**U.S.
          SECURITIES AND EXCHANGE COMMISSION**
 **Washington,
          DC 20549**
 
 **FORM
          10-QSB/A**
  (Mark
          one)
  **x** **QUARTERLY
          REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
          ACT OF 1934**
  For
                    the quarterly period ended:**March
                    31, 2007**
  **o** **TRANSITION
          REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT**
  For
                    the transition period from _________ to
                    ___________
  Commission
                    file number000-08924
  **TWL
        Corporation**
 Formerly
        Trinity Learning Corporation
 (Exact
        name of small business issuer as specified in its charter)
 
 **Utah**
              
              **73-0981865**(State
                  or other jurisdiction of
                incorporation
                  or organization)
              
              (IRS
                  Employer Identification No.)
 
 **4101
        International Parkway, Carrollton, Texas 75007**
 (Address
        of principal executive offices)
 
 **(972)
        309-4000**
 (Issuer’s
        telephone number)
 
 
 Check
        whether the issuer (1) filed all reports required to be filed by sections
        13 or
        15(d) of the Exchange Act during the past 12 months (or such shorter period
        that
        the issuer was required to file such reports), and (2) has been subject to
        such
        filing requirements for the past 90 days. Yes x No o
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act). Yes o No x
  As
        of May
        17, 2007, **** 43,978,013
        shares of the issuer’s common stock and 4,300,000 shares of the issuer’s
        Preferred Stock, no par value per share, were outstanding.
  
 1
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            25
 
 **TWL
        CORPORATION AND SUBSIDIARIES**
 
 **EXPLANATORY
        NOTE**
 
 This
        amended Quarterly Report on Form 10-QSB/A (the “Amended Quarterly Report”) is
        being filed by TWL Corporation (the “Company”) solely to file the correct
        version of the “Condensed Consolidated Statements of Operations and
        Comprehensive Losses” appearing on page 5 of this Amended Quarterly Report whose
        incorrect version was inadvertently filed with the Securities and Exchange
        Commission (the “SEC”) as part of the Company’s Quarterly Report on Form 10-QSB
        and amended Quarterly Report filed with the SEC on Form 10-QSB/A, filed on
        May
        22, 2007, as a result of an erroneous filing made by the Company’s Edgarizer,
        the firm the Company uses to 'edgarize' the filing (the process used to submit
        filings electronically with the SEC). The Company is assessing its filing
        procedures to ensure they are adequate for future filings.
 
 Throughout
        this report, we refer to TWL Corporation, together with its subsidiaries,
        as
“we,” “us,” “our company,” “TWL” or “the Company.”
 
 THIS
        FORM
        10-QSB FOR THE NINE MONTHS ENDED MARCH 31, 2007, CONTAINS FORWARD-LOOKING
        STATEMENTS, INCLUDING STATEMENTS ABOUT THE CONTINUED STRENGTH OF OUR BUSINESS
        AND OPPORTUNITIES FOR FUTURE GROWTH. IN SOME CASES, YOU CAN IDENTIFY
        FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS “MAY”, “WILL”, “SHOULD”,
“EXPECT”, “PLAN”, “INTEND”, “ANTICIPATE”, “BELIEVE”, “ESTIMATE”, “PREDICT”,
“POTENTIAL” OR “CONTINUE”, THE NEGATIVE OF SUCH TERMS OR OTHER COMPARABLE
        TERMINOLOGY. WE BELIEVE THAT OUR EXPECTATIONS ARE REASONABLE AND ARE BASED
        ON
        REASONABLE ASSUMPTIONS. HOWEVER, SUCH FORWARD-LOOKING STATEMENTS BY THEIR
        NATURE
        INVOLVE RISKS AND UNCERTAINTIES.
 
 WE
        CAUTION THAT A VARIETY OF FACTORS, INCLUDING BUT NOT LIMITED TO THE FOLLOWING,
        COULD CAUSE OUR BUSINESS AND FINANCIAL RESULTS TO DIFFER MATERIALLY FROM
        THOSE
        EXPRESSED OR IMPLIED IN FORWARD-LOOKING STATEMENTS: DETERIORATION IN CURRENT
        ECONOMIC CONDITIONS; OUR ABILITY TO PURSUE BUSINESS STRATEGIES; PRICING
        PRESSURES; CHANGES IN THE REGULATORY ENVIRONMENT; OUR ABILITY TO ATTRACT
        AND
        RETAIN QUALIFIED PROFESSIONALS; INDUSTRY COMPETITION; CHANGES IN INTERNATIONAL
        TRADE; MONETARY AND FISCAL POLICIES; OUR ABILITY TO INTEGRATE FUTURE
        ACQUISITIONS SUCCESSFULLY; AND OTHER FACTORS DISCUSSED MORE FULLY IN
        MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
        OPERATIONS AND RISK FACTORS BELOW, AS WELL AS IN OTHER REPORTS SUBSEQUENTLY
        FILED FROM TIME TO TIME WITH THE SECURITIES AND EXCHANGE COMMISSION. WE ASSUME
        NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS.
  2
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 **TABLE
        OF CONTENTS**
  PART
                  I. FINANCIAL INFORMATIONITEM
                  1.
              
              Condensed
                  Consolidated Financial StatementsCondensed
                  Consolidated Balance Sheet at March 31, 2007
              
              4Condensed
                  Consolidated Statements of Operations and Comprehensive Losses
                  for the
                  three and Nine MonthsEnded
                  March 31, 2007 and 2006
              
              5Condensed
                  Consolidated Statements of Cash Flows for the Nine
                  Months Ended March 31, 2007 and 2006
              
              6Notes
                  To Consolidated Financial
                  Statements
              
              7ITEM
                  2
              
              Management’s
                  Discussion and Analysis or Plan of
                  Operation
              
              16ITEM
                  3
              
              Controls
                  and Procedures
              
              21PART
                  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
              
              24ITEM
                  6
              
              Exhibits
              
              24
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 *Table
            of Contents*
 
 **TWL
        Corporation**
 **(formerly
        Trinity Learning Corporation)**
 **Condensed
        Consolidated Balance Sheet**
 
 **March
                  31,****2007****(Unaudited)****Assets****Current
                  Assets**Cash
                  and Cash Equivalents
              
              $
              1,878,202Accounts
                  Receivable, net
              
              
              3,550,012Inventory,
                  net
              
              
              915,495Prepaid
                  Expenses and Other Current Assets
              
              
              375,502Total
                  Current Assets
              
              
              6,719,211Property
                  & Equipment, net
              
              
              4,550,562Other
                  Assets
              
              
              1,152,041**Total
                  Assets**
              
              $
              12,421,814**Liabilities
                  and Stockholders' Equity (Deficit)****Current
                  Liabilities**Accounts
                  Payable
              
              
              4,919,205Accrued
                  Expenses
              
              
              9,432,094Interest
                  Payable
              
              
              908,240Deferred
                  Revenue
              
              
              4,470,093Capital
                  Lease - Current
              
              
              1,266,104Line
                  of Credit - Current
              
              
              1,200,000Convertible
                  Notes Payable, net of unamortized discount of $578,990
              
              
              5,431,094Notes
                  Payable - Related Parties
              
              
              530,718Total
                  Current Liabilities
              
              
              28,157,548**Long
                  Term Liabilities**Obligations
                  under capital leases
              
              
              11,085,521Note
                  Payable, net of unamortized discount of $335,276
              
              
              2,037,224Other
                  Long-term Liabilities
              
              
              62,750Total
                  Long-term Liabilities
              
              
              13,185,495**Total
                  Liabilities**
              
              
              41,343,043**Stockholders'
                  Equity (Deficit)**Preferred
                  Stock, 10,000,000 Shares Authorized at No Par Value; 4,300,000
                  shares
                  issued and outstanding
              
              
              3,460,000Common
                  Stock, 750,000,000 Shares Authorized at No Par Value; 43,415,513
                  shares
                  Issued and Outstanding
              
              
              38,376,673Accumulated
                  Deficit
              
              
              (70,750,401
              )Other
                  Comprehensive Income (Loss)
              
              
              (7,501
              )Total
                  Stockholders' Deficit
              
              
              (28,921,229
              )**Total
                  Liabilities and Stockholders' Deficit**
              
              
              12,421,814
  The
        accompanying notes are an integral part of these financial
        statements
  4
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 *Table
            of Contents*
  **TWL
        Corporation**
 *(formerly
        Trinity Learning Corporation)*
 **Condensed
        Consolidated Statements of Operations and Comprehensive
        Losses**
 (Unaudited)
 
 For
                  Three Months Ended
              
              For
                  Nine Months EndedMarch
                  31,
              
              March
                  31,2007
              
              2006
              
              2007
              
              2006(Restated)
              
              
              
              (Restated)Revenues,
                  netSubscription
                  revenue
              
              $
              2,652,459
              
              $
              3,205,568
              
              $
              8,334,212
              
              $
              10,533,053One-time
                  sales
              
              
              2,283,007
              
              
              1,701,354
              
              
              7,524,903
              
              
              6,189,243Production
                  revenue
              
              
              523,192
              
              
              518,364
              
              
              1,573,886
              
              
              1,232,071Other
                  revenue
              
              
              678,031
              
              
              722,128
              
              
              1,824,938
              
              
              2,217,552Total
                  Revenues, net
              
              
              6,136,689
              
              
              6,147,414
              
              
              19,257,939
              
              
              20,171,919Cost
                  of Sales
              
              
              (1,585,417
              )
              
              (1,746,910
              )
              
              (4,559,784
              )
              
              (4,482,252
              )Gross
                  Profit
              
              
              4,551,272
              
              
              4,400,504
              
              
              14,698,155
              
              
              15,689,667ExpensesSalaries
                  & Benefits
              
              
              5,088,439
              
              
              4,258,007
              
              
              13,758,782
              
              
              13,541,418Professional
                  Fees
              
              
              334,271
              
              
              1,007,449
              
              
              1,472,998
              
              
              2,099,264Selling,
                  General & Administrative
              
              
              440,157
              
              
              4,516,850
              
              
              3,845,937
              
              
              9,445,913Depreciation
                  & Amortization
              
              
              587,218
              
              
              1,019,251
              
              
              2,724,059
              
              
              2,307,074Total
                  Expenses
              
              
              6,450,085
              
              
              10,801,557
              
              
              21,801,776
              
              
              27,393,669Loss
                  from Operations
              
              
              (1,898,813
              )
              
              (6,401,053
              )
              
              (7,103,621
              )
              
              (11,704,002
              )Other
                  Income (Expense):Interest
              
              
              (766,021
              )
              
              (477,813
              )
              
              (2,075,188
              )
              
              (2,777,567
              )Financing
                  Costs
              
              
              -
              
              
              -
              
              
              (1,705,989
              )
              
              -Loss
                  on Debt Conversion
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,614,064
              )Other
                  income (expense)
              
              
              -
              
              
              -
              
              
              106,659
              
              
              816Total
                  Other Income and (Expense)
              
              
              (766,021
              )
              
              (477,813
              )
              
              (3,674,518
              )
              
              (4,390,815
              )**Minority
                  Interest**
              
              
              -
              
              
              -
              
              
              -
              
              
              (10,801
              )Net
                  Loss
              
              $
              (2,664,834
              )
              $
              (6,878,866
              )
              $
              (10,778,139
              )
              $
              (16,105,618
              )Deemed
                  dividend on issuance of preferred stock
              
              
              -
              
              
              -
              
              
              (250,000
              )
              
              -Net
                  Loss available for common shareholders
              
              $
              (2,664,834
              )
              $
              (6,878,866
              )
              $
              (11,028,139
              )
              $
              (16,105,618
              )Net
                  Loss Per Share - Basic and Diluted
              
              $
              0.06
              
              $
              0.17
              
              $
              0.25
              
              $
              0.41Weighted
                  Average Sahres Outstanding - Basic and Diluted
              
              
              43,415,513
              
              
              40,607,388
              
              
              43,415,513
              
              
              39,454,326
  **Comprehensive
        Income (Loss)**
 
 For
                  Three Months Ended
              
              For
                  Nine Months EndedMarch
                  31,
              
              March
                  31,2007
              
              2006
              
              2007
              
              2006Net
                  Loss for common shareholders
              
              
              (2,664,834
              )
              
              (6,878,866
              )
              
              (11,028,139
              )
              
              (16,105,618
              )Foreign
                  Currency Translation Gain (Loss)
              
              
              (3,745
              )
              
              2,652
              
              
              (11,631
              )
              
              (31,547
              )Comprehensive
                  Loss
              
              $
              (2,668,579
              )
              $
              (6,876,214
              )
              $
              (11,039,770
              )
              $
              (16,137,165
              )
 
 The
        accompanying notes are an integral part of these financial
        statements
  5
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 *Table
            of Contents*
 
 **TWLCorporation
        and Subsidiaries**
 *(formerly
        Trinity Learning Corporation)*
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 (Unaudited)
 
 For
                  the Nine Months Ended March 31,2007
              
              2006(Restated)Net
                  cash used in operating activities
              
              
              (1,664,333
              )
              
              (2,441,631
              )Cash
                  flow from investing activities:Restricted
                  cash
              
              
              -
              
              
              5,091,670Capital
                  expenditures
              
              
              (28,137
              )
              
              (1,295
              )Net
                  cash provided by (used) in investing activities
              
              
              (28,137
              )
              
              5,090,375Cash
                  flow from financing activities:Payment
                  for capital leases
              
              
              (891,296
              )
              
              (829,144
              )Proceeds
                  from lines of credit
              
              
              12,100,000
              
              
              -Payments
                  on lines of credit
              
              
              (10,900,000
              )
              
              -Borrowings
                  under notes
              
              
              3,500,000
              
              
              100,000Repayments
                  under notes
              
              
              (217,745
              )
              
              (5,323,529
              )Repayments
                  under short-term notes - related party
              
              
              -
              
              
              (750,000
              )Borrowings
                  under long-term liabilities
              
              
              -
              
              
              4,500,000Other
                  financing activities
              
              
              (189,995
              )
              
              152,136Net
                  cash provided by (used) in financing activities
              
              
              3,400,964
              
              
              (2,150,537
              )Effect
                  of foreign exchange on cash
              
              
              (11,631
              )
              
              184Net
                  increase in cash and cash equivalents
              
              
              1,696,863
              
              
              498,391Cash
                  and cash equivalents at beginning of period
              
              
              181,339
              
              
              752,261Cash
                  and cash equivalents at end of period
              
              $
              1,878,202
              
              $
              1,250,652
  The
        accompanying notes are an integral part of these consolidated financial
        statements
  6
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 *Table
            of Contents*
  **TWL
        Corporation and Subsidiaries**
 *(formerly
        Trinity Learning Corporation)*
 **Notes
        to Consolidated Financial Statements**
 **March
        31, 2007**
 (unaudited)
 
 **NOTE
        1. Business and Basis of Presentation**
 
 TWL
        Corporation (the “Company”) is creating a global learning company by acquiring
        operating subsidiaries that specialize in educational and training content,
        delivery, and services for particular industries or that target a particular
        segment of the workforce. The Company believes that there are product and
        service synergies between and among our various subsidiaries that position
        us to
        create a global learning company that can provide integrated learning services
        to corporations, organizations, educational institutions, and individual
        learners, using a variety of delivery technologies, platforms and methods
        to
        meet the growing need for global learning solutions. The Company believes
        that
        it will be one of the first companies to be able to serve major multinational
        employers at multiple levels of their organizations and assist these customers
        to meet the challenges of a major turnover in the world’s workforce over the
        coming decade. Factors such as demographics, technology, and globalization
        will
        require enterprises, organizations and governments around the world to invest
        in
        human capital to remain competitive.
  We
        operate through our primary operating subsidiary, TWL Knowledge Group, Inc.,
        formerly Trinity Workplace Learning Corporation, located in our 205,000 square
        foot digital multimedia production center in Carrollton, Texas, in the greater
        Dallas metropolitan area. At this Global Learning Center we create, distribute
        and archive rich media for workplace learning and certification for
        approximately 2,000 corporate, institutional and government customers in
        healthcare, industrial services, and public safety including homeland security,
        first responders, and federal agencies. We distribute content to our customers
        through a variety of learning media including satellite, broadband, e-learning,
        CD-ROM, and DVDs. Our proprietary brands include the Law Enforcement Training
        Network, HomelandOne, the Fire and Emergency Training Network, and others.
        In
        our healthcare division we participate in 17 distinct accreditations for
        medical-related continuing professional education and certification. While
        our
        strategic focus is to grow our assets and operations in North America, we
        continue to maintain ownership positions in small operating subsidiaries
        in
        Australia and Norway.
 
 The
        information furnished herein was taken from the books and records of the
        Company
        without audit. However, in the opinion of management, the accompanying unaudited
        interim consolidated financial statements reflect all adjustments that are
        necessary for a fair presentation of the financial position, results of
        operations and cash flows for the interim periods presented.
 
 The
        accompanying unaudited interim consolidated financial statements and related
        notes have been prepared in accordance with accounting principles generally
        accepted in the United States of America for interim financial information
        and
        with the instructions to Form 10-QSB and Item 310 of Regulation S-B.
        Accordingly, they do not include all the information and footnotes required
        by
        accounting principles generally accepted in the United States of America
        for
        complete financial statements. These financial statements include the accounts
        of TWL and its consolidated subsidiaries. All significant intercompany
        transactions and accounts have been eliminated in consolidation.
 
 These
        unaudited interim consolidated financial statements should be read in
        conjunction with the audited financial statements and related notes thereto
        included in the Company’s Annual Report on Form 10-KSB for the year ended June
        30, 2006. The results of operations for the nine months ended March 31, 2007,
        are not necessarily indicative of the operating results for the full
        year.
 
 **Restatement**
 
 The
        comparative periods for 2006 have been restated to reflect:
 
 1.
        The
        Company had previously recorded warrants issued in 2006 in connection with
        Palisades financing as a derivative instrument which were included in financing
        costs and liabilities. The Company has subsequently determined that the
        financial instruments do not qualify as derivative instruments therefore
        an
        accounting adjustment has been recorded to reflect an adjustment to the fair
        value of the debt instrument and corresponding warrant valuation. The
        unamortized discount is being amortized over the term of the
        liability;
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 *Table
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  2.
        The
        Company had previously recorded a gain due to non conversion of contingently
        redeemable stock in the amount of $2,210,000 related to the expiration of
        a
        conversion feature associated with the acquisition agreement for Ayshire,
        IRCA
        and Vilpas. During the period ended March 31, 2006, the Company has reduced
        the
        gain to zero and increased common stock accordingly.
 
 Three
                  months ended
              
              Nine
                  months ended31-Mar-06
              
              31-Mar-06Net
                  income as origially reported
              
              $
              (4,666,730
              )
              $
              (13,893,482
              )Increase
                  in interest income
              
              
              (2,136
              )
              
              (2,136
              )Gain
                  due to non-conversion of contingently redeemable stock
              
              
              (2,210,000
              )
              
              (2,210,000
              )Net
                  income as restated
              
              $
              (6,878,866
              )
              $
              (16,105,618
              )Earnings
                  per share for the three and six months ended June 30, 2003 was
                  adjusted as
                  follows:As
                  originally reported
              
              $
              (0.12
              )
              $
              (0.35
              )Adjustment
              
              
              (0.05
              )
              
              (0.06
              )As
                  restated
              
              $
              (0.17
              )
              $
              (0.41
              )
 
 **Earnings
        (Loss) Per Share**
 
 Basic
        earnings (loss) per common share is computed by dividing net loss available
        for
        common stockholders by the weighted average number of common shares outstanding
        for the period. Diluted earnings (loss) per share is computed by dividing
        net
        income (loss) available for common stockholders by the weighted-average common
        shares and dilutive potential common share equivalents. As all common stock
        equivalents would be anti-dilutive, basic loss per share is the same as dilutive
        loss per share.
 
 **Use
        of Estimates**
 
 The
        preparation of the Company’s financial statements in conformity with accounting
        principles generally accepted in the United States of America necessarily
        requires it to make estimates and assumptions that affect the reported amounts
        of assets and liabilities and disclosure of contingent assets and liabilities
        at
        the balance sheet dates and the reported amounts of revenues and costs during
        the reporting periods. Actual results could differ from those estimates.
        On an
        ongoing basis, the Company reviews its estimates based on information that
        is
        currently available. Changes in facts and circumstances may cause the Company
        to
        revise its estimates. Significant estimates include revenue recognition,
        valuation and allocation of the purchase consideration of the assets and
        liabilities and assets acquired in business combinations and equity investments
        in associated companies, our determination of fair value of common stock
        issued
        in business combinations and equity investments in associated companies,
        and the
        annual valuation and review for impairment of assets acquired and of long-lived
        assets.
 
 **NOTE
        2 - GOING CONCERN**
 
 During
        the nine month period ended March 31, 2007 the Company incurred a net loss
        of
        $11,028,139 and experienced a cash flow deficit from its operations, in the
        amount of $1,664,333. As of March 31, 2007 the Company had a cash balance
        of
        $1,878,202 and a negative working capital balance of $21,438,837. The negative
        working capital is attributable to extending payments to vendors, increased
        accrued expenses, increased short-term borrowings and the reclassification
        of
        long-term notes payable to current due to the Company’s determination that it
        could not pay certain obligations as they became due and payable thus creating
        an event of default, see Note 3. It is anticipated that such loses and cash
        flow
        deficits will continue in the near future.
  8
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            of Contents*
  Currently,
        we do not have an established source of revenues sufficient to cover our
        operating costs and to allow us to continue as a going concern. We cannot
        be
        certain that our existing sources of cash will be adequate to meet our liquidity
        requirements. Based on our cash balance at May 1, 2007, we will not be able
        to
        sustain operations for more than three months without additional sources
        of
        funding. To meet our present and future liquidity requirements, we will continue
        to seek additional funding through private placements, conversion of outstanding
        loans and payables into common stock, development of the business of our
        newly-acquired subsidiaries and collections on accounts receivable. There
        can be
        no assurance that we will be successful in obtaining more debt and/or equity
        financing in the future or that our results of operations will materially
        improve in either the short- or the long-term. If we fail to obtain such
        financing and improve our results of operations, we will be unable to meet
        our
        obligations as they become due. This raises substantial doubt about our ability
        to continue as a going concern.
 
 Our
        financial statements are prepared using accounting principles generally accepted
        in the United States of America generally applicable to a going concern,
        which
        contemplates the realization of assets and liquidation of liabilities in
        the
        normal course of business. Accordingly, our consolidated financial statements
        do
        not include any adjustments relating to the recoverability of assets and
        classification of liabilities that might be necessary should we be unable
        to
        continue as a going concern.
 
 **NOTE
        3 - Debt**
 
 On
        July
        27, 2006, we entered into a Letter Agreement (the "Letter Agreement #1")
        with
        Palisades Master Fund LP ("Palisades") pursuant to which Palisades agreed
        to
        waive an Event of Default for the Company's failure to timely file a
        registration statement with the SEC (the “Waiver”) in connection with the March
        2006 financing with Palisades (the "March 2006 Financing"), and further agreed
        to subordinate its security interest to the Company’s loan in the amount of
        $4,500,000 to Laurus (the “Subordination”). Furthermore, Palisades agreed to
        modify certain provisions of the Registration Rights Agreement and Securities
        Purchase Agreement, dated March 31, 2006. Furthermore, at our sole option,
        we
        have the right to redeem the Palisades Preferred Stock at $0.10 per share
        at any
        time on or before the 5th anniversary of the Palisades Closing Date (as defined
        below).
  We
        also
        agreed to file a registration statement registering the resale of the shares
        issuable upon the conversion of the Palisades Preferred Stock no later than
        210
        days after the Palisades Closing Date (as defined below). We further agreed
        to
        issue an additional 82,800,000 warrants to Palisades (the "Additional Warrants")
        as consideration for the Waiver, such that Palisades would have the right
        to
        substitute the Additional Warrants for Preferred Stock of the Company under
        similar terms and conditions as any Preferred Stock that would be issued
        to
        Laurus (as defined below), predicated upon the Company agreeing to a financing
        agreement with Laurus on or before August 31, 2006.
  On
        July
        31, 2006 (the "Palisades Closing Date"), the Company entered into a subsequent
        Letter Agreement with Palisades (the "Letter Agreement #2") whereby Palisades
        and the Company agreed to modify the Letter Agreement #1, such that Palisades
        would subordinate its security interest in all of the assets of the Company
        and
        its subsidiaries to Laurus (as defined below). As consideration for the Waiver,
        the Subordination and Palisades’ agreement to surrender the 7,200,000 warrants
        issued in connection with the March 2006 Financing and in lieu of the Company
        issuing the additional 82,800,000 warrants as agreed to pursuant Letter
        Agreement #1.
  On
        August
        31, 2006 (the "Closing Date"), the Company entered into agreements with Laurus
        Master Fund, Ltd., a Cayman Islands corporation ("Laurus") and Palisades
        Equity
        Fund (“PEF”), pursuant to which the Company sold debt and issued preferred stock
        of the Company to Laurus in a private offering pursuant to exemption from
        registration under Section 4(2) of the Securities Act of 1933, as amended.
        As a
        part of this financing, PEF agreed to return all of its warrants issued under
        the March 31, 2006 Securities Purchase Agreement. In return, they were issued
        1,800,000 shares of convertible preferred stock. PEF was also issued 1,000,000
        shares of convertible preferred stock as part of this transaction. The
        securities being sold and issued to Laurus included the following:
  -
        A
        secured three-year term note (the "Secured Note") with a principal amount
        of
        $2,500,000 (the "Secured Note Amount"), which matures on August 31, 2009
        (the
        "Maturity Date");
  -
        A
        secured three-year revolving note with a principal amount of $5,000,000 (the
        "Revolving Note"; the Revolving Note and the Secured Note shall be collectively
        referred to as the "Notes").
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  Of
        the
        Secured Note, net proceeds of $2,173,000 were received by the Company on
        the
        Closing Date. Any proceeds of the Revolving Note will be deposited in a
        restricted account with Cole Taylor Bank as security for the total loan amount
        and for use by us to make acquisitions as approved by Laurus. We also agreed
        to
        pay, out of the Loan proceeds, the sum of $270,000 to Laurus Capital Management,
        LLC, the manager of Laurus, the sum of $60,000 to Laurus as reimbursement
        for
        Laurus' legal fees, due diligence fees and expenses incurred in connection
        with
        the transaction, and $2,000 to Loeb & Loeb LLP as escrow agent fees.
  The
        Notes
        are secured by a blanket lien on all of the Company's assets, the assets
        of the
        Company's subsidiaries and the cash held in the restricted account at Cole
        Taylor Bank. The Company pledged its ownership interests in TWL Knowledge
        Group,
        Inc., its subsidiary, to Laurus in connection with the aforementioned financing.
        In the event of a default, Laurus has the right to accelerate payments under
        the
        Notes and, in addition to any other remedies available to it, to foreclose
        upon
        the assets securing the Notes.
  The
        principal amount of the Secured Note carries an interest rate of prime plus
        three percent (the "Secured Note Rate"), subject to adjustment, and we must
        make
        monthly amortizing payments of $42,500, commencing January 1, 2007 and with
        said
        monthly amortizing payments increasing to $62,500 commencing on January 1,
        2008,
        toward the outstanding non-restricted principal amount. Furthermore, the
        Secured
        Note Rate shall not at any time be less than nine percent (9.0%). The Company
        may prepay the Secured Note at any time by paying Laurus 105% of the Secured
        Note Amount if such prepayment occurs prior to the first anniversary of the
        Closing Date, 103% if such prepayment occurs on or after the first anniversary
        of the Closing Date and prior to the second anniversary of the Closing Date,
        or
        101% of the Secured Note Amount outstanding at such time if such prepayment
        occurs thereafter but prior to the Maturity Date, plus any accrued but unpaid
        interest thereon.
  The
        principal amount of the Revolving Note carries an interest rate of prime
        plus
        two percent (the "Revolving Note Rate"), subject to adjustment, and we must
        make
        said monthly interest payments, payable in arrears, commencing September
        1,
        2006. Furthermore, the Revolving Note Rate shall not at any time be less
        than
        nine percent (9.0%). This monthly interest payment amount will be increased
        proportionately if and when funds are released from the restricted account.
        The
        Company may prepay the May 2006 Revolving Note at any time without penalty.
  In
        consideration of the foregoing and so long as no Event of Default, as defined
        in
        the Security Agreement entered into by and between the Company, Laurus and
        TWL
        Knowledge Group, Inc., has occurred and is continuing, Laurus agreed not
        to
        directly or indirectly, sell, offer, contract or grant any option to sell
        (including without limitation any short sale), pledge, transfer, establish
        an
        open "put equivalent position" within the meaning of Rule 16a-1(h) under
        the
        U.S. Securities Exchange Act of 1934, as amended, or otherwise dispose of
        any
        Shares or publicly announce an intention to do any of the foregoing, for
        a
        period of no less than twelve (12) months from the Closing Date.
  The
        Shares of Preferred Stock are convertible into shares of our common stock
        at a
        price of $0.10 per share, subject to anti-dilution adjustments. Laurus has
        contractually agreed to restrict its ability to convert the Shares of Preferred
        Stock and receive shares of the Company's Common Stock such that the number
        of
        shares of the Company common stock held by it after such exercise does not
        exceed 4.99% of the Company's then issued and outstanding shares of common
        stock. Such restriction shall automatically become null and void following
        notice to the Company upon occurrence of an event of default under the
        agreements with Laurus or upon 61days prior notice to the Company.
  We
        also
        have granted Laurus a right of first refusal with respect to any debt or
        equity
        financings, with such restriction being in effect for no longer than 2 years
        after the Closing Date.
  The
        Company is obligated to file a registration statement registering the resale
        of
        shares of the Company's Common Stock issuable upon the conversion of the
        Shares.
        If the registration statement is not filed within 60 days of Closing Date,
        or
        declared effective within 180 days of Closing Date, or if the registration
        is
        suspended other than as permitted, in the registration rights agreement between
        the Company and Laurus, the Company is obligated to pay Laurus certain fees
        and
        the obligations may be deemed to be in default.
  The
        Company accounted for the transaction by allocating proceeds to the preferred
        stock, the secured note, and the revolving note, pro rata based upon each
        instruments relative fair value. Based upon this allocation proceeds in the
        amount of $1,250,000 was allocated to the preferred stock. Proceeds in the
        amount of $2,083,333 were allocated to the secured note leaving a debt discount
        in the amount of $416,667. Also in connection with the transaction the Company
        recorded $833,333 in loan origination costs related to the revolving note.
        The
        Company is amortizing the debt discount and loan origination fees over the
        life
        of the respective notes.
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  The
        Company maintains and utilizes a revolving loan or open line of credit for
        $5,000,000 with Laurus Master Fund, Ltd. At the end of the nine month period
        ending March 31, 2007, borrowings of $12,100,000 offset by repayments of
        $10,900,000 left a balance of $1,200,000 drawn against the revolving loan
        balance. Interest on the unpaid balance is accrued daily and paid monthly.
        The
        current rate of interest is 10.25%. The revolving loan is secured by 90%
        the
        eligible accounts receivable of the Company’s domestic operations and 30% of
        eligible inventory not to exceed $1,000,000.
 
 On
        January 5, 2007, the Company determined that it could not pay certain
        obligations as and when they shall become due and payable. The Company’s
        inability to meet its obligations as they become due represents an event
        of
        default under, and accelerates its payment obligations in connection with,
        the
        15% senior secured convertible debenture (the “Debenture”) causing it to become
        due and payable immediately, together with interest and other amounts owing
        in
        respect thereof. Specifically, the Company’s determination with respect to the
        Debenture is as follows:
 
 Accrued
        interest of $337,500, due January 1, 2007 on the Debenture in the principal
        amount of $4,500,000, and as of January 10, 2007 a late fee at the rate of
        18%
        on the accrued interest in the amount of $3,750.
 
 On
        March
        13, 2007 (the "Closing Date"), TWL Corporation (the "Company") entered into
        a
        Purchase and Amendment Agreement (the "Agreement") with certain accredited
        investors (the "Holders") for the issuance of up to an aggregate of $4,000,000
        in face amount of 15% Senior Secured Convertible Debentures (the "Debentures")
        maturing March 31, 2011, and warrants (the "Warrants"; the Warrants and the
        Debentures are collectively referred to as the "Securities"), to purchase
        up to
        an aggregate of 53,333,333 shares of common stock of the Company (the
        "Financing"). The Company sold and will sell the Securities on the same terms
        as
        the 15% Senior Secured Convertible Debentures sold on March 31, 2006 and
        the
        accompanying four year warrants sold on equal date (the "March 2006 Financing")
        as reported in the Company's Current Report filed with the Securities and
        Exchange Commission (the "Commission") on Form 8-K on April 3, 2006 (the
        "Current Report"), with the exception of the following terms: (i) the Debentures
        are convertible into shares of the Company's common stock at a price equal
        to
        $0.03 per share (the "Conversion Price"), (ii) the Warrants shall be exercisable
        at $0.03 per share, have a six month termination period and do not have a
        cashless exercise provision, (iii) the Company's obligation to redeem 1/24th
        of
        the face amount of the Debentures on the first of every month (the "Rate"),
        starting March 31, 2008 (the "Dates"), shall be conditional on the Holders
        of
        the Debentures electing to have the Company redeem the Debentures at the
        scheduled Rate on the scheduled Dates which payment can be made in cash or
        in
        common stock of the Company; if in stock at the lower of the Conversion Price
        or
        80% of the volume weighted average price of the Company's stock for the twenty
        trading days prior to the repayment date; and (iv) the Securities are subject
        to
        Modified Registration Rights (as defined further below). The purchase and
        sale
        of any additional Securities may occur in one or more closings to occur no
        later
        than six months after the Closing Date.
 
 Similar
        to the terms of the March 2006 Financing, (i) the Company's obligation to
        repay
        the Debentures is secured by all of its assets, and the assets of its wholly
        owned subsidiary, TWL Knowledge Group, Inc. (the "Subsidiary"), pursuant
        to a
        Security Agreement which the Company and the Subsidiary entered into with
        the
        Holders on the Closing Date; and (ii) the Company's Subsidiary entered into
        a
        Subsidiary Guarantee with the Holders on the Closing Date pursuant to which
        the
        Subsidiary agreed to guarantee the Company's repayment of the Debentures
        to the
        Holders.
 
 The
        Holders have agreed to restrict their ability to convert their Debentures
        or
        exercise their Warrants and receive shares of our common stock such that
        the
        number of shares of common stock held by them in the aggregate and their
        affiliates after such conversion of the Debentures or exercise of the Warrants
        does not exceed 4.99% of the then issued and outstanding shares of common
        stock.
 
 Further,
        out of the Proceeds, the Company paid commissions of $80,000, an unallocated
        expense reimbursement fee of $20,000, and issued 100,000 Warrants to the
        placement agent on the terms substantially similar to the Warrants with the
        exception of the five year maturity period, a registered broker dealer firm,
        each as consideration for services performed in connection with the issuance
        of
        the Debentures and Warrants to the Holders on the Closing date pursuant to
        the
        Securities Purchase Agreement. The placement agent has no obligation to buy
        any
        Debentures or Warrants from us. In addition, we have agreed to indemnify
        the
        placement agent and other persons against specific liabilities under the
        Securities Act of 1933, as amended. In the event of further sales by the
        Company
        of additional Debentures and additional Warrants per the terms of the Agreement,
        the Company has agreed to pay to the placement agent (i) 8.0% of the additional
        Debentures sold by the Company, plus an unallocated expense reimbursement
        of an
        additional 2.0% of the additional Debentures received by the Company during
        the
        term of the Agreement; and (ii) warrants equal to ten percent (10%) of the
        number of the Additional Debentures (the "Placement Agent Warrants"), such
        that
        the Placement Agent Warrants shall have a five year maturity, and otherwise
        be
        substantially in the form of the Warrants sold to the Holders.
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  In
        addition, the Company has agreed to the following registration rights, which
        shall equally be applicable to the Holders, additional purchasers of the
        Securities, if any, and the current holders of the securities sold by the
        Company in the March 2006 Financing: the Company has agreed to file a
        registration statement (the "Registration Statement") with the Commission
        the
        60th calendar day (the "Filing Date") following the date the Company receives
        a
        written notice from the Holders holding at least the majority of the Registrable
        Securities (as defined in the Agreement) requesting the Company to file an
        initial Registration Statement (the "Initial Filing Date") and use its best
        efforts to have it declared effective the 120th calendar day following the
        Initial Filing Date (or 150th if reviewed by the SEC). If the Registration
        Statement is not filed or effective on time or the Company fails to maintain
        the
        effectiveness of the Registration Statement, the Company shall pay 1.0 %
        of the
        amount of the Debentures sold in liquidated damages until such default is
        cured,
        subject to an overall limit of up to 3 months of partial liquidated damages.
        The
        Registration Statement also will cover the future sale by (i) placement agent
        of
        the shares issuable on exercise of the Warrants issued to the placement agent
        in
        connection with the transaction, (ii) shares of common stock of the Company
        underlying the securities sold in the March 2006 Financing, and (iii) the
        rest
        of the Registrable Securities (as defined in the Agreement). These registration
        rights shall collectively be referred to as the "Modified Registration Rights."
 
 Except
        as
        set forth above, the Company sold the Debentures and the Warrants on the
        same
        terms as the 15% Senior Secured Convertible Debentures sold in the March
        2006
        Financing as reported in the Company's Current Report.
 
 In
        addition, the holder of the Company’s term note (the “Term Note”) and revolving
        note sold by the Company on August 31, 2006 (the “August 2006 Holder”), as
        reported by the Company in its Current Report filed with the Commission on
        Form
        8-K on September 6, 2006, has agreed to the following terms of consents and
        waivers with the Company: (i) consent to the Company entering into the Financing
        and related agreements, (ii) consent to the Modified Registration Rights,
        (iii)
        consent to a reduction of the conversion price of the 15% Senior Secured
        Convertible Debentures sold in the March 2006 Financing to $0.03, a reduction
        of
        the exercise price of the warrants sold in the March 2006 Financing to $0.03,
        and a reduction of the conversion price of the shares of the Series A Preferred
        Stock issued by the Company in connection with the March 2006 Financing to
        $0.03, (iv) waiver of all liquidated damages that may have accrued through
        the
        Closing Date under the registration rights agreement (the “RR Agreement”)
        entered into by and between the Company and the August 2006 Holder, as a
        result
        solely of the Company’s failure to file a registration statement (the “August
        2006 Registration Statement”) on or prior to the Filing Date, each as defined in
        the RR Agreement, (iv) waiver of participation rights to the extent available
        to
        the August 2006 Holders as a result of the Financing, (v) agreement to have
        the
        Company file the August 2006 Registration Statement no later then 210 days
        of
        the Closing Date, and have the Commission declare it effective no later than
        365
        days following the Closing Date. Furthermore, to the extent that the Company
        receives (x) gross proceeds of no less than $2,000,000 and no greater than
        $4,000,000 from the issuance of the Securities and such gross proceeds are
        used
        by the Company solely for working capital and payment of accounts payable
        purposes and not to repay indebtedness of the Company or any of its Subsidiaries
        (collectively the “Purposes”), the August 2006 Holder and the Company agreed
        that for the three consecutive Amortization Dates (as defined in the Term
        Note)
        following the first date of receipt of the Company of no less than $2,000,000
        of
        gross proceeds (the “Initial Deferral Term”) from the issuance of such
        Securities, the principal portion of the Monthly Amount (as defined in the
        Term
        Note) due on each such Amortization Date shall be postponed to, and repaid
        to
        the August 2006 Holder on, the Maturity Date (as defined in the Term Note),
        or
        (y) gross proceeds of no less than $4,000,000 from the issuance of the
        Securities and such gross proceeds are used by the Company solely for the
        Purposes, the August 2006 Holder and the Company agreed that for the three
        consecutive Amortization Dates (as defined in the Term Note) following the
        Initial Deferral Term (the “Additional Deferral Term”), the principal portion of
        the Monthly Amount (as defined in the Term Note) due on each such Amortization
        Date shall be postponed to, and repaid to the August 2006 Holder on, the
        Maturity Date (as defined in the Term Note).
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  The
        above
        consents and waivers entered into by and between the Company and the August
        2006
        Holder, were granted in consideration of the Company reducing the exercise
        price
        of the shares of the Series A Preferred Stock issued by the Company to these
        holders, from its current amount to $0.08 per share of common stock (to the
        extent such original exercise price is prior to such reduction greater than
        or
        equal to $0.08). Except as set forth above, all of the terms and provisions
        of
        the security agreement and the various transaction documents entered into
        by and
        between the Company and the August 2006 Holder, are, and shall remain, in
        full
        force and effect.
 
 The
        Company claims an exemption from the registration requirements of the Act
        for
        the private placement of these securities pursuant to Section 4(2) of the
        Act
        and/or Regulation D promulgated thereunder since, among other things, the
        transaction did not involve a public offering, the investors were accredited
        investors and/or qualified institutional buyers, the investors had access
        to
        information about the Company and their investment, the investors took the
        securities for investment and not resale, and the Company took appropriate
        measures  to  restrict  the  transfer  of  the
 securities.
 
 **NOTE
        4 - Stockholders’ Deficit**
 
 On
        July
        24, 2006, the Company issued 1,800,000 shares of common stock for services
        rendered. The services were rendered at their fair value of $0.07 per share,
        totaling $126,000.
 
 In
        connection with an agreement with a debt holder to subordinate their security
        interest to a new lender, on July 27, 2006 and July 31, 2006, the Company
        issued
        2,800,000 shares of preferred stock with a coupon rate of 7% convertible
        into 10
        shares of common stock at $0.10 per share. The shares were recorded at fair
        value totaling $1,960,000. In connection with this event the lender also
        agreed
        to surrender 7,200,000 common stock warrants and lowered the conversion price
        on
        certain outstanding debentures. See Note 3 for further discussion.
 
 On
        August
        31, 2006, the Company issued 1,500,000 shares of preferred stock with a coupon
        rate of 7% convertible into 10 shares of common stock at $0.10 per share.
        The
        shares were valued at the then current common stock market value of $0.10
        per
        share. Accordingly, $1,500,000 has been recorded to the preferred stock account
        of the Company. The shares were issued in connection with additional long-term
        financing outlined in other notes. See Note 3 for further
        discussion.
 
 The
        following schedule summarizes the option activity during the nine month period
        ended March 31, 2007:
 
 Shares
              
              Weighted
                Average
                Exercise
                PriceOutstanding
                  at beginning of year
              
              
              10,628,000
              
              $
              0.30Granted
              
              
              14,130,300
              
              
              0.06Canceled
              
              
              (3,908,400
              )
              
              0.23Outstanding
                  at end of period
              
              
              20,849,900
              
              
              0.15Exercisable
                  at period-end
              
              
              9,490,622
              
              
              0.24
 
 Range
                  of
                Exercise
                Price
              
              Number
                  of
                Options
                Outstanding
              
              
              Weighted
                Average
                Exercise
                Price
              
              Average
                Remaining
                Contractual
                Life
                  (Years)$
              0.05
              
              350,000
              
              $
              0.05
              
              0.52$
              0.05
              
              12,000
              
              
              0.05
              
              6.68$
              0.06
              
              13,782,400
              
              
              0.06
              
              6.50$
              0.07
              
              4,500
              
              
              0.07
              
              6.59$
              0.07
              
              13,000
              
              
              0.07
              
              6.86$
              0.16
              
              250,000
              
              
              0.16
              
              4.09$
              0.16
              
              250,000
              
              
              0.16
              
              4.11$
              0.19
              
              975,000
              
              
              0.19
              
              3.86$
              0.22
              
              1,680,000
              
              
              0.22
              
              3.05$
              0.25
              
              500,000
              
              
              0.25
              
              0.92$
              0.27
              
              125,000
              
              
              0.27
              
              3.13$
              0.50
              
              25,000
              
              
              0.50
              
              1.00$
              0.50
              
              1,010,000
              
              
              0.50
              
              1.42$
              0.50
              
              625,000
              
              
              0.50
              
              1.75$
              0.50
              
              250,000
              
              
              0.50
              
              1.84$
              0.50
              
              898,000
              
              
              0.50
              
              2.83$
              0.85
              
              100,000
              
              
              0.85
              
              2.4220,849,900
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  The
        Company has adopted the fair value based method of accounting for stock-based
        employee compensation in accordance with Statement of Financial Accounting
        Standards Number 123 (REVISED 2004), “Accounting for Stock-Based Compensation”
(SFAS 123[R]). In accordance with SFAS 123[R], we recognized option compensation
        expense in the amount of $444,754 for the nine months ending March 31, 2007.
        The
        expense was calculated using the Black Scholes valuation model with the
        following assumptions:
  March
                  31,
                2007Five-year
                  Risk-free Interest Rage
              
              3.85Dividend
                  Yield
              
              NilVolatility
              
              133%Average
                  Expected Term (Years to Exercise)
              
              5
  **NOTE
        5 - Warrants**
 
 Outstanding
        Warrants at March 31, 2007 are as follows:
 
 Description
              
              Shares
              
              Exercise
                  Price Per Share
              
              Exercisable
                  Through**Granted**October
                  2002 Equity Private Placement
              
              500,000
              
              0.25
              
              September
                  2007October
                  2002 Equity Private Placement Bonus Warrants (1)
              
              250,000
              
              1.00
              
              September
                  2010May
                  2003 Equity Private Placement
              
              2,438,000
              
              0.25
              
              September
                  2007May
                  2003 Equity Private Placement
              
              7,708,600
              
              0.25
              
              October
                  2007May
                  2003 Equity Private Placement Bonus Warrants (1)
              
              1,219,000
              
              1.00
              
              September
                  2010May
                  2003 Equity Private Placement Bonus Warrants (1)
              
              3,854,300
              
              1.00
              
              October
                  2010Warrants
                  issued to Mr. Swindells on note conversion
              
              850,000
              
              0.25
              
              November
                  2007Bonus
                  warrants to Mr. Swindells (1)
              
              425,000
              
              1.00
              
              November
                  20072004
                  Bridge Loan Warrant
              
              1,549,000
              
              0.25
              
              May
                  20102004
                  Bridge Loan Warrant
              
              1,146,000
              
              0.25
              
              February
                  2010Warrants
                  Issued to Financial Advisors
              
              125,000
              
              1.00
              
              July
                  2009Warrants
                  Issued to Financial Advisors
              
              1,600,000
              
              0.81
              
              August
                  2009Warrants
                  issued to Financial Advisors
              
              20,000
              
              0.25
              
              July
                  2008Warrants
                  issued to Financial Advisors
              
              190,050
              
              0.25
              
              October
                  2008Warrants
                  issued to Financial Advisors
              
              10,000
              
              0.25
              
              October
                  20082005
                  Convertible Loan Warrants
              
              1,476,027
              
              0.25
              
              January
                  2009Warrants
                  Issued to Financial Advisors
              
              150,000
              
              0.31
              
              August
                  2008Warrants
                  Issued to Financial Advisors
              
              376,818
              
              0.31
              
              July
                  2010Warrants
                  Issued to Financial Advisors
              
              3,391,362
              
              0.27
              
              July
                  2010Warrants
                  Issued to Debt Private Placement
              
              250,000
              
              0.15
              
              March
                  2008Warrants
                  Issued to Equity Private Placement
              
              937,500
              
              0.20
              
              March
                  2008Warrants
                  Issued to debt holders that converted debt during calendar
                  2005
              
              1,476,027
              
              0.25
              
              January
                  2008Warrants
                  Issued to Creditors
              
              75,000
              
              0.30
              
              March
                  2008Total
                  Granted
              
              30,017,684
              
              0.43Exercised
              
              -Total
                  Outstanding
              
              30,017,684
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  On
        July
        31, 2006 the Company entered into a subsequent Letter Agreement with Palisades
        whereby Palisades surrendered 7,200,000 warrants issued in connection with
        the
        March 2006 financing. We recognized a gain of $254,011 in the quarter ending
        September 30, 2006 as a result of this surrender.
 
 (1)  Bonus
        warrants are issuable upon exercise of the original warrant.
 
 **NOTE
        6 - SUBSEQUENT EVENTS**
 
 Effective
        as of April 9, 2007, Ron Posner resigned as a member of the board of directors
        of TWL Corporation (the “Company”). Currently, the Company is undertaking
        efforts to search for a qualified replacement to be appointed to fill the
        board
        of directors’ vacancy created by the resignation of Mr. Posner.
 
 As
        of the
        date of this Current Report, the Company has received gross proceeds of
        $1,000,000 from the sale of the Securities.
 
 **NOTE
        7 - MATERIAL EVENTS**
 
 On
        September 26, 2006, the Company held a Special Shareholders meeting (the
        “Meeting”), for the Company’s shareholders of record as of August 11, 2006 (the
“Record Date”), as was previously disclosed by the Company in its definitive
        Proxy Statement filed on Schedule 14(a) with the SEC on August 18, 2006.
        During
        the Meeting, the affirmative vote of the Company’s shareholders holding the
        majority of the Company’s outstanding shares as of the Record Date approved the
        following proposals:
  1.
              Amending
                  the Company’s Articles of Incorporation to change the name of the Company
                  from Trinity Learning Corporation to TWL Corporation;
                  and
 
 2.
              Amending
                  the Company’s Articles of Incorporation to increase the authorized number
                  of Common Stock from 100,000,000 shares to 750,000,000
                  shares.
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  The
        Company filed a Certificate of Amendment with the Secretary of State of the
        State of Utah, effective as of September 29, 2006, to effect a name change
        of
        the Company from Trinity Learning Corporation to TWL Corporation and to increase
        the authorized common stock of the Company from 100,000,000 shares to
        750,000,000 shares.
 
 In
        addition, the Company filed a Certificate of Amendment with the Secretary
        of
        State of Delaware, effective as of September 12, 2006, to effect a name change
        of its subsidiary Trinity Workplace Learning to TWL Knowledge Group,
        Inc.
 
 **ITEM
        1. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
        OPERATION**
 
 Our
        fiscal year ends on June 30. This management's discussion and analysis of
        financial condition and results of operations and other portions of this
        Quarterly Report on Form 10-QSB (the “Quarterly Report”) contain forward looking
        information that involves risks and uncertainties. Our actual results could
        differ materially from those anticipated by this forward looking information.
        Factors that could cause or contribute to such differences include, but are
        not
        limited to, those discussed or referred to in the Annual Report on Form 10-KSB
        for the fiscal year ended June 30, 2006 under the heading Information Regarding
        Forward-Looking Statements and elsewhere. Investors should review this Quarterly
        Report in combination with our Annual Report on Form 10-KSB in order to have
        a
        more complete understanding of the principal risks associated with an investment
        in our common stock. This management's discussion and analysis of financial
        condition and results of operations should be read in conjunction with our
        unaudited condensed consolidated financial statements and related notes included
        elsewhere in this document.
 
 **Overview**
  Our
        financial statements are prepared using accounting principles generally accepted
        in the United States of America generally applicable to a going concern,
        which
        contemplates the realization of assets and liquidation of liabilities in
        the
        normal course of business. Currently, we do not have an established source
        of
        revenues sufficient to cover our operating costs and to allow us to continue
        as
        a going concern. We cannot be certain that our existing sources of cash will
        be
        adequate to meet our liquidity requirements. Based upon our cash balance
        at May
        1, 2007, we will not be able to sustain operations for more than three months
        without additional sources of funding. To meet our present and future liquidity
        requirements, we will continue to seek conversion of outstanding loans and
        payables into common stock, development of the business of our newly-acquired
        subsidiaries and collections on accounts receivable. There can be no assurance
        that we will be successful in obtaining more debt and/or equity financing
        in the
        future or that our results of operations will materially improve in either
        the
        short- or the long-term. If we fail to obtain such financing and improve
        our
        results of operations, we will be unable to meet our obligations as they
        become
        due. This raises substantial doubt about our ability to continue as a going
        concern.
 
 **Results
        of Operations**
 
 **Comparison
        of the three months ended March 31, 2007 to the three months ended March
        31,
        2006**
 
 Our
        revenue for the third quarter of 2007 was $6,136,689 as compared to $6,147,414
        for the third quarter of 2006. This slight decrease in revenue is due to
        the
        loss of subscription customers in our Government and Healthcare divisions.
        This
        loss reduced subscription revenue by $553,109 and other revenue of $44,097.
        This
        was partially offset by increased single event sales in our Industrial division
        of $581,653.
 
 Cost
        of
        sales, which consists of direct labor, hardware costs, cost of goods sold
        and
        other incidental expenses, was $1,585,417 for the three months ending March
        31,
        2007 as compared to $1,746,910 for the three months ending March 31, 2006
        resulting in gross profit of $4,551,272 for the three months ending March
        31,
        2007 as compared to $4,400,504 for the three months ending March 31, 2006.
        A
        large portion of the Company’s expenses are considered fixed costs.
        Consequently, a decrease in revenue can have a significant impact on net
        income.
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  Operating
        expenses for the three months ending March 31, 2007 were $6,450,085 as compared
        to $10,801,557 for the three months ending March 31, 2006. Salaries and benefits
        increased $830,432 from $4,258,007 for the three month period ending 2006
        to
        $5,088,439 for the three month period ending 2007. Professional fees decreased
        $673,178 from $1,007,449 for the three months ending March 31, 2006 to $334,271
        for the three months ending March 31, 2007. Selling, general and administrative
        expenses decreased $4,076,693 from $4,516,850 for the three months ending
        March
        31, 2006 to $440,157 for the three month period ending March 31, 2007.
        Depreciation and amortization decreased from $1,019,251 for the three months
        ending March 31, 2007 to $587,218 for the three months ending March 31,
        2007.
 
 Other
        expenses of $766,021 were $288,208 greater than that for the three months
        ending
        March 31, 2006. This increase in other expenses was due to increased interest
        expense.
 
 We
        reported net loss available for common stockholders of $2,664,834 or $0.06
        per
        share for the three months ended March 31, 2007, compared to a net loss of
        $6,878,866 or $0.17 per share for the three months ended March 31,
        2006.
 
 **Comparison
        of the nine months ended March 31, 2007 to the nine months ended March 31,
        2006**
 
 Our
        revenue for the third quarter of 2007 was $19,257,939 as compared to $20,171,919
        for the third quarter of 2006. This decrease in revenue is due to decreased
        subscription revenue $2,198,841 and other revenue $392,614 offset by increases
        in one-time sales $1,335,660 and production revenue $341,815.
 
 Cost
        of
        sales, which consist of labor, hardware costs, cost of goods sold and other
        incidental expenses, was $4,559,784 for the nine months ending March 31,
        2007 as
        compared to $4,482,252 for the nine months ending March 31, 2006, resulting
        in
        gross profit of $14,698,155 for the nine months ending March 31, 2007 as
        compared to $15,689,667 for the nine months ending March 31, 2006.
 
 Operating
        expenses for the nine months ending March 31, 2007 were $21,801,776 as compared
        to $27,393,669 for the nine months ending March 31, 2006. Salaries and benefits
        increased $217,364 from $13,541,418 for the nine month period ending 2006
        to
        $13,758,782 for the nine month period ending 2007. Professional fees decreased
        $626,266 from $2,099,264 for the nine months ending March 31, 2006 to $1,472,998
        for the nine months ending March 31, 2007. Selling, general and administrative
        expenses decreased $5,599,976 from $9,445,913 for the nine months ending
        March
        31, 2006 to $3,845,937 for the nine month period ending March 31, 2007.
        Depreciation and amortization increased from $2,307,074 for the nine months
        ending March 31, 2006 to $2,724,059 for the nine months ending March 31,
        2007.
 
 Other
        expenses for the nine months ending March 31, 2007 were $3,674,518 compared
        to
        $4,390,815 for the nine months ending March 31, 2006. This decrease is
        attributable to decreased interest expense of $702,379, prior year loss on
        debt
        conversion of $1,614,064, increased financing costs of $1,705,989 and other
        of
        105,843.
 
 We
        reported net loss available for common stockholders of $11,028,139 or $0.25
        per
        share for the nine months ended March 31, 2007, compared to a net loss of
        $16,105,618 or $0.41 per share for the nine months ended March 31,
        2006.
 
 **Liquidity
        and Capital Resources**
 
 Our
        expenses are currently greater than our revenues. We have a history of losses
        and our accumulated deficit as of March 31, 2007 was $70,750,401 as compared
        to
        $59,722,262 as of June 20, 2006.
 
 At
        March
        31, 2007, we had an unrestricted cash balance of $1,878,202 compared to $181,339
        at June 30, 2006. Net cash used by operating activities during the nine months
        ended March 31, 2007 was $1,664,333 attributable primarily to our adjusted
        loss
        from operations offset by our increase in accounts payable and accrued expenses.
        Net cash provided by financing activities was $3,400,964 for the nine months
        ended March 31, 2007 representing borrowings, long-term notes and short-term
        loans.
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  Accounts
        receivable increased from $2,680,555 at June 30, 2006 to $3,550,012 at March
        31,
        2007. This increase is attributable to our increased sales efforts.
 
 Accounts
        payable decreased from $6,830,088 at June 30, 2006 to $4,919,205 at March
        31,
        2007. Accrued expenses increased from $4,102,247 at March 31, 2006 to $9,432,094
        at March 31, 2007. The net increase in accounts payable and accrued expenses
        was
        attributable to the lack of sufficient working capital which caused the Company
        to delay scheduled payments to its vendors.
 
 As
        a
        professional services organization we are not capital intensive. Capital
        expenditures historically have been for computer-aided instruction, accounting
        and project management systems and general-purpose computer equipment to
        accommodate our growth.
 
 On
        July
        27, 2006, we entered into a Letter Agreement (the "Letter Agreement #1")
        with
        Palisades Master Fund LP ("Palisades") pursuant to which Palisades agreed
        to
        waive an Event of Default for the Company's failure to timely file a
        registration statement with the SEC (the “Waiver”) in connection with the March
        2006 financing with Palisades (the "March 2006 Financing"), and further agreed
        to subordinate its security interest to the Company’s loan in the amount of
        $4,500,000 to Laurus (the “Subordination”). Furthermore, Palisades agreed to
        modify certain provisions of the Registration Rights Agreement and Securities
        Purchase Agreement, dated March 31, 2006. Furthermore, at our sole option,
        we
        have the right to redeem the Palisades Preferred Stock at $0.10 per share
        at any
        time on or before the 5th anniversary of the Palisades Closing Date (as defined
        below). The fair value of the preferred stock issued to Palisades in connection
        with their subordination agreement had an estimated fair value of $1,960,000.
        The fair value of the warrants surrendered by Palisades in connection with
        their
        subordination agreement had a estimated fair value of $254,011. The net amount
        of the fair value of the preferred stock issued and the warrants received
        by the
        Company ($1,705,989) was recorded as financing costs.
  We
        also
        agreed to file a registration statement registering the resale of the shares
        issuable upon the conversion of the Palisades Preferred Stock no later than
        210
        days after the Palisades Closing Date (as defined below). We further agreed
        to
        issue an additional 82,800,000 warrants to Palisades (the "Additional Warrants")
        as consideration for the Waiver, such that Palisades would have the right
        to
        substitute the Additional Warrants for Preferred Stock of the Company under
        similar terms and conditions as any Preferred Stock that would be issued
        to
        Laurus (as defined below), predicated upon the Company agreeing to a financing
        agreement with Laurus on or before August 31, 2006.
  On
        July
        31, 2006 (the "Palisades Closing Date"), the Company entered into a subsequent
        Letter Agreement with Palisades (the "Letter Agreement #2") whereby Palisades
        and the Company agreed to modify the Letter Agreement #1, such that Palisades
        would subordinate its security interest in all of the assets of the Company
        and
        its subsidiaries to Laurus (as defined below). As consideration for the Waiver,
        the Subordination and Palisades’ agreement to surrender the 7,200,000 warrants
        issued in connection with the March 2006 Financing and in lieu of the Company
        issuing the additional 82,800,000 warrants as agreed to pursuant Letter
        Agreement #1.
  On
        August
        31, 2006 (the "Closing Date"), the Company entered into agreements with Laurus
        Master Fund, Ltd., a Cayman Islands corporation ("Laurus") and Palisades
        Equity
        Fund (“PEF”), pursuant to which the Company sold debt and issued preferred stock
        of the Company to Laurus in a private offering pursuant to exemption from
        registration under Section 4(2) of the Securities Act of 1933, as amended.
        As a
        part of this financing, PEF agreed to return all of its warrants issued under
        the March 31, 2006 Securities Purchase Agreement. In return, they were issued
        1,800,000 shares of convertible preferred stock. PEF was also issued 1,000,000
        shares of convertible preferred stock as part of this transaction. The
        securities being sold and issued to Laurus included the following:
  -
        A
        secured three-year term note (the "Secured Note") with a principal amount
        of
        $2,500,000 (the "Secured Note Amount"), which matures on August 31, 2009
        (the
        "Maturity Date");
  -
        A
        secured three-year revolving note with a principal amount of $5,000,000 (the
        "Revolving Note"; the Revolving Note and the Secured Note shall be collectively
        referred to as the "Notes").
  In
        connection with the Secured Note, net proceeds of $2,173,000 were received
        by
        the Company on the Closing Date. Any proceeds of the Revolving Note will
        be
        deposited in a restricted account with Cole Taylor Bank as security for the
        total loan amount and for use by us to make acquisitions as approved by Laurus.
        We also agreed to pay, out of the Loan proceeds, the sum of $270,000 to Laurus
        Capital Management, LLC, the manager of Laurus, the sum of $60,000 to Laurus
        as
        reimbursement for Laurus' legal fees, due diligence fees and expenses incurred
        in connection with the transaction, and $2,000 to Loeb & Loeb LLP as escrow
        agent fees.
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  The
        Notes
        are secured by a blanket lien on all of the Company's assets, the assets
        of the
        Company's subsidiaries and the cash held in the restricted account at Cole
        Taylor Bank. The Company pledged its ownership interests in TWL Knowledge
        Group,
        Inc., its subsidiary, to Laurus in connection with the aforementioned financing.
        In the event of a default, Laurus has the right to accelerate payments under
        the
        Notes and, in addition to any other remedies available to it, to foreclose
        upon
        the assets securing the Notes.
  The
        principal amount of the Secured Note carries an interest rate of prime plus
        three percent (the "Secured Note Rate"), subject to adjustment, and we must
        make
        monthly amortizing payments of $42,500, commencing January 1, 2007 and with
        said
        monthly amortizing payments increasing to $62,500 commencing on January 1,
        2008,
        toward the outstanding non-restricted principal amount. Furthermore, the
        Secured
        Note Rate shall not at any time be less than nine percent (9.0%). The Company
        may prepay the Secured Note at any time by paying Laurus 105% of the Secured
        Note Amount if such prepayment occurs prior to the first anniversary of the
        Closing Date, 103% if such prepayment occurs on or after the first anniversary
        of the Closing Date and prior to the second anniversary of the Closing Date,
        or
        101% of the Secured Note Amount outstanding at such time if such prepayment
        occurs thereafter but prior to the Maturity Date, plus any accrued but unpaid
        interest thereon.
  The
        principal amount of the Revolving Note carries an interest rate of prime
        plus
        two percent (the "Revolving Note Rate"), subject to adjustment, and we must
        make
        said monthly interest payments, payable in arrears, commencing September
        1,
        2006. Furthermore, the Revolving Note Rate shall not at any time be less
        than
        nine percent (9.0%). This monthly interest payment amount will be increased
        proportionately if and when funds are released from the restricted account.
        The
        Company may prepay the May 2006 Revolving Note at any time without penalty.
  In
        consideration of the foregoing and so long as no Event of Default, as defined
        in
        the Security Agreement entered into by and between the Company, Laurus and
        TWL
        Knowledge Group, Inc., has occurred and is continuing, Laurus agreed not
        to
        directly or indirectly, sell, offer, contract or grant any option to sell
        (including without limitation any short sale), pledge, transfer, establish
        an
        open "put equivalent position" within the meaning of Rule 16a-1(h) under
        the
        U.S. Securities Exchange Act of 1934, as amended, or otherwise dispose of
        any
        Shares or publicly announce an intention to do any of the foregoing, for
        a
        period of no less than twelve (12) months from the Closing Date.
  The
        Shares of Preferred Stock are convertible into shares of our common stock
        at a
        price of $0.10 per share, subject to anti-dilution adjustments. Laurus has
        contractually agreed to restrict its ability to convert the Shares of Preferred
        Stock and receive shares of the Company's Common Stock such that the number
        of
        shares of the Company common stock held by it after such exercise does not
        exceed 4.99% of the Company's then issued and outstanding shares of common
        stock. Such restriction shall automatically become null and void following
        notice to the Company upon occurrence of an event of default under the
        agreements with Laurus or upon 61days prior notice to the Company.
  We
        also
        have granted Laurus a right of first refusal with respect to any debt or
        equity
        financings, with such restriction being in effect for no longer then 2 years
        after the Closing Date.
  The
        Company is obligated to file a registration statement registering the resale
        of
        shares of the Company's Common Stock issuable upon the conversion of the
        Shares.
        If the registration statement is not filed within 60 days of Closing Date,
        or
        declared effective within 180 days of Closing Date, or if the registration
        is
        suspended other than as permitted, in the registration rights agreement between
        the Company and Laurus, the Company is obligated to pay Laurus certain fees
        and
        the obligations may be deemed to be in default.
  On
        September 26, 2006, the Company held a Special Shareholders meeting (the
        “Meeting”), for the Company’s shareholders of record as of August 11, 2006 (the
“Record Date”), as was previously disclosed by the Company in its definitive
        Proxy Statement filed on Schedule 14(a) with the SEC on August 18, 2006.
        During
        the Meeting, the affirmative vote of the Company’s shareholders holding the
        majority of the Company’s outstanding shares as of the Record Date approved the
        following proposals:
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  1.
              Amending
                  the Company’s Articles of Incorporation to change the name of the Company
                  from Trinity Learning Corporation to TWL Corporation;
                  and
 
 2.
              Amending
                  the Company’s Articles of Incorporation to increase the authorized number
                  of Common Stock from 100,000,000 shares to 750,000,000
                  shares.
 
 The
        Company filed a Certificate of Amendment with the Secretary of State of the
        State of Utah, effective as of September 29, 2006, to effect a name change
        the
        Company from Trinity Learning Corporation to TWL Corporation and to increase
        the
        authorized common stock of the Company from 100,000,000 shares to 750,000,000
        shares.
 
 In
        addition, the Company filed a Certificate of Amendment with the Secretary
        of
        State of Delaware, effective as of September 12, 2006, to effect a name change
        of its subsidiary Trinity Workplace Learning to TWL Knowledge Group,
        Inc.
 
 On
        January 5, 2007, the Company determined that it could not pay certain
        obligations as and when they shall become due and payable. The Company’s
        inability to meet its obligations as they become due represents an event
        of
        default under, and accelerates its payment obligations in connection with,
        the
        15% senior secured convertible debenture (the “Debenture”) causing it to become
        due and payable immediately, together with interest and other amounts owing
        in
        respect thereof. Specifically, the Company’s determination with respect to the
        Debenture is as follows:
 
 Accrued
        interest of $337,500 was due January 1, 2007 on the Debenture in the principal
        amount of $4,500,000, and as of January 10, 2007 a late fee at the rate of
        18%
        on the accrued interest in the amount of $3,750.
 
 On
        March
        13, 2007 (the "Closing Date"), TWL Corporation (the "Company") entered into
        a
        Purchase and Amendment Agreement (the "Agreement") with certain accredited
        investors (the "Holders") for the issuance of up to an aggregate of $4,000,000
        in face amount of 15% Senior Secured Convertible Debentures (the "Debentures")
        maturing March 31, 2011, and six months warrants (the "Warrants"; the Warrants
        and the Debentures are collectively referred to as the "Securities"), to
        purchase up to an aggregate of 53,333,333 shares of common stock of the Company
        (the "Financing"). The Company sold and will sell the Securities on the same
        terms as the 15% Senior Secured Convertible Debentures sold on March 31,
        2006
        and the accompanying four year warrants sold on equal date (the "March 2006
        Financing") as reported in the Company's Current Report filed with the
        Securities and Exchange Commission (the "Commission") on Form 8-K on April
        3,
        2006 (the "Current Report"), with the exception of the following terms: (i)
        the
        Debentures are convertible into shares of the Company's common stock at a
        price
        equal to $0.03 per share (the "Conversion Price"), (ii) the Warrants shall
        be
        exercisable at $0.03 per share, have a six month termination period and do
        not
        have a cashless exercise provision, (iii) the Company's obligation to redeem
        1/24th of the face amount of the Debentures on the first of every month (the
        "Rate"), starting March 31, 2008 (the "Dates"), shall be conditional on the
        Holders of the Debentures electing to have the Company redeem the Debentures
        at
        the scheduled Rate on the scheduled Dates which payment can be made in cash
        or
        in common stock of the Company; if in stock at the lower of the Conversion
        Price
        or 80% of the volume weighted average price of the Company's stock for the
        twenty trading days prior to the repayment date; and (iv) the Securities
        are
        subject to Modified Registration Rights (as defined further below). The purchase
        and sale of any additional Securities may occur in one or more closings to
        occur
        no later than six months after the Closing Date. As of the date of this Current
        Report, the Company has received gross proceeds of $1,000,000 from the sale
        of
        the Securities (the "Proceeds").
 
 Similar
        to the terms of the March 2006 Financing, (i) the Company's obligation to
        repay
        the Debentures is secured by all of its assets, and the assets of its wholly
        owned subsidiary, TWL Knowledge Group, Inc. (the "Subsidiary"), pursuant
        to a
        Security Agreement which the Company and the Subsidiary entered into with
        the
        Holders on the Closing Date; and (ii) the Company's Subsidiary entered into
        a
        Subsidiary Guarantee with the Holders on the Closing Date pursuant to which
        the
        Subsidiary agreed to guarantee the Company's repayment of the Debentures
        to the
        Holders.
 
 The
        Holders have agreed to restrict their ability to convert their Debentures
        or
        exercise their Warrants and receive shares of our common stock such that
        the
        number of shares of common stock held by them in the aggregate and their
        affiliates after such conversion of the Debentures or exercise of the Warrants
        does not exceed 4.99% of the then issued and outstanding shares of common
        stock.
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  Further,
        out of the Proceeds, the Company paid commissions of $80,000, an unallocated
        expense reimbursement fee of $20,000, and issued 100,000 Warrants to the
        placement agent on the terms substantially similar to the Warrants with the
        exception of the five year maturity period, a registered broker dealer firm,
        each as consideration for services performed in connection with the issuance
        of
        the Debentures and Warrants to the Holders on the Closing date pursuant to
        the
        Securities Purchase Agreement. The placement agent has no obligation to buy
        any
        Debentures or Warrants from us. In addition, we have agreed to indemnify
        the
        placement agent and other persons against specific liabilities under the
        Securities Act of 1933, as amended. In the event of further sales by the
        Company
        of additional Debentures and additional Warrants per the terms of the Agreement,
        the Company has agreed to pay to the placement agent (i) 8.0% of the additional
        Debentures sold by the Company, plus an unallocated expense reimbursement
        of an
        additional 2.0% of the additional Debentures received by the Company during
        the
        term of the Agreement; and (ii) warrants equal to ten percent (10%) of the
        number of the Additional Debentures (the "Placement Agent Warrants"), such
        that
        the Placement Agent Warrants shall have a five year maturity, and otherwise
        be
        substantially in the form of the Warrants sold to the Holders.
 
 In
        addition, the Company has agreed to the following registration rights, which
        shall equally be applicable to the Holders, additional purchasers of the
        Securities, if any, and the current holders of the securities sold by the
        Company in the March 2006 Financing: the Company has agreed to file a
        registration statement (the "Registration Statement") with the Commission
        the
        60th calendar day (the "Filing Date") following the date the Company receives
        a
        written notice from the Holders holding at least the majority of the Registrable
        Securities (as defined in the Agreement) requesting the Company to file an
        initial Registration Statement (the "Initial Filing Date") and use its best
        efforts to have it declared effective the 120th calendar day following the
        Initial Filing Date (or 150th if reviewed by the SEC). If the Registration
        Statement is not filed or effective on time or the Company fails to maintain
        the
        effectiveness of the Registration Statement, the Company shall pay 1.0 %
        of the
        amount of the Debentures sold in liquidated damages until such default is
        cured,
        subject to an overall limit of up to 3 months of partial liquidated damages.
        The
        Registration Statement also will cover the future sale by (i) placement agent
        of
        the shares issuable on exercise of the Warrants issued to the placement agent
        in
        connection with the transaction, (ii) shares of common stock of the Company
        underlying the securities sold in the March 2006 Financing, and (iii) the
        rest
        of the Registrable Securities (as defined in the Agreement). These registration
        rights shall collectively be referred to as the "Modified Registration Rights."
        Except as set forth above, the Company sold the Debentures and the Warrants
        on
        the same terms as the 15% Senior Secured Convertible Debentures sold in the
        March 2006 Financing as reported in the Company's Current Report.
 
 To
        meet
        our present and future liquidity requirements, we are continuing to seek
        conversion of outstanding loans and payables into common stock, developing
        the
        business of our subsidiaries and collections on accounts receivable. There
        can
        be no assurance that we will be successful in obtaining more debt and/or
        equity
        financing in the future or that our results of operations will materially
        improve in either the short- or the long-term. Based upon our cash balance
        at
        May 1, 2007 we will not be able to sustain operations for more than three
        months
        without additional sources of financing or improved operating results. If
        we
        fail to obtain such financing and improve our results of operations, we will
        be
        unable to meet our obligations as they become due. That would raise substantial
        doubt about our ability to continue as a going concern.
 
 **ITEM
        2. CONTROLS AND PROCEDURES**
 
 *(a)
        Management’s Evaluation of Disclosure Controls and
        Procedures*
  Our
        Chief
        Executive Officer and Chief Financial Officer, after conducting an evaluation,
        together with other members of management, of the effectiveness of the design
        and operation of our disclosure controls and procedures at the end of the
        period
        covered by this report, have concluded that our disclosure controls and
        procedures were effective to ensure that information required to be disclosed
        by
        us in our reports filed or submitted under the Exchange Act is recorded,
        processed, summarized, and reported within the time periods specified in
        the
        rules and forms of the SEC. There were no significant changes in our internal
        controls or in other factors that could significantly affect these controls
        subsequent to that evaluation, and there were no significant deficiencies
        or
        material weaknesses in such controls requiring corrective actions.
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  *(b)
        Changes In Internal Controls*
  There
        were no significant changes in our internal controls or in other factors
        that
        could significantly affect these controls subsequent to that evaluation,
        and
        there were no significant deficiencies or material weaknesses in such controls
        requiring corrective actions.
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  PART
        II
  **OTHER
        INFORMATION**
 
 **ITEM
        1. LEGAL PROCEEDINGS**
 
 See
        section Item 3 “Legal Proceedings” in our Annual Report filed with the SEC on
        Form 10-KSB on November 13, 2006.
 
 **ITEM
        2.**
 
 *Issuance
        of Unregistered Securities*
 
 All
        of
        the above offerings and sales were deemed to be exempt under rule 506 of
        Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.
        No
        advertising or general solicitation was employed in offering the securities.
        The
        offerings and sales were made to a limited number of persons, all of whom
        were
        accredited investors, business associates of TWL Corporation or executive
        officers of TWL Corporation and transfer was restricted by TWL Corporation
        in
        accordance with the requirements of the Securities Act of 1933. In addition
        to
        representations by the above-referenced persons, we have made independent
        determinations that all of the above-referenced persons were accredited or
        sophisticated investors, and that they were capable of analyzing the merits
        and
        risks of their investment, and that they understood the speculative nature
        of
        their investment. Furthermore, all of the above-referenced persons were provided
        with access to our Securities and Exchange Commission filings.
 
 *Purchases
        of Equity Securities by the Issuer and Affiliated Purchasers.*
 
 None.
 
 **ITEM
        3. DEFAULTS UPON SENIOR SECURITIES**
 
 On
        January 5, 2007, the Company determined that it could not pay certain
        obligations as and when they shall become due and payable. The Company’s
        inability to meet its obligations as they become due represents an event
        of
        default under, and accelerates its payment obligations in connection with,
        the
        15% senior secured convertible debenture (the “Debenture”) causing it to become
        due and payable immediately, together with interest and other amounts owing
        in
        respect thereof. Specifically, the Company’s determination with respect to the
        Debenture is as follows:
 
 Accrued
        interest of $337,500, due January 1, 2007 on the Debenture in the principal
        amount of $4,500,000, and as of January 10, 2007 a late fee at the rate of
        18%
        on the accrued interest in the amount of $3,750.
 
 On
        March
        13, 2007 (the "Closing Date"), the Company entered into a Purchase and Amendment
        Agreement (the "Agreement") with certain accredited investors (the "Holders")
        for the issuance of up to an aggregate of $4,000,000 in face amount of 15%
        Senior Secured Convertible Debentures (the "Debentures") maturing March 31,
        2011, and six months warrants (the "Warrants"; the Warrants and the Debentures
        are collectively referred to as the "Securities"), to purchase up to an
        aggregate of 53,333,333 shares of common stock of the Company (the "Financing").
        The Company sold and will sell the Securities on the same terms as Debentures
        sold on March 31, 2006 and the accompanying four year warrants sold on equal
        date (the "March 2006 Financing") as reported in the Company's Current Report
        filed with the Securities and Exchange Commission (the "Commission") on Form
        8-K
        on March 20, 2007 (the "Current Report"), with the exception of the terms
        therein. The Company is currently negotiating with the new Holders of the
        Debentures with respect to the event of default that occurred on January
        5,
        2007.
  **ITEM
        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
        HOLDERS**
  See
        section Item 4 “Submission of Matters to a Vote of Security Holders” in our
        Annual Report filed with the SEC on Form 10-KSB on November 13,
        2006.
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  **ITEM
        5. OTHER INFORMATION**
 
 None.
 
 **ITEM
        6. EXHIBITS**
 
 The
        following exhibits are filed herewith:
 
 31.1
        Certification of Periodic Financial Reports by Dennis
        J. Cagan, the Company’s Chief Executive Officer, in satisfaction of Section 302
        of the Sarbanes-Oxley Act of 2002. *
 
 31.2
        Certification of Per iodic
        Financial Reports by Patrick R. Quinn, the Company’s Chief Financial Officer, in
        satisfaction of Section 302 of the Sarbanes-Oxley Act of 2002. *
 
 32.1
        Certification of Periodic Financial Reports by Dennis
        J. Cagan, the Company’s Chief Executive Officer, in satisfaction of Section 906
        of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. Section 1350. *
 
 32.2
        Certification of Periodic Financial Reports by
        Patrick R. Quinn, the Company’s Chief Financial Officer, in satisfaction of
        Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. Section 1350.
        *
 
 *
        Filed
        Herewith
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  **SIGNATURES**
 
 In
        accordance with the requirements of the Exchange Act of 1934, the registrant
        caused this report to be signed on its behalf by the undersigned, thereunto
        duly
        authorized.
 
  TWL
                  CORPORATIONMay
                  24, 2007
              
              By:
              */s/
                  Dennis J. Cagan*Dennis
                  J. CaganChief
                  Executive OfficerMay
                  24, 2007
              
              By:
              /*s/
                  Patrick R. Quinn*Patrick
                  R. QuinnChief
                  Financial Officer




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