 2007
        and the period from inception to December 31, 2006 were 3.184 PEN and 3.197 PEN, respectively. Cash
        flows are also translated at average translation rates for the period,
        therefore, amounts reported on the statement of cash flows will not necessarily
        agree with changes in the corresponding balances on the balance sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|4. | Recent Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | In February 2007, the FASB
        issued SFAS No. 159, The Fair Value Option for Financial Assets
        and Financial Liabilities. This Statement permits entities to choose
        to measure many financial assets and financial liabilities at fair value.
        Unrealized gains and losses on items for which the fair value option
        has been elected are reported in earnings. SFAS No. 159 is effective
        for fiscal years beginning after November 15, 2007. The Company is currently
        assessing the impact of SFAS No. 159 on its financial position and results
        of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  

8

---



Pure Biofuels Corp.
  (A Development Stage Company)
  Notes to the Consolidated Financial Statements 
  (unaudited)

|4. | Recent Accounting
        Policies (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | In September 2006,
        the FASB issued SFAS No. 158, Employers Accounting for Defined
        Benefit Pension and Other Postretirement Plans  an amendment of
        FASB Statements No. 87, 88, 106, and 132(R). This statement requires
        employers to recognize the overfunded or underfunded status of a defined
        benefit postretirement plan (other than a multiemployer plan) as an asset
        or liability in its statement of financial position and to recognize
        changes in that funded status in the year in which the changes occur
        through comprehensive income of a business entity or changes in unrestricted
        net assets of a not-for-profit organization. This statement also requires
        an employer to measure the funded status of a plan as of the date of
        its year-end statement of financial position, with limited exceptions.
        The provisions of SFAS No. 158 are effective for employers with publicly
        traded equity securities as of the end of the fiscal year ending after
        December 15, 2006. The adoption of this statement had no effect on the
        Companys reported financial position or results of operations.
|  
|   | In September 2006,
        the SEC issued Staff Accounting Bulletin (SAB) No. 108, Considering
        the Effects of Prior Year Misstatements when Quantifying Misstatements
        in Current Year Financial Statements. SAB No. 108 addresses how
        the effects of prior year uncorrected misstatements should be considered
        when quantifying misstatements in current year financial statements.
        SAB No. 108 requires companies to quantify misstatements using a balance
        sheet and income statement approach and to evaluate whether either approach
        results in quantifying an error that is material in light of relevant
        quantitative and qualitative factors. SAB No. 108 is effective for period
        ending after November 15, 2006. The adoption of SAB No. 108 had no effect
        on the Companys consolidated financial statements.                                                                                                                                                                                                                                                                                                                               
|  
|   | In September 2006,
        the FASB issued SFAS No. 157, Fair Value Measurements. The
        objective of SFAS No. 157 is to increase consistency and comparability
        in fair value measurements and to expand disclosures about fair value
        measurements. SFAS No. 157 defines fair value, establishes a framework
        for measuring fair value in generally accepted accounting principles,
        and expands disclosures about fair value measurements. SFAS No. 157 applies
        under other accounting pronouncements that require or permit fair value
        measurements and does not require any new fair value measurements. The
        provisions of SFAS No. 157 are effective for fair value measurements
        made in fiscal years beginning after November 15, 2007. The adoption
        of this statement is not expected to have a material effect on the Companys
        future reported financial position or results of operations.                                                                                                                                                                                                                                                 
|  
|5. | VAT Receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   | At March 31, 2007,
        the Company recognized a VAT (value added tax) receivable of $322,043
        in Peru. VAT is charged at a standard rate of 19% and the Company obtains
        income tax credits for VAT paid in connection with the purchase of capital
        equipment and other goods and services employed in its operations. The
        Company is entitled to use the credits against its Peruvian income tax
        liability or to receive a refund credit against VAT payable or sales.
        As the Company does not anticipate incurring either a Peruvian tax and
        VAT liability during the next fiscal year, the receivable was classified
        as a long-term asset.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|6. | Property,
        Plant and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  

| |                                  |  |           |  |              |  | March
          31, |  | December
          31,
| | -------------------------------- |  | --------- |  | ------------ |  | ------------------- |  | ----------------------
| |                                  |  |           |  |              |  | 2007                |  | 2006                  
| |                                  |  |           |  | Accumulated  |  | Net
          Book  |  | Net
          Book    
| |                                  |  | Cost      |  | Amortization |  | Value               |  | Value                 
| |                                  |  | $         |  | $            |  | $                   |  | $                     
|
| | Land                             |  | 3,122,951 |  |             |  | 3,122,951           |  | 3,098,951             
| | Plant under
        Construction |  | 1,769,400 |  |             |  | 1,769,400           |  | 796,200               
| | Building Improvements            |  | 27,794    |  | 525          |  | 27,269              |  | 27,562                
| | Computer Equipment               |  | 60,917    |  | 5,630        |  | 55,287              |  | 50,774                
| | Furniture & Miscellaneous        |  | 54,808    |  | 1,652        |  | 53,156              |  | 47,350                
|
| |                                  |  | 5,035,870 |  | 7,807        |  | 5,028,063           |  | 4,020,837             

Depreciation expense amounted
    to $3,670 for the three months ending March 31, 2007 and $7,807 from
    inception, respectively.



9

---





Pure Biofuels Corp.
  (A Development Stage Company)
  Notes to the Consolidated Financial Statements (unaudited)

|7. | Long Term Debt                                                                                                                                                                                                                                                          
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | On December 21, 2006, the
        Company entered into a purchase agreement with Tradetex International
        Inc. (Tradetex), whereby the Company acquired land located
        in Callao, Peru. The purchase price of $3,008,998 is to be paid as
        follows:
|   |                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                         
|   | In the event that the Company
        is unable to make the two $600,000 payments, Tradetex retains the
        right to the amount through the foreclosure and sale of the land.                                                                                       
|  

|   |                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|   | Total amount
        owing as at March 31, 2007                                                                                                                                                                                                                                                                                          | $ 1,200,000                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
|   | Less:
        current portion                                                                                                                                                                                                                                                                                                            | (600,000)                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|   |                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|   |                                                                                                                                                                                                                                                                                                                                          | $   600,000                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
|   |                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                         
|   | Total interest expense for the
        three months ending March 31, 2007 amounted to $24,000. The Company
        capitalized interest costs incurred on funds used to purchase the land.                                                                                                                                              
|  
|8. | Related Party Transactions                                                                                                                                                                                                                                                                                                              
|  
|   | The Company entered into the
        following transactions with related parties during the three months ended
        March 31, 2007:                                                                                                                                                                                                  
|  
|   | a)                                                                                                                                                                                                                                                                                                                                       | Incurred consulting fees of $30,000
        for services provided by directors of the Company.                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | b)                                                                                                                                                                                                                                                                                                                                       | As at March 31, 2007, included
        in due to related parties is $327 for which the Company is indebted
        to the President of the Company.                                                                                                                                                                                                                                                                                                                     
|  
|   | Included in due to related parties
        at March 31, 2007 is $66,153 owing to directors, the President and
        an employee related to the President of the Company for consulting fees.                                                                                                                                          
|  
|   | These transactions were recorded
        at the exchange amount which is the amount agreed to by the related parties.                                                                                                                                                                                                                   
|  
|9. | Commitments                                                                                                                                                                                                                                                                                                                             
|  
|   | On September 15, 2006, the Company
        entered into the following consulting agreements, all of which were cancellable
        within 28 days of written notice. Effective February 28, 2007, the Company
        terminated these consulting and management agreements, which were entered
        into on September 15, 2006 with:
|  
|   | a)                                                                                                                                                                                                                                                                                                                                       | A consultant to provide investor
        relations services. Under the terms of the agreement, the Company agreed
        to pay $3,000 per month for an initial term of three years, and at
        the election of the Company, can be renewed for one or more additional
        one-year terms. The Company agreed to pay a one time signing bonus of $7,500.
        During the period ended March 31, 2007, consulting fees of $6,000
        were incurred.      
|  
|   | b)                                                                                                                                                                                                                                                                                                                                       | Another consultant to provide
        investor relations services. Under the terms of the agreement, the Company
        agreed to pay $3,000 per month for an initial term of three years,
        and at the election of the Company, can be renewed for one or more additional
        one-year terms. The Company agreed to pay a one time signing bonus of $7,500.
        During the period ended March 31, 2007, consulting fees of $6,000
        were incurred.
|  
|   | c)                                                                                                                                                                                                                                                                                                                                       | A director to provide management
        services. Under the terms of the agreement, the Company agreed to pay $7,000
        per month for an initial term of three years, and at the election of
        the Company, can be renewed for one or more additional one-year terms.
        The Company agreed to pay a one time signing bonus of $103,500. During
        the period ended March 31, 2007, consulting fees of $14,000 were
        incurred.             
|  
|   | d)                                                                                                                                                                                                                                                                                                                                       | A director to provide accounting
        services to the Company. Under the terms of the agreement, the Company
        agreed to pay $2,000 per month for an initial term of three years,
        and at the election of the Company, can be renewed for one or more additional
        one-year terms. The Company agreed to pay a one time signing bonus of $3,000.
        During the period ended March 31, 2007, consulting fees of $4,000
        were incurred. 
|  
|   | The Company also entered into
        the following agreements:                                                                                                                                                                                                                                                                         
|  
|   | e)                                                                                                                                                                                                                                                                                                                                       | On February 6, 2007, the Company,
        the President of the Company and certain stockholders (the President
        and certain stockholders collectively the Stockholders) entered
        into an agreement pursuant to which the Stockholders placed 12,267,255
        shares of the Companys common stock into escrow. The shares will
        be released back to the Stockholders upon the completion by the Company
        of certain strategic goals.   
|  
|10
|  

---



Pure Biofuels Corp.
  (A Development Stage Company)
  Notes to the Consolidated Financial Statements 
  (unaudited)

|9. | Commitments (continued)
|-- | -----------------------
|  
|   | f)                     
|  
|   | g)                     
|  
|   | h)                     
|  
|   |                        
|  
|   | i)                     
|  
|   |                        
|  
|   |                        
|  

| | 2007 | $   46,476 | 
| | ---- | ---------- | 
| | 2008 | 63,666     | 
| | 2009 | 48,816     | 
| | 2010 |           | 
| | 2011 |           | 
|
| |      | $ 158,958  | 

|    | The office lease
        contains certain rent escalation clauses over the life of the lease.
        The total amount of rental payments due over the lease term is being
        charged to rent expense on a straight-line method over the term of the
        lease.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|10. | Common Stock                                                                                                                                                                                                                                                            
|   
|    | a)                                                                                                                                                                                                                                                                      
|   
|    | b)                                                                                                                                                                                                                                                                      
|   
|    |                                                                                                                                                                                                                                                                         
|   

11

---



Pure Biofuels Corp.
  (A Development Stage Company)
  Notes to the Consolidated Financial Statements 
  (unaudited)

|11. | Warrants                                                                                                                         
|--- | ---------------------------------------------------------------------------------------------------------------------------------
|   
|    | The following summarizes the
        stock purchase warrant transactions for the three month period ended
        March 31, 2007:
|   

| |                                        |           |                          | Weighted
        average    
| | -------------------------------------- | --------- | ------------------------ | ----------------------------
| |                                        |           |                          | remaining                   
| |                                        | Number of | Weighted
        average | contractual
        life (in
| |                                        | warrants  | exercise
        price   | years)                      
| | Outstanding,
        December 31, 2006 | 3,550,595 | $ 1.50                   | 0.76                        
|
| | Granted                                | 151,505   | $ 1.50                   | 0.98                        
|
| | Outstanding,
        March 31, 2007    | 3,702,100 | $ 1.50                   | 0.57                        

|12. | Segmented Information                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | The Companys operations
        are conducted in two reportable segments, U.S. and Peru. The net loss
        and net identifiable assets by reportable segments are as follows:
|   

| |                             | U.S.    | Peru      | Total    
| | --------------------------- | ------- | --------- | ---------
| |                             | $       | $         | $        
| | Net loss                    | 190,159 | 781,058   | 971,217  
| | Property,
        Plant and |         |           |          
| | Equipment                   | 477,000 | 4,551,063 | 5,028,063
| | Total
        assets        | 539,502 | 4,971,560 | 5,511,062

|13. | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | On April 19, 2007
        the Company entered into a purchase agreement with an accredited investor
        pursuant to which the Company agreed to sell up to $3 million aggregate
        principal amount of its 12% senior secured convertible debentures due
        July 19, 2007 and warrants to purchase up to 704,082 shares of common
        stock in a private placement to an accredited investor. The sale of $3
        million aggregate principal amount of Debentures and Warrants to purchase
        an aggregate of up to 704,082 shares of common stock was consummated
        April 19, 2007. In connection with the sale of the Debentures, the Company
        paid various fees in the amount of $175,000 from the proceeds of
        the sale to the advisor of the Investor. The Debenture is convertible
        into shares of the Companys common stock at the option of the holder
        of Debentures at any time after April 19, 2007, at an initial conversion
        rate of 1,020.408 shares of common stock per $1,000 principal amount
        of Debentures, which is equivalent to a conversion price of $0.98
        per share. The conversion price is subject to adjustment in accordance
        with the terms of the Debenture. Subject to the conversion and redemption
        rights the Company is obligated to pay 120% of the principal amount of
        the Debenture, plus accrued and unpaid interest, in cash on July 19,
        2007 (the maturity date), provided that the Maturity Date
        shall be extended until October 19, 2007 in the event that any principal
        is outstanding under the Debenture as of the Maturity Date due to the
        Companys inability to consummate a financing of at least $3
        million and no Event of Default then exists. If the Maturity Date is
        extended the Investor will receive an additional 704,082 warrants.
|   
|    | On April 19, 2007
        the Company entered into a Security Agreement with the Investor and Palma
        Industrial SAC and Pure Biofuels del Peru SAC, 99% owned subsidiaries
        of the Company, pursuant to which the obligations under the Debenture
        were secured by liens on substantially all of the assets of the Company
        and the subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    | The debenture is
        redeemable by the Company upon the first trading day immediately following
        any of the following events:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   

12

---



Pure Biofuels Corp.
  (A Development Stage Company)
Notes to the Consolidated Financial Statements (unaudited)

|13. | Subsequent Events (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Upon the occurrence of any
        of the preceding events, and assuming the Company has filed an effective
        registration statement with the SEC relating to the shares underlying the
        debenture, the Company will also have the option to convert the Debenture
        into shares of common stock at a conversion price equal to the lower
        of (i) $0.98 and (ii) that price which will be computed as 95% of
        the lowest volume weighted average price of the common stock during the
        sixty consecutive trading days immediately preceding the applicable repayment
        date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    | The Debentures are secured
        obligations of the Company and are senior in right of payment to the
        Companys future secured indebtedness. The Debentures also restrict
        the Company and its subsidiaries from incurring indebtedness or other
        obligations, including senior secured indebtedness or other secured obligations
        in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    | If there is an event of default
        on the Debentures, the principal amount of the Debenture, plus accrued
        and unpaid interest may be declared immediately due and payable, subject
        to certain conditions set forth in the Debenture. These amounts automatically
        become due and payable in the case of certain types of bankruptcy or
        insolvency events involving the Company. Also upon an event of a default,
        the investor will have the right to full recourse against the amounts
        owed by the Company pursuant to the Debenture through the pledge of 5,000,000
        shares of the Companys common stock by the Companys CEO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    | The Warrants are exercisable
        into shares of the companys common stock at the option of the holder
        of Warrants at any time after April 19, 2007, at an initial exercise
        price of $0.98 per share. The exercise price is subject to adjustment
        in accordance with the terms of the Warrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    | On May 11, 2007, we entered
        into a binding letter of intent, with Interpacific Oil SAC, a Peruvian
        corporation and its stockholders, Luis Goyzueta, Alberto Pinto and Patrick
        Orlando, which provides for the acquisition by us of either all the assets
        or all the capital stock of Interpacific for an aggregate consideration
        of (1) $6.3 million, payable $0.7 million in cash and, a number
        of shares of the common stock of our company equal to $5.6 million
        (subject to reduction as described below) divided by the per share purchase
        price of our common stock used in the first equity or debt financing
        following the execution of the letter of intent or if no such financing
        occurs within 90 days after the closing of the acquisition, then the
        lowest closing market price of our common stock between the execution
        of the definitive agreement and 90 days after the closing of the definitive
        agreement and (2) a five year warrant to purchase 2,925,000 shares of
        our common stock, at an exercise price equal to the closing bid price
        of our common stock on the trading day immediately preceding the date
        of the closing of the acquisition between the parties. Interpacific is
        related to the Company as Luis Goyzeuta is the CEO, director and majority
        stockholder of the Company and Alberto Pinto is COO and director of the
        Company.
|   

13

---





Item
2. Managements Discussion and Analysis or Plan of Operation

You
    should read the following discussion of our financial condition and results
    of operations together with the financial statements and the notes to the
    financial statements included in this quarterly report. This discussion
    contains forward-looking statements that reflect our plans, estimates and
    beliefs. Our actual results may differ materially from those anticipated
in these forward-looking statements.



We are engaged in the business of producing, processing and distributing biodiesel, and related products, as an alternative fuel for freight and transportation plants and the marine, farming, rail and aviation industries.



On September 15, 2006, we completed a share exchange agreement with Pure Biofuels Peru. As a result of the share exchange agreement, we abandoned our previous software development, website maintenance and server administration business and commenced the business of producing, processing and distributing biodiesel. Because we are the successor business to Pure Biofuels Peru and because the operations and assets of Pure Biofuels Peru represents our entire business and operations from the closing date of the share exchange agreement, our management's discussion and analysis and plan of operations are based on Pure Biofuels Peru's intended operations.



On September 15, 2006, in connection with the closing of the share exchange agreement, we changed our fiscal year end to December 31. The share exchange, contemplated by the share exchange agreement, was deemed to be a reverse acquisition for accounting purposes. Pure Biofuels Peru, the acquired entity, is regarded as the predecessor entity as of September 15, 2006. Starting with the periodic report for the quarter in which the acquisition was consummated, our company will file annual and quarterly reports based on the December 31 fiscal year end of Pure Biofuels Peru. Such financial statements will depict the operating results of Pure Biofuels Peru, including the acquisition of our company, from September 15, 2006.



Plan of Operations



Overview



This
    quarterly report contains forward-looking statements that involve significant
    risks and uncertainties. The following discussion, which focuses on our plan
    of operation through the commencement of operations of our plant, consists
    almost entirely of forward-looking information and statements. Actual events
    or results may differ materially from those indicated or anticipated, as
    discussed in the section entitled Forward Looking Statements.



We intend to construct and operate a 52.5 million gallon biodiesel production plant at a site near the Callao Port in Lima, Peru. Currently, we are a development stage company with no revenues from operations. To date, our efforts have been devoted principally to developing plans for the construction of the plant, engaging service providers and related activities.



The plant will have a design capacity of approximately 52.5 million gallons of biodiesel per year. In addition, we expect the plant will produce approximately 9 million pounds of crude glycerin each year. The plant will consist principally of a materials handling and storage area, a transesterification reactor in which the biodiesel is produced, a storage and loading area for biodiesel and glycerin, truck scales and an administrative office.



We
    will not generate revenue until we complete construction of our plant, which
    we are targeting for the first quarter of 2008. In order for us to construct
    the plant and commence operations, we will require additional equity financing
    in the amount of $26,000,000. If we are successful in obtaining additional
    equity financing, we intend to utilize the proceeds of such financing as
    follows:





14





---









|Use of Proceeds                                | Amount     
|---------------------------------------------- | -----------
|Organizational and Financing Costs             | $2,000,000 
|Capital Equipment                              | $16,000,000
|Working Capital                                | $6,000,000 
|Growth Initiatives: Research and Due Diligence | $1,500,000 
|Contingency                                    | $500,000   
|Total                                          | $26,000,000



Results of Operation



For
    the first quarter ended March 31, 2007, we had no revenues and our operating
    expenses were $971,217. Since May 10, 2006 was our date of inception, there
    is no comparable information for the first quarter of 2006. Until our biodiesel
    plant is operational or we complete the acquisition of Interpacific
    Oil SAC, we do not expect to generate any revenues, and we will continue
    to incur expenses relating to the building of our biodiesel plant.



Organizational and Financing Costs



We estimate that our organization and financing costs for the next twelve month period will be approximately $2,000,000. These costs will primarily consist of legal, administrative, compliance and other expenses.



Capital Equipment



We
    committed to a purchase order to acquire the process equipment in May 2007.
    Based on our project schedule, site assembly and infrastructure building
    commenced in May 2007 with completion and startup in the first quarter
    of 2008. Our planned capital expenditures for the next twelve month period
    in connection with the construction of the plant are estimated as follows:



|Infrastructure / Activity                                                                           | Cost       
|--------------------------------------------------------------------------------------------------- | -----------
|Tanks  170,000 MT of storage (installed, including valves, piping, etc)                            | $5,300,000 
|Automation equipment                                                                                | $600,000   
|Centrifuges (to be used inside refinery)                                                            | $4,600,000 
|Water treatment plant                                                                               | $400,000   
|Civil works (including administrative building, access road and other infrastructure)               | $700,000   
|Underwater pipes                                                                                    | $1,200,000 
|Refinery (including reactors, piping and pumps)                                                     | $2,000,000 
|Services building (electrical substation, quality control laboratory, boilers, water softener etc.) | $600,000   
|Miscellaneous/ Contingency                                                                          | $600,000   
|Total                                                                                               | $16,000,000



Growth Initiatives: Research and Due Diligence



We
    estimate that our research and due diligence costs for the next twelve month
    period will be approximately $1,500,000. These costs will primarily consist
    of feasibility studies to start our own plantations of palm oil in order
    to be self sufficient in the sourcing of our feedstock.



Contingency



We
    estimate that our contingency costs for the next twelve month period will
    be approximately $500,000. These costs will primarily consist of increases
    in raw materials cost for plant construction such as steel or cement or delays
in permitting from the local authorities.





15



---







Employees



We
    estimate that our employee and consultant compensation expenses for the next
    twelve month period will be approximately $2,000,000. These costs will primarily
consist of wages and consulting contracts for hired professionals.



There
    will be 30 employees pre-construction and 45 employees post-construction
    of our processing plant. The new employees post-construction will consist
    of plant operators and quality control personnel.



Trends and Uncertainties



Our ability to generate revenues in the future is dependent on whether we successfully complete construction of our biodiesel processing plant. We cannot predict whether or when this may happen and this causes uncertainty with respect to the continuation and growth of our company and our ability to generate revenues.



Financing



To date, we have had negative cash flows from operations and we have been dependent on sales of our equity securities and debt financing to meet our cash requirements.



In March 2007, we issued 303,009 units to 10 investors at an issue price of $0.75 per unit for total proceeds of $227,256.75 in accordance with the terms of private placement agreements.  We issued the 303,009 units in reliance upon Regulation S and/or Section 4(2) of the Securities Act of 1933 in an offshore transaction to non-U.S. Persons (as that term is defined in Regulation S under the Securities Act of 1933).  Each unit consists of one common share in the capital of our company and one-half of one common share purchase warrant.  Each whole warrant entitles the holder thereof to purchase one common share in the capital of our company for a period of one year at a price of $1.50.



Given
    that we are a development stage company and have not generated any revenues
    to date, our cash flow projections are subject to numerous contingencies
    and risk factors beyond our control, including our ability to manage our
    expected growth, complete construction of our proposed plant and commence
    operations. We can offer no assurance that our company will generate cash
    flow sufficient to meet our cash flow projections or that our expenses will
    not exceed our projections. If our expenses exceed estimates, we will require
    additional monies during the next twelve months to execute our business plan.



There are no assurances that we will be able to obtain funds required for our continued operation. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease the operation of our business.



There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon obtaining further long-term financing, completion of our proposed plant and successful and sufficient market acceptance of our products once developed and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.



Recent Developments



On
    April 19, 2007 we entered into a purchase agreement with a private equity
    fund, pursuant to which we agreed to sell $3 million aggregate principal
    amount of our 12% senior secured convertible debentures due July 19, 2007
    and warrants to purchase up to 704,082 shares of our common stock in a private
    placement to an accredited investor within the meaning of Rule 501 of Regulation
    D under the Securities Act. The sale of $3 million aggregate principal amount
    of debentures and warrants to purchase an aggregate of up to 704,082 shares
    of common stock was consummated on



16





---





April 19, 2007.  In connection with the sale of the debentures, we paid various fees in the amount of $175,000 from the proceeds of the sale to the advisor of the private equity fund.



On
    April 19, 2007, we entered into a security agreement with a private equity
    fund and Palma Industrial SAC and Pure Biofuels del Peru SAC, each a 99.9%-owned
    subsidiary of our company, pursuant to which the obligations under the debenture
    were secured by liens on substantially all of the assets of us and our subsidiaries.



On May 11, 2007, we entered into a binding letter of intent, with Interpacific Oil SAC, a Peruvian corporation and its shareholders, Luis Goyzueta, Alberto Pinto and Patrick Orlando, which provides for the acquisition by us of either all the assets or all the capital stock of Interpacific for an aggregate consideration of (1) $6.3 million, payable $0.7 million in cash and, a number of shares of the common stock of our company equal to $5.6 million (subject to reduction as described below) divided by the per share purchase price of our common stock used in the first equity or debt financing following the execution of the letter of intent or if no such financing occurs within 90 days after the closing of the acquisition, then the lowest closing market price of our common stock between the execution of the definitive agreement and 90 days after the closing of the definitive agreement and (2) a five year
warrant to purchase 2,925,000 shares of our common stock, at an exercise price equal to the closing bid price of our common stock on the trading day immediately preceding the date of the closing of the acquisition between the parties. The acquisition of Interpacific Oil is subject to certain conditions
including Peruvian approvals and the negotiation and execution of
definitive agreements and may not close.  Mr. Goyzueta,  our CEO and
director,  holds the shares in Interpacific for his father and Mr. Pinto
is our COO and one of our  directors.



Liquidity and Capital Resources



As
    of March 31, 2007, we had $54,493 in cash and cash equivalents. In addition,
    for the three months ended March 31, 2007, our cash used in operating activities
was $549,030.



We began construction on our planned 52.5 million gallon biodiesel production plant at a site near the Callao Port in Lima, Peru.  We believe that the plant should begin operation during the first quarter of 2008 assuming we raise the necessary financing.



We
    have not yet entered into any term sheet, letter of intent or other agreement
    for a financing through a contemplated private placement of between $15 million
    and $25 million of equity or debt securities. We cannot confirm when a transaction
    will be completed, if at all. The securities to be sold in the private placement
    have not been registered under the Securities Act and may not be offered
    or sold in the United States unless registered under the Securities Act or
an applicable exemption from registration is available.



There are no assurances that we will be able to obtain further funds required for our continued operations. We intend to pursue various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.



Going Concern



We have suffered recurring losses from operations. The continuation of our company as a going concern is dependent upon our company attaining and maintaining profitable operations and raising additional capital. The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our company discontinue operations.



Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above, in their report on the annual financial statements for the year ended December 31, 2006, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.





17





---







The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.



Off-Balance Sheet Arrangements



Our company has no outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. Neither our company nor our operating subsidiary engages in trading activities involving non-exchange traded contracts.



Critical Accounting Policies



Basis of Presentation



The consolidated financial statements include the accounts of our company and our subsidiaries, Pure Biofuels Peru and Palma Industrial S.A.C. All intercompany transactions and balances have been eliminated. We are a development stage company as defined by Statement of Financial Accounting Standard (SFAS) No. 7, Accounting and Reporting for Development Stage Enterprises. Our fiscal year end is December 31.



Use of Estimates



The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management estimates relate to the determination of depreciation rates for equipment and future tax rates used to determine future income taxes. Actual results could differ from these estimates.



Financial Instruments/Concentrations



The fair value of our financial instruments which include cash, accounts payable and accrued liabilities, and due to related parties were estimated to approximate their carrying value due to the immediate or relatively short maturity of these instruments. The fair value of long term debt approximates its carrying value. Our operations are in Peru and virtually all of our assets and liabilities are giving rise to market risks from changes in foreign currency rates. The financial risk is the risk to our operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, we do not use derivative instruments to reduce our exposure to foreign currency risk.



Property, Plant and Equipment



Property, plant and equipment are recorded at cost. The Company provides for depreciation at the following annual rates:



|Computer Equipment        | - 25% straight line
|------------------------- | -------------------
|Furniture & Miscellaneous | - 10% straight line
|Building Improvements     | - 10% straight line



Long-lived Assets



In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. We recognize impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.



18





---







Foreign Currency Translation



Our reporting currency is the US dollar.  Our subsidiaries use their
local currency, Peruvian Nuevos Soles (PEN), as their functional
currency.  Assets and liabilities are translated using the exchange
rates prevailing at the balance sheet date. Translation adjustments
resulting from this process are included in accumulated other
comprehensive income in the statement of shareholders' equity.
Transaction gains and losses that arise from exchange rate fluctuations
on transactions denominated in a currency other than the functional
currency are included in the results of operations as incurred.



Translation adjustments amounted to $2,441 as of March 31, 2007.  Asset
  and liability amounts at March 31, 2007 and December 31, 2006 were
  translated at 3.183 PEN to $1.00 USD and 3.194 PEN to $1.00 USD,
  respectively.  Equity accounts were stated at their historical rate.
  The average translation rates applied to income statement accounts for
  the three months ended March 31, 2007 and the period from inception to December 31, 2006 were 3.184
  PEN and 3.197 PEN, respectively. Cash flows are also translated at
  average translation rates for the period, therefore, amounts reported on
  the statement of cash flows will not necessarily agree with changes in
  the corresponding balances on the balance sheet.



Basic and Diluted Net Loss per Share



We compute net loss per share in accordance with SFAS No. 128, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive common shares if their effect is anti-dilutive.



Stock-based Compensation



We
    record stock-based compensation in accordance with SFAS No. 123R Share
    Based Payments, using the fair value method. On November 1, 2006, we
    approved a stock option plan (the Plan) that enables it to grant
    options to employees, including our officers and directors, and our subsidiaries
    and other individuals who contribute to the success of our company. Our board
    of directors will administer the Plan whereby it may, from time to time,
    grant up to a total of 18,000,000 stock options. The stock options granted
    under the Plan shall vest and become exercisable at such time and such terms
    as our board of directors may determine at the time of the grant of the options.
    On April 27, 2007, our board of directors amended and restated the Plan.
    As of March 31, 2007, we had not granted any stock options or recorded any
    stock-based compensation.



Recent Accounting Pronouncements



In September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB No. 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB No. 108 requires companies to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. SAB No. 108 is effective for period ending after November 15, 2006. The adoption of SAB No. 108 had no effect on our consolidated financial statements.



In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement is not expected to have a material effect on our future reported financial position or results of operations.



In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106, and 132(R). This statement requires employers to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or



19



---





changes in unrestricted net assets of a not-for-profit organization. This statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. The provisions of SFAS No. 158 are effective for employers with publicly traded equity securities as of the end of the fiscal year ending after December 15, 2006. The adoption of this statement had no effect on our reported financial position or results of operations.



In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. This Statement permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We are currently assessing the impact of SFAS No. 159 on its financial position and results of operations.



Risk Factors

Much of the information included in this quarterly report includes or is based upon estimates, projections or other forward looking statements.  Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations.  While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.

Such estimates, projections or other forward looking statements involve various risks and uncertainties as outlined below.  We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other forward looking statements.

Our common shares are considered speculative during the development of our new business operations.

Please see our Risk Factors in Item 1 from our annual report on Form 10-KSB for the year ended December 31, 2006, filed April 13, 2007.

Item 3.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) or Rule 15d-15(e) as of the end of the period covered by this report.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.  There were no changes in our internal control over financial reporting during the quarter ended March 31, 2007 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.  Potential investors should be aware that the design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future
events.  There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our Company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our Company's reports filed under the Exchange Act is accumulated and communicated to management, to allow timely decisions regarding required disclosure.





20





---







PART II - OTHER INFORMATION

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

The following sets forth certain information regarding sales of equity securities that were either not registered under the Securities Act or not previously included in a Current Report on Form 8-K during the three months ended March 31, 2007.

In March 2007, we issued 303,009 units to 10 investors at an issue price of $0.75 per unit for total proceeds of $227,256.75 in accordance with the terms of private placement agreements.  We issued the 303,009 units in reliance upon Regulation S and/or Section 4(2) of the Securities Act of 1933 in an offshore transaction to non-U.S. Persons (as that term is defined in Regulation S under the Securities Act of 1933).  Each unit consists of one common share in the capital of our company and one-half of one common share purchase warrant.  Each whole warrant entitles the holder thereof to purchase one common share in the capital of our company for a period of one year at a price of $1.50.

Item
      6. Exhibits

|Exhibit No. | Description of Exhibit                                                                                                                                                                                                                                                                                 
|----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.12       | Letter
            Agreement, dated February 6, 2007, among the Company, 
        Luis Goyzueta,
        David Clifton, Hiroshi Dejaeghere, Joy Clifton, 
        ARC Investment Partners,
        Tapirdo Enterprises, LLC and SGM Capital, LLC.                                                      
|            |                                                                                                                                                                                                                                                                                                        
|31.1        | Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Letter Agreement, dated February 6, 2007, among the Company, Luis
Goyzueta, David Clifton, Hiroshi Dejaeghere, Joy Clifton, ARC Investment
Partners, Tapirdo Enterprises, LLC and SGM Capital, LLC.
|            |                                                                                                                                                                                                                                                                                                        
|31.2        | Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                    
|            |                                                                                                                                                                                                                                                                                                        
|32.1        | Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                    
|            |                                                                                                                                                                                                                                                                                                        
|32.2        | Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                    

21

---



SIGNATURES

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

|                               | PURE BIOFUELS CORP.
|------------------------------ | -------------------
|                               |                    
|Date:
            May 21, 2007 | By:                
|                               |                    
|                               |                    
|Date:
            May 21, 2007 | By:                
|                               |                    







22



---