afseq308.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

Form 10-Q

(Mark one)

[ X ]

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2008

[ ]	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No. 0-29417

	ALL Fuels & Energy Company
	(Exact name of registrant as specified in its charter)

DELAWARE

62-1581902

(State or Other Jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

6165 N.W. 86th Street, Johnston, Iowa 50131

(Address of principal executive offices, including zip code)

(515) 331-6509

(Issuer’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ] (Do not check if a smaller reporting company)

Smaller reporting company [ X ]

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

Yes [ ] No [ X ]

As of November 17, 2008, there were 51,709,360 shares of the issuer’s common stock outstanding.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

INDEX TO FINANCIAL STATEMENTS

Page

ALL Fuels & Energy Company

Condensed Consolidated Balance Sheets as of September 30, 2008 (unaudited), and December 31, 2007 (audited)

Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2008 (unaudited) and 2007 (unaudited), and the Period from Commencement of Development Stage (June 7, 2004) to September 30, 2008 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008 (unaudited) and 2007 (unaudited), and the Period from Commencement of Development Stage (June 7, 2004) to September 30, 2008 (unaudited)

Notes to Condensed Consolidated Financial Statements

ALL FUELS & ENERGY COMPANY

(a development stage company)

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2008, and December 31, 2007

9/30/08

unaudited

12/31/07

ASSETS

Current assets

Cash and cash equivalents

$67,156

$612,888

Prepaid expenses

31,649

52,637

Total current assets

98,805

665,525

Property and equipment - at cost

Land

951,238

Equipment

1,729

1,093

Construction in progress

---

187,024

952,967

1,139,355

Less accumulated depreciation

(670)

(275)

Total property and equipment - net

952,297

1,139,080

Other assets

Deferred borrowing costs

2,452

3,672

Total other assets

2,452

3,672

Total assets

$1,053,554

$1,808,277

The accompanying notes are an integral part of these statements.

9/30/08

unaudited

12/31/07

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities

Accounts payable and accrued expenses

$181,060

$83,992

Unearned rental income

10,000

---

Total current liabilities

191,060

83,992

Long term debt

488,000

Total liabilities

679,060

571,992

Stockholders’ equity (deficit)

Common stock, $.01 par value; 80,000,000 shares authorized, 51,709,360 and 51,365,719 shares issued and outstanding

517,094

513,658

Additional paid-in capital

15,989,479

14,981,840

Treasury stock, at cost

(150,000)

Receivable from shareholder

(50,000)

Accumulated deficit

(6,423,944)

Deficit accumulated during the development stage

(9,508,135)

(7,635,269)

Total stockholders’ equity (deficit)

374,494

1,236,285

Total liabilities and stockholders’ equity (deficit)

$1,053,554

$1,808,277

The accompanying notes are an integral part of these statements.

ALL FUELS & ENERGY COMPANY

(a development stage company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months and Nine Months Ended September 30, 2008 and 2007, and the Period from Commencement of Development Stage (June 7, 2004) to September 30, 2008

Three Months Ended September 30,

Nine Months Ended

September 30,

(2008)

(unaudited)

2007

(unaudited)

2008

(unaudited)

2007

(unaudited)

Period from

Commence-ment of Development

Stage (June 7,

2004) to 9/30/08

(unaudited)

Revenues

$---

Operating Costs and Expenses

Consulting

82,985

80,000

871,000

454,700

7,580,913

Legal and professional

18,721

26,224

224,936

478,502

1,034,430

Impairment charge

193,720

---

193,720

---

333,540

General and administrative

127,810

48,772

450,171

429,591

1,176,131

Total operating expenses

423,236

154,996

1,739,827

1,362,793

10,125,014

Other income (expense)

Interest expense

(6,150)

(13,918)

(19,777)

(23,721)

(53,049)

Interest income

1,312

5,174

6,775

20,277

50,946

Rental income

10,000

---

30,000

13,125

56,250

Equity loss in subsidiary

(145,446)

---

(150,037)

---

(150,037)

Total other income (expense)

(140,284)

(8,744)

(133,039)

9,681

(95,890)

Net loss

$(563,520)

$(163,740)

$(1,872,866)

$(1,353,112)

$(10,220,904)

Income (loss) per share

$(0.01)

$(0.00)

$(0.04)

Weighted average number of shares outstanding (basic and diluted)

51,693,619

50,822,548

51,327,269

36,858,961

The accompanying notes are an integral part of these statements.

ALL FUELS & ENERGY COMPANY

(a development stage company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended September 30, 2008 and 2007, and the Period from Commencement of Development Stage (June 7, 2004) to September 30, 2008

Nine Months Ended September 30,

(2008)

(unaudited)

2007

(unaudited)

Period from

Commencement of Development

Stage (June 7,

2004) to 9/30/08

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$(1,872,866)

$(1,353,112)

$(10,220,904)

Adjustments to reconcile net loss to cash used for

operating activities:

Depreciation and amortization

1,613

294

3,739

Equity loss in subsidiary

150,037

---

150,037

Options issued for compensation

276,408

---

6,351,621

Stock issued for services and compensation

591,400

780,515

1,757,745

Impairment charge

193,720

---

333,540

Decrease in deposits

---

10,000

---

Decrease in accrued expenses

---

(40,057)

---

Increase (decrease) in prepaids

20,988

(115,061)

(119,469)

Increase in unearned rental income

10,000

---

10,000

Increase in accounts payable

97,068

32,174

123,429

Net cash used for operating activities

(531,632)

(685,247)

(1,610,262)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of land

---

(951,238)

Investment in AFSE Enzyme, LLC

(150,037)

(951,238)

(150,037)

Increase in accrued liabilities - related party

---

40,056

Collections from receivable - related party

---

22,500

---

Purchase of office equipment

(636)

---

(1,966)

Payments on construction-in-progress

(6,696)

(64,766)

(193,720)

Net cash used in investing activities

(157,369)

(993,504)

(1,256,905)

The accompanying notes are an integral part of these statements.

Nine Months Ended September 30,

(2008)

(unaudited)

2007

(unaudited)

Period from

Commencement of Development

Stage (June 7,

2004) to 9/30/08

(unaudited)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from sale of common stock for cash

143,269

75,000

2,600,253

Principal payments on related party advances

---

(3,988)

Proceeds from long-term debt, net of deferred borrowing costs

---

483,918

483,120

Purchase of treasury stock

---

(150,000)

Contributions from shareholders

---

950

Net cash provided by financing activities

143,269

408,918

2,930,335

NET CHANGE IN CASH

(545,732)

(1,269,833)

63,168

Cash, beginning of period

612,888

1,772,495

3,988

Cash, end of period

$67,156

$502,662

$67,156

The accompanying notes are an integral part of these statements.

ALL FUELS & ENERGY COMPANY

(a development stage company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2008

(unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim financial statements of ALL Fuels & Energy Company (the “Company”) have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America, pursuant to the Securities and Exchange Commission rules and regulations. In management’s opinion all adjustments necessary for a fair presentation of the results for interim periods have been reflected in the interim financial statements. The results of operations for any interim period are not necessarily indicative of the results for a full year. All adjustments to the financial statements are of a normal recurring nature.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Such disclosures are those that would substantially duplicate information contained in the most recent audited financial statements of the Company, such as significant accounting policies and stock options. Management presumes that users of the interim statements have read or have access to the audited financial statements and notes thereto included in the Company’s annual report on Form 10-KSB for the year ended December 31, 2007.

Note 2. Management’s Plans for Liquidity

With the sale of the Company’s real estate asset, the Company will possess a level of capital sufficient to sustain its current operations for all of 2009. However, the Company will require substantial additional capital to purchase one or more existing ethanol production facilities or to pursue other business opportunities. The Company believes it will be able to secure the financing, in the form of debt, equity or a combination thereof, necessary to complete these opportunities. To this end, the Company has retained Trinity Capital, Los Angeles, California, as its investment banker. To date, the Company has not received a commitment for an equity investment or a loan in any amount.

During the remainder of 2008 and first half of 2009, the Company intends to commit small portions of its capital to each of its recently announced enzyme and polymer pipe ventures. It is likely that the enzyme venture will require approximately $1.5 million over the next 24 months to complete the development of up to ten market-ready enzymes. See Note 6 below for additional information concerning the enzyme venture. It is likely that the polymer pipe venture will require approximately $3 million over the next 12 months to commence pipe manufacturing and sales operations. See Note 7 below for additional information concerning the polymer pipe business opportunity. The needed funding will be sought from third parties.

Note 3. Prepaid Expenses

At September 30, 2008, the Company had prepaid expenses of $31,649, of which $29,807 relates to expenses incurred in connection with its efforts in acquiring certain ethanol-related businesses. In future periods, prepaid expenses associated with successful acquisitions will be capitalized, while those associated with unsuccessful acquisition efforts will be expensed. The remaining $1,842 represents prepaid insurance.

Note 4. Land, Equipment and Construction in Progress

At September 30, 2008, the Company owned 152.5 acres near Manchester, Iowa, which has been carried at its cost of $951,238. The Company also has acquired approximately $636 of office equipment. Through September 30, 2008, the Company had paid $193,720 in construction-related expenses associated with the Company’s proposed ethanol production facility to be constructed on the Manchester, Iowa, land.

Subsequent to September 30, 2008, the Company entered into an agreement to sell the Manchester land. See Note 8 below for additional information regarding the sale of the Manchester land. Due to the sale of the Manchester land, all construction-in-progress capital items have been expensed, an amount of approximately $194,000.

Note 5. Capital Stock

Stock for Services

During the first nine months of 2008, the Company issued a total of 1,016,667 shares of common stock to third-party consultants for services, resulting in $550,000 in non-cash compensation expense included in professional and legal expenses and consulting fees in the accompanying statements of operations. There are no performance commitments or penalties for non-performance, therefore the Company recorded the expense at the date of issuance.

During the first nine months of 2008, the Company issued a total of 75,000 shares of common stock to three of its directors as bonuses. The issuance of these shares resulted in $41,400 in consulting fees in the accompanying statement of operations. There are no performance commitments or penalties for non-performance, therefore the Company recorded the expense at the date of issuance.

Stock Issued on Exercise of Options

During the first nine months of 2008, the Company issued a total of 405,000 shares of common stock on the exercise of options. These shares were issued for a total of $143,269 in cash.

Cancellation of Common Stock

In January 2008, a total of 1,238,100 shares of Company common stock were cancelled, pursuant a settlement agreement.

Note 6. AFSE Enzyme, LLC

The Company has recorded its investment in AFSE Enzyme, LLC on the equity method. Under this method, the Company records its initial investment at its cost and increases the investment by any additional funds invested. It then adjusts the amount of the investment by its share of the investee’s earnings or losses. To date, the Company has invested $150,037 in the venture. Subsequent to the end of the quarter, the Company ended its involvement in AFSE Enzyme and will pursue the project without using AFSE Enzyme. Due to there being significant uncertainty that the Company will recover its investment, the Company has written off the remaining investment in AFSE Enzyme at September 30, 2008.

AFSE Enzyme, LLC is a Florida limited liability company 50% owned by the Company. AFSE Enzyme was formed for the stated purpose of participating in the development and subsequent commercialization of certain enzyme-related technologies. AFSE Enzyme’s development activities are to produce one or more “super” enzymes that would serve to produce ethanol from cellulosic plant material. The Company believes such an enzyme product would, in theory, reduce ethanol productions costs by up to 50% compared to traditional corn-based production. In addition, these enzyme development activities are to produce one or more additive enzyme products that would serve to enhance corn ethanol production by 5% to 10%. It is likely that AFSE Enzyme will require approximately $1.5 million over the next 24 months to complete the development of up to ten market-ready enzymes. The needed funding will be sought from third parties.

Note 7. Polymer Pipe Opportunity

In September 2008, the Company entered into an ethanol alliance agreement with a private Iowa company, whereby the parties intend to form a series of entities for the purpose of engaging in numerous businesses related to the ethanol industry. The Company and its business partner intend to apply proprietary, patent-pending technologies to facilitate its vision of constructing multi-purpose pipelines capable of transporting all forms of alternative fuels, including ethanol. The technology embodied in this alliance allows the pipeline to be kept “clean” and capable of moving various fuel types: ethanol, biodiesel, liquid nitrogen, and other industrial/agricultural liquids. It is expected that this first phase of this project will require approximately $3 million over the next 12 months. The needed funding will be sought from third parties.

Note 8. Subsequent Events

Sale of Land

In November 2008, the Company entered into an agreement to sell its primary asset, an approximately 160-acre tract of land located in Manchester, Iowa. The selling price of the Manchester property is $988,400, of which $98,000 has been deposited in escrow. The sale of the Manchester property is scheduled to close on December 2, 2008. Upon the closing of the sale of the Manchester property, indebtedness associated with the Manchester property of approximately $488,000 will be repaid and a sales commission of approximately $30,000 will be paid. The balance of the funds will be used by us in our business operations.

Interim Loans

In November 2008, one of the Company’s directors loaned the Company $20,000 for use as working capital. This loan is unsecured, bear interest at the rate of 5% per annum and is evidenced by a promissory note. Also in November 2008, the Company borrowed, on a short-term basis, $100,000 from a commercial lender. This loan is being used for working capital. Upon the sale of the Manchester property, both of these loans will be repaid in full.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

In January 2007, there occurred a change in control and in management with respect to our company. Our new management determined that we would seek to become a producer of ethanol. To that end, in April 2007, we consummated a plan and agreement of reorganization with ALL Energy Company, a development-stage ethanol company, whereby ALL Energy Company became our wholly-owned subsidiary. At that time, our management and that of ALL Energy Company was the same.

References to “us”, “we” and “our” include our subsidiary, ALL Energy Company, and its subsidiary, ALL Energy Manchester, LLC, and our subsidiary, AFSE Enzyme, LLC, unless otherwise indicated.

Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 21A of the Securities Exchange Act of 1934. Forward-looking statements which are based on various assumptions (some of which are beyond the Company's control), may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may", "will", "believe", "expect", "estimate", "anticipate", "continue" or similar terms or variations on those terms, or the negative of these terms. Actual results could differ materially from those set forth in forward-looking statements, due to a variety of factors, including, but not limited to, events that deprive us of the services of our president, Dean Sukowatey, whether we are able to obtain adequate capital with which to construct and/or purchase one or more ethanol production facilities and other uncertainties, all of which are difficult to predict and many of which are beyond our control.

We do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Recent Developments

Changes in Our Board of Directors. On October 7, 2008, a majority of our shareholders acting by written consent in lieu of a meeting removed, without cause, three of our then-directors from our board of directors. After such removal action, two persons with extensive ethanol industry experience, James R. Broghammer and Scott D. Zabler, were appointed to our board of directors. Since this change in our board of directors, our business strategies have been refocused and our business prospects have improved significantly.

Sale of Land. With the existing uncertainty surrounding the ethanol industry, our new board of directors determined it to be in the best interests of the our company and our shareholders that we abandon our plan to build a 110 million gallon per year ethanol plant on the 160 acre tract owned by us located in Manchester, Iowa. In keeping with this determination, in November 2008, we entered into an agreement to sell the Manchester property, our primary asset, it having been determined that our company would be in a better position to take advantage of ethanol-related business opportunities with a higher level of liquidity. The selling price of the Manchester property is $988,400, with the sale scheduled to close on December 2, 2008. Upon the closing of the sale, indebtedness associated with the Manchester property of approximately $488,000 will be repaid and a sales commission of approximately $30,000 will be paid. The balance of the funds will be used by us in pursuit of existing business opportunities.

Enzyme Development. For most of 2008, we have been pursuing an agreement with a leading research institution for the development and commercialization of an ethanol “super” enzyme, producing cellulosic ethanol with a theoretical savings of up to 50% reduction in ethanol production costs. Ethanol produced by such a super enzyme would be manufactured from sustainable non-food biomass and surplus waste products, such as wood chips, household garbage and sugarcane waste, which are abundantly available domestically and internationally. One of the key benefits would be the elimination of the cost of the more traditional component ethanol feed-stock, corn. There is no assurance that we will be successful in developing and commercializing any enzyme products.

References to “us”, “we” and “our” include our subsidiary, ALL Energy Company, and its subsidiary, ALL Energy Manchester, LLC, and our 50%-owned subsidiary, AFSE Enzyme, LLC, unless otherwise indicated.

Critical Accounting Policies

While we believe that the factors considered provide a meaningful basis for the accounting policies applied in the preparation of the condensed consolidated financial statements, we cannot guarantee that our estimates and assumptions will be accurate. If such estimates and assumptions prove to be inaccurate, we may be required to make adjustments to these estimates in future periods.

Litigation and Tax Assessments. Should we become involved in lawsuits, we intend to assess the likelihood of any adverse judgments or outcomes of any of these matters as well as the potential range of probable losses. A determination of the amount of accrual required, if any, for these contingencies will be made after careful analysis of each matter. The required accrual may change from time to time, due to new developments in any matter or changes in approach (such as a change in settlement strategy) in dealing with these matters.

Additionally, in the future, we may become engaged in various tax audits by federal and state governmental authorities incidental to our business activities. We anticipate that we will record reserves for any estimated probable losses for any such proceeding.

Stock-Based Compensation. We account for stock-based compensation based on the provisions of Statement of Financial Accounting Standards No. 123. In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment, (FAS-123R). This statement replaces FAS-123, Accounting for Stock-Based Compensation, supercedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FAS-95, Statement of Cash Flows. FAS-123R requires companies to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees and to record compensation cost for all stock awards granted after the required effective date and for awards modified, repurchased or cancelled after that date. The scope of FAS-123R encompasses a wide range of share-based compensation arrangements, including share options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans.

New Accounting Pronouncements. In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 is effective January 1, 2008. We do not believe this statement will adversely impact our financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 applies to all entities and is effective for fiscal years beginning after November 15, 2007.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141R”), which establishes principles and requirements for how the acquirer shall recognize and measure in its financial statements the identifiable assets acquired, liabilities assumed, any non-controlling interest in the acquiree and goodwill acquired in a business combination. SFAS No. 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company is currently assessing the potential impact that the adoption of SFAS No. 141(R) will have on its financial position and results of operations.

Results of Operations

For the first nine months of 2008, our monthly cash operating expenses, which include salary, professional fees and costs associated with the pursuit of business opportunities, averaged approximately $70,000. Should we be successful in commencing other business opportunities, our operating expenses will increase, although we are unable to predict the amount of such increase.

Three Months Ended September 30, 2008, vs. Three Months Ended September 30, 2007.

Revenues. We did not generate any revenues during either the 2008 or the 2007 three month period ended September 30. During each period, we actively pursued numerous business opportunities, including the acquisition of one or more existing ethanol production facilities. In addition, during the 2008 period, we began to pursue the development of our enzyme business, as well other business opportunities, including the formation of a venture to exploit a polymer pipe technology. We cannot predict whether we will be successful in these efforts.

Expenses. Our operating expenses during the three months ended September 30, 2008, were $423,236, up from $154,996 for the prior year’s three month period. Our non-cash operating expenses, which include stock issued for services and options issued for services, totalled $10,000 and $-0-, for the three month periods, respectively.

First Nine Months 2008 vs. First Nine Months 2007.

Revenues. We did not generate any revenues during either the First Nine Months 2008 or the First Nine Months 2007 and we cannot predict whether we will generate revenues during the remainder of 2008 or the first quarter of 2009. We continue to seek business opportunities and to acquire one or more existing ethanol production facilities, although we have not entered into any agreement relating thereto. We cannot predict whether we will be successful in these efforts.

Expenses. Our operating expenses during the First Nine Months 2008 were $1,739,827, down from $1,362,793 for the First Nine Months 2007. Our non-cash operating expenses, which include stock issued for services and options issued for services, totalled $867,808 for the First Nine Months 2008 compared to $780,515 for the First Nine Months 2007.

Financial Condition

At September 30, 2008, we had $67,156 in cash and a working capital deficit of $92,255. These positions are down from December 31, 2007, levels, when we had $612,888 in cash and working capital of $581,533. Subsequent to September 30, 2008, we entered into an agreement sell our 160 acres located in Manchester, Iowa, as a means of improving our liquidity. Upon the closing of this sale in December 2008, after paying costs associated with the sale and retiring the debt associated with the Manchester property, including the repayment of a $20,000 advance from one of our directors and a $100,000 working capital loan obtained in November 2008, we will have approximately $450,000 on hand. This amount of cash is expected to be adequate to sustain our current level of operations for the all of 2009. However, as discussed below, we will be required to obtain additional capital to pursue current business opportunities and otherwise to pursue our complete plan of business.

Management’s Plans Relating to Future Liquidity

We currently possess approximately $50,000 in cash. However, upon the closing of the sale of the Manchester land, we will, as described above, possess approximately $450,000, a level of capital sufficient expected to sustain our current operations for all of 2009. However, we will require substantial additional capital to purchase one or more existing ethanol production facilities. Our management believes it will be able to secure the financing, in the form of debt, equity or a combination thereof, necessary to complete these opportunities. To this end, we have retained Trinity Capital, Los Angeles, California, as our investment banker. In addition, we are seeking an investment partner for our enzyme venture. To date, we have not received a commitment for an equity investment or a loan in any amount.

Capital Expenditures

During the First Nine Months 2008, our capital expenditures were $7,332. During the First Nine Months 2007, we purchased approximately 160 acres of land located in Manchester, Iowa, for approximately $951,000 in cash. This property has been sold, as described above. Should we obtain the capital required to purchase one or more existing ethanol production facilities, our capital expenditures will be significant. However, we cannot predict the exact amount of these potential expenditures.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4T. Controls and Procedures.

During the first three months of 2008, our Chief Executive Officer and Acting Chief Financial Officer reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 240.13a-14(c) and 15d-14(c)). Based on his review and evaluation, our Chief Executive Officer and Acting Chief Financial Officer determined that our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 240.13a-14(c) and 15d-14(c)) were not, at that time, effective in timely alerting him and other members of management to material information about our company required to be disclosed by us in our periodic reports that we file or submit under the Securities Exchange Act of 1934. To assure proper financial controls and procedures in the future, we implemented certain changes to our financial reporting procedures, including, a weekly review by our management of all financial transactions and the general ledger entries associated therewith.

Except as set forth in the foregoing paragraphs, there have not been any significant changes in our internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently involved in any legal proceedings.

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

(a)

Securities Sold. In September 2008, 16,667 shares of common stock were issued.

(b)	Underwriter or Other Purchasers. Such shares of common stock were issued to Brewer & Pritchard, P.C.

(c)	Consideration. Such shares of common stock were issued in payment of legal fees in the amount of $10,000.

(d)

Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company.

Item 3. Defaults upon Senior Securities.

None.

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

No matter was submitted to our shareholders, during the three months ended September 30, 2008.

Effective October 7, 2008, a majority of our shareholders acting by written consent in lieu of a meeting removed, without cause, three of our directors from our board of directors. The directors removed from our board of directors were: Mark W. Leonard, Steven J. Leavitt and Brian K. Gibson.

In April 2007, holders of approximately 60% of our common stock, acting by written consent in lieu of a meeting, approved an amendment to our amended and restated certificate of incorporation, whereby our authorized capital shares would be increased to 700,000,000 shares of common stock and 50,000,000 shares of preferred stock. This amendment to our amended and restated certificate of incorporation will be effected in the near future.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit No.

Description

31.1 *

Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(b)

31.2 *

Certification of Chief Accounting Officer required by Rule 13a-14(a) or Rule 15d-14(b)

32.1 *

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350

32.1 *

Certification of Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350

* filed herewith.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

Date: November 19, 2008.

ALL FUELS & ENERGY COMPANY

By:

/s/ DEAN E. SUKOWATEY

Dean E. Sukowatey

President and Acting Chief Financial Officer