Our Management's Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Overview

Since our inception, we began the development and design of our biomass plasma reactor for the production of Fisher Tropsch liquid fuel. To date, we have successfully built a lab scale version of the reactor and have acquired sufficient data to begin development of the larger scale plant. In order to succeed, we intend to do the following:

Our focus in the next 12 months has been to seek necessary working capital, and to develop our bench scale plant. Our development plan focuses on joint venture relationships and strategic partnerships, through participation in trade shows and other direct marketing efforts. Our marketing strategy is based on a reliable product, consistent quality and the delivery of a unique liquid fuel product. We estimate the necessary proceeds to implement this stage of the development plan to be $500,000. We do not plan to carry out these actions until we have secured funds from equity investment to fund this development plan. At this time, we are uncertain if we can secure the necessary funding.

Our long term business strategy is to focus and develop a commercial application of our plasma-assisted biomass to energy plant. We will utilize a combination of technologies which have been developed by the company, strategic partners and contractors to produce sulfur free diesel, fertilizer and electricity from waste and other organic feedstock. Our long term business plan calls for the commercialization of the technologies though a series of scale-up plants starting with a 100 bbd(barrel per day), then a 1,000 bbd plant and finally a series of 10,000 bbd plants throughout the continental United States, Mexico and Canada. We intend to finance this long term strategy via cash flow from the lower producing plants as well as equity, debt and joint venture financing. We estimate the necessary proceeds to develop the 100 bb/d plant to be $2,500,000. At this time, we are uncertain if we can secure the necessary funding.

Three Months Ended September 30, 2008 and 2007

Results of Operations

                                                                  Three Months          Three Months
                                       Three Months Ended             Ended                 Ended
                                       September 30, 2008      September 30, 2007       June 30, 2008

Revenues                               $                 -     $                 -     $             -
Operating expenses:
 Research and development                                -                  44,916                   -
 General and administrative                         46,795                 112,869             124,979
 Consulting fees                                   646,760                 193,437              92,689
Income (loss) from operations                     (693,555 )              (351,222 )          (217,668 )
Other income (expenses)                            (10,178 )               (11,027 )           (10,178 )
Net income (loss)                      $          (703,733 )   $          (362,249 )   $      (227,846 )

ITEM 2 Managements Discussion and Analysis of Financial Condition and Results of
Operations. - continued

Three Months Ended September 30, 2008 and 2007 - continued

Revenue

Our revenue for the three months ended September 30, 2008 and 2007, and for the three months ended June 30, 2008, was $0. Accordingly, our cost of goods sold was $0 for the same three month periods. We have not generated revenues and thus we are in the development stage.

Research and development

We spent $0 on research and development for the three months ended September 30, 2008 and June 30, 2008, compared to $44,916 for the three months ended September 30, 2007.

General and administrative expenses

We incurred general and administrative expenses of $46,795 for the three months ended September 30, 2008 compared to general administrative expenses of $112,869 for the three months ended September 30, 2007 and $124,979 for the three months ended June 30, 2008. Our general and administrative expenses for the three months ended September 30, 2008 consisted primarily of legal and accounting fees.

Consulting fees

We incurred $646,760 in consulting fees for the three months ended September 30, 2008, compared to $193,437 for the same period one year ago and $92,689 for the three months ended June 30, 2008. These consulting fees were all paid for with issuances of common stock. The consulting fees we incurred for the three months ended September 30, 2008 related to professional services and various other business development services.

Other Income

Our total other income was ($10,178) for the three months ended September 30, 2008, which consisted entirely of interest expense, compared to $(11,027) for the same period one year ago, and $(10,178) for the three months ended June 30, 2008.

Net Income (Loss)

We had a net loss of $703,733 for the three months ended September 30, 2008, compared to a net loss of $362,249 for the three months ended September 30, 2007, and $227,846 for the three months ended June 30, 2008. The net loss for the three months ended September 30, 2008 was a result of our lack of revenues and the amounts we spent on general and administrative expenses and consulting fees.

Nine Months Ended September 30, 2008 and 2007

Results of Operations

                                                                                        For the Period
                                                                                         from October
                                                                                           1, 1992
                                                                                         (Inception)
                                           Nine Months              Nine Months            through
                                              Ended                    Ended            September 30,
                                        September 30, 2008      September 30, 2007           2008

Revenues                               $                  -     $                 -     $            -
Operating expenses:
 Research and development                                 -                  81,158            188,727
 General and administrative                         223,730                 189,236         15,897,430
 Consulting fees                                    888,481                 288,505          1,586,719
Income (loss) from operations                    (1,112,211 )              (558,899 )      (17,672,876 )
Other income (expenses)                             (43,992 )               (37,449 )         (238,882 )
Net income (loss)                      $         (1,156,203 )   $          (596,348 )   $  (19,061,308 )

ITEM 2 Managements Discussion and Analysis of Financial Condition and Results of
Operations. - continued

Nine Months Ended September 30, 2008 and 2007 - continued

Revenue

Our revenue for the nine months ended September 30, 2008 and 2007 was $0. Additionally, we have had total revenues of $0 from our inception on October 1, 1992 through September 30, 2008. Accordingly, our cost of goods sold was $0 for the nine month periods ended September 30, 2008 and 2007, and we have not had any cost of goods sold since our inception. We have not generated revenues and thus we are in the development stage.

Research and development

We spent $0 on research and development for the nine months ended September 30, 2008, compared to $81,158 for the same period one year ago and $188,727 since our inception.

General and administrative expenses

We incurred general and administrative expenses of $223,730 for the nine months ended September 30, 2008 compared to general administrative expenses of $189,236 for the nine months ended September 30, 2007 and $15,897,430 for the period since our inception. Our general and administrative expenses for the nine months ended September 30, 2008 consisted primarily of legal and accounting fees.

Consulting fees

We incurred $888,481 in consulting fees for the nine months ended September 30, 2008, compared to $288,505 for the same period one year ago and $1,586,719 since our inception. The consulting fees we incurred for the nine months ended September 30, 2008 related to professional services and various other business development services.

Other Income

Our total other income was ($43,992) for the nine months ended September 30, 2008, which consisted entirely of interest expense, compared to ($37,449) for the same period one year ago. We have a total of ($238,882) of other income since our inception through September 30, 2008, also consisting entirely of interest expense.

Net Income (Loss)

We had a net loss of $1,156,203 for the nine months ended September 30, 2008, compared to a net loss of $596,348 for the nine months ended September 30, 2007. The net loss for the nine months ended September 30, 2008 was a result of our lack of revenues and the amounts we spent on general and administrative expenses and consulting fees. Our net loss for the period from October 1, 1992 (inception) through September 30, 2008 was $19,061,308.

Liquidity and Capital Resources

Introduction

As of September 30, 2008, we had total current assets of $1,338 and total current liabilities of $224,779. During the period from October 1, 1992 (inception) through September 30, 2008, we incurred a net loss of $19,061,308.

Our ability to continue as a going concern on a long-term basis is dependent upon our ability to generate sufficient cash flows from operations to meet our obligations on a timely basis, to obtain additional financing, and ultimately attain profitability.

Although we have been successful in the past in raising capital, no assurance can be given that sources of financing will continue to be available and/or that demand for our equity/debt instruments will be sufficient to meet our capital needs, or that financing will be available on favorable terms.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, dilution of the interests of existing shareholders may occur. If we raise additional funds through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to existing shareholders.

ITEM 2 Managements Discussion and Analysis of Financial Condition and Results of
Operations. - continued

Liquidity and Capital Resources - continued

Our cash, total current assets, total assets, total current liabilities, and total liabilities as of September 30, 2008, compared to the end of our last quarterly period were:

                                          As of            As of
                                      September 30,      June 30,
                                          2008             2008         Change

         Cash and cash equivalents   $         1,338     $  20,752     $ (19,414 )
         Total current assets                  1,338        20,752       (19,414 )
         Total assets                         15,935        35,877       (19,942 )
         Total current liabilities           224,779       262,039       (37,260 )
         Total liabilities                   627,728       664,988       (37,260 )

Cash Requirements

We intend to use our available funds for working capital purposes.

Sources and Uses of Cash

Operating Activities

Our net cash used in operating activities was $222,527 for the nine months ended September 30, 2008 and $262,536 for the nine months ended September 30, 2007. Negative operating cash flows during the nine months ended September 30, 2008 were primarily the result of a net loss from operations of $1,156,203, which was partially offset by (i) the issuance of $888,481 in common stock for services, (ii) a decrease of $4,355 in prepaid expenses, and (iii) an increase of $39,432 in accounts payable and accrued expenses. Our net cash used in operating activities was $13,264,115 for the period from October 1, 1992 (inception) through September 30, 2008.

Financing Activities

Our net cash provided by financing activities was $224,578 for the nine months ended September 30, 2008, compared to $31,986 for the nine months ended September 30, 2007, and were both the result of the sale of our common stock. Our net cash provided by financing activities was $13,282,627 for the period from October 1, 1992 (inception) through September 30, 2008, and was all the result of the sale of our common stock.

Critical Accounting Policies

In the notes to the audited financial statements for the year ended December 31, 2007, included in our Form 10-K, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and our financial position. The Company believes that the accounting principles we utilized conform to accounting principles generally accepted in the United States of America.

The preparation of financial statements that are in conformity with accounting principles generally accepted in the United States of America requires our management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, we evaluate estimates. We base our estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.