SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15 (d)


OF THE
SECURITIES EXCHANGE ACT OF 1934


For the
quarterly period ended December 31, 2008





 ̈ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15 (d)


OF THE
SECURITIES EXCHANGE ACT OF 1934


For the
transition period from __________ to __________________





Commission
File No. 0-15260





Element
21 Golf Company


(Exact
name of Registrant as specified in its charter)





Delaware
                  
                  88-0218411(State
      or other jurisdiction of incorporation or organization)
                  
                  (Internal
      Revenue Service Employer Identification
No.)





200
      Queens Quay East, Unit #1, Toronto, Ontario, Canada, M5A
    4K9(Address
      of Principal Executive Offices)416-362-2121Registrant’s
      telephone number, including area code




Check
whether the Registrant (1) 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   o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a small reporting
company.  See the definition of “large accelerated filer”,
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.


Large
      accelerated filer
               ̈
              Accelerated
      filer
               ̈Non-accelerated
      filer
               ̈
              Smaller
      reporting company
              x





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


Yes 
o
  No   x





APPLICABLE
ONLY ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE
YEARS




Check
whether the registrant filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court


Yes 
o
  No o




APPLICABLE
ONLY TO CORPORATE ISSUERS:




Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the last practicable date,8,933,656 shares of common
stock, par value $.01 per share as of  February 12,
2009.








Element
21 Golf Company and Subsidiary





INDEX




Page
                      NumberPART
      I.
                    FINANCIAL
      INFORMATIONItem
      1
                    Condensed
      Consolidated Financial Statements:Condensed
      Consolidated Balance Sheets as of December 31, 2008 (unaudited) and June
      30, 2008
                    
                    3Condensed
      Consolidated Statements of Operations for the Six and Three Months Ended
      December 31, 2008 and 2007 (unaudited)
                    
                    4Condensed
      Consolidated Statements of Cash Flows for the Six Months Ended December
      31, 2008 and 2007 (unaudited)
                    
                    5Notes
      to Condensed Consolidated Financial Statements (Unaudited)
                    
                    6Item
      2
                    Management's
      Discussion and Analysis or Plan of Operation
                    
                    10Item
      4
                    Controls
      and Procedures
                    
                    12PART
      II
                    OTHER
      INFORMATIONItem
      1
                    Legal
      Proceedings
                    
                    13Item
      2
                    Unregistered
      Sales of Equity Securities and Use of Proceeds
                    
                    13Item
      3
                    Defaults
      upon Senior Securities
                    
                    13Item
      4
                    Submission
      of Matters to a Vote of Security Holders
                    
                    13Item
      5
                    Other
      Information
                    
                    13Item
      6
                    Exhibits
                    
                    13SIGNATURES
                    
                    16EXHIBITS


2





PART
1 - FINANCIAL INFORMATION


Item
1 - Financial Statements





ELEMENT
21 GOLF COMPANY AND SUBSIDIARY


CONDENSED
CONSOLIDATED BALANCE SHEETS





December 31,
                      2008
                    
                    
                    June 30, 2008(unaudited)-
      ASSETS -CURRENT
      ASSETS:Cash
      and cash equivalents
                    
                    $
                    260,682
                    
                    
                    $
                    770,602Accounts
      receivable - net of allowance for doubtful accounts of
    $42,000
                    
                    
                    283,512
                    
                    
                    
                    471,006Inventories
                    
                    
                    1,405,119
                    
                    
                    
                    1,556,788Prepaid
      expenses and other current assets
                    
                    
                    148,807
                    
                    
                    
                    46,615TOTAL
      CURRENT ASSETS
                    
                    
                    2,098,120
                    
                    
                    
                    2,845,011FIXED
      ASSETS – NET
                    
                    
                    63,357
                    
                    
                    
                    101,255TOTAL
      ASSETS
                    
                    $
                    2,161,477
                    
                    
                    $
                    2,946,266-
      LIABILITIES AND SHAREHOLDERS’ DEFICIT -CURRENT
      LIABILITIES:Accounts
      payable
                    
                    $
                    514,004
                    
                    
                    $
                    945,230Royalty
      payable
                    
                    
                    386,027
                    
                    
                    
                    240,524Accrued
      expenses – compensation
                    
                    
                    1,852,560
                    
                    
                    
                    1,617,074Deferred
      revenue
                    
                    
                    -
                    
                    
                    
                    60,720Loan
      payable – shareholder
                    
                    
                    825,000
                    
                    
                    
                    825,000Derivative
      liability
                    
                    
                    13,759
                    
                    
                    
                    117,284TOTAL
      CURRENT LIABILITIES
                    
                    
                    3,591,350
                    
                    
                    
                    3,805,832LONG-TERM
      LIABILITIES:Accounts
      payable - related parties
                    
                    
                    242,076
                    
                    
                    
                    242,076Loans
      and advances – officer
                    
                    
                    176,468
                    
                    
                    
                    110,412TOTAL
      LONG-TERM LIABILITIES
                    
                    
                    418,544
                    
                    
                    
                    352,488-
      COMMITMENTS AND CONTINGENCIESSHAREHOLDERS’
      DEFICIT:Preferred
      stock, $.10 par value, authorized 2,447,000 shares, no shares issued and
      outstanding
                    
                    
                    -
                    
                    
                    
                    -Series
      A Convertible Preferred stock, $.001 par value, authorized 2,200,000
      shares, 2,113,556 shares issued and outstanding
                    
                    
                    2,114
                    
                    
                    
                    2,114Series
      B Convertible Preferred stock, $.10 par value, authorized 353,000 shares,
      294,126 shares issued and outstanding
                    
                    
                    29,413
                    
                    
                    
                    29,413Common
      stock, $.01 par value; 300,000,000 shares authorized,8,516,156 and
      7,256,088 shares issued and outstanding at December 31, 2008 and June 30,
      2008, respectively
                    
                    
                    85,162
                    
                    
                    
                    72,561Additional
      paid-in capital
                    
                    
                    23,247,854
                    
                    
                    
                    22,754,425Accumulated
      deficit
                    
                    
                    (25,212,960
                    )
                    
                    
                    (24,070,567
                    )TOTAL
      SHAREHOLDERS’ DEFICIT
                    
                    
                    (1,848,417
                    )
                    
                    
                    (1,212,054
                    )TOTAL
      LIABILITIES AND SHAREHOLDERS’ DEFICIT
                    
                    $
                    2,161,477
                    
                    
                    $
                    2,946,266





See notes
to condensed consolidated financial statements


3





ELEMENT
21 GOLF COMPANY AND SUBSIDIARY


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


FOR
THE SIX AND THREE MONTHS ENDED DECEMBER 31, 20087 AND 2007


(unaudited)





Six months Ended December 31,
                                      
                                      
                                      Three months Ended December 31,2008
                                      
                                      
                                      2007
                                      
                                      
                                      2008
                                      
                                      
                                      2007REVENUES
                                      
                                      $
                                      985,907
                                      
                                      
                                      $
                                      386,932
                                      
                                      
                                      $
                                      430,651
                                      
                                      
                                      $
                                      255,801COSTS
      OF SALES
                                      
                                      
                                      635,047
                                      
                                      
                                      
                                      275,127
                                      
                                      
                                      
                                      285,325
                                      
                                      
                                      
                                      215,583GROSS
      MARGIN
                                      
                                      
                                      350,860
                                      
                                      
                                      
                                      111,805
                                      
                                      
                                      
                                      145,326
                                      
                                      
                                      
                                      40,218General
      and administrative expenses
                                      
                                      
                                      1,557,816
                                      
                                      
                                      
                                      2,854,291
                                      
                                      
                                      
                                      672,118
                                      
                                      
                                      
                                      1,915,031LOSS
      FROM OPERATIONS
                                      
                                      
                                      (1,206,956
                                      )
                                      
                                      
                                      (2,742,486
                                      )
                                      
                                      
                                      (526,792
                                      )
                                      
                                      
                                      (1,874,813
                                      )OTHER
      INCOME (EXPENSE)Interest
      income
                                      
                                      
                                      2,629
                                      
                                      
                                      
                                      7,811
                                      
                                      
                                      
                                      1,183
                                      
                                      
                                      
                                      6,530Interest
      expense
                                      
                                      
                                      (41,591
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (20,796
                                      )
                                      
                                      
                                      -Derivative
      income
                                      
                                      
                                      103,525
                                      
                                      
                                      
                                      2,028,644
                                      
                                      
                                      
                                      42,818
                                      
                                      
                                      
                                      2,675,91164,563
                                      
                                      
                                      
                                      2,036,455
                                      
                                      
                                      
                                      23,205
                                      
                                      
                                      
                                      2,682,441INCOME
      (LOSS) BEFORE PROVISION FOR INCOME TAXES
                                      
                                      
                                      (1,142,393
                                      )
                                      
                                      
                                      (706,031
                                      )
                                      
                                      
                                      (503,587
                                      )
                                      
                                      
                                      807,628Provision
      for income taxes
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -NET
      INCOME(LOSS)
                                      
                                      $
                                      (1,142,393
                                      )
                                      
                                      $
                                      (706,031
                                      )
                                      
                                      $
                                      (503,587
                                      )
                                      
                                      $
                                      807,628Basic
      weighted average shares
                                      
                                      
                                      7,535,876
                                      
                                      
                                      
                                      6,137,071
                                      
                                      
                                      
                                      7,530,324
                                      
                                      
                                      
                                      6,240,917Diluted
      weighted average shares
                                      
                                      
                                      7,535,876
                                      
                                      
                                      
                                      6,137,071
                                      
                                      
                                      
                                      7,530,324
                                      
                                      
                                      
                                      8,642,407Basic
      income (loss) per share
                                      
                                      $
                                      (0.15
                                      )
                                      
                                      $
                                      (0.12
                                      )
                                      
                                      $
                                      (0.07
                                      )
                                      
                                      $
                                      0.13Diluted
      income (loss) per share
                                      
                                      $
                                      (0.15
                                      )
                                      
                                      $
                                      (0.12
                                      )
                                      
                                      $
                                      (0.07
                                      )
                                      
                                      $
                                      0.09





See notes
to condensed consolidated financial statements.




4





ELEMENT
21 GOLF COMPANY AND SUBSIDIARY


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR
THE SIX MONTHS ENDED DECEMBER 30, 2008 AND 2007


(unaudited)





2008
                
                
                2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                
                $
                (1,142,393
                )
                
                $
                (706,031
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Compensatory
      common stock and warrants
                
                
                657,639
                
                
                
                2,152,260Depreciation
      and amortization
                
                
                37,898
                
                
                
                184,600Excess
      derivative liability expense (income)
                
                
                (103,525
                )
                
                
                (1,966,267
                )Changes
      in:Accounts
      receivable
                
                
                187,494
                
                
                
                (11,953
                )Inventory
                
                
                151,669
                
                
                
                (90,769
                )Prepaid
      expenses and other current assets
                
                
                (102,192
                )
                
                
                (237,616
                )Accounts
      payable and accrued expenses
                
                
                (256,346
                )
                
                
                (287,763
                )Accrued
      interest
                
                
                54,500
                
                
                
                (27,250
                )Deferred
      revenue
                
                
                (60,720
                )
                
                
                (12,071
                )Net
      Cash (used in) Operating Activities
                
                
                (575,976
                )
                
                
                (1,002,860
                )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of capital assets
                
                
                —
                
                
                
                (44,703
                )Net
      Cash (Used in) Investing Activities
                
                
                —
                
                
                
                (44,703
                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Loans
      and advances received from (repaid to)
    officers/shareholders
                
                
                66,056
                
                
                
                20,655(Repayments
      of) net proceeds from bridge loans
                
                
                —
                
                
                
                (475,000
                )Net
      Cash Provided by (used by) Financing Activities
                
                
                66,056
                
                
                
                (454,345
                )NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                
                
                (509,920
                )
                
                
                (1,501,908
                )CASH
      AND CASH EQUIVALENTS, BEGINNING OF PERIOD
                
                
                770,602
                
                
                
                1,751,178CASH
      AND CASH EQUIVALENTS, END OF PERIOD
                
                $
                260,682
                
                
                $
                249,270SUPPLEMENTAL
      CASH FLOWS INFORMATION:Interest
      paid
                
                $
                -
                
                
                $
                46,750NON-CASH
      INVESTING AND FINANCING ACTIVITIES:Issuance
      of common stock to pay expenses and settle accrued
expenses
                
                $
                493,429
                
                
                $
                1,314,400





See notes
to condensed consolidated financial statements.




5


ELEMENT
21 GOLF COMPANY AND SUBSIDIARY


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





NOTE
      1
            NATURE
      OF BUSINESS AND OPERATIONS





Element
21 Golf Company and subsidiary (the “Company” and or “Element 21”) designs,
develops and markets Scandium alloy golf and fishing products.  The
first products manufactured using the Company’s proprietary technology have been
produced and the Company commenced distribution to wholesalers and retail
markets during the last quarter of its fiscal year ended June 30,
2006.





In June,
2007 the Company expanded into recreational fishing equipment. On June 21, 2007,
the Company entered into a non-exclusive, world-wide patent license with
Advanced Light Alloys Corporation (Advanced) by which Element 21 was licensed by
Advanced to make, use, and sell fishing equipment utilizing certain of
Advanced’s patents.





The
Company is subject to a number of risks similar to those of other companies in
the early stages of operations.  Principal among these risks are
dependencies on key individuals, competition from other current or substitute
products and larger companies, the successful marketing of its products and the
potential need to obtain adequate additional financing necessary to fund future
operations.





NOTE
      2
            BASIS
      OF PREPARATION





Pursuant
to the rules and regulations of the Securities and Exchange Commission for Form
10-Q, the financial statements, footnote disclosures and other information
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. The financial
statements contained in this report are unaudited but, in the opinion of
Management, reflect all adjustments, consisting of only normal recurring
adjustments necessary for a fair presentation of the condensed consolidated
financial statements.  All significant inter-company accounts and
transactions have been eliminated in consolidation. The results of operations
for any interim period are not necessarily indicative of results for the full
year. The balance sheet at June 30, 2008 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements.


For
further information, refer to the consolidated financial statements and notes
thereto included in the Company’s Form 10-KSB for the year ended June 30,
2008.




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
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. Actual results could differ from those estimates.





On April
25, 2008, the Company effected a 1 for 20 reverse stock split.  All
share and per share amounts in this report have been retroactively restated to
reflect the 1 for 20 reverse split.





Inventories,
which consist primarily of goods held for resale, are stated at the lower of
cost (first-in, first-out method) or market and are comprised as
follows:




December 31,
                      2008
                    
                    
                    June 30, 2008Finished
      goods
                    
                    $
                    1,178,091
                    
                    
                    $
                    943,485Components
                    
                    
                    227,028
                    
                    
                    
                    613,303Total
                    
                    $
                    1,405,119
                    
                    
                    $
                    1,556,788





NOTE
      3
            RECENT
      ACCOUNTING PRONOUNCEMENTS AFFECTING THE
COMPANY





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”,
which defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosures about fair
value measurements.  This statement does not require any new fair
value measurements, but provides guidance on how to measure fair value by
providing a fair value hierarchy used to classify the source of the
information,  SFAS No. 157 is effective for fiscal years beginning
after November 15, 2007, and all interim periods within those fiscal
years.  In February, 2008, the FASB released FASB Staff Position (FSP
FAS 157-2 – Effective Date of
FASB Statement No. 157) which delays the effective date of SFAS No. 157
for all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually), to fiscal years beginning after November 15, 2008 and
interim periods within those fiscal years.  The implementation of SFAS
No. 157 for financial assets and liabilities, effective July 1, 2008, did not
have an impact on the Company’s financial position and results of
operations.  The Company is currently evaluating the impact of
adoption of this statement in its non-financial assets and
liabilities..


6


ELEMENT
21 GOLF COMPANY AND SUBSIDIARY


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





NOTE
      3
            RECENT
      ACCOUNTING PRONOUNCEMENTS AFFECTING THE COMPANY
  (Continued)





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities Including an Amendment of FASB Statement
No. 115”.  SFAS No. 159 permits entities to
choose to measure many financial instruments and certain other items at fair
value that are not currently required to be measured at fair value. This
statement also establishes presentation and disclosure requirements designed to
facilitate comparisons between entities that choose different measurement
attributes for similar types of assets and liabilities. SFAS No. 159
is effective for fiscal years beginning after November 15, 2007. Our
adoption of SFAS 159 did not have a material impact on our results of operations
or financial position.





In March
2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative
Instruments and Hedging Activities. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. Our adoption of SFAS 161 is not expected to have a material impact
on our results of operations or financial position.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”.  The new standard is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. generally accepted accounting
principles (GAAP) for nongovernmental entities.  Prior to the issuance
of SFAS 162, GAAP hierarchy was defined in the American Institute of Certified
Public Accountants (AICPA) Statement on Auditing Standards (SAS) No. 69, The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles. SFAS 162 is effective 60 days following the SEC’s approval of the
Public Company Accounting Oversight Board Auditing amendments to AU Section 411,
The Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles.  Our adoption of SFAS 162 is not expected to have a
material impact on our results of operations or financial position.





NOTE
      4
            GOING
      CONCERN





These
interim financial statements have been presented on the basis that the Company
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.  The
Company has only recently begun generating revenues.  Even with the
generation of revenues from the sale of golf and fishing products now being
produced and sold, the Company expects to incur expenses in excess of revenues
for an indefinite period.





Key
financial information follows:




Six Months
                    Ended
                    December 31,
                    2008
                  
                  
                  Year Ended
                    June 30,
                    2008Negative
      working capital
                  
                  $
                  (1,493,230
                  )
                  
                  $
                  (960.821
                  )Net
      loss
                  
                  $
                  (1,142,393
                  )
                  
                  $
                  (2,855,341
                  )Accumulated
      deficit
                  
                  $
                  (25,212,960
                  )
                  
                  $
                  (24,070,567
                  )





As shown
in the accompanying financial statements, during the six months ended December
31, 2008 the Company incurred a net loss of $1,142,393 and cash utilized by
operations during this period was $575,976. For the fiscal year ended June 30,
2008, the Company realized a net loss of $2,855,341 and utilized cash of
$1,477,309 from operations.





These
factors, among others, raise significant doubt about the Company’s ability to
continue as a going concern.  The unaudited condensed consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of assets or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.





The
Company’s continuation as a going concern is dependent upon its ability to
generate sufficient cash flow and meet its obligations on a timely basis and
ultimately attain profitability.  Since acquiring the Element 21
Technologies golf development business, the Company has depended on advances and
consulting services from consultants engaged by the Company as well as prior
financings.


7


ELEMENT
21 GOLF COMPANY AND SUBSIDIARY


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





NOTE
      4
            GOING
      CONCERN (Continued)





Absent
these continuing advances, services and financings, the Company could not
continue with the development and marketing of its golf and fishing
products.





Managements’
plans for the Company include more aggressive marketing, raising capital in
addition to $300,000 that management has raised in January 2009 and other
strategies designed to optimize shareholder value. However, no assurance can be
given that management will be successful in fulfilling all components of its
plan. The failure to achieve these plans will have a material adverse effect on
the Company’s financial position, results of operations and ability to continue
as a going concern.





NOTE
      5
            RELATED
      PARTY ADVANCES AND LOANS PAYABLE





During
the six months period ended December 31, 2008, a certain officer advanced a net
amount of $66,056 to the Company.  The officer will not require repayment
of the $176,468 loans and advances balance at December 31, 2008 within the next
12 months.





In
February 7, 2008, a shareholder made a loan to the Company of $1 million in the
form of an unsecured promissory note with stated interest of 10%; such note was
paid in full, including interest of $25,000, on May 27, 2008. The Company
entered into a new unsecured promissory note of $825,000 on May 27, 2008 with a
stated interest rate of 10% and a repayment date of November 1,
2008.  The loan agreement contains default provisions and the Company
went into default; however, during the quarter ended December 31, 2008, the
Company has negotiated an extension of the repayment date until February 28,
2009.





NOTE
      6
            (LOSS)
      PER SHARE





Basic net
income (loss) per share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding for the
periods.  Diluted net income (loss) per share reflects, in addition to
the weighted average number of common shares, the potential dilution of stock
options and warrants outstanding, exercised and/or converted into common stock,
unless the effect of such equivalent shares was anti-dilutive.





For the
six months ended December 31, 2008 and 2007, the effect of stock options and
other potentially dilutive shares were excluded from the calculation of diluted
net loss per common share, as their inclusion would have been
anti-dilutive.  Therefore diluted loss per share is equal to basic
loss per share. Such securities, shown below, presented on a common share
equivalent basis and outstanding as at December 31, 2008 and 2007 have been
excluded from the three and six month diluted loss per share
computations:





December 31,
                    2008
                  
                  
                  December 31,
                    2007Warrants
                  
                  
                  2,565,939
                  
                  
                  
                  3,618,705Convertible
      Preferred Stock
                  
                  
                  1,885,016
                  
                  
                  
                  2,179,133Stock
      Options
                  
                  
                  160
                  
                  
                  
                  -




NOTE
      7
            SHAREHOLDER’S
      EQUITY




During
the six months ended December 31, 2008 the Company issued 1,260,068 shares of
its common stock to consultants for services rendered and to be rendered by them
for an aggregate value of $493,429 based on the market price of the shares at
time of issuance.





In
February 2006, the Company issued a warrant to purchase 50,000 shares of the
Company’s common stock at a price of $0.20 as part of the Company’s repayment of
outstanding indebtedness to a creditor of the Company. The warrant vested
immediately and is exercisable for a three year period from the date of
issuance. As of December 31, 2008, the warrant was revalued and the derivative
liability was adjusted to approximately $121. As of December 31, 2008 the
Company revalued the warrant under the Black Scholes option-pricing model with
the following assumptions: an expected life equal to the contractual term of the
warrant, as the case may be; no dividends; a risk free rate of return of 1.36%
and volatility of 94.32%.


8





ELEMENT
21 GOLF COMPANY AND SUBSIDIARY


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





NOTE
      7
            SHAREHOLDER’S
      EQUITY (Continued)





The
Company issued warrants in conjunction with the issuance of convertible notes in
2006.  As of December 31, 2008, all of the remaining unexpired
warrants (three year) were revalued and the liability was adjusted to
approximately $3,825. As of December 31, 2008 the Company revalued the warrants
using the Black Scholes option-pricing model with the following assumptions: an
expected life equal to the contractual term of the conversion options or
warrants, as the case may be; no dividends; a risk free rate of return of 1.36%
and volatility of 94.32%.  Volatility is based upon the historical
volatility of the Company’s stock price.





The
Company also previously issued warrants in conjunction with compensation for
services rendered by various consultants.  As of December 31, 2008,
all of the remaining unexpired warrants were revalued and the liability was
adjusted to approximately $9,813. As of December 31, 2008 the Company revalued
the warrants using the Black Scholes option-pricing model with the following
assumptions: an expected life equal to the contractual term of the conversion
options or warrants, as the case may be; no dividends; a risk free rate of
return of 1.36% and volatility of 94.32%.  Volatility is based upon
the historical volatility of the Company’s stock price.





NOTE 8
            FAIR VALUE
      MEASUREMENTS




Effective
July 1, 2008, we adopted SFAS 157, Fair Value Measurements (SFAS 157). SFAS 157
clarifies the definition of fair value, prescribes methods for measuring fair
value, and establishes a fair value hierarchy to classify the inputs used in
measuring fair value as follows:




Level
1-Inputs are unadjusted quoted prices in active markets for identical assets or
liabilities available at the measurement date.




Level
2-Inputs are unadjusted quoted prices for similar assets and liabilities in
active markets, quoted prices for identical or similar assets and liabilities in
markets that are not active, inputs other then quoted prices that are
observable, and inputs derived from or corroborated by observable market
data.




Level
3-Inputs are unobservable inputs which reflect the reporting entity’s own
assumptions on what assumptions the market participants would use in pricing the
asset or liability based on the best available information.




The
adoption of SFAS No. 157 did not have a material impact on our fair value
measurements.





The
following tables present our assets and liabilities that are measured at fair
value on a recurring basis and are categorized using the fair value hierarchy.
The fair value hierarchy has three levels based on the reliability of the inputs
used to determine fair value.




Fair Value Measurements at Reporting Date UsingDescription
            
            December 31,
              2008
            
            
            Quoted Prices inActive Marketsfor IdenticalAssets
              (Level 1)
            
            
            Significant OtherObservable Inputs(Level 2)
            
            
            Significant UnobservableInputs(Level 3)LiabilitiesDerivativeInstrument
            
            $
            13,759
            
            
            $
            -
            
            
            $
            -
            
            
            $
            13,759





Fair Value Measurements Using SignificantUnobservable Inputs(Level 3)
 Beginning
      Balance
                    
                    $
                    117,284Total
      gains or (losses) (realized/unrealized)Included
      in earnings
                    
                    
                    (103,525
                    )Included
      in other comprehensive income
                    
                    
                    -Purchases,
      issuances and settlements
                    
                    
                    -Transfer
      in and/or out of Level 3
                    
                    
                    -Ending
      Balance
                    
                    $
                    13,759





NOTE 9
            SUBSEQUENT
      EVENTS




On
February 4, 2009, the Company consummated a Three Hundred Thousand Dollar
($300,000) Convertible Bridge financing by entering into a Convertible Bridge
Loan Note, Warrant Agreement and Subscription Agreement with Rodney Hammer. The
Subscription Agreement provides for the Purchaser to loan to the Company,
$300,000 in exchange for a Convertible Bridge Note which provides for repayment
within 6 months from January 30, 2009 at the rate of 7% per annum with interest
due and payable upon maturity. This note can be converted by the Purchaser at
anytime during or at the expiration of 6 months at a conversion price equal to
$0.45 cents per share. In addition the Company issued to the Purchaser a warrant
(the "Warrant") to purchase an additional $300,000 worth of shares at $0.35
cents each for a period of 12 months from January 30, 2009. The Warrant expires
on January 30, 2010. The exercise price of the Warrant is subject to adjustment
in the event of certain dilutive issuances, stock dividends, stock splits, share
combinations or other similar recapitalization events.


9


ITEM
      2
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION





Cautionary
Statement Regarding Forward-Looking Information





Under the
Private Securities Litigation Reform Act of 1995, companies are provided with a
“safe harbor” for making forward-looking statements about the potential risks
and rewards of their strategies.  Forward-looking statements often
include the words “believe”, “expect”, “anticipate”, “intend”, “plan”,
“estimate” or similar expressions.  In this Form 10-Q, forward-looking
statements also include:





▪
            statements
      about our business plans;


▪
            statements
      about the potential for the development, regulatory approval and public
      acceptance of new services;


▪
            estimates
      of future financial performance;


▪
            predictions
      of national or international economic, political or market
      conditions;


▪
            statements
      regarding other factors that could affect our future operations or
      financial position; and


▪
            other
      statements that are not matters of historical
  fact.





These
statements may be found under “Management’s Discussion and Analysis or Plan of
Operation” as well as in this Form 10-Q.  Our ability to achieve
our goals depends on many known and unknown risks and uncertainties, including
changes in general economic and business conditions.  These factors
could cause our actual performance and results to differ materially from those
described or implied in forward-looking statements.





These
forward looking statements speak only as of the date of this Form
10-Q.  We believe it is in the best interest of our investors to use
forward-looking statements in discussing future events.  However, we
are not required to, and you should not rely on us to, revise or update these
statements or any factors that may materially affect actual results, whether as
a result of new information, future events or otherwise.  You should
carefully review the risk factors described in this Form 10-Q and also review
the other documents we file from time to time with the Securities and Exchange
Commission (“SEC”).





Results of
Operations





Six
Months Ended December 31, 2008 and 2007





For the
six months ended December 31, 2008 the Company had revenue of $985,907, which
includes non-cash barter revenue of $118,471, and incurred costs of sales of
$635,047 and general and administrative expenses of $1,557,816. Included in
general and administrative expenses is a non-cash charge of $266,038,
representing the value of compensatory common stock and warrants for services
provided by consultants. This resulted in a net loss of $1,142,393, as compared
with the six months ended December 31, 2007 in which the Company had revenue of
$386,932, incurred costs of sales of $275,127 and general and administrative
expenses of $2,854,291, resulting in a net loss of $706,031.





Three
Months Ended December 31, 2008 and 2007





For the
three months ended December 31, 2008 the Company had revenue of $430,651, which
includes non-cash barter revenue of $102,813, and incurred costs of sales of
$285,325 and general and administrative expenses of $672,118. Included in
general and administrative expenses is a non-cash charge of $266,038,
representing the value of compensatory common stock and warrants for services
provided by consultants. This resulted in a net loss of $503,587, as compared
with the three months ended December 31, 2007 in which the Company had revenue
of $255,801, incurred costs of sales of $215,583 and general and administrative
expenses of $1,915,031, and derivative income of $2,675,911.  Included in
general and administrative expenses is a non-cash charge of $577,687,
representing the value of common shares issued for services provided by
consultants. This resulted in a net income of $807,628.





Financial
Condition, Liquidity and Capital Resources





The
Company has negative working capital as of December 31, 2008 of
$1,493,230.  The Company retains consultants who are also significant
stockholders of the Company to perform development and public company reporting
activities in exchange for stock of the Company.  At June 30, 2008, we
had a working capital deficiency of $960,821.  Our continuation as a
going concern will require that we raise significant additional
capital.


10





Absent
continued issuances of common stock for services to our consultants and
continued advances by stockholders of the Company, the Company cannot
manufacture its golf shaft or fishing product lines or market its products based
on its technologies.  The Company is actively searching for capital in
addition to $300,000 that management has raised in January 2009 to implement its
business plans, supply the Company with products for distribution, and develop
collateral materials for its potential customer base.  There can be no
assurance that such capital will be raised on terms acceptable to the Company
and if this capital is raised, it, may cause significant dilution to the
Company’s stockholders.





Recent
Accounting Pronouncements





See Note
3 “Recent Accounting Pronouncements Affecting the Company” in the Notes to
Condensed Consolidated Financial Statements in Item 1 for a full description of
recent accounting pronouncements, including the expected dates of adoption and
estimated effects on results of operations and financial condition, which is
incorporated herein.





Dividend
Policy





The
Company has not declared or paid any cash dividends on its common stock since
its inception and does not anticipate the declaration or payment of cash
dividends in the foreseeable future.  The Company intends to retain
earnings, if any, to finance the development and expansion of its
business.  The Company is prohibited from paying dividends on common
stock as long as there are any unpaid accrued dividends due to the Series B
Convertible Stock shareholders. Therefore, there can be no assurance that
dividends of any kind will ever be paid.





Effect
of Inflation





Management
believes that inflation has not had a material effect on its operations for the
periods presented.





Critical
Accounting Policies





The
Company’s discussion and analysis of its financial condition and results of
operations are based upon the Company’s consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these consolidated financial statements
requires the Company to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses and related disclosure of
contingent assets and liabilities. The Company bases its estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.





The
Company believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
financial statements.





Stock-Based
Compensation:





The
Company accounts for stock-based employee compensation arrangements in
accordance with the provisions of Statement of Financial Accounting
Standards No. 123(R), Shared-Based Payments (FAS 123(R)). Under FAS
123(R), compensation cost is calculated on the date of the grant using the Black
Scholes option-pricing formula. The compensation expense is then amortized over
the vesting period. The Company uses the Black-Scholes option-pricing formula in
determining the fair value of the Company’s options at the grant date and
applies judgment in estimating the key assumptions that are critical to the
model such as the expected term, volatility and forfeiture rate of an option.
The Company’s estimate of these key assumptions is based on historical
information and judgment regarding market factors and trends. If actual results
are not consistent with the Company’s assumptions and judgments used in
estimating the key assumptions, the Company may be required to record additional
compensation or income tax expense, which could have a material impact on the
Company’s financial position and results of operations.





Allowance
for Doubtful Accounts:





The
Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of the Company’s customers were to deteriorate, resulting in
an impairment of their ability to make payments, additional allowances may be
required, which would be charged against earnings.


11


Income
Taxes





As part
of the process of preparing our consolidated financial statements, we are
required to estimate our income taxes in each of the jurisdictions in which we
operate.  This process involves estimating the actual current tax
liabilities together with assessing temporary differences resulting from
differing treatment of items for tax and accounting purposes.  These
differences result in deferred tax assets and liabilities, which are included
within the consolidated balance sheet.  The most significant tax assets are
available net operating loss carryforwards. .  We must then assess the
likelihood that the deferred tax assets will be recovered from future taxable
income and, to the extent we believe that recovery is not likely, a valuation
allowance must be established.  To the extent we establish a valuation
allowance or increase or decrease this allowance in a period, the impact will be
included in the tax provision in the statement of operations.  Significant
management judgment is required to determine our provision for income taxes and
the recoverability of the deferred tax asset.  It is based on our estimates
of future taxable income by jurisdiction in which we operate and the period over
which the deferred tax assets will be recoverable.  In the event that
actual results differ from these estimates or we adjust these estimates in
future periods, a valuation allowance may need to be established which could
result in a tax provision equal to the carrying value of the deferred tax
assets.





Property
and Equipment





We record
property and equipment at cost and depreciate that cost over the estimated
useful life of the asset on a straight-line basis. Ordinary maintenance and
repairs are expensed as incurred and improvements that significantly increase
the useful life of property and equipment are capitalized.





We test
property and equipment for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the asset to future net cash flows expected
to be generated by the asset. If such assets are deemed to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets based on the projected
net cash flows discounted at a rate commensurate with the risk of the
assets.





ITEM
      3
            CONTROLS
      AND PROCEDURES:





(a) Evaluation of disclosure controls
and procedures.  Management, including our Chief Executive
Officer and Principal Financial Officer, carried out an evaluation of the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this quarterly report.  Based on this evaluation,
our Chief Executive Officer and Principal Financial Officer concluded that our
disclosure controls and procedures were effective to provide a reasonable level
of assurance that the information required to be disclosed in the reports filed
or submitted by us under the Securities Exchange Act of 1934 is recorded,
processed and summarized.  .





(b) Changes in internal control over
financial reporting.  There were no changes in our internal
control over financial reporting that occurred during the last fiscal quarter
that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.


12





PART
II - OTHER INFORMATION





Item
      1
            LEGAL
      PROCEEDINGS





None





Item
      2
            UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS





During
the three months ended December 31, 2008 the Company issued 1,026,172 shares of
its common stock to consultants for services rendered and to be rendered by them
and for an aggregate value of $266,038   The shares were issued in
reliance on exemptions from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended.





Item
      3
            DEFAULT
      UPON SENIOR SECURITIES





None





Item
      4
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS





None





Item
      5
            OTHER
      INFORMATION





None





Item
      6
            EXHIBITS





Exhibit No.
                  
                  Exhibit
      Description3(i)(1)
                  
                  Amended
      Certificate of Incorporation of the Company, incorporated herein by
      reference to the Company’s   Registration Statement on Form S-1, as
      amended, File No. 33-43976 filed on November 14, 1991.3(i)(2)
                  
                  Certificate
      of Amendment to Amended Certificate of Incorporation of the Company,
      incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K
      dated May 12, 2006.3(i)(3)
                  
                  Certificate
      of the Powers, Designations, Preferences and Rights of the Series A
      Convertible Preferred Stock, $0.10 par value per share, incorporated
      herein by reference to Exhibit 4.1 to the Company’s Form 8-K dated
      February 24, 2006.3(i)(4)
                  
                  Certificate
      of the Powers, Designations, Preferences and Rights of the Series B
      Convertible Preferred Stock, $0.10 par value per share, incorporated
      herein by reference to Exhibit 3(i) to the Company’s Form 8-K dated August
      3, 2006.





3(i)(5)
                  
                  Certificate
      of the Powers, Designations, Preferences and Rights of the Series B
      Convertible Preferred Stock, $0.10 par value per share, incorporated
      herein by reference to Exhibit 3(i) to 3(iix9x1) to the Company’s Form 8-K
      dated June 18, 2007.3(ii)(1)
                  
                  Amended
      and Restated Bylaws of the Company, incorporated herein by reference to
      the Company’s   Registration Statement on Form S-1, as amended,
      File No. 33-43976 filed on November 14, 1991.3(ii)(2)
                  
                  Certificate
      of Amendment to the Certificate of Incorporation of the Company to
      effectuate a 1 for 20 reverse stock split of the Company’s issued and
      outstanding shares of common stock, incorporated herein by reference to
      the Company’s  Form 8-K dated April 24, 2008.4.1
                  
                  Form
      of Element 21 Golf Company 10% Convertible Promissory Note, incorporated
      herein by reference to Exhibit 4.2 to the Company’s Form 8-K dated
      February 24,
2006.




4.2
              
              Element
      21 Golf Company 10% Convertible Promissory Note issued to Oleg Muzyrya ,
      incorporated herein by reference to Exhibit 4.3 to the Company’s Form 8-K
      dated February 24,
2006.


13




4.3
                
                Common
      Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.4 to
      the Company’s Form 8-K dated February 24, 2006.4.4
                
                Form
      of Element 21 Golf Company 10% Convertible Promissory Note, incorporated
      herein by reference to Exhibit 4.1 to the Company’s Form 8-K dated May 23,
      2006.4.5
                
                Common
      Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.2 to
      the Company’s Form 8-K dated May 23, 2006.4.6
                
                Form
      of Warrant for Purchase of 3,750,000 Shares of Common Stock dated July 31,
      2006, incorporated herein by reference to Exhibit 4.1 to the Company’s
      Form 8-K dated August 3, 2006.4.7
                
                Form
      of Warrant for Purchase of 5,073,530 Shares of Common Stock dated July 31,
      2006, incorporated herein by reference to Exhibit 4.2 to the Company’s
      Form 8-K dated August 3, 2006.4.8
                
                Form
      of Warrant for Purchase of 3,750,000 Shares of Common Stock dated July 31,
      2006, incorporated herein by reference to Exhibit 4.1 to the Company’s
      Form 8-K dated December 1, 2006.4.9
                
                Form
      of Warrant for Purchase of 5,073,530 Shares of Common Stock dated July 31,
      2006, incorporated herein by reference to Exhibit 4.2 to the Company’s
      Form 8-K dated December 1, 2006.4.10
                
                Common
      Stock Purchase Warrant, incorporated herein by reference to Exhibit 4.1 to
      the Company’s Form 8-K dated June 18, 2006.4.11
                
                Form
      of Warrant for Purchase of 5,882,400 Shares of Common Stock dated June 15,
      2007, incorporated herein by reference to Exhibit 4.2 to the Company’s
      Form 8-K dated June 18, 2007.


10.1
              
              Series
      A Convertible Preferred Stock Exchange Agreement and Acknowledgement dated
      as of February 22, 2006, incorporated herein by reference to Exhibit 10.1
      to the Company’s Form 8-K dated February 24, 2006.10.2
              
              Element
      21 Golf Company 2006 Equity Incentive Plan, incorporated herein by
      reference to Annex C to the Company’s Proxy Statement Pursuant to Section
      14(a) of the Securities Exchange Act of 1934 filed on April 7,
      2006.10.3
              
              Form
      of Subscription Agreement for Shares of Series B Convertible Preferred
      Stock dated as of July 31, 2006, incorporated herein by reference to
      Exhibit 10.1 to the Company’s Form 8-K dated August 3,
    2006.10.4
              
              Form
      of Subscription Agreement for Shares of Series B Convertible Preferred
      Stock dated as of November 30, 2006, incorporated herein by reference to
      Exhibit 10.1 to the Company’s Form 8-K dated August 3,
    2006.10.5
              
              Form
      of Subscription Agreement for Shares of Series B Convertible Preferred
      Stock dated as of June 15, 2007, incorporated herein by reference to
      Exhibit 10.2 to the Company’s Form 8-K dated June 18,
  2007.10.6
              
              Form
      of Subscription Agreement for Shares of Common Stock dated as of June,
      2007, incorporated herein by reference to Exhibit 10.1 to the Company’s
      Form 8-K dated June 18, 2007.10.7
              
              License
      Agreement with Advanced Light Alloys Corporation dated as of June 21, 2007
      incorporated by reference to exhibit 10.1 to the Company’s Form 10KSB
      dated June 21, 200710.8
              
              Consulting
      Agreement with Nataliya Hearn dated as of January 4, 2006 incorporated by
      reference to exhibit 10.4 to the Company’s Form 10KSB dated October 13,
      200610.9
              
              Consulting
      Agreement with John Grippo dated as of November 10, 2005 incorporated by
      reference to exhibit 10.5 to the Company’s Form 10KSB dated October 13,
      2006


14





31.2
            
            Certification
      Pursuant to Section 302 of the Sarbanes Oxley Act of
  200232.1
            
            Certification
      Pursuant to Section 906 of the Sarbanes Oxley Act of
  200210.1
            
            Consulting
      Agreement with Nataliya Hearn dated as of January 4,
  2007.10.2
            
            Consulting
      Agreement with David Sindalovsky dated as of September 15,
      2007.10.3
            
            Consulting
      Agreement with John Grippo dated as of January 4, 2007.10.4
            
            Common
      Stock Purchase Warrant agreement with Nataliya Hearn dated as of January
      4, 2007.


15





SIGNATURE





Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.





Element
      21 Golf CompanyFebruary
      12, 2009
            By:
            /s/
       Nataliya HearnNataliya
      Hearn, Ph.D.President
      and DirectorFebruary
      12, 2009
            By:
            /s/ David
      KhazakChief
      Financial Officer


16