UNITED STATES 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 September 30, 2008
 
 Commission File Number: 000-49672
 
 ANGEL
ACQUISITION CORP.
 (Formerly
Palomar Enterprises, Inc.)
 
 
 NEVADA
              06-1588136(State
      or Other Jurisdiction of
              (IRS
      EmployerIncorporation
      or Organization)
              Identification
      Number)
 
 1802 N.
CARSON STREET, SUITE 212-3018
 CARSON CITY, NEVADA
89701
 Address
of Principal Executive Offices
 
 (775)
887-0670
 (Registrant's
Telephone Number, Including Area Code)
  (Former
name, former address and former fiscal year, if changed since last
report)
  Indicate by check mark whether the
registrant (1) filed all reports required to be filed by Section 13 or 15(d) of
the Exchange Act during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.YesxNo ̈
 
 Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company.
 
 
 Large
      accelerated
      filer           ̈
              Accelerated
      filer                        ̈Non-accelerated
      filer             ̈
              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 ̈Nox
 
  State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date:  As of October 22, 2008, the issuer
had 9,563,301shares of its common stock issued and outstanding.
  
 
  1
   INDEXPage
                NumberPART
      I - FINANCIAL INFORMATIONItem
      1. Financial Statements
              3Balance
      Sheet (Unaudited) September 30, 2008
              4Statements
      of Operations (Unaudited) Nine months ended September 30, 2008 and
      September 30, 2007
              6Statements
      of Cash Flows (Unaudited) Nine months ended September 30, 2008 and
      September 30, 2007
              7Notes
      to Financial Statements For the Nine months ended September 30, 2008 and
      September 30, 2007
              9Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operation
              14Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
              15Item
      4. Controls and Procedures
              16Item
      4. (T) Controls and Procedures
              17PART
      II - OTHER INFORMATIONItem
      1. Legal Proceedings
              18Item
      1A. Risk Factors
              18Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              18Item
      3. Defaults Upon Senior Securities
              18Item
      4. Submission of Matters to a Vote of Security Holders
              18Item
      5. Other Information
              18Item
      6. Exhibits
              18SIGNATURES
              19
 
 
 
 
 
 2
 
 
 
 
 
 PART I -
FINANCIAL INFORMATION
 
 ITEM 1.
FINANCIAL STATEMENTS.
 
 
 The
accompanying unaudited interim financial statements of Angel Acquisition
Corp (hereafter referred to as "Angel" or "registrant") have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the rules of the Securities and Exchange Commission ("SEC"), and
should be read in conjunction with the audited financial statements and notes
thereto contained in our Annual Report filed with the SEC on Form 10-KSB.
In the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year. Notes to the
financial statements which would substantially duplicate the disclosure
contained in the audited financial statements for 2007 as reported in the 10-KSB
have been omitted.
 
 
 
 
 
 
 
 
 
 
 
 
 
 3
  
 ANGEL ACQUISITION
      CORP.
                (Formerly
      Palomar Enterprises, Inc.).Balance
      Sheetas
      of September 30, 2008(unaudited)September
      30,2008ASSETS:Cash
      in Bank
              
              
              
              
              $
              5,450Notes
      Receivable-net of allowance of $720,896
              
              
              -Prepaids
      and other current assets
              
              
              -Total
      current assets
              
              
              5,450Other
      assets
              
              
              
              
              
              67,915Property,
      plant and equipment, net of accumulated depreciation of
      $135,585
              
              1,287,107GoodwillTOTAL
      ASSETS
              
              $
              1,360,472LIABILITIES AND STOCKHOLDERS'
      EQUITYLIABILITIES:Accrued
      Interest
              
              $
              307,144Accrued
      expenses
              
              
              12,203Accrued
      Derivative
              
              
              991,614Current
      portion of notes payable
              
              
              2,129,952Total
      current liabilities
              
              
              3,440,913Notes
      payable, long term
              
              
              742,398TOTAL
      LIABILITIES
              
              
              4,183,311
 
 The
accompanying notes are an integral part of these financial
statements.
 
 
 
 4
 
 
 ANGEL
      ACQUISITION CORP.
                (Formerly
      Palomar Enterprises, Inc.)Balance
      Sheet, continuedAs
      of September 30, 2008(unaudited)September
      30,2008STOCKHOLDERS' EQUITY:Series
      A preferred stock, $0.00001 par value, 10,000,000
sharesauthorized,
      9,000,000 shares issued and outstanding
              
              
              90Series
      B preferred stock, $0.00001 par value, 50,000,000 sharesauthorized,
      30,000,000 shares issued and outstanding
              
              300Series
      C preferred stock, $0.00001 par value, 30,000,000 sharesauthorized,
      no shares issued or outstanding
              
              -Common
      stock, $0.00001 par value, 25,000,000,000 sharesauthorized,
      8,977,301 shares issued and outstanding
              
              90Shares
      Subscribed
              (145,000)Additional
      paid in Capital
              
              
              15,226,957Accumulated
      Deficit
              
              
              (17,905,276)Total
      stockholders' deficit
              
              
              (2,822,839)TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              1,360,472
          
 The
accompanying notes are an integral part of these financial
statements.
 
 
  5
 
 ANGEL ACQUISITION CORP.
                (Formerly
      Palomar Enterprises, Inc.)Statements
      of OperationsFor
      the Nine Months and Three Months Ended September 30, 2008, and
      2007(unaudited)For
      the Nine Months Ended
              
              For
      the Three Months EndedSeptember
      30,
              
              September
      30,2008
              
              2007
              
              2008
              
              2007Revenue
              
              $
              187,984
              
              $
              419,528
              
              $
              48,239
              
              $
              88,361Cost
      of goods sold
              
              
              68,742
              
              
              171,405
              
              
              27,862
              
              
              50,163Gross
      profit
              
              
              119,242
              
              
              133,123
              
              
              20,377
              
              
              38,198Operating
      expenses:General
      and administrative
              
              
              924,333
              
              
              241,241
              
              
              778,298
              
              
              107,884Facilities
      and rent
              
              
              26,356
              
              
              54,810
              
              
              5,394
              
              
              24,504Consulting,
      legal and professional
              
              
              414,109
              
              
              1,055,437
              
              
              193,956
              
              
              114,161Payroll
      and related costs
              
              
              298,920
              
              
              373,413
              
              
              31,000
              
              
              215,377Total
      operating expenses
              
              
              1,663,718
              
              
              1,724,901
              
              
              1,008,648
              
              
              461,926Loss
      from  operations
              
              
              (1,544,476)
              
              
              (1,591,778)
              
              
              (988,271)
              
              
              (438,402)Other
      income or (expense)Interest
      expense
              
              
              (153,835)
              
              
              (133,711)
              
              
              (76,578)
              
              
              (35,185)Derivative
      Loss, Loss on R/E Venture
              
              
              (203,594)
              
              
              (198,389)
              
              
              (140,351)
              
              
              27,438Total
      other income or (expense)
              
              
              (357,429)
              
              
              (332,100)
              
              
              (216,929)
              
              
              (7,747)(Loss)
              
              
              (1,901,915)
              
              
              (1,923,878)
              
              
              (1,205,200)
              
              
              (446,149)Loss
      from discontinued
                Operations/gain
      on sale
              
              
              (126,572)
              
              
              (2,042,068)
              
              
              -
              
              
              (535,832)Net
      (loss)
              
              $
              (2,028,487)
              
              $
              (3,965,946)
              
              $
              (1,205,200)
              
              $
              (981,981)
              (Common
      shares outstanding – basic
              
              
              3,262,426
              
              
              1,384,484
              
              
              5,368,151
              
              642,596Net
      (loss) per share from continuing operations- basic
              
              
              (.583)
              
              
              (1.38)
              
              
              (225)
              
              (.695)Net
      (loss) per share from discontinued operations – basic
              
              
              (.038)
              
              
              (1.47)
              
              
              -
              
              (.834)Net
      loss per share
              
              $
              (.621)
              
              $
              (2.85)
              
              $
              (.225)
              $
              (1.529)
 
 The
accompanying notes are an integral part of these financial
statements.
 
 
 
 6
 
 ANGEL ACQUISITION
      CORP.
                (Formerly
      Palomar Enterprises, Inc.).Statements
      of Cash FlowsFor
      the Six Months Ended September 30, 2008 and 2007(unaudited)For
      the Nine Months EndedSeptember
      30,2008
              
              2007Cash
      flows from operating activitiesNet
      (loss) for the period
              
              $
              (1,901,915)
              
              $
              (1,923,878)Discontinued
      operations
              
              
              (126,572)
              
              
              (2,042,068)Adjustments
      to reconcile net (loss) toNet
      cash (used) by operating activities: Minority
              
              
              -
              
              
              19,038Depreciation
              
              
              21,368
              
              
              25,520Common
      stock issued for services
              
              
              223,750
              
              
              2,273,436Accrued
      Derivative liability
              
              
              393,474
              
              
              178,759Changes
      in operating assets and liabilities:Decrease
      in inventory(Increase)
      decrease in prepaid expenses/other
              
              
              50,440
              
              
              (82,559)(Increase
      ) in notes receivable
              
              
              762,996
              
              
              -Increase
      in accounts payable and accrued expenses
              
              
              93,604
              
              
              178,793Net
      cash (used) by operating activities
              
              
              (482,855)
              
              
              (1,372,959)Cash
      flows from investing activitiesPurchase
      of property and equipment/sale/net
              
              
              -
              
              
              26,635Cash
      portion on sale of subsidiary
              
              
              463,000
              
              
              -Net
      cash (used) by investing activities
              
              
              463,000
              
              
              26,635Cash
      flows from financing activitiesProceeds
      from note payable/net of repayments
              
              
              53,898
              
              
              563,635Shares
      issued for debt reduction
              
              
              26,066
              
              
              (88,434)stock
      subscribed
              
              
              (71,951)
              
              
              1,032,585Cash
      overdraft
              
              
              -
              
              
              -Net
      cash provided by financing activities
              
              
              8,013
              
              
              1,507,877Net
      increase (decrease) in cash
              
              
              (11,842)
              
              
              161,553Cash
      – beginning
              
              
              17,292
              
              
              35,187Cash
      – ending
              
              $
              5,450
              
              $
              196,740
 
 The
accompanying notes are an integral part of these financial
statements.
 
 
 7
 
 
 
 ANGEL
      ACQUISITION CORP.
                (Formerly
      Palomar Enterprises, Inc.).Consolidated
      Statements of Cash Flows, continuedFor
      the Nine Months Ended September 30, 2008 and 2007(unaudited)For
      the Nine Months Ended
                September
      30,2008
              2007Supplemental
      disclosures:Interest
      paid
              
              $
              75,071
              
              $
              57,843Income
      taxes paid
              
              $
              -
              
              $
              -Non-cash
      investing and financing activities:Common
      stock issued for services
              
              $
              223,750
              
              $
              2,273,436
 
                
 The
accompanying notes are an integral part of these financial
statements.
 
 
 8
 
 ANGEL ACQUISTION CORP.
  NOTES
TO UNAUDITED FINANCIAL STATEMENTS
  FOR
THE PERIOD ENDED SEPTEMBER 30, 2008
  NOTE
A - ORGANIZATION AND DESCRIPTION OF BUSINESS
  Palomar
Enterprises, Inc. formerly the Company was incorporated on March 10, 1999 in
accordance with the laws of the State of Nevada.
  On
February 5, 2008 Palomar changed its name to Angel Acquisition Corp to properly
reflect the change in business direction.
  The
Company assists private companies in the process of going public as well as
being a licensed mortgage broker and developer.
  In April,
2008, the Board of Directors authorized the disposition of its ninety eight
percent interest in The Blackhawk Fund.  As a result, the Company is
accounting for the operations of The Blackhawk Fund as discontinued operations
in the accompanying financial statements.  The Company has
reclassified prior periods to conform to the current period
  NOTE
B - PREPARATION OF FINANCIAL STATEMENTS
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
  Management
further acknowledges that it is solely responsible for adopting sound accounting
practices, establishing and maintaining a system of internal accounting control
and preventing and detecting fraud. The Company's system of internal accounting
control is designed to assure, among other items, that 1) recorded transactions
are valid; 2) valid transactions are recorded; and 3) transactions are recorded
in the proper period in a timely manner to produce financial statements which
present fairly the financial condition, results of operations and cash flows of
the Company for the respective periods being presented The Company is in the
real estate development and mortgage business employing 13 real estate
brokers.
  NOTE
C - GOING CONCERN UNCERTAINTY
  The
Company has been unable to generate sufficient operating revenues and has
incurred operating losses.
  The
Company is operating as a mortgage broker and real estate developer. However,
the Company is dependent upon the available cash on hand and either future sales
of securities or upon its current management and/or advances or loans from
controlling shareholders or corporate officers to provide sufficient working
capital.
  The
Company has now changed its direction and while continuing in the mortgage
business is now concentrating on taking private companies public.
  There is
no assurance that the Company will be able to obtain additional funding through
the sales of additional securities or, that such funding, if available, will be
obtained on terms favorable to or affordable by the Company. It is the intent of
management and controlling shareholders to provide sufficient working capital
necessary to support and preserve the integrity of the corporate
entity.
  However,
there is no legal obligation for either management and/or controlling
shareholders to provide such additional funding.
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.
  The
financial statements do not include any adjustments that might result from this
uncertainty.
    9
  NOTE
D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  1. Cash
and cash equivalents
  The
Company considers all cash on hand and in banks, including accounts in book
overdraft positions, certificates of deposit and other highly- liquid
investments with maturities of three months or less, when purchased, to be cash
and cash equivalents.
  2. Basis
of Presentation
  In April
of 2008 the Company sold its subsidiary the Blackhawk Fund. .(See Note J –
Discontinued Operations
  On
February 5, 2008 the Company effectuated a 300 to 1 reverse stock split-all
financial statements have been retroactively stated to record this reverse
split.
  3.
Research and development expenses
  Research
and development expenses are charged to operations as incurred. There were no
research and development costs incurred in the periods.
  4.
Advertising expenses
  Advertising
and marketing expenses are charged to operations as incurred. Advertising
expenses for the periods ending September 30, 2008 was $24,614.
  5.
Revenue recognition
  The
Company generates revenue from the sale of real estate, brokerage commissions,
rental properties and mortgage loan originations. Revenues from real estate
sales and commissions are recognized on execution of the sales contract. The
Company records gross commissions on the sales of properties closed. The Company
pays the broker of record five percent of all transactions and 100 percent of
personal sales. This is in accordance with standard procedures. The Company
compensates its independent agents on a sliding scale between 70 and 80 percent
based on productivity. The Company also recognizes sales when it sells
properties that have been held for sale when their renovation is complete.
Revenue is recognized at "closing".
  The
Company has not recognized any revenue form its new business plan.
  6. Income
Taxes
  The
Company utilizes the asset and liability method of accounting for income taxes.
Temporary differences represent differences in the recognition of assets and
liabilities for tax and financial reporting purposes, primarily accumulated
depreciation and amortization.
  As of
December 31, 2007, the deferred tax asset is related solely to the Company's net
operating loss carry forward and is fully reserved.
  7.
Earnings (loss) per share
  Basic
earnings (loss) per share are computed by dividing the net income (loss) by the
weighted-average number of shares of common stock and common stock equivalents
(primarily outstanding options and warrants). Common stock equivalents represent
the dilutive effect of the assumed exercise of the outstanding stock options and
warrants, using the treasury stock method. The calculation of fully diluted
earnings (loss) per share assumes the dilutive effect of the exercise of
outstanding options and warrants at either the beginning of the respective
period presented or the date of issuance, whichever is later. As of September
30, 2008, the Company's outstanding warrants are considered
anti-dilutive.
  
 10
  8. Use of
Estimates
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the accounting period. Actual results could differ from those
estimates.
  RECENT
ACCOUNTING PRONOUNCEMENTS
 
 In July
2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprises' financial statements in accordance
with SFAS No. 109, "Accounting for Income Taxes". FIN 48 prescribes a
recognition threshold and measurement attributable for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. FIN 48 also provides guidance on derecognizing, classification,
interest and penalties, accounting in interim periods, disclosures and
transitions. FIN 48 is effective for fiscal years beginning after December 15,
2006. The Company is  currently reviewing the effect, if any, FIN 48
will have on its financial position and operations.
 
 In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measures" ("SFAS No.
157"). SFAS No157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles ("GAAP"), expands disclosures
about fair value measurements, and applies under other accounting pronouncements
that require or permit fair value measurements. SFAS No. 157 does not require
any new fair value measurements, however the FASB anticipates that for some
entities, the application of SFAS No. 157 will change current practice. SFAS No.
157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, which for the Company would be its fiscal year
beginning November 1, 2008. The implementation of SFAS No. 157 is not expected
to have a material impact on the Company's results of operations and financial
condition.
 
 In
September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 158, "Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and
132(R)". This statement requires employers to recognize the overfunded or
underfunded status of a defined benefit postretirement plan (other than a
multi-employer plan) as an asset or liability in its statement of financial
position and to recognize changes in that funded status in the year in which the
changes occur through comprehensive income of a business entity or changes in
unrestricted net assets of a not-for-profit organization. This statement also
requires an employer to measure the funded status of a plan as of the date of
its year-end statement of financial position, with limited exceptions. The
provisions of SFAS No. 158 are effective for employers with publicly traded
equity securities as of the end of the fiscal year ending after December 15,
2006. The adoption of this statement is not expected to have a material effect
on the Company's future reported financial position or results of
operations.
 
 In
September 2006, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 108 (Topic 1N), "Quantifying Misstatements in Current
Year Financial Statements" ("SAB No. 108"). SAB No. 108 addresses how the effect
of prior year uncorrected misstatements should be considered when quantifying
misstatements in current year financial statements. SAB No. 108 requires SEC
registrants (i) to quantify misstatements using a combined approach which
considers both the balance sheet and income statement approaches; (ii) to
evaluate whether either approach results in quantifying an error that is
material in light of relevant quantitative and qualitative factors; and (iii) to
adjust their financial statements if the new combined approach results in a
conclusion that an error is material. SAB No. 108 addresses the mechanics of
correcting misstatements that include effects from prior years. It indicates
that the current year correction of a material error that includes prior year
effects may result in the need to correct prior year financial statements even
if the misstatement in the prior year or years is considered immaterial. Any
prior year financial statements found to be materially misstated in years
subsequent to the issuance of SAB No. 108 would be restated in accordance with
SFAS No. 154, "Accounting Changes and Error Corrections." Because the combined
approach represents a change in practice, the SEC staff will not require
registrants that followed an acceptable approach in the past to restate prior
years' historical financial statements. Rather, these registrants can report the
cumulative effect of adopting the new approach as an adjustment to the current
year's beginning balance of retained earnings. If the new approach is adopted in
a quarter other than the first quarter, financial statements for prior interim
periods within the year of adoption may need to be restated. SAB No. 108 is
effective for fiscal years ending after November 15, 2006, which for Company
would be its fiscal year beginning December 1, 2007. The implementation of SAB
No. 108 is not expected to have a material impact on the Company's results of
operations and financial condition.
  NOTE
E - FAIR VALUE OF FINANCIAL INSTRUMENTS
  The
carrying amount of cash, notes receivable, accounts payable, accrued liabilities
and notes payable, as applicable, approximates fair value due to the short-term
nature of these items. The fair value of the related party notes payable cannot
be determined because of the Company's affiliation with the parties with whom
the agreements exist. The use of different assumptions or methodologies may have
a material effect on the estimates of fair values.
     11
  NOTE
F - RELATED PARTY TRANSACTIONS
  Company
pays consulting fees to the two officer's companies for management services. The
consulting fees totaled $282,500 for the period ended September 30,
2008.  The Company is also a 50% partner with one of its shareholders
in a property. All expenses are divided equally.
 
 NOTE
G – PROPERTY
 Property
and equipment consisted of the following at September 30, 2008:
 
 Building
              $            1,395,612Office
      equipment
              27,080Total
              1,422,692Less:
      Accumulated depreciation
              (135,585)Property
      & equipment, net
              $            1,287,107
 
 Assets
are being depreciated from five to forty years using the straight line
method.
  NOTE
H - NOTES PAYABLE
  Notes
payable at September 30, 2008 are comprised of the following:
 
 Note
      payable to lending institution, original balance of $980,000 interest at
      7.5% per annum. Requires monthly principal and interest payments of 6,852
      through 2034. Collateralized by building.
              $        767,898Convertible
      debentures payable to an investor group, interest at 8% due no later than
      March 2009.
              1,216,154Convertible
      note to investors due short term 20% interest 7.88% and 9.25% over prime
      interest only for the first ten years then amortized over 360
      months.
              65,000Credit
      line from a bank up to 500,000 interest only at one percent over
      prime.
              498,298Convertible
      debenture, interest 8%, past due
              325,000Total
              $            2,872,350Less
      current portion
              2,129,952Total
      long-term portion
              $               742,398
 
 NOTE
I - LEASES
  Our lease
at 120 Birmingham Dr. # 110-G Cardiff, CA. 92007 costs $975 per month. We are
also a party to a lease agreement with Ikon Financial Services. We lease a
copier from Ikon Financial Services for a price of $445 per month.
   12
  NOTE J - DISCONTINUED
OPERATIONS
  In April
2008 the Company authorized the disposal of its ninety eight percent interest in
The Blackhawk Fund.  The Company sold the stock in its subsidiary to
an unrelated third party for $463,000, consisting of $463,000 in cash. The
company recognized a gain on the sale of $85,752. Included in notes receivable
is an amount due from the former subsidiary of $720,896 due without interest
upon demand, which has been reserved for in full as doubtful to collect at
September 30, 2008
  Income
(loss) from discontinued operations consists of direct revenues and direct
expenses of The Blackhawk Fund.  A summary of the operating results
included in discontinued operations in the accompanying statement of operations
is a follows:
  Three
      Months Ended
              
              Nine
      Months EndedSeptember
      30,
              
              September
      30,2008
              
              2007
              
              2008
              
              2007Revenues
              $        -
              
              $     38,145
              
              $     15,200
              
              $     313,073Cost
      of goods sold
              -
              
              17,072
              
              -
              
              251,303Gross
      profit
              -
              
              21,073
              
              -
              
              61,770Operating
      expenses
              -
              
              (554,605)
              
              (229,690)
              
              2,018,517Loss
      from operations
              -
              
              (533,532)
              
              (214,490)
              
              (1,956,747)Other
      expense
              -
              
              (2,300)
              
              (44,417)
              
              (89,321)Net
      loss
              $     -
              
              $     (535,832)
              
              $  (258,907)
              
              $(2,042,068)
  NOTE
K - DERIVATIVE LIABILITY
 
 The
Company is accounting for the conversion option in the Convertible Note and the
conversion price in the Securities Purchase Agreement and the associated
warrants as derivative liabilities in accordance with SFAS 133, “Accounting for
Derivative Instruments and Hedging Activities” and EITF 00-19 “Accounting for
Derivative Financial Instruments Indexed to and Potentially Settled in a
Company’s Own Stock” due to the fact that the conversion feature and the
warrants both have a variable conversion price.
  The fair
value of the Convertible Note was determined utilizing the Black-Scholes stock
option valuation model.  The significant assumptions used in the
valuation are:  the exercise price as noted above; the stock price as
of September 30, 2008; expected volatility of 66%; risk free interest rate of
approximately 4.50%; and a term of one year.
  NOTE
L - COMMON STOCK TRANSACTIONS
  On
December 31, 2007 the Company had 261,748,758 shares issued. It then issued
3,747,142 shares to February 5, 2008 which then totaled 258,495,900 shares. On
February 6, 2008 the company effectuated a reverse stock split of 300 to 1 which
then resulted in 861,653 shares. The company subsequently issued 565,000 shares
for services valued at $63,750 and 12,548 shares for debt of $3,900 during the
first quarter of 2008.
  In the
second quarter of 2008 the Company issued 200,000 shares of stock for services
of $10,000 and 119,800 shares of stock for a reduction of debt of
$5,153.
  In the
third quarter of 2008 the Company issued 7,218,300 shares of stock 1,218,300 for
debt of $17,013 and 6,000,000 for services of $150,000.
   13
  ITEM 2. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  FORWARD-LOOKING
STATEMENT
  Much of
the discussion in this Item is "forward looking" as that term is used in Section
27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934. Actual operations and results may materially differ from present plans and
projections due to changes in economic conditions, new business opportunities,
changed business conditions, and other developments. Other factors that could
cause results to differ materially are described in our filings with the
Securities and Exchange Commission.
  There are
several factors that could cause actual results or events to differ materially
from those anticipated, and include, but are not limited to general economic,
financial and business conditions, changes in and compliance with governmental
laws and regulations, including various state and federal environmental
regulations, our ability to obtain additional financing from outside investors
and/or bank and mezzanine lenders and our ability to generate sufficient
revenues to cover operating losses and position us to achieve positive cash
flow. Readers are cautioned not to place undue reliance on the forward- looking
statements contained herein, which speak only as of the date hereof. We believe
the information contained in this Form 10-QSB to be accurate as of the date
hereof. Changes may occur after that date. We will not update that information
except as required by law in the normal course of its public disclosure
practices. Additionally, the following discussion regarding our financial
condition and results of operations should be read in conjunction with the
financial statements and related notes contained in Item 1 of Part I of this
Form 10-Q, as well as the financial statements in Item 7 of Part II of our Form
10-K for the fiscal year ended, December 31, 2007.
  OVERVIEW
  We
provide brokerage services in the real estate market, as well as purchase,
renovate, develop and sell residential properties. We are also embarking on a
new business plan that will be a micro-financing resource for small
businesses.
 
 RESULTS
OF OPERATIONS:
 
 Three
months ended September 30, 2008 compared to the three months ended September 30,
2007:
 
 Total net
sales and revenue were at $48,239 for the three months ending September 30, 2008
compared to $ 88,361 for the prior period. This represents a
decrease of   45.4 percent mainly due to the lack of
residential sales in 2008.
 
 Total
operating expenses for the three months ended September 30, 2008 were $1,008,648
compared to $ 461,926 for the same period in 2007 The increase is attributable
to a write off of a note receivable to bad debt of $762,996..
 
 Net loss
from operations the period ending September 30, 2008 was $
1,205,200 compared to a net loss for the prior period in 2007 which
was$446,149.
 
 Interest
expense, net for the three months ending September 30, 2008 was $ 76,578. The
interest expense for the prior period in 2007 was $35,185
 
 Nine
months ended September 30, 2008 compared to the nine months ended September 30,
2007:
 
 Total net
sales and revenues were at $187,984 for the nine months ended September 30, 2008
compared to $419,528 for the prior period. Lack of residential sales was the
reason for the decrease
 
 Total
operating expenses for the nine months ended September 30, 2008 were
$1,663,718compared to 2007, which were $.1,724,901. The prior year we incurred
higher stock for services cost.
 
 Net loss
from operations was $ 1,544,476 for the nine month period ending September 30,
2008, compared to a loss of $1,581,778 for the same period in 2007.
 
 Interest
expense, net for the nine months ended September 30, 2008 was $ 153,835 compared
to 133,711
   14
 
 LIQUIDITY
AND CAPTIAL RESOURCES:
 
 As of
September 30, 2008 we had a deficiency in working capital of
$3,425,463
 
 CRITICAL
ACCOUNTING POLICIES
 
 The
preparation of our consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires us to
make estimates and judgments that affect our reported assets, liabilities,
revenues, and expenses, and the disclosure of contingent assets and liabilities.
We base our estimates and judgments on historical experience and on various
other assumptions we believe to be reasonable under the circumstances. Future
events, however, may differ markedly from our current expectations and
assumptions. While there are a number of significant accounting policies
affecting our consolidated financial statements, we believe the following
critical accounting policy involve the most complex, difficult and subjective
estimates and judgments.
 
 OFF-BALANCE
SHEET ARRANGEMENTS.
 
 We do not
have any off-balance sheet arrangements.
 
 ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
 
 We
Have Historically Lost Money and Losses May Continue in the Future
 
 We have
historically lost money.   The loss for the 2007 fiscal year was
$4,512,111 and future losses are likely to occur.  Accordingly, we may
experience significant liquidity and cash flow problems if we are not able to
raise additional capital as needed and on acceptable terms.  No
assurances can be given we will be successful in reaching or maintaining
profitable operations.
 
 We
Will Need to Raise Additional Capital to Finance Operations
 
 Our
operations have relied almost entirely on external financing to fund our
operations.  Such financing has historically come from a combination
of borrowings and from the sale of common stock and assets to third
parties.  We will need to raise additional capital to fund our
anticipated operating expenses and future expansion.  Among other
things, external financing will be required to cover our operating
costs.  We cannot assure you that financing whether from external
sources or related parties will be available if needed or on favorable
terms.  The sale of our common stock to raise capital may cause
dilution to our existing shareholders.  Our inability to obtain
adequate financing will result in the need to curtail business
operations.  Any of these events would be materially harmful to our
business and may result in a lower stock price.
 
 There
is Substantial Doubt About Our Ability to Continue as a Going Concern Due to
Recurring Losses and Working Capital Shortages, Which Means that We May Not Be
Able to Continue Operations Unless We Obtain Additional Funding
 
 The
report of our independent accountants on our December 31, 2007 financial
statements include an explanatory paragraph indicating that there is substantial
doubt about our ability to continue as a going concern due to recurring losses
and working capital shortages.  Our ability to continue as a going
concern will be determined by our ability to obtain additional
funding.  Our financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
 
 Our
Common Stock May Be Affected By Limited Trading Volume and May Fluctuate
Significantly
 
 There has
been a limited public market for our common stock and there can be no assurance
that an active trading market for our common stock will develop.  As a
result, this could adversely affect our shareholders' ability to sell our common
stock in short time periods, or possibly at all.  Our common stock has
experienced, and is likely to experience in the future, significant price and
volume fluctuations that could adversely affect the market price of our common
stock without regard to our operating performance.  In addition, we
believe that factors such as quarterly fluctuations in our financial results and
changes in the overall economy or the condition of the financial markets could
cause the price of our common stock to fluctuate substantially. Substantial
fluctuations in our stock price could significantly reduce the price of our
stock.
    
 15
  There
is no Assurance of Continued Public Trading Market and Being a Low Priced
Security may Affect the Market Value of Our Stock
  To date,
there has been only a limited public market for our common stock. Our common
stock is currently quoted on the OTCBB. As a result, an investor may find it
difficult to dispose of, or to obtain accurate quotations as to the market value
of our stock. Our stock is subject to the low-priced security or so called
"penny stock" rules that impose additional sales practice requirements on
broker-dealers who sell such securities. The Securities Enforcement and Penny
Stock Reform Act of 1990 requires additional disclosure in connection with any
trades involving a stock defined as a penny stock (generally, according to
recent regulations adopted by the SEC, any equity security that has a market
price of less than $5.00 per share, subject to certain exceptions that we no
longer meet). For example, brokers/dealers selling such securities must, prior
to effecting the transaction, provide their customers with a document that
discloses the risks of investing in such securities. Included in this document
are the following:
  -
the bid and offer price quotes in and for the "penny stock," and the number of
shares to which the quoted prices apply,
  - the
brokerage firm's compensation for the trade, and
  - the
compensation received by the brokerage firm's sales person for the
trade.
  In
addition, the brokerage firm must send the investor:
  - a
monthly account statement that gives an estimate of the value of each "penny
stock" in the investor's account, and
  - a
written statement of the investor's financial situation and investment
goals.
  If the
person purchasing the securities is someone other than an accredited investor or
an established customer of the broker/dealer, the broker/dealer must also
approve the potential customer's account by obtaining information concerning the
customer's financial situation, investment experience and investment objectives.
The broker/dealer must also make a determination whether the transaction is
suitable for the customer and whether the customer has sufficient knowledge and
experience in financial matters to be reasonably expected to be capable of
evaluating the risk of transactions in such securities. Accordingly, the
Commission's rules may limit the number of potential purchasers of the shares of
our common stock.
  Resale
restrictions on transferring "penny stocks" are sometimes imposed by some
states, which may make transaction in our stock more difficult and may reduce
the value of the investment. Various state securities laws pose restrictions on
transferring "penny stocks" and as a result, investors in our common stock may
have the ability to sell their shares of our common stock impaired.
  There can
be no assurance we will have market makers in our stock. If the number of market
makers in our stock should decline, the liquidity of our common stock could be
impaired, not only in the number of shares of common stock which could be bought
and sold, but also through possible delays in the timing of transactions, and
lower prices for the common stock than might otherwise prevail. Furthermore, the
lack of market makers could result in persons being unable to buy or sell shares
of the common stock on any secondary market.
  We
Could Fail to Retain or Attract Key Personnel
 
 Our
future success depends in significant part on the continued services of Steve
Bonenberger, our Chief Executive Officer.  We cannot assure you we
would be able to find an appropriate replacement for key
personnel.  Any loss or interruption of our key personnel's services
could adversely affect our ability to develop our business plan.  We
have no employment agreements or life insurance on Mr. Bonenberger.
 
 Nevaeda
Law and Our Charter May Inhibit a Takeover of Our Company That Stockholders May
Consider Favorable
 
 Provisions
of Nevada law, such as its business combination statute, may have the effect of
delaying, deferring or preventing a change in control of our
company.  As a result, these provisions could limit the price some
investors might be willing to pay in the future for shares of our common
stock.
 
 ITEM 4. CONTORLS AND PROCEDURES
 
 Evaluation of Disclosure
Controls and Procedures
 
 We
maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) that are designed to be effective in providing reasonable assurance that
information required to be disclosed in our reports under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the Securities and Exchange Commission (the “SEC”),
and that such information is accumulated and communicated to our management to
allow timely decisions regarding required disclosure.
    
 16
  In
designing and evaluating disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable, not absolute assurance of achieving the
desired objectives. Also, the design of a control system must reflect the fact
that there are resource constraints and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, have been detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty and that breakdowns can occur because of simple error or mistake. The
design of any system of controls is based, in part, upon certain assumptions
about the likelihood of future events and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions.
 
 As of the
end of the period covered by this report, we carried out an evaluation, under
the supervision and with the participation of management, including our chief
executive officer and principal financial officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based upon that
evaluation, management concluded that our disclosure controls and procedures are
effective as of September 30, 2008 to cause the information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods prescribed
by SEC, and that such information is accumulated and communicated to management,
including our chief executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required
disclosure.
 
 ITEM
4(T). CONTROLS AND PROCEDURES
 
 Evaluation of and Report on
Internal Control over Financial Reporting
 The
management of Angel Acquisition Corp. is responsible for establishing and
maintaining adequate internal control over financial reporting. Internal control
over financial reporting is defined in Rule 13a-15(f) or 15d-15(f)
promulgated under the Securities Exchange Act of 1934 as a process designed by,
or under the supervision of, the company’s principal executive and principal
financial officers and effected by the company’s board of directors, management
and other personnel, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America and includes those policies and procedures that:
 −
              Pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of the assets of the
      company;−
              Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with accounting
      principles generally accepted in the United States of America and that
      receipts and expenditures of the company are being made only in accordance
      with authorizations of management and directors of the
      company; and−
              Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the company’s assets that
      could have a material effect on the financial
  statements.
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
  Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of September 30, 2008. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated Framework.
  Based on
its assessment, management concluded that, as of September 30, 2008, the
Company’s internal control over financial reporting is effective based on those
criteria.
  This
quarterly does not include an attestation report of the Company’s registered
accounting firm regarding internal control over financial reporting. 
Management’s report is not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission.
 Changes in Internal Control
over Financial Reporting
 
 There was
no change in our internal controls over financial reporting identified in
connection with the requisite evaluation that occurred during our last fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
   
 17
  PART
II - OTHER INFORMATION
 
 ITEM 1. LEGAL
PROCEEDINGS.
 
 None.
 
 ITEM 1A. RISK
FACTORS
 
 In
addition to the other information set forth in this report, you should carefully
consider the risks and other factors set forth and discussed in our Annual
Report on Form 10-KSB for the year ended December 31, 2007 and our initial
registration statement on Form SB-2, which could materially affect our business,
financial condition or future results. Our projected risks, as outlined in both
our Annual Report and registration statement on Form SB-2 have not substantially
or materially changed and are, therefore, not restated here. These risks may not
the only risks facing our Company. Additional risks and uncertainties not
currently known to us or that we currently deem to be immaterial also may
materially adversely affect our business, financial condition and/or operating
results.
 
 ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
 
 In the third quarter of 2008 the Company issued
7,218,300 shares of stock 1,218,300 for debt of $17,013 and 6,000,000 for
services of $150,000. The shares were issued based upon the exemption from
registration found in Section 4(2) of the Securities Act.
  ITEM
3. DEFAULTS 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
                NUMBER
              DESCRIPTION OF EXHIBIT31.1
              Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Sec.1350, as adopted
      pursuant   to Sec.302 of the Sarbanes-Oxley Act of
    2002.
 
 31.2
              Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Sec.1350, as adopted
      pursuant to   Sec.302 of the Sarbanes-Oxley Act of
    2002
 
 32.1
              Certification
      of Chief Executive Officer, pursuant to 18 U.S.C. Sec.1350, as adopted
      pursuant   to Sec.906 of the Sarbanes-Oxley Act of
    2002.
 
 32.2
              Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Sec.1350, as adopted
      pursuant to   Sec.906 of the Sarbanes-Oxley Act of
    2002.
 
  18
  
 
 SIGNATURES
 
 In
accordance with the requirements of the Exchange Act, the Registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 ANGEL ACQUISITION
CORP.
  Dated:
November 4, 2008
  By
/s/ Steve
Bonenberger
 Steve
Bonenberger, President, Chief
 Executive
Officer and Director
  Dated:
November 4, 2008
 By:
/s/ Brent
Fouch
 Brent
Fouch, Treasurer, Chief
 Financial
Officer and Director
 
 
 
        
  19