UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


____________________





FORM
10-Q





(Mark
One)





x
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
quarterly period ended November 30, 2008





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the transition period from
___________to___________





Commission
file number 333-127953








OCTILLION
CORP.


(Exact
name of registrant as specified in its charter)





Nevada
              59-3509694(State or other
      jurisdiction of incorporation
      or organization)
              (I.R.S. Employer
      Identification
      No.)1050
      Connecticut Avenue NW, 10th
      Floor
              20036Washington,
      DC
              (Zip
      Code)(Address
      of principal executive offices)





(800)
213-0689


(Registrant’s
telephone number, including area code)





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




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





Large
      accelerated filer
                  
                  o
                  
                  Accelerated
      filer
                  oNon-accelerated
      filer (Do not check if a smaller reporting company)
                  
                  o
                  
                  Smaller
      reporting company
                  x







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




Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 57,754,600 shares of Common Stock, par
value $0.001, were outstanding on January 1, 2009.













OCTILLIONCORP.


FORM
10-Q





For
the Quarterly Period Ended November 30, 2008





Table
of Contents








PART
      I    FINANCIAL INFORMATIONItem
      1.
                Consolidated Financial Statements
    (Unaudited).Consolidated Balance Sheets (Unaudited)
                3Consolidated Statements of Operations
      (Unaudited)
                4Consolidated Statement of Stockholders’ Equity (Deficit)
      (Unaudited)
                5Consolidated Statements of Cash Flows
      (Unaudited)
                6Notes to the Consolidated Financial Statements
      (Unaudited)
                7Item
      2.
                Management's Discussion and Analysis of Financial Condition and
      Results of Operations.
                15Item
      4T.
                Controls and Procedures.
                22PART
      II   OTHER INFORMATIONItem
      1.
                Legal Proceedings.
                23Item
      2.
                Unregistered Sales of Equity Securities and Use of
      Proceeds.
                23Item
      3.
                Defaults Upon Senior Securities.
                23Item
      4.
                Submission of Matters to a Vote of Security
      Holders.
                23Item
      5.
                Other Information.
                23Item
      6.
                Exhibits.
                23SignaturesCertifications




Table of Contents





PARTI— FINANCIAL
INFORMATION





Item 1. Consolidated
Financial Statements (Unaudited)






OCTILLION
      CORP.(A
      Development Stage Company)CONSOLIDATED
      BALANCE SHEETS(Expressed
      in U.S. Dollars)(Unaudited)November
      30,
                                      
                                      
                                      August
      31,2008
                                      
                                      
                                      2008ASSETSCurrent
      assetsCash
      and cash equivalents
                                      
                                      $
                                      2,721,329
                                      
                                      
                                      $
                                      2,992,010Deferred
      research and development costs
                                      
                                      
                                      140,519
                                      
                                      
                                      
                                      140,519Prepaid
      expenses and other current assets
                                      
                                      
                                      3,029
                                      
                                      
                                      
                                      500Total
      current assets
                                      
                                      
                                      2,864,877
                                      
                                      
                                      
                                      3,133,029Fixed
      assets, net of accumulated depreciation of $0 and $2,659
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Total
      assets
                                      
                                      $
                                      2,864,877
                                      
                                      
                                      $
                                      3,133,029LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                                      
                                      $
                                      41,559
                                      
                                      
                                      $
                                      35,331Accrued
      liabilities
                                      
                                      
                                      166,942
                                      
                                      
                                      
                                      156,109Total
      liabilities
                                      
                                      
                                      208,501
                                      
                                      
                                      
                                      191,440Stockholders'
      equityPreferred
      stock: $0.10 par value; 1,000,000 shares authorized, no shares issued and
      outstanding
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Common
      stock: $0.001 par value; 100,000,000 shares authorized,57,754,600 shares
      issued and outstanding at November 30, 2008 and August 31,
      2008
                                      
                                      
                                      57,755
                                      
                                      
                                      
                                      57,755Additional
      paid-in capital
                                      
                                      
                                      7,419,410
                                      
                                      
                                      
                                      10,986,585Accumulated
      other comprehensive income
                                      
                                      
                                      59,704
                                      
                                      
                                      
                                      10,693Deficit
      accumulated during the development stage
                                      
                                      
                                      (4,880,493
                                      )
                                      
                                      
                                      (8,113,444
                                      )Total
      stockholders' equity
                                      
                                      
                                      2,656,376
                                      
                                      
                                      
                                      2,941,589Total
      liabilities and stockholders' equity
                                      
                                      $
                                      2,864,877
                                      
                                      
                                      $
                                      3,133,029(The
      accompanying notes are an integral part of these consolidated financial
      statements)


3
 Table of Contents




OCTILLIONCORP.(A
      Development Stage Company)CONSOLIDATED
      STATEMENTS OF OPERATIONSFOR
      THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007, AND FOR
    THEPERIOD
      FROM INCEPTION (MAY 5, 1998) TO NOVEMBER 30, 2008(Expressed
      in U.S. Dollars)(Unaudited)CumulativeMay
      5, 1998
                                      
                                      
                                      Three
      Months Ended(inception)
      to
                                      
                                      
                                      November
      30,November
      30, 2008
                                      
                                      
                                      2008
                                      
                                      
                                      2007Revenue
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Operating
      (income) expenseInvestor
      relations
                                      
                                      
                                      2,150,325
                                      
                                      
                                      
                                      10,800
                                      
                                      
                                      
                                      378,910Wages
      and benefits
                                      
                                      
                                      546,900
                                      
                                      
                                      
                                      (3,418,560
                                      )
                                      
                                      
                                      958,366Management
      fees - related party
                                      
                                      
                                      209,627
                                      
                                      
                                      
                                      6,553
                                      
                                      
                                      
                                      -Professional
      fees
                                      
                                      
                                      486,706
                                      
                                      
                                      
                                      60,790
                                      
                                      
                                      
                                      18,065Research
      and development
                                      
                                      
                                      459,177
                                      
                                      
                                      
                                      22,250
                                      
                                      
                                      
                                      78,054Travel
      and entertainment
                                      
                                      
                                      255,025
                                      
                                      
                                      
                                      22,378
                                      
                                      
                                      
                                      28,361Other
      operating expenses
                                      
                                      
                                      242,028
                                      
                                      
                                      
                                      16,375
                                      
                                      
                                      
                                      28,873Total
      operating (income) expense
                                      
                                      
                                      4,349,788
                                      
                                      
                                      
                                      (3,279,414
                                      )
                                      
                                      
                                      1,490,629Operating
      income (loss)
                                      
                                      
                                      (4,349,788
                                      )
                                      
                                      
                                      3,279,414
                                      
                                      
                                      
                                      (1,490,629
                                      )Other
      income (expense)Interest
      income
                                      
                                      
                                      98,035
                                      
                                      
                                      
                                      7,196
                                      
                                      
                                      
                                      12,904Interest
      expense
                                      
                                      
                                      (10,841
                                      )
                                      
                                      
                                      (106
                                      )
                                      
                                      
                                      -Loss
      on disposal of fixed assets
                                      
                                      
                                      (5,307
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Foreign
      exchange gain (loss)
                                      
                                      
                                      (80,495
                                      )
                                      
                                      
                                      (53,553
                                      )
                                      
                                      
                                      2,211Payable
      forgiven
                                      
                                      
                                      30,000
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Total
      other income (expense)
                                      
                                      
                                      31,392
                                      
                                      
                                      
                                      (46,463
                                      )
                                      
                                      
                                      15,115Income
      (loss) from continuing operations
                                      
                                      
                                      (4,318,396
                                      )
                                      
                                      
                                      3,232,951
                                      
                                      
                                      
                                      (1,475,514
                                      )Loss
      from discontinued operations
                                      
                                      
                                      (162,097
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Net
      income (loss)
                                      
                                      $
                                      (4,480,493
                                      )
                                      
                                      $
                                      3,232,951
                                      
                                      
                                      $
                                      (1,475,514
                                      )Net
      income (loss) per share:Continuing
      operations
                                      
                                      
                                      
                                      
                                      
                                      $
                                      0.056
                                      
                                      
                                      $
                                      (0.027
                                      )Discontinued
      operations
                                      
                                      
                                      
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -$
                                      0.056
                                      
                                      
                                      $
                                      (0.027
                                      )Weighted
      average number ofcommon shares outstanding:Basic
      and diluted
                                      
                                      
                                      
                                      
                                      
                                      
                                      57,754,600
                                      
                                      
                                      
                                      53,864,600(The
      accompanying notes are an integral part of these consolidated financial
      statements)





4
 Table of Contents




OCTILLIONCORP.(A
      Development Stage Company)CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)FROM
      MAY 5, 1998 (INCEPTION) TO NOVEMBER 30, 2008(Expressed
      in U.S. Dollars)(Unaudited)DeficitAccumulated
                                                                
                                                                
                                                                accumulatedAdditional
                                                                
                                                                
                                                                other
                                                                
                                                                
                                                                during
      the
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                TotalPreferred
      Stock
                                                                
                                                                
                                                                Common
      Stock
                                                                
                                                                
                                                                paid-in
                                                                
                                                                
                                                                comprehensive
                                                                
                                                                
                                                                development
                                                                
                                                                
                                                                Comprehensive
                                                                
                                                                
                                                                stockholders'Shares
                                                                
                                                                
                                                                Amount
                                                                
                                                                
                                                                Shares
                                                                
                                                                
                                                                Amount
                                                                
                                                                
                                                                capital
                                                                
                                                                
                                                                income
      (loss)
                                                                
                                                                
                                                                stage
                                                                
                                                                
                                                                income
      (loss)
                                                                
                                                                
                                                                equity
      (deficit)Restricted
      common stock issued to related parties for management services at $0.003
      per share
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                $
                                                                -
                                                                
                                                                
                                                                
                                                                9,000,000
                                                                
                                                                
                                                                $
                                                                9,000
                                                                
                                                                
                                                                $
                                                                (6,000
                                                                )
                                                                
                                                                $
                                                                -
                                                                
                                                                
                                                                $
                                                                -
                                                                
                                                                
                                                                $
                                                                -
                                                                
                                                                
                                                                $
                                                                3,000Unrestricted
      common stock sales to third parties at $0.13 per share
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                1,125,000
                                                                
                                                                
                                                                
                                                                1,125
                                                                
                                                                
                                                                
                                                                148,875
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                150,000Comprehensive
      income (loss)Net
      loss for the period
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (12,326
                                                                )
                                                                
                                                                
                                                                (12,326
                                                                )
                                                                
                                                                
                                                                (12,326
                                                                )Total
      comprehensive loss
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (12,326
                                                                )Balance,
      August 31, 1998
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                10,125,000
                                                                
                                                                
                                                                
                                                                10,125
                                                                
                                                                
                                                                
                                                                142,875
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (12,326
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                140,674Comprehensive
      income (loss)Net
      loss for the year
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (77,946
                                                                )
                                                                
                                                                
                                                                (77,946
                                                                )
                                                                
                                                                
                                                                (77,946
                                                                )Total
      comprehensive loss
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (77,946
                                                                )Balance,
      August 31, 1999
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                10,125,000
                                                                
                                                                
                                                                
                                                                10,125
                                                                
                                                                
                                                                
                                                                142,875
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (90,272
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                62,728Comprehensive
      income (loss)Net
      loss for the year
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (12,446
                                                                )
                                                                
                                                                
                                                                (12,446
                                                                )
                                                                
                                                                
                                                                (12,446
                                                                )Total
      comprehensive loss
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (12,446
                                                                )Balance,
      August 31, 2000
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                10,125,000
                                                                
                                                                
                                                                
                                                                10,125
                                                                
                                                                
                                                                
                                                                142,875
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (102,718
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                50,282Comprehensive
      income (loss)Net
      loss for the year
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (12,904
                                                                )
                                                                
                                                                
                                                                (12,904
                                                                )
                                                                
                                                                
                                                                (12,904
                                                                )Total
      comprehensive loss
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (12,904
                                                                )Balance,
      August 31, 2001
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                10,125,000
                                                                
                                                                
                                                                
                                                                10,125
                                                                
                                                                
                                                                
                                                                142,875
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (115,622
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                37,378Comprehensive
      income (loss)Net
      loss for the year
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (54,935
                                                                )
                                                                
                                                                
                                                                (54,935
                                                                )
                                                                
                                                                
                                                                (54,935
                                                                )Total
      comprehensive loss
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (54,935
                                                                )Balance,
      August 31, 2002
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                10,125,000
                                                                
                                                                
                                                                
                                                                10,125
                                                                
                                                                
                                                                
                                                                142,875
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (170,557
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (17,557
                                                                )Restricted
      common stock issued to a related party to satisfy outstanding management
      fees at $0.003 per share on December 19, 2002
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                24,000,000
                                                                
                                                                
                                                                
                                                                24,000
                                                                
                                                                
                                                                
                                                                56,000
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                80,000Restricted
      common stock issued to a related party to satisfy outstanding management
      fees at $0.003 per share on March 18, 2003
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                6,999,600
                                                                
                                                                
                                                                
                                                                7,000
                                                                
                                                                
                                                                
                                                                16,332
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                23,332Comprehensive
      income (loss)Net
      loss for the year
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (97,662
                                                                )
                                                                
                                                                
                                                                (97,662
                                                                )
                                                                
                                                                
                                                                (97,662
                                                                )Total
      comprehensive loss
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (97,662
                                                                )Balance,
      August 31, 2003
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                41,124,600
                                                                
                                                                
                                                                
                                                                41,125
                                                                
                                                                
                                                                
                                                                215,207
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (268,219
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (11,887
                                                                )Comprehensive
      income (loss)Net
      loss for the year
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (19,787
                                                                )
                                                                
                                                                
                                                                (19,787
                                                                )
                                                                
                                                                
                                                                (19,787
                                                                )Total
      comprehensive loss
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (19,787
                                                                )Balance,
      August 31, 2004
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                41,124,600
                                                                
                                                                
                                                                
                                                                41,125
                                                                
                                                                
                                                                
                                                                215,207
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (288,006
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (31,674
                                                                )Comprehensive
      income (loss)Net
      loss for the year
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (103,142
                                                                )
                                                                
                                                                
                                                                (103,142
                                                                )
                                                                
                                                                
                                                                (103,142
                                                                )Total
      comprehensive loss
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (103,142
                                                                )Balance,
      August 31, 2005
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                41,124,600
                                                                
                                                                
                                                                
                                                                41,125
                                                                
                                                                
                                                                
                                                                215,207
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (391,148
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (134,816
                                                                )Issuance
      of common stock and warrants at $0.17 per share on May 16,
      2006
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                3,000,000
                                                                
                                                                
                                                                
                                                                3,000
                                                                
                                                                
                                                                
                                                                497,000
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                500,000Comprehensive
      income (loss)Net
      loss for the year
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (157,982
                                                                )
                                                                
                                                                
                                                                (157,982
                                                                )
                                                                
                                                                
                                                                (157,982
                                                                )Total
      comprehensive loss
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (157,982
                                                                )Balance,
      August 31, 2006
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                44,124,600
                                                                
                                                                
                                                                
                                                                44,125
                                                                
                                                                
                                                                
                                                                712,207
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (549,130
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                207,202Exercise
      of Class A Warrants  at $0.167 per share during November -
      December 2006
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                3,000,000
                                                                
                                                                
                                                                
                                                                3,000
                                                                
                                                                
                                                                
                                                                497,000
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                500,000Exercise
      of Class B Warrants  at $0.183 per share November - May
      2007
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                3,000,000
                                                                
                                                                
                                                                
                                                                3,000
                                                                
                                                                
                                                                
                                                                547,000
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                550,000Exercise
      of Class C Warrants  at $0.50 per share during August
      2007
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                980,000
                                                                
                                                                
                                                                
                                                                980
                                                                
                                                                
                                                                
                                                                489,020
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                490,000Exercise
      of Class D Warrants  at $0.55 per share during August
      2007
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                880,000
                                                                
                                                                
                                                                
                                                                880
                                                                
                                                                
                                                                
                                                                483,120
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                484,000Exercise
      of Class E Warrants  at $0.60 per share during August
      2007
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                880,000
                                                                
                                                                
                                                                
                                                                880
                                                                
                                                                
                                                                
                                                                527,120
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                528,000Issuance
      of common stock and warrants at $0.50 per share on April 23,
      2007
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                1,000,000
                                                                
                                                                
                                                                
                                                                1,000
                                                                
                                                                
                                                                
                                                                499,000
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                500,000Dividend
      paid - spin off of MircoChannelTechnologies
      Corporation
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (400,000
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (400,000
                                                                )Comprehensive
      income (loss)Foreign
      currency translation adjustments
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (1,811
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (1,811
                                                                )
                                                                
                                                                
                                                                (1,811
                                                                )Net
      loss for the year
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (1,442,769
                                                                )
                                                                
                                                                
                                                                (1,442,769
                                                                )
                                                                
                                                                
                                                                (1,442,769
                                                                )Total
      comprehensive loss
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (1,444,580
                                                                )Balance,
      August 31, 2007
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                53,864,600
                                                                
                                                                
                                                                
                                                                53,865
                                                                
                                                                
                                                                
                                                                3,754,467
                                                                
                                                                
                                                                
                                                                (1,811
                                                                )
                                                                
                                                                
                                                                (2,391,899
                                                                )
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                1,414,622Common
      stock and warrants issued for cash and services at $1.00 per Unit in
      February 2008
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                3,675,000
                                                                
                                                                
                                                                
                                                                3,675
                                                                
                                                                
                                                                
                                                                3,392,280
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                3,395,955Exercise
      of Class C Warrants  at $0.50 per share during March
      2008
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                20,000
                                                                
                                                                
                                                                
                                                                20
                                                                
                                                                
                                                                
                                                                9,980
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                10,000Exercise
      of Class D Warrants  at $0.55 per share during May
      2008
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                20,000
                                                                
                                                                
                                                                
                                                                20
                                                                
                                                                
                                                                
                                                                10,980
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                11,000Exercise
      of Class F Warrants  at $1.25 per share during April - May
      2008
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                175,000
                                                                
                                                                
                                                                
                                                                175
                                                                
                                                                
                                                                
                                                                218,575
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                218,750Stock
      based compensation
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                3,600,303
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                3,600,303Comprehensive
      income (loss)Foreign
      currency translation adjustments
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                12,504
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                12,504
                                                                
                                                                
                                                                
                                                                12,504Net
      loss for the period
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (5,721,545
                                                                )
                                                                
                                                                
                                                                (5,721,545
                                                                )
                                                                
                                                                
                                                                (5,721,545
                                                                )Total
      comprehensive loss
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (5,709,041
                                                                )Balance,
      August 31, 2008
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                57,754,600
                                                                
                                                                
                                                                
                                                                57,755
                                                                
                                                                
                                                                
                                                                10,986,585
                                                                
                                                                
                                                                
                                                                10,693
                                                                
                                                                
                                                                
                                                                (8,113,444
                                                                )
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                2,941,589Reversal
      of stock based compensation due to forfeiture of stock
    options
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (3,587,040
                                                                )
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                (3,587,040
                                                                )Stock
      based compensation
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                19,865
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                19,865Comprehensive
      incomeForeign
      currency translation adjustments
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                49,011
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                49,011
                                                                
                                                                
                                                                
                                                                49,011Net
      income for the period
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                3,232,951
                                                                
                                                                
                                                                
                                                                3,232,951
                                                                
                                                                
                                                                
                                                                3,232,951Total
      comprehensive income
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                $
                                                                3,281,962Balance,
      November 30, 2008
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                $
                                                                -
                                                                
                                                                
                                                                
                                                                57,754,600
                                                                
                                                                
                                                                $
                                                                57,755
                                                                
                                                                
                                                                $
                                                                7,419,410
                                                                
                                                                
                                                                $
                                                                59,704
                                                                
                                                                
                                                                $
                                                                (4,880,493
                                                                )
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                $
                                                                2,656,376(The
      accompanying notes are an integral part of these consolidated financial
      statements)





5
 Table of Contents




OCTILLIONCORP.(A
      Development Stage Company)CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007, AND FOR
    THEPERIOD
      FROM INCEPTION (MAY 5, 1998) TO NOVEMBER 30, 2008(Expressed
      in US Dollars)(Unaudited)CumulativeMay
      5, 1998
                                
                                
                                Three
      Months Ended(inception)
      to
                                
                                
                                November
      30,November
      30, 2008
                                
                                
                                2008
                                
                                
                                2007Cash
      flows from operating activitiesIncome
      (loss) from continuing operations
                                
                                $
                                (4,318,396
                                )
                                
                                $
                                3,232,951
                                
                                
                                $
                                (1,475,514
                                )Add:
      loss from discontinued operations
                                
                                
                                (162,097
                                )
                                
                                
                                -
                                
                                
                                
                                -Adjustments
      to reconcile net income (loss) to net cash used in operating
      activitiesDepreciation
                                
                                
                                4,482
                                
                                
                                
                                -
                                
                                
                                
                                313Reversal
      of stock based compensation expense due to forfeiture of stock
      options
                                
                                
                                (3,587,040
                                )
                                
                                
                                (3,587,040
                                )
                                
                                
                                -Stock
      based compensation expense
                                
                                
                                3,620,168
                                
                                
                                
                                19,865
                                
                                
                                
                                887,125Loss
      of disposal of fixed assets
                                
                                
                                5,307
                                
                                
                                
                                -
                                
                                
                                
                                -Payable
      written off
                                
                                
                                (30,000
                                )
                                
                                
                                -
                                
                                
                                
                                -Common
      stock issued for services
                                
                                
                                3,000
                                
                                
                                
                                -
                                
                                
                                
                                -Common
      stock issued for debt settlement
                                
                                
                                103,332
                                
                                
                                
                                -
                                
                                
                                
                                -Changes
      in operating assets and liabilities:Increase
      in deferred research and development costs
                                
                                
                                (140,519
                                )
                                
                                
                                -
                                
                                
                                
                                -Increase
      in prepaid expenses and other current assets
                                
                                
                                (3,029
                                )
                                
                                
                                (2,529
                                )
                                
                                
                                (1,506
                                )Increase
      (decrease) in accounts payable
                                
                                
                                41,559
                                
                                
                                
                                6,228
                                
                                
                                
                                (1,154
                                )Increase
      in accrued liabilities
                                
                                
                                166,942
                                
                                
                                
                                10,833
                                
                                
                                
                                60,196Increase
      in accounts payable - related party
                                
                                
                                30,000
                                
                                
                                
                                -
                                
                                
                                
                                4,375Net
      cash used in operating activities
                                
                                
                                (4,266,291
                                )
                                
                                
                                (319,692
                                )
                                
                                
                                (526,165
                                )Cash
      flows from investing activitiesPurchase
      of fixed assets
                                
                                
                                (9,789
                                )
                                
                                
                                -
                                
                                
                                
                                (2,271
                                )Net
      cash flows used in investing activities
                                
                                
                                (9,789
                                )
                                
                                
                                -
                                
                                
                                
                                (2,271
                                )Cash
      flows from financing activitiesProceeds
      from the issuance of common stock and warrants, net
                                
                                
                                7,337,705
                                
                                
                                
                                -
                                
                                
                                
                                -Repayment
      of promissory note
                                
                                
                                (155,000
                                )
                                
                                
                                -
                                
                                
                                
                                -Proceeds
      from promissory notes
                                
                                
                                155,000
                                
                                
                                
                                -
                                
                                
                                
                                -Dividend
      paid
                                
                                
                                (400,000
                                )
                                
                                
                                -
                                
                                
                                
                                -Net
      cash flows provided by financing activities
                                
                                
                                6,937,705
                                
                                
                                
                                -
                                
                                
                                
                                -Increase
      (decrease) in cash and cash equivalents
                                
                                
                                2,661,625
                                
                                
                                
                                (319,692
                                )
                                
                                
                                (528,436
                                )Effect
      of foreign currency translation
                                
                                
                                59,704
                                
                                
                                
                                49,011
                                
                                
                                
                                (4,018
                                )Cash
      and cash equivalents at beginning of period
                                
                                
                                -
                                
                                
                                
                                2,992,010
                                
                                
                                
                                1,437,876Cash
      and cash equivalents at end of period
                                
                                $
                                2,721,329
                                
                                
                                $
                                2,721,329
                                
                                
                                $
                                905,422Supplemental
      cash flow information:Interest
      paid in cash
                                
                                $
                                10,841
                                
                                
                                $
                                106
                                
                                
                                $
                                -Income
      taxes paid in cash
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -Supplemental
      noncash transaction:Accrued
      management fees converted to equity
                                
                                $
                                103,332
                                
                                
                                $
                                -
                                
                                
                                $
                                -(The
      accompanying notes are an integral part of these consolidated financial
      statements)





6
 Table of Contents





OCTILLIONCORP.


(a
development stage company)


Notes
to Consolidated Financial Statements


(Unaudited)





November
30, 2008


(Expressed
in U.S. Dollars)





Note
1:  Organization and Going Concern Uncertainties





Octillion
Corp. (“the Company”) was incorporated in the State of Nevada on May 5, 1998.
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, Sungen Energy, Inc. (“Sungen”),
Kinetic Energy Corp. (“Kinetic Energy”), and Octillion Technologies Limited
(“Octillion Technologies”). Sungen was incorporated on July 11, 2006 in the
State of Nevada and has no assets and no liabilities. Kinetic Energy was
incorporated on June 19, 2008 in the State of Nevada and has no assets and no
liabilities. Octillion Technologies was incorporated on April 11, 2007 in the
Province of British Columbia, Canada for providing administrative services to
the Company’s Canadian office. The Company ceased to conduct business in Canada
in September 2008. All significant inter-company balances and transactions have
been eliminated.





Octillion
Corp., together with its wholly owned subsidiaries, is a next generation
alternative and renewable energy technology developer focused on the
identification, acquisition, development, and commercialization of alternative
and renewable energy technologies.  Among the Company’s current research
and development activities is the development of technology to adapt
existing home and office glass windows, skylights, and building facades into
products capable of generating electricity from solar energy without losing
significant transparency or requiring major changes in manufacturing
infrastructure, and technologies to harness the kinetic energy of vehicles to
generate electricity.





On August
22, 2007, the Company spun off its wholly-owned biotechnology subsidiary,
MicroChannel Technologies Corporation (“MicroChannel”) with the shareholders of
the Company. The net assets and results of operations of MicroChannel of the
prior period have been reclassified as discontinued operations.





The
Company has not generated any revenues, has an accumulated deficit of $4,880,493
as of November 30, 2008, and does not have positive cash flows from operating
activities. In view of these conditions, the ability of the Company to continue
as a going concern is in substantial doubt and dependent upon achieving a
profitable level of operations and on the ability of the Company to obtain
necessary financing to fund ongoing operations.  Management believes that
its current and future plans enable it to continue as a going concern for the
next twelve months.





To meet
these objectives, the Company completed a private placement of common stock and
warrants for net proceeds of $3,395,955 on February 12, 2008 and continues to
seek other sources of financing in order to support existing operations and
expand the range and scope of its business. However, there are no assurances
that any such financing can be obtained on acceptable terms, if at all.
Management believes that actions presently taken to revise the Company's
operating and financial requirements provide the opportunity for the Company to
continue as a going concern. The Company's ability to achieve these objectives
cannot be determined at this time.





These
consolidated financial statements do not give effect to any adjustments which
would be necessary should the Company be unable to continue as a going concern
and therefore be required to realize its assets and discharges its liabilities
in other than the normal course of business and at amounts different from those
reflected in the accompanying consolidated financial statements.





Note
2.  Presentation of Interim Information





The
accompanying unaudited interim consolidated financial statements have been
prepared in accordance with Form 10-Q instructions and in the opinion of
management of Octillion Corp., include all adjustments (of a normal recurring
nature) considered necessary to present fairly the financial position of the
Company as of November 30, 2008 and August 31, 2008 and the related results of
operations, stockholders’ equity (deficit), and cash flows for the three months
ended November 30, 2008 and 2007 and for the cumulative period from May 5, 1998
(inception) to November 30, 2008. These results have been determined on the
basis of generally accepted accounting principles and practices in the United
States and applied consistently with those used in the preparation of the
Company’s 2008 Annual Report on Form 10-K.





7
 Table of Contents





Certain
information and footnote disclosures normally included in the quarterly
financial statements presented in accordance with generally accepted accounting
principles in the United States have been condensed or omitted. It is suggested
that the accompanying unaudited interim consolidated financial statements be
read in conjunction with the consolidated financial statements and notes thereto
incorporated by reference in the Company’s 2008 Annual Report on Form
10-K.





Recently
Issued Accounting Standards




In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS
157), which defines fair value, establishes a framework for measuring fair
value, and expands disclosures about fair-value measurements required under
other accounting pronouncements. It does not change existing guidance as to
whether or not an instrument is carried at fair value. SFAS 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. In February 2008, the FASB issued
FASB Staff Position No. FAS 157-1 (FSP FAS 157-1), which excludes SFAS No. 13,
“Accounting for Leases” and certain other accounting pronouncements that address
fair value measurements under SFAS 13, from the scope of SFAS 157. In February
2008, the FASB issued FASB Staff Position No. 157-2 (FSP 157-2), which provides
a one-year delayed application of SFAS 157 for nonfinancial assets and
liabilities, except for items that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least annually). The Company
is required to adopt SFAS 157 as amended by FSP FAS 157-1 and FSP FAS 157-2 on
September 1, 2009, the beginning of its fiscal year 2010.  The Company
does not expect the application of SFAS No. 157 to have a material effect on the
Company’s consolidated financial statements.





In
October 2008, the FASB issued FASB Staff Position No. FAS 157-3, “Determining
the Fair Value of a Financial Asset in a Market That Is Not Active” (FSP 157-3),
which clarifies the application of SFAS 157 when the market for a financial
asset is inactive. Specifically, FSP 157-3 clarifies how (1) management’s
internal assumptions should be considered in measuring fair value when
observable data are not present, (2) observable market information from an
inactive market should be taken into account, and (3) the use of broker quotes
or pricing services should be considered in assessing the relevance of
observable and unobservable data to measure fair value. The guidance in FSP
157-3 is effective immediately.  The adoption of FSP 157-3 is not
expected to have a material effect on the Company’s consolidated financial
statements.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities, Including an Amendment to FASB No.
115” (SFAS 159). Under SFAS 159, entities may elect to measure specified
financial instruments and warranty and insurance contracts at fair value on a
contract-by-contract basis, with changes in fair value recognized in earnings
each reporting period. The election, called the fair value option, will enable
entities to achieve an offset accounting effect for changes in fair value of
certain related assets and liabilities without having to apply more complex
hedge accounting provisions.  SFAS No. 159 is effective for fiscal
years beginning after November 15, 2007.  The Company did not elect
the fair value option for any of its existing financial assets or financial
liabilities; therefore, this statement did not have a material impact on the
Company’s consolidated financial statements.





In June
2008, the FASB issued Staff Position EITF 03-06-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities” (FSP EITF 03-06-1). FSP EITF 03-06-1 provides that unvested
share-based payment awards that contain non-forfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating securities and
shall be included in the computation of earnings per share pursuant to the
two-class method in SFAS No. 128, “Earnings per Share”.   FSP
EITF 03-06-1 did not have any impact on the Company’s consolidated financial
statements.





In June
2007, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-3,
Accounting for Nonrefundable
Advance Payments for Goods or Services to be Used in Future Research and
Development Activities, (“EITF 07-3”) which is effective for new
contracts entered into for fiscal years beginning after December 15,
2007.  EITF 07-3 requires that nonrefundable advance payments for
future research and development activities be deferred and capitalized. Such
amounts will be recognized as an expense as the goods are delivered or the
related services are performed.  The Company adopted EITF 07-3 on
September 1, 2008, the beginning of its fiscal year 2009.  The
adoption of EITF 07-3 did not have a material impact on the Company’s
consolidated financial statements.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an Amendment of Accounting Research Bulletin
No 51” (SFAS 160). SFAS 160 establishes accounting and reporting standards for
ownership interests in subsidiaries held by parties other than the parent,
changes in a parent’s ownership of a noncontrolling interest, calculation and
disclosure of the consolidated net income attributable to the parent and the
noncontrolling interest, changes in a parent’s ownership interest while the
parent retains its controlling financial interest and fair value measurement of
any retained noncontrolling equity investment. SFAS 160 is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. Early adoption is prohibited. The
Company must adopt SFAS 160 on September 1, 2009, the beginning of its fiscal
year 2010.  The Company does not expect the application of SFAS No.
160 to have a material effect on its consolidated financial
statements.





8
 Table of Contents





In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (SFAS
141R), which establishes principles and requirements for the reporting entity in
a business combination, including recognition and measurement in the financial
statements of the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree. SFAS 141R applies prospectively to
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008, and interim periods within those fiscal years. The Company must adopt
SFAS 141R on September 1, 2009, the beginning of its fiscal year
2010.  The Company does not expect the application of SFAS 141R to
have a material effect on its consolidated financial statements.





Note
3: Net Income (Loss) per Share





Basic net
income (loss) per share is computed by dividing the net income (loss) by the
weighted average number of common shares outstanding during the period. Diluted
net income (loss) per share is computed by dividing the net income (loss) by the
weighted average number of common and dilutive common equivalent shares
outstanding during the period.





During
the three months ended November 30, 2008, stock options and warrants to purchase
4,434,500 shares of common stock with a weighted-average exercise price of $1.21
per share were not included in the diluted earnings per share computation as the
effects would have been anti-dilutive.





During
the three months ended November 30, 2007, the Company recorded a net
loss.  Therefore, the issuance of shares of common stock from the
exercise of stock options or warrants would be
anti-dilutive.  Excluded from the computation of diluted net loss per
share for the three months ended November 30, 2007, because their effect would
be anti-dilutive, are stock options and warrants to acquire 1,760,000 shares of
common stock with a weighted-average exercise price of $3.67 per
share.





As the
inclusion of all potentially dilutive stock options and warrants outstanding
would have been anti-dilutive during the three months ended November 30, 2008
and 2007, basic and diluted net income (loss) per share are the
same.





For
purposes of earnings per share computations, shares of common stock that are
issuable at the end of a reporting period are included as
outstanding.





Following
is the computation of basic and diluted net income (loss) per share for the
three months ended November 30, 2008 and 2007:





Three
      Months EndedNovember
      30,2008
                        
                        
                        2007Numerator
      - net income (loss )
                        
                        $
                        3,232,951
                        
                        
                        $
                        (1,475,514
                        )Denominator
      - weighted average number of common shares outstanding
                        
                        
                        57,754,600
                        
                        
                        
                        53,864,600Basic
      and diluted net income (loss) per common share
                        
                        $
                        0.056
                        
                        
                        $
                        (0.027
                        )





Note 4:OptionInterestin Solar Energy Conversion
Technology





UIUC
Sponsored Research Agreement





On August
25, 2006, through the Company’s wholly owned subsidiary, Sungen Energy, Inc.
(“Sungen”), the Company entered into a Sponsored Research Agreement (“UIUC
Sponsored Research Agreement”) with the University of Illinois at
Urbana-Champaign (“UIUC”) for the development of a new patent-pending technology
to integrate films of silicon nanoparticle material on glass substrates, acting
as photovoltaic solar cells that have the potential to convert normal home and
office glass windows into ones capable of converting solar energy into
electricity, with limited loss of transparency and minimal changes in
manufacturing infrastructure (the “UIUC Silicon Nanoparticle Energy
Technology”). On July 23, 2007, the Company through its wholly owned
subsidiary, Sungen, amended its Sponsored Research Agreement with the
UIUC.  Pursuant to this amended Sponsored Research Agreement, the
Company agreed to provide an additional $203,617 to the previously awarded
amount of $219,201 for a total of $422,818, to the University of Illinois in
order to accelerate the development of films of silicon nanoparticle material
composed of nanosilicon photovoltaic solar cells that have the potential to
convert solar radiation to electrical energy.





9
 Table of Contents





The UIUC
Sponsored Research Agreement expired on August 22, 2008.  As of this
date, the Company had advanced a total of $266,709 to the University of Illinois
pursuant to the terms of the UIUC Sponsored Research
Agreement.  Pursuant to the terms of the UIUC Sponsored Research
Agreement, the Company was to advance an additional $156,109 to the University
of Illinois, which is included in other accrued liabilities at November 30,
2008.  However, the Company has not made the advance pending
determination as to whether funds previously paid to UIUC under the terms of the
UIUC Sponsored Research Agreement have been fully expended.   The
Company is currently in discussions with UIUC regarding the status of these
funds.  The Company is of the opinion that to the extent these funds
were not expended they should be refunded to the Company.





During
the three months ended November 30, 2008 and 2007, the Company recorded $0 and
$78,054 as research and development expense pursuant to the UIUC Sponsored
Research Agreement.  During the period from inception (May 5, 1998) to
November 30, 2008, the Company recorded $422,818 as research and development
expense pursuant to the UIUC Sponsored Research Agreement.





Oakland
Sponsored Research Agreement





On August
18, 2008, the Company entered into a two-year Sponsored Research Agreement
(“Oakland Sponsored Research Agreement”) with scientists at
Oakland University to further the development of the Company’s photovoltaic
technology.





Pursuant
to the terms of the Oakland Sponsored Research Agreement the Company agreed to
advance a total of $348,066 to fund the research and development activities of
which $140,519 is payable on or before September 1, 2008, $127,547 is payable on
or before October 1, 2009 and $80,000 is payable on demand during the contract
period for reimbursement of materials provided by Oakland
University.  As of November 30, 2008, the Company advanced $140,519 to
Oakland University in accordance with the terms of the Oakland
Sponsored Research Agreement, which is included in deferred research and
development costs.  As of November 30, 2008, researchers had not
expended funds related to the Oakland Sponsored Research Agreement and
accordingly, no amortization of the deferred research and development costs was
recorded during the three months ended November 30, 2008.





Note
5: Energy Harvesting Technologies





On
November 4, 2008, the Company, through its wholly-owned subsidiary, Kinetic
Energy Corp., entered into an agreement with VERYST Engineering LLC (the “Veryst
Agreement”) relating to the development of technologies for generating
electricity from the motion of cars and trucks.  The Veryst Agreement
continues until terminated by either Veryst Engineering LLC or the
Company.  Pursuant to a Confidential Treatment Order (“CT ORDER”)
filed with the SEC, payment terms, scope of work and the terms of the license
agreement pursuant to the Veryst Agreement have not been disclosed.





Note
6: Capital Stock





At
November 30, 2008 there were 1,000,000 shares of preferred stock (par value
$0.10 per share) authorized, of which no shares were issued and outstanding.
 The Board of Directors has the authority to issue such stock in one or
more series, to fix the number of shares and to fix and determine the relative
rights and preferences of the shares of any such series so established to the
full extent permitted by the laws of the State of Nevada and the Articles of
Incorporation.





On
February 12, 2008, the Company consummated the sale of an aggregate of 3,675,000
shares of its common stock and Class F Callable Warrants to purchase up to an
additional 3,675,000 shares of the Company’s common stock for aggregate proceeds
of $3,675,000 pursuant to the terms of a Securities Purchase Agreement dated
February 8, 2008 with certain institutional and other accredited investors, as
defined in Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended (the “Investors”).





The Class
F Callable Warrants are exercisable for a period of three years at an initial
exercise price of $1.25 per share beginning on February 12, 2008. The number of
shares issuable upon exercise of the Class F Callable Warrants and the exercise
price of the Class F Callable Warrants are adjustable in the event of stock
splits, combinations and reclassifications, but not in the event of the issuance
by the Company of additional securities, unless such issuance is at a price per
share which is less than the then applicable exercise price of the warrants, in
which event then the exercise price shall be reduced and only reduced to equal
lower issuance price and the number of shares issuable upon exercise thereof
shall be increased such that the aggregate exercise price payable thereunder,
after taking into account the decrease in the exercise price, shall be equal to
the aggregate exercise price prior to such adjustment.





The Class
F Callable Warrants are callable by the Company, at a price of $0.001 per
warrant, subject to certain conditions, after the earlier to occur of (i) the
expiration of the then applicable hold periods for a cashless exercise under
Rule 144 as promulgated pursuant to the Securities Act of 1933, as amended or
(ii) the date the registration statement filed pursuant to the Registration
Rights Agreement is declared effective by the SEC, which was declared effective
by the SEC on March 21, 2008, if Octillion’s common stock, the volume weighted
average price for each of 5 consecutive Trading Days exceeds $1.75.





10
 Table of Contents





Pursuant
to the Securities Purchase Agreement and the Registration Rights Agreement, the
Company and the investor parties have made other covenants and representations
and warranties regarding matters that are customarily included in financings of
this nature.  In the event that during the twelve month period following
the closing date of the private placement, the Company issues shares at a price
per share which is less than $1.00 (“Base Share Price”), then the Company is
required to issue to the investors the number of shares equal to (1) the
quotient of the aggregate purchase price payable under the Securities Purchase
Agreement divided by Base Share Price less (2) the quotient
of the aggregate purchase price divided by the per share purchase price under
the Securities Purchase Agreement.





The
Company engaged an agent (the “Agent”) to help in the fund raising efforts of
the Securities Purchase Agreement.  The Agent was paid a total cash
fee of 7% of the aggregate proceeds and Class F Callable Warrants to purchase
514,500 shares of the Company’s common stock valued at $642,980 and representing
7% of the total number of shares purchased by the Investors. In addition, the
Agent was reimbursed $6,045 for expenses incurred on behalf of the
Company.





The fair
value of the 4,189,500 Class F Callable warrants granted was estimated at $1.25
each, for a total amount of $5,236,875, using the Black-Scholes Option Pricing
Model with the following weighted average assumptions: dividend yield of 0%,
expected volatility of 159.33%, risk-free interest rates of 4.76%, and expected
lives of 3 years.  The proceeds received pursuant to the Securities
Purchase Agreement allocated to the warrants were $2,337,885.





Note
7:  Warrants





As of
November 30, 2008, the following warrants were outstanding and
exercisable:





(a)
            100,000
      Class D Warrants which entitle the holders to purchase 100,000 common
      shares of the Company at $0.55 each expiring on April 23,
      2009.





(b)
            120,000
      Class E Warrants which entitle the holders to purchase 120,000 common
      shares of the Company at $0.60 each expiring on April 23,
      2010.





(c)
            4,014,500
      Class F Callable Warrants which entitle the holders to purchase 4,014,500
      common shares of the Company at $1.25 expiring on February 12,
      2011.





There
were no warrants granted or exercised during the three months ended November 30,
2008.




Note
8: Stock Options





During
2006, the Company adopted the 2006 Incentive Stock Option Plan (the “2006 Plan”)
that provides for both incentive and nonqualified stock options to be granted to
employees, directors, officers and consultants. The 2006 Plan provides for the
granting of options to purchase a maximum of 15,000,000 shares of common
stock.  Options granted to employees under the Company’s 2006 Plan
generally vest over two to five years or as otherwise determined by the plan
administrator. Options to purchase shares expire no later than ten years after
the date of grant.





In
September 2007, the Company appointed Mr. Nicholas Cucinelli to the positions of
President and Chief Executive Officer and granted him a stock option to purchase
up to 1,500,000 shares of the Company’s common stock at an exercise price of
$4.21.  On February 15, 2008, the Company cancelled the stock option
granted to Mr. Nicholas Cucinelli in September 2007 for 1,500,000 stock options
and simultaneously entered into a 10 year stock option agreement with Mr.
Nicholas Cucinelli for the purchase of 1,250,000 shares of the Company’s common
stock at an exercise price of $1.66 per share. The cancellation and re-issuance
was accounted for as a modification of the originally issued stock option in
accordance with SFAS 123(R) Share-Based Payment,resulting in a total adjusted fair value of $6,895,000 which was being
recognized over the requisite service period.





On
October 15, 2008, Mr. Nicholas Cucinelli resigned from the positions of
President and Chief Executive Officer of the Company.  As a result,
the stock option granted to Mr. Cucinelli on February 15, 2008 to purchase
1,250,000 shares of common stock were all forfeited pursuant to the terms of an
Employment Termination Agreement dated October 15, 2008 between the Company and
Mr. Cucinelli.  Pursuant to Mr. Cucinelli’s resignation, stock option
compensation expense of $3,573,778 recorded in fiscal year 2008 for Mr.
Cucinelli’s stock option was reversed during the quarter ended November 30, 2008
and is included in wages and benefits.





11
 Table of Contents





On March
10, 2008, the Company granted a stock option to each of two of its directors
permitting each to purchase, subject to applicable vesting provisions, 50,000
shares of the Company’s common stock at an exercise price of $1.66 per share.
Each stock option vests in five equal annual installments of 10,000 options
each, commencing on February 8, 2009, and annually thereafter. The stock options
are further subject to the terms and conditions of a stock option agreement
between each director and the Company.  Under the terms of the stock option
agreement, the stock option agreement will terminate and there will be no
further vesting of stock options effective as of the date that the director
ceases to be a director of the Company.  Upon termination of such service,
the director will have a specified period of time to exercise vested stock
options, if any.  The fair value of the aggregate 100,000 stock
options granted was estimated at $1.23 each, for a total of $123,000, using the
Black-Scholes Option Pricing Model with the following weighted average
assumptions: dividend yield of 0%, expected volatility of 164.88%, risk-free
interest rates of 2.37%, and expected lives of 5 years.





On
September 9, 2008, Mr. Gladwin resigned from the Company’s Board of
Directors.  As a result, the stock option granted to Mr. Gladwin on
March 10, 2008 to purchase 50,000 shares of common stock were all forfeited upon
his resignation.  Pursuant to Mr. Gladwin’s resignation, stock option
compensation expense of $13,262 recorded in fiscal year 2008 for Mr. Gladwin’s
stock option was reversed during the quarter ended November 30, 2008 and is
included in professional fees.





On
September 9, 2008, the Company granted a stock option to each of two of its
directors permitting each to purchase, subject to applicable vesting
provisions, 50,000 shares of the Company’s common stock at an exercise price of
$0.85 per share. Each stock option vests in five equal annual installments of
10,000 options each, commencing on September 9, 2009, and annually
thereafter. The stock options are further subject to the terms and
conditions of a stock option agreement between each director and the Company.
 Under the terms of the stock option agreement, the stock option agreement
will terminate and there will be no further vesting of stock options effective
as of the date that the director ceases to be a director of the Company.
 Upon termination of such service, the director will have a specified
period of time to exercise vested stock options, if any.  The fair
value of the aggregate 100,000 stock options granted was estimated at $0.77
each, for a total of $77,000, using the Black-Scholes Option Pricing Model with
the following weighted average assumptions: dividend yield of 0%, expected
volatility of 126.74%, risk-free interest rate of 3.21%, and expected lives of
6.5 years.





On
September 12, 2008, the Company granted a stock option to the consultant Chief
Financial Officer (the “CFO”) of the Company to purchase, subject to applicable
vesting provisions, 50,000 shares of the Company’s common stock at an exercise
price of $0.78 per share. The stock option vests in five equal annual
installments of 10,000 options each, commencing on September 12, 2009, and
annually thereafter. The stock option is further subject to the terms and
conditions of the stock option agreement between the CFO and the Company.
 Under the terms of the stock option agreement, the stock option agreement
will terminate and there will be no further vesting of stock options effective
as of the date that the CFO ceases to serve as a consultant to the Company.
 Upon termination of such service, the CFO will have a specified period of
time to exercise vested stock options, if any.  The fair value of the
50,000 stock options granted was estimated at $0.71 each, for a total of
$35,500, using the Black-Scholes Option Pricing Model with the following
weighted average assumptions: dividend yield of 0%, expected volatility of
126.74%, risk-free interest rate of 3.32%, and expected life of 6.5
years.





A summary
of the Company’s stock option activity for the three months ended November, 2008
and related information follows:





Weighted
      AverageRemaining
                      
                      AggregateWeighted
      Average
                      
                      Contractual
                      
                      IntrinsicNumber
      of Options
                      
                      
                      Exercise
      Price
                      
                      Term
                      
                      ValueOutstanding
      at August 31, 2008
                      
                      
                      1,350,000
                      
                      
                      $
                      1.66Granted
                      
                      
                      150,000
                      
                      
                      
                      0.83Forfeited
      due to resignation
                      
                      
                      (1,300,000
                      )
                      
                      
                      1.66Outstanding
      at November 30, 2008
                      
                      
                      200,000
                      
                      
                      $
                      1.04
                      
                      9.66
      years
                      
                      $
                      -Exercisable
      at November 30, 2008
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      N/A
                      
                      $
                      -





The
aggregate intrinsic value in the table above represents the total pretax
intrinsic value for all “in-the-money” options (i.e. the difference between the
Company’s closing stock price on the last trading day of its first
quarter of 2009 (November 30, 2008 was a Sunday.  The last
trading day was November 28, 2008) and the exercise price, multiplied by the
number of shares) that would have been received by the option holders had all
option holders exercised their options on November 30, 2008. The intrinsic value
changes based on the fair market value of the Company’s common
stock.





12
 Table of Contents





There
were no stock options exercised during the three months ended November 30,
2008.  The weighted average fair value of options granted during the three
months ended November 30, 2008 was $0.75 per share.





During
the three months ended November 30, 2008 the Company recorded stock compensation
expense of $19,865 for the amortization of outstanding stock options, of which
$4,053 is included in management fees – related party and $15,812 is included in
professional fees.  As of November 30, 2008, the Company had $140,873
of total unrecognized compensation cost related to unvested stock options which
is expected to be recognized over a period of 4.75 years.





The
following table summarizes information about stock options outstanding and
exercisable at November 30, 2008:





Stock
      Options Outstanding
                                  
                                  
                                  Stock
      Options ExercisableWeighted
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  WeightedAverage
                                  
                                  
                                  Weighted
                                  
                                  
                                  
                                  
                                  
                                  Average
                                  
                                  
                                  WeightedNumber
      of
                                  
                                  
                                  Remaining
                                  
                                  
                                  Average
                                  
                                  
                                  Number
      of
                                  
                                  
                                  Remaining
                                  
                                  
                                  AverageOptions
                                  
                                  
                                  Contractual
                                  
                                  
                                  Exercise
                                  
                                  
                                  Options
                                  
                                  
                                  Contractual
                                  
                                  
                                  ExerciseExercise
      Prices
                                  
                                  
                                  Outstanding
                                  
                                  
                                  Life
      (Years)
                                  
                                  
                                  Price
                                  
                                  
                                  Exercisable
                                  
                                  
                                  Life
      (Years)
                                  
                                  
                                  Price$
                                  0.78
                                  
                                  
                                  
                                  50,000
                                  
                                  
                                  
                                  9.79
                                  
                                  
                                  $
                                  0.78
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  $
                                  —0.85
                                  
                                  
                                  
                                  100,000
                                  
                                  
                                  
                                  9.78
                                  
                                  
                                  
                                  0.85
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —1.66
                                  
                                  
                                  
                                  50,000
                                  
                                  
                                  
                                  9.28
                                  
                                  
                                  
                                  1.66
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —$
                                  0.78
      – 1.66
                                  
                                  
                                  
                                  200,000
                                  
                                  
                                  
                                  9.66
                                  
                                  
                                  $
                                  1.04
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  $
                                  —





The
Company does not repurchase shares to fulfill the requirements of options that
are exercised. Further, the Company issues new shares when options are
exercised.





Note
9:  Related Party Transactions





Wages
and benefits





During
the three months ended November 30, 2008 the Company incurred $77,154 in cash
wages and benefits expense for services rendered by Mr. Nicholas Cucinelli,
the former President and Chief Executive Officer of the Company, which includes
$50,000 severance pursuant to an Employment Termination Agreement, dated October
15, 2008 between the Company and Mr. Cucinelli.  Upon Mr. Cucinelli’s
resignation, the Company simultaneously appointed Mr. Meetesh Patel as the
President, Chief Executive Officer and Director of the
Company.  During the three months ended November 30, 2008, the Company
incurred $27,361 in cash wages and benefits expense for services rendered by Mr.
Patel.





Upon Mr.
Nicholas Cucinelli’s resignation as President and Chief Executive Officer of the
Company, the stock option granted him on February 15, 2008 to purchase 1,250,000
shares of common stock was forfeited pursuant to the terms of the Employment
Termination Agreement.  As a result of Mr. Cucinelli’s resignation,
stock option compensation expense of $3,573,778 recorded in fiscal year 2008 for
Mr. Cucinelli’s stock option was reversed during the quarter ended November 30,
2008 and is included in wages and benefits.





Professional
fees





During
the three months ended November 30, 2008, the Company incurred $8,333 for
services rendered by non-employee directors of the Company.





On
September 9, 2008, Mr. Gladwin resigned from the Company’s Board of
Directors.  Upon Mr. Gladwin’s resignation, the stock option granted
to him on March 10, 2008 to purchase 50,000 shares of common stock was
forfeited.  Pursuant to Mr. Gladwin’s resignation, stock option
compensation expense of $13,262 recorded in fiscal year 2008 for Mr. Gladwin’s
stock option was reversed during the quarter ended November 30, 2008 and is
included in professional fees.





On
September 9, 2008, the Company granted a stock option to each of two of its
directors permitting each to purchase, subject to applicable vesting
provisions, 50,000 shares of the Company’s common stock at an exercise price of
$0.85 per share. Each stock option vests in five equal annual installments of
10,000 options each, commencing on September 9, 2009, and annually
thereafter. The stock options are further subject to the terms and
conditions of a stock option agreement between each director and the Company.
 Under the terms of the stock option agreement, the stock option agreement
will terminate and there will be no further vesting of stock options effective
as of the date that the director ceases to be a director of the Company.
 Upon termination of such service, the director will have a specified
period of time to exercise vested stock options, if any.  The fair
value of the aggregate 100,000 stock options granted was estimated at $0.77
each, for a total of $77,000.  During the three months ended November
30, 2008, the Company recorded stock compensation expense of $15,812 related to
stock options granted to non-employee directors, which is included in
professional fees.




Note
10: Subsequent Event
 
 On
January 9, 2009, Mr. Frank Fabio resigned from the positions of
Chief Financial Officer and Secretary of the Company. As a result, the stock
option granted to Mr. Fabio on September 12, 2008 to purchase 50,000 shares
of common stock was forfeited pursuant to the terms of a Nonstatutory Stock
Option Agreement dated September 12, 2008 between the Company and
Mr. Fabio. Pursuant to Mr. Fabio'sresignation, the stock
option compensation expense of $4,053 recorded during the quarter ended November
30, 2008 for Mr. Fabio's stock option will be reversed during the quarter
ended February 28, 2009.
 
 On
January 9, 2009, Mr. Meetesh Patel, the Company's President,
Chief Executive Officer, and a Director of the Company was appointed to the
positions of Chief Financial Officer and Secretary of the Company to fill the
vacancy created by the resignation of Mr. Fabio.




13
 Table of Contents





During
the three months ended November 30, 2008 and 2007, the law firm of Sierchio
Greco & Greco, LLP (“SG&G LLP”), the Company’s corporate and securities
legal counsel, provided $17,775 and $15,080 of legal services to the
Company. Joseph Sierchio, a non-employee director of the Company, is a
principal of SG&G LLP.  At November 30, 2008, the Company owed
SG&G LLP $7,725 which is included in accounts payable.





Management
fees – related party


During
the three months ended November 30, 2008, the Company incurred $2,500 for
services rendered by Mr. Frank Fabio, the consultant Chief Financial Officer
(the “CFO) of the Company.





On
September 12, 2008, the Company granted a stock option to the CFO of the Company
to purchase, subject to applicable vesting provisions, 50,000 shares of the
Company’s common stock at an exercise price of $0.78 per share. The stock option
vests in five equal annual installments of 10,000 options each, commencing on
September 12, 2009, and annually thereafter. The stock option is further
subject to the terms and conditions of the stock option agreement between the
CFO and the Company.  Under the terms of the stock option agreement, the
stock option agreement will terminate and there will be no further vesting of
stock options effective as of the date that the CFO ceases to serve as a
consultant to the Company.  Upon termination of such service, the CFO will
have a specified period of time to exercise vested stock options, if
any.  The fair value of the 50,000 stock options granted was estimated
at $0.71 each, for a total of $35,500.  During the three months ended
November 30, 2008, the Company recorded stock compensation expense of $4,053
related to the stock option granted to the CFO, which is included in management
fees – related party.





All
related party transactions are recorded at the exchange amount established and
agreed to between related parties and are in the normal course of
business.





14
 Table of Contents





Item2.  Management’s discussion and Analysis of Financial
Condition and Results of Operations.





Forward-Looking
Statements





Except
for the historical information presented in this document, the matters discussed
in this Form 10-Q for the three months ended November 30, 2008, and specifically
in the items entitled "Management’s Discussion and Analysis of Financial
Condition and Results of Operations," or otherwise incorporated by reference
into this document, contain "forward-looking statements" (as such term is
defined in the Private Securities Litigation Reform Act of 1995). These
statements are identified by the use of forward-looking terminology such as
"believes," "plans," "intend," "scheduled," "potential," "continue,"
"estimates," "hopes," "goal," "objective," expects," "may," "will," "should," or
"anticipates" or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy that involve risks and
uncertainties.





The safe
harbor provisions of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended, apply to
forward-looking statements made by the Company. The reader is cautioned that no
statements contained in this Form 10-Q should be construed as a guarantee or
assurance of future performance or results. These forward-looking statements
involve risks and uncertainties, including those identified within this Form
10-Q. The actual results that the Company achieves may differ materially from
any forward-looking statements due to such risks and uncertainties. These
forward-looking statements are based on current expectations, and the Company
assumes no obligation to update this information. Readers are urged to carefully
review and consider the various disclosures made by the Company in this Form
10-Q and in the Company's other reports filed with the Securities and Exchange
Commission that attempt to advise interested parties of the risks and factors
that may affect the Company's business.





Overview





The
following Management’s Discussion and Analysis (“MD&A”) is intended to help
the reader understand the results of operations and financial condition of
Octillion Corp. MD&A is provided as a supplement to, and should be read in
conjunction with, the Company’s consolidated financial statements and the
accompanying notes to the consolidated financial statements.





Octillion
Corp. (the “Company”) was incorporated in the State of Nevada on May 5, 1998;
and together with its wholly owned subsidiaries Sungen Energy, Inc. (“Sungen”),
Kinetic Energy Corp. (“Kinetic Energy”), and Octillion Technologies Limited
(“Octillion Technologies”) is a next generation alternative and renewable energy
technology developer focused on the identification, acquisition, development,
and commercialization of alternative and renewable energy
technologies.  Sungen was incorporated on July 11, 2006 in the State
of Nevada and has no assets and no liabilities.  Kinetic Energy was
incorporated on June 19, 2008 in the State of Nevada and has no assets and no
liabilities.  Octillion Technologies was incorporated on April 11, 2007 in
the Province of British Columbia, Canada for providing administrative services
to the Company’s Canadian office.  The Company ceased to conduct
business in Canada in September 2008.  For convenience, the terms
“Company” and “we,” “us,” and “our” are used to refer collectively to the parent
company and the subsidiaries through which the Company’s various businesses are
actually conducted.





Among the
Company’s current research and development activities is the development of a
technology to adapt home and office glass windows, skylights, and building
facades into products capable of generating electricity from solar energy
without losing significant transparency or requiring major changes in
manufacturing infrastructure, and technologies to harness the kinetic energy of
vehicles to generate electricity.





Because
the Company is a smaller reporting company certain disclosures otherwise
required to be made in a Form 10-Q are not required to be made by the
Company.





Photovoltaic
Technologies





UIUC
Sponsored Research Agreement





On August
25, 2006, through the Company’s wholly owned subsidiary, Sungen Energy, Inc.
(“Sungen”), the Company entered into a Sponsored Research Agreement (“UIUC
Sponsored Research Agreement”) with the University of Illinois at
Urbana-Champaign (“UIUC”) for the development of a new patent-pending technology
to integrate films of silicon nanoparticle material on glass substrates, acting
as photovoltaic solar cells that have the potential to convert normal home and
office glass windows into ones capable of converting solar energy into
electricity, with limited loss of transparency and minimal changes in
manufacturing infrastructure (the “UIUC Silicon Nanoparticle Energy
Technology”). On July 23, 2007, the Company through its wholly owned
subsidiary, Sungen, amended its Sponsored Research Agreement with the
UIUC.  Pursuant to this amended Sponsored Research Agreement, the
Company agreed to provide an additional $203,617 to the previously awarded
amount of $219,201 for a total of $422,818, to the University of Illinois in
order to accelerate the development of films of silicon nanoparticle material
composed of nanosilicon photovoltaic solar cells that have the potential to
convert solar radiation to electrical energy.





15
 Table of Contents





The UIUC
Sponsored Research Agreement expired on August 22, 2008.  As of this
date, the Company had advanced a total of $266,709 to the University of Illinois
pursuant to the terms of the UIUC Sponsored Research
Agreement.  Pursuant to the terms of the UIUC Sponsored Research
Agreement, the Company was to advance an additional $156,109 to the University
of Illinois, which is included in other accrued liabilities at November 30,
2008.  However, the Company has not made the advance pending
determination as to whether funds previously paid to UIUC under the terms of the
UIUC Sponsored Research Agreement have been fully expended.   The
Company is currently in discussions with UIUC regarding the status of these
funds.  The Company is of the opinion that to the extent these funds
were not expended they should be refunded to the Company.





During
the three months ended November 30, 2008 and 2007, the Company recorded $0 and
$78,054 as research and development expense pursuant to the UIUC Sponsored
Research Agreement.  During the period from inception (May 5, 1998) to
November 30, 2008, the Company recorded $422,818 as research and development
expense pursuant to the UIUC Sponsored Research Agreement.





Oakland
Sponsored Research Agreement





On August
18, 2008, the Company entered into a two-year Sponsored Research Agreement
(“Oakland Sponsored Research Agreement”) with scientists at
Oakland University to further the development of the Company’s photovoltaic
technology.  In addition to working to advance the Company’s solar
photovoltaic technology, scientists and collaborating researchers will explore
additional nanotechnology applications that may be derived from their
efforts.





The
Oakland Sponsored Research Agreement is focused on transparent photovoltaic
device construction on glass substrates, and also includes provisions to explore
related innovations such as flexible substrates, hybridized solar cell designs,
and other photovoltaic innovations. In addition to furthering the Company’s
efforts to develop a transparent window capable of generating electricity, the
Oakland Sponsored Research Agreement also allows the Company and Oakland
University to jointly benefit from nanotechnology innovations that may broadly
apply in other applications and markets, creating incentives for the
commercialization of peripheral discoveries and the potential for spin-off
activities and sub-licensing agreements.





Pursuant
to the terms of the Oakland Sponsored Research Agreement the Company agreed to
advance a total of $348,066 to fund the research and development activities of
which $140,519 is payable on or before September 1, 2008, $127,547 is payable on
or before October 1, 2009 and $80,000 is payable on demand during the contract
period for reimbursement of materials provided by Oakland
University.  As of November 30, 2008, the Company advanced $140,519 to
Oakland University in accordance with the terms of the Oakland
Sponsored Research Agreement, which is included in deferred research and
development costs.  As of November 30, 2008, researchers had not
expended funds related to the Oakland Sponsored Research Agreement and
accordingly, no amortization of the deferred research and development costs was
recorded during the three months ended November 30, 2008.





Energy Harvesting
Technologies





On
November 4, 2008, the Company, through its wholly-owned subsidiary, Kinetic
Energy Corp., entered into an agreement with VERYST Engineering LLC (the “Veryst
Agreement”) relating to the development of technologies for generating
electricity from the motion of cars and trucks.  The Veryst Agreement
continues until terminated by either Veryst Engineering LLC or the
Company.  Pursuant to a Confidential Treatment Order (“CT ORDER”)
filed with the SEC, payment terms, scope of work and the terms of the license
agreement pursuant to the Veryst Agreement have not been disclosed.





Nerve Regeneration
Technology





On August
22, 2007, the Company spun off its wholly-owned biotechnology subsidiary,
MicroChannel Technologies Corporation (“MicroChannel”) with the shareholders of
the Company. The net assets and results of operations of MicroChannel of the
prior period have been reclassified as discontinued operations.





16
 Table of Contents





Results of
Operations





Operating
Expenses





A summary
of the Company’s operating income (expense) for the three months ended November
30, 2008 and 2007 was as follows:





Three
      Months EndedNovember
      30,
                          
                          
                          Percentage2008
                          
                          
                          2007
                          
                          
                          ChangeOperating
      income (expense)Investor
      relations
                          
                          $
                          10,800
                          
                          
                          $
                          378,910
                          
                          
                          
                          (97.15
                          )
      %Wages
      and benefits
                          
                          
                          (3,418,560
                          )
                          
                          
                          958,366
                          
                          
                          
                          *Management
      fees - related party
                          
                          
                          6,553
                          
                          
                          
                          -
                          
                          
                          
                          *Professional
      fees
                          
                          
                          60,790
                          
                          
                          
                          18,065
                          
                          
                          
                          236.51Research
      and development
                          
                          
                          22,250
                          
                          
                          
                          78,054
                          
                          
                          
                          (71.49
                          )Travel
      and entertainment
                          
                          
                          22,378
                          
                          
                          
                          28,361
                          
                          
                          
                          (21.10
                          )Other
      operating expenses
                          
                          
                          16,375
                          
                          
                          
                          28,873
                          
                          
                          
                          (43.29
                          )Total
      operating income (expense)
                          
                          $
                          (3,279,414
                          )
                          
                          $
                          1,490,629
                          
                          
                          
                          *
                          %





* Not
meaningful





Investor Relations





The
decrease in investor relations is due to the Company focusing on fund raising
efforts during the three months ended November 30, 2007 compared to the three
months ended November 30, 2008, which required increased analyst coverage,
company branding and information distribution.





Wages and benefits





On
October 15, 2008, Mr. Nicholas Cucinelli resigned as President and Chief
Executive Officer of the Company.  As a result, the stock option
granted him on February 15, 2008 to purchase 1,250,000 shares of common stock
was forfeited pursuant to the terms of an Employment Termination Agreement
between the Company and Mr. Cucinelli.  As a result of Mr. Cucinelli’s
resignation, stock option compensation expense of $3,573,778 recorded in fiscal
year 2008 for Mr. Cucinelli’s stock option was reversed during the quarter ended
November 30, 2008.  In contrast, during the three months ended
November 30, 2007, stock compensation expense of $887,125 was recorded in
connection with Mr. Cucinelli’s stock option grant.  Pursuant to the
terms of Mr. Cucinelli’s Employment Termination Agreement, he also received
$50,000 severance during the three months ended November 30, 2008.





Management fees – related
party





Mr. Frank
Fabio was appointed the Company’s consultant Chief Financial Officer (the
“CFO”), effective September 12, 2008.  During the three months ended
November 30, 2008, the Company incurred $2,500 for services rendered by Mr.
Fabio.





On
September 12, 2008, the Company granted a stock option to the CFO of the Company
to purchase, subject to applicable vesting provisions, 50,000 shares of the
Company’s common stock at an exercise price of $0.78 per share. The stock option
vests in five equal annual installments of 10,000 options each, commencing on
September 12, 2009, and annually thereafter. The stock option is further
subject to the terms and conditions of the stock option agreement between the
CFO and the Company.  Under the terms of the stock option agreement, the
stock option agreement will terminate and there will be no further vesting of
stock options effective as of the date that the CFO ceases to serve as a
consultant to the Company.  Upon termination of such service, the CFO will
have a specified period of time to exercise vested stock options, if
any.  The fair value of the 50,000 stock options granted was estimated
at $0.71 each, for a total of $35,500.  During the three months ended
November 30, 2008, the Company recorded stock compensation expense of $4,053
related to the stock option granted to the CFO.





Professional fees





Professional
fees primarily consist of accounting and audit fees, legal fees and non-employee
Board fees.  Professional fees increased partially as a result of the
Company closing its administrative office in Vancouver, British Columbia,
Canada, effective August 31, 2008, terminating all of the employees in
Vancouver, Canada.  Due to this downsizing, as of September 1, 2008,
the Company began outsourcing its accounting function to third parties resulting
in an increase in accounting fees of $22,057.  Additionally, during
the quarter ended November 30, 2008, the Company appointed two new members to
the Board of Directors, replacing two directors who resigned during the quarter
ended November 30, 2008.





17
 Table of Contents





During
the three months ended November 30, 2008 and 2007, the Company incurred $8,333
and $0 for services rendered by non-employee directors of the
Company.





On
September 9, 2008, the Company granted a stock option to each of two of its
directors permitting each to purchase, subject to applicable vesting
provisions, 50,000 shares of the Company’s common stock at an exercise price of
$0.85 per share. Each stock option vests in five equal annual installments of
10,000 options each, commencing on September 9, 2009, and annually
thereafter. The options are further subject to the terms and conditions of
a stock option agreement between each director and the Company.  Under the
terms of the stock option agreement, the agreement will terminate and there will
be no further vesting of stock options effective as of the date that the
director ceases to be a director of the Company.  Upon termination of such
service, the director will have a specified period of time to exercise vested
stock options, if any.  The fair value of the aggregate 100,000 stock
options granted was estimated at $0.77 each, for a total of
$77,000.  During the three months ended November 30, 2008, the Company
recorded stock compensation expense of $15,812 related to stock options granted
to non-employee directors,





On
September 9, 2008, Mr. Gladwin resigned from the Company’s Board of
Directors.  Upon Mr. Gladwin’s resignation, the stock option granted
to him on March 10, 2008 to purchase 50,000 shares of common stock was
forfeited.  Pursuant to Mr. Gladwin’s resignation, stock option
compensation expense of $13,262 recorded in fiscal year 2008 for Mr. Gladwin’s
stock option was reversed during the quarter ended November 30,
2008.





Research and development





Research
and development costs represent costs incurred to develop the Company’s
technology and are incurred pursuant to the Company’s sponsored research
agreements with UIUC, Oakland University, and VERYST Engineering LLC. These
agreements include salaries and benefits for research and development personnel,
allocated overhead and facility occupancy costs, contract services and other
costs. The Company charges all research and development expenses to operations
as they are incurred except for prepayments which are capitalized and amortized
over the applicable period.





Research
and development expense for the three months ended November 30, 2008 consists
substantially of costs incurred pursuant to the Veryst
Agreement.  Research and development expense for the three months
ended November 30, 2007 consists entirely of costs incurred pursuant to the UIUC
Sponsored Research Agreement.





Travel and entertainment





Travel
and entertainment decreased primarily as a result of the Company closing its
administrative office in Vancouver, British Columbia, Canada, effective August
31, 2008, terminating all of the employees in Vancouver, Canada.





Other operating expenses





Other
operating expenses includes rent, utilities, office supplies, information
technology related fees and other administrative costs.  Other
operating expenses decreased primarily as a result of the Company closing its
administrative office in Vancouver, British Columbia, Canada, effective August
31, 2008.  Rent for the Vancouver, Canada administrative office was
CAD$3,200 per month.





18
 Table of Contents





Other
income (expense)





A summary
of the Company’s other income (expense) for the three months ended November 30,
2008 and 2007 was as follows:





Three
      Months EndedNovember
      30,
                          
                          
                          Percentage2008
                          
                          
                          2007
                          
                          
                          ChangeOther
      income (expense)Interest
      income
                          
                          $
                          7,196
                          
                          
                          $
                          12,904
                          
                          
                          
                          (44.23
                          )
      %Interest
      expense
                          
                          
                          (106
                          )
                          
                          
                          -
                          
                          
                          
                          *Foreign
      exchange gain (loss)
                          
                          
                          (53,553
                          )
                          
                          
                          2,211
                          
                          
                          
                          *Total
      other income (expense)
                          
                          $
                          (46,463
                          )
                          
                          $
                          15,115
                          
                          
                          
                          *
                          %





* Not
meaningful





Interest income





Despite
the higher average cash balance maintained during the three months ended
November 30, 2008 compared to the same period in 2007, interest income decreased
as a result of the sharp decline in the interest rate on the Company’s
interest-bearing cash accounts from the first quarter of 2008 to the first
quarter of 2009.





Foreign exchange gain
(loss)





The
Company translates assets and liabilities of its foreign subsidiaries, other
than those denominated in United States Dollars, at the rate of exchange at the
balance sheet date.  The increase in foreign exchange loss is
primarily the result of the increase in the intercompany payable of the
Company’s foreign subsidiary (denominated in Canadian dollars) to Octillion
Corp. from CAD$127,966 at November 30, 2007 to CAD$436,636 at November 30,
2008.





Liquidity and Capital
Resources





The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern.  The Company incurred cumulative losses
of $4,880,493 through November 30, 2008.  Additionally, the Company
has expended a significant amount of cash in developing its photovoltaic
technologies.  The Company expects that any future revenues will
not be sufficient to sustain its operations for the foreseeable future. The
Company’s profitability will require the successful completion of its research
and development programs, and the subsequent commercialization of the results or
of products derived from such research and development efforts.  These
conditions raise substantial doubt about the Company’s ability to continue as a
going concern.





As of
November 30, 2008, the Company had a cash balance of $2,721,329. The Company has
financed its operations primarily pursuant to a Securities Purchase Agreement in
which the Company received $3,395,955 net proceeds in February 2008 and from the
exercise of warrants.





Net cash
used in operating activities was $319,692 for the three months ended November
30, 2008, compared to net cash used of $526,165 for the same period in
2007.  The decrease in cash used primarily reflects a decrease in
investor relations expense of $368,110, offset by an increase in accounting fees
of $22,057 as a result of the Company outsourcing its accounting function to
third parties, effective September 1, 2008 and a $50,000 severance payment made
to Mr. Cucinelli, the Company’s former Chief Executive Officer and President
pursuant to his Termination Employment Agreement dated October 15,
2008.





Net cash
used in investing activities was $0 for the three months ended November 30,
2008, compared to $2,271 during the same period in 2007.  During the
three months ended November 30, 2007, the Company purchased $2,271 of equipment,
all of which was for use by the administrative office in Vancouver, B.C. and
subsequently disposed of on August 31, 2008.





Securities
Purchase Agreement





On
February 12, 2008, the Company consummated the sale of an aggregate of 3,675,000
shares of its common stock and Class F Callable Warrants to purchase up to an
additional 3,675,000 shares of the Company’s common stock for aggregate proceeds
of $3,675,000 pursuant to the terms of a Securities Purchase Agreement dated
February 8, 2008 with certain institutional and other accredited
investors.





19
 Table of Contents





The
Company engaged an agent (the “Agent”) to help in the fund raising efforts of
the Securities Purchase Agreement.  The agent was paid a total cash
fee of 7% of the aggregate proceeds ($257,250) and received Class F Callable
Warrants to purchase 514,500 shares of the Company’s common stock valued at
$642,980 and representing 7% of the total number of shares purchased by the
Investors. In addition, the agent was reimbursed $6,045 for expenses incurred on
behalf of the Company.





Related Party
Transactions





Wages
and benefits


During
the three months ended November 30, 2008 the Company incurred $77,154 in cash
wages and benefits expense for services rendered by Mr. Nicholas Cucinelli,
the former President and Chief Executive Officer of the Company, which includes
$50,000 severance pursuant to an Employment Termination Agreement, dated October
15, 2008 between the Company and Mr. Cucinelli.  Upon Mr. Cucinelli’s
resignation, the Company simultaneously appointed Mr. Meetesh Patel as the
President, Chief Executive Officer and Director of the
Company.  During the three months ended November 30, 2008, the Company
incurred $27,361 in cash wages and benefits expense for services rendered by Mr.
Patel.





Upon Mr.
Nicholas Cucinelli’s resignation as President and Chief Executive Officer of the
Company, the stock option granted him on February 15, 2008 to purchase 1,250,000
shares of common stock was forfeited pursuant to the terms of the Employment
Termination Agreement.  As a result of Mr. Cucinelli’s resignation,
stock option compensation expense of $3,573,778 recorded in fiscal year 2008 for
Mr. Cucinelli’s stock option was reversed during the quarter ended November 30,
2008 and is included in wages and benefits.





Professional
fees


During
the three months ended November 30, 2008, the Company incurred $8,333 for
services rendered by non-employee directors of the Company.





On
September 9, 2008, Mr. Gladwin resigned from the Company’s Board of
Directors.  Upon Mr. Gladwin’s resignation, the stock option granted
to him on March 10, 2008 to purchase 50,000 shares of common stock was
forfeited.  Pursuant to Mr. Gladwin’s resignation, stock option
compensation expense of $13,262 recorded in fiscal year 2008 for Mr. Gladwin’s
stock option was reversed during the quarter ended November 30, 2008 and is
included in professional fees.





On
September 9, 2008, the Company granted a stock option to each of two of its
directors permitting each to purchase, subject to applicable vesting
provisions, 50,000 shares of the Company’s common stock at an exercise price of
$0.85 per share. Each stock option vests in five equal annual installments of
10,000 options each, commencing on September 9, 2009, and annually
thereafter. The options are further subject to the terms and conditions of
a stock option agreement between each director and the Company.  Under the
terms of the stock option agreement, the stock option agreement will terminate
and there will be no further vesting of stock options effective as of the date
that the director ceases to be a director of the Company.  Upon termination
of such service, the director will have a specified period of time to exercise
vested stock options, if any.  The fair value of the aggregate 100,000
stock options granted was estimated at $0.77 each, for a total of
$77,000.  During the three months ended November 30, 2008, the Company
recorded stock compensation expense of $15,812 related to stock options granted
to non-employee directors, which is included in professional fees.





During
the three months ended November 30, 2008 and 2007, the law firm of Sierchio
Greco & Greco, LLP (“SG&G LLP”), the Company’s corporate and securities
legal counsel, provided $17,775 and $15,080 of legal services to the
Company. Joseph Sierchio, a non-employee director of the Company, is a
principal of SG&G LLP.  At November 30, 2008, the Company owed
SG&G LLP $7,725 which is included in accounts payable.





Management
fees – related party


During
the three months ended November 30, 2008, the Company incurred $2,500 for
services rendered by Mr. Frank Fabio, the consultant Chief Financial Officer
(the “CFO”) of the Company.





On
September 12, 2008, the Company granted a stock option to the CFO of the Company
to purchase, subject to applicable vesting provisions, 50,000 shares of the
Company’s common stock at an exercise price of $0.78 per share. The stock option
vests in five equal annual installments of 10,000 options each, commencing on
September 12, 2009, and annually thereafter. The stock option is further
subject to the terms and conditions of the stock option agreement between the
CFO and the Company.  Under the terms of the stock option agreement, the
stock option agreement will terminate and there will be no further vesting of
stock options effective as of the date that the CFO ceases to serve as a
consultant to the Company.  Upon termination of such service, the CFO will
have a specified period of time to exercise vested stock options, if
any.  The fair value of the 50,000 stock options granted was estimated
at $0.71 each, for a total of $35,500. During the three months ended November
30, 2008, the Company recorded stock compensation expense of $4,053 related to
the stock option granted to the CFO, which is included in management fees –
related party.





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All
related party transactions are recorded at the exchange amount established and
agreed to between related parties and are in the normal course of
business.





Other Contractual
Obligations





As of
November 30, 2008, the Company has future minimum lease payments of $2,750 under
its corporate office operating lease.





Off-Balance Sheet
Arrangements





The
Company has no off-balance sheet arrangements.





Recently IssuedAccounting
Pronouncements





See Note
2. “Presentation of Interim Information” to the Consolidated Financial
Statements in this Form 10-Q.





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 Table of Contents





Item4T.   Controls and Procedures





(a)
Evaluation of Disclosure Controls and Procedures





The
Company’s management, with the participation of its Chief Executive Officer and
Chief Financial Officer, has evaluated the effectiveness of the Company’s
disclosure controls and procedures (as defined in 13a-15(e) and 15d-15(e) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end
of the period covered by this report.  Based on that evaluation, the
Company’s Chief Executive Officer and Chief Financial Officer concluded that the
Company’s disclosure controls and procedures are effective to provide reasonable
assurance that information required to be disclosed in the Company’s periodic
filings under the Exchange Act is accumulated and communicated to the Company’s
management, including the Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.





(b)
Changes in Internal Control over Financial Reporting





There
were no changes in the Company’s internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred
during the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.





22
 Table of Contents





PART
II – OTHER INFORMATION





Item1.
            Legal
      Proceedings.





None





Item2.
            Unregistered
      Sales of Equity Securities and Use of
Proceeds.





None





Item3.
            Defaults
      Upon Senior Securities





None





Item4.
            Submission
      of Matters to a Vote of Security
Holders





None





Item5.
            Other
      Information





None





Item6.
            Exhibits





31.1
            Certification
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      Rule 13a-14(a)




32.1
            Certification
      by the Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002








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 Table of Contents





SIGNATURES





Pursuant
to the requirements of Sections 13 or 15 (d) of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned,  thereunto
duly  authorized.





Octillion Corp.(Registrant)








Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons  on  behalf of the
registrant and in capacities and on the dates indicated.







Signature
                          
                          Title
                          
                          Date/s/ Meetesh Patel
                          
                          President, Chief
      Executive Officer,Chief Financial
      Officer,
                          
                          January
      13, 2009Meetesh
      Patel
                          
                          Secretary, Director







24